EXHIBIT A
SUBLEASE
THIS SUBLEASE (“Sublease”) is made as of the 1st day of February, 2016 (the
“Sublease Effective Date”), by and between ENTROPIC COMMUNICATIONS, LLC, a
Delaware limited liability company (“Sublandlord”), and DEXCOM, INC., a Delaware
corporation (“Subtenant”). Sublandlord and Subtenant are each referred to herein
as a “Party”, and collectively as the “Parties”.
RECITALS
A.    Sublandlord, as the successor-in-interest to ENTROPIC COMMUNICATIONS,
INC., a Delaware corporation, is the “Tenant,” and JOHN HANCOCK LIFE INSURANCE
COMPANY (U.S.A.), a Michigan corporation, as the successor-in-interest to KILROY
REALTY, L.P., a Delaware partnership, is the “Landlord,” under that certain
Office Lease dated August 31, 2007 (the “Original Lease”), as amended by that
certain First Amendment to Office Lease dated July 24, 2012 (the “First
Amendment”), and that certain Amended and Restated Second Amendment to Lease
dated October 16, 2013 (the “Second Amendment”) and that certain Third Amendment
to Office Lease dated July 31, 2014 (the “Third Amendment”, and collectively
with the Original Lease and the First Amendment and the Second Amendment,
referred to herein as the “Master Lease”).
B.    Pursuant to the Master Lease, Sublandlord currently holds a leasehold
interest in the entirety of that certain building comprising 132,600 rentable
square feet of space (the “Premises”) located at 6350 Sequence Drive, San Diego,
California (the “Building”).
C.    As set forth in Section 4.1 of the Second Amendment, the Lease Expiration
Date of the Master Lease is January 31, 2022. A copy of the Master Lease is
attached hereto as Exhibit A.
D.    Sublandlord wishes to sublease to Subtenant, and Subtenant wishes to
sublease from Sublandlord, the entirety of the Premises, subject to a phased
rent schedule as further set forth in this Sublease, and otherwise upon the
terms and conditions set forth in this Sublease.
AGREEMENT
In consideration of the mutual covenants contained herein, the sufficiency of
which is hereby acknowledged, the parties hereto agree as follows.
1.Sublease. Sublandlord hereby subleases and demises to Subtenant and Subtenant
hereby hires and takes from Sublandlord the Premises.
2.    Term.
2.1.    Term. The term (“Term”) of this Sublease shall commence on the
“Commencement Date”, which shall be the date that is the later to occur of (i)
February 1, 2016, or (ii) fifteen (15) days following (a) the Landlord Consent
Date (as defined below), and (b) Sublandlord’s delivery of possession of the
Premises to Subtenant. The Term shall expire on January 31, 2022 (the

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“Expiration Date”), which date the expiration of the Master Lease; provided,
however, Subtenant and Sublandlord shall coordinate their respective efforts
during the final thirty (30) days of the Term so that Sublandlord may have
access to perform Sublandlord’s restoration obligations pursuant to the Master
Lease, concurrently with Subtenant performing any of Subtenant’s restoration
obligations pursuant to this Sublease, if any.
2.2.    Consent. The “Landlord Consent Date” shall be the date on which
Subtenant receives from Sublandlord written evidence of Landlord’s consent to
this Sublease (the “Landlord Consent”). The Parties hereby acknowledge and agree
that the effectiveness of this Sublease is contingent upon Sublandlord obtaining
the Landlord Consent no later than sixty (60) days after the Sublease Effective
Date (the “Consent Deadline”). In the event Landlord has not provided the
Landlord Consent to Sublandlord and Subtenant on or before the Consent Deadline,
each of Sublandlord and Subtenant shall have the right to deliver notice to the
other terminating this Sublease due to the failure of Landlord Consent being
timely obtained.
2.3.    Possession. Pursuant to the Early Access Period (defined below),
Sublandlord shall deliver possession of the Premises to Subtenant on the
Landlord Consent Date.
2.4.    Early Access. Notwithstanding the foregoing, Sublandlord shall provide
Subtenant with early access to the Premises from and after the Landlord Consent
Date though the Commencement Date (the “Early Access Period”). During the Early
Access Period, Subtenant may use the Premises for purposes of establishing
telecommunications connectivity, installing furniture, fixtures and equipment,
and otherwise preparing the Premises for Subtenant’s use and occupancy. During
the Early Access Period, Subtenant shall not unreasonably interfere with any
work being performed within the Building by Sublandlord pursuant to the terms of
this Sublease. All provisions of this Sublease shall apply during the Early
Access Period, except that Tenant shall have no obligation to pay Base Rent or
Direct Expense Share (defined below) until the Commencement Date. During the
Early Access Period, Subtenant shall pay the costs for utilities to the
Premises, which shall be paid by Subtenant directly to the respective utility
providers. Notwithstanding anything to the contrary herein, if Subtenant
commences business operations in the Premises during the Early Access Period (as
opposed to using the Early Access Period to prepare the Premises for Subtenant’s
use and occupancy), the Commencement Date shall occur and all of the terms and
conditions of this Sublease shall apply including the obligation to pay all
Rent.
2.5.    Telecommunications. Sublandlord hereby agrees to use commercially
reasonable efforts to facilitate Subtenant receiving the cooperation of Landlord
in allowing Subtenant and Subtenant’s vendors to have access to the Premises to
assist in establishing telecommunications connectivity for telephone and
internet service, prior to, during and following the Early Access Period, as may
be requested by Subtenant; provided, however, Subtenant shall pay any charges
associated with initiating such service, as well as any invoices from vendors
for such services once established.

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3.    Rent.
3.1.    Base Rent. Commencing on the Commencement Date and continuing through
the Expiration Date, Subtenant shall pay to Sublandlord as rent for the Premises
(“Base Rent”) the following amounts:
Period
Portion of Premises for Calculations
% of Premises
Monthly Base Rent/SF
Total Monthly
Base Rent
Commencement Date - January 31, 2016
40,000 RSF
30.17%
$1.80
$72,000.00
February 1, 2016 - January 31, 2017
40,000 RSF
30.17%
$1.86
$74,520.00
February 1, 2017 - January 31, 2018
65,000 RSF
49.02%
$1.93
$125,333.32
February 1, 2018 - January 31, 2019
94,000 RSF
70.89%
$2.00
$187,595.06
February 1, 2019 - February 28, 2019
132,600 RSF
100.00%
Free
$0.00
March 1, 2019 - January 31, 2020
132,600 RSF
100.00%
$2.07
$273,890.79
February 1, 2020 - January 31, 2021
132,600 RSF
100.00%
$2.14
$283,476.97
February 1, 2021 - January 31, 2022
132,600 RSF
100.00%
$2.21
$293,398.66

Notwithstanding the fact that Sublandlord shall deliver possession of the entire
Premises to Subtenant at the beginning of the Early Access Period, for
Subtenant’s exclusive use through the Expiration Date, the Base Rent to be paid
by Subtenant shall be phased-in as set forth above, using the stated “Portion of
the Premises for Calculations” as the multiplier for the Monthly Base Rent rate
applicable during each “Period” listed above.
3.2.    Additional Rent. Subtenant shall pay to Sublandlord, as additional rent
during the Term, the percentage of the Direct Expenses (as defined in the Master
Lease) that correspond to the phased-in Portion of the Premises for Calculations
for such period of the Term (the “Direct Expense

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Share”). For clarity, during the applicable period of the Term, the Direct
Expense Share to be paid by Subtenant shall be calculated as the Direct Expenses
owed by Sublandlord pursuant to the Master Lease for such period, multiplied by
the percentage of the Premises listed above in Section 3.1. Notwithstanding the
foregoing, if, prior to January 31, 2019, Subtenant actually conducts business
operations in a portion of the Premises that is greater than the specific
portion of the Premises listed in Section 3.1 above for such specific Period,
from and after such occupancy, the Portion of the Premises for Calculations used
to calculate Subtenant’s Direct Expense Share shall automatically increase to
include the larger portion of the Premises in which Subtenant is actually
conducting business operations from and after the date of such conduct through
the remainder of the Sublease Term. Sublandlord shall have the right to inspect
the Premises for the purpose of verifying the portion of the Premises in which
Subtenant is actually conducting business operations as set forth above.
Subtenant shall pay the Direct Expense Share to Sublandlord monthly with Base
Rent, and Sublandlord shall remain responsible for paying to Landlord the
difference between the Direct Expenses owing under the Master Lease and the
Direct Expense Share paid by Subtenant pursuant to the terms herein.
Notwithstanding the foregoing, in the event any cost or expense is incurred
under the Master Lease for Subtenant’s sole benefit (including the
disproportionate use of utilities) or as a result of Subtenant’s request for
certain services (such as after-hours HVAC charges), Subtenant shall pay the
entire cost thereof. The Direct Expense Share payable by Subtenant shall not be
subject to any surcharge or profit imposed by Sublandlord. The Direct Expenses
under the Master Lease from which the Direct Expense Share is calculated shall
be reflective of the actual expenses due by Sublandlord to Landlord pursuant to
the Master Lease.
3.3.    Proration. In the event the Commencement Date does not fall on the first
date of the month, the Monthly Base Rent and the Direct Expense Share for the
second month of the Term shall be prorated for the partial month.
3.4.    First Month’s Rent. Concurrently with the execution and delivery of this
Sublease, Subtenant shall pay to Sublandlord the sum of $90,558.37, representing
the first full month of Base Rent of $72,000.00, and the first full month of the
Direct Expense Share of $18,558.37.
3.5.    Security Deposit. Also concurrently with the execution and delivery of
this Sublease, Subtenant shall pay to Sublandlord the sum of $293,398.66 as the
“Security Deposit”. The Security Deposit shall be subject to the same terms and
conditions set forth in Article 21 of the Master Lease, as incorporated herein.
4.    Use; Parking; Signage. Subtenant covenants and agrees to use the Premises
for the Permitted Use under the Master Lease, in conformance with all applicable
zoning ordinances, and all other applicable rules and regulations, and subject
to the Master Lease. Subtenant shall have access to and use of all parking
stalls associated with the Building to which Sublandlord has such right under
and in accordance with the Master Lease, for the entire Term of this Sublease
and at no additional charge imposed by Sublandlord on Subtenant. Subject to
approval of Landlord in accordance with the Master Lease, and subject to Section
8 of the Second Amendment, Subtenant shall have the right to all interior and
exterior signage rights associated with the Building. All costs and expenses
incurred in the design, permits, installation, maintenance and removal of such
signage shall be the sole responsibility of Subtenant, but may be reimbursed as
part of the Subtenant Improvement Allowance (as defined below). All signage
installed at Subtenant’s request shall be subject to the restoration
requirements specified in the Master Lease.

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5.    Master Lease.
5.1.    Subtenant and this Sublease shall be subject in all respects to the
terms of, and the rights of the Landlord under, the Master Lease. Except as
otherwise expressly provided in Section 7 hereof, the covenants, agreements,
terms, provisions and conditions of the Master Lease insofar as they are not
inconsistent with the terms of this Sublease are made a part of and incorporated
into this Sublease as if recited herein in full, and the rights and obligations
of the Landlord and the Tenant under the Master Lease shall be deemed the rights
and obligations of Sublandlord and Subtenant respectively hereunder and shall be
binding upon and inure to the benefit of Sublandlord and Subtenant respectively.
As between the parties hereto only, in the event of a conflict between the terms
of the Master Lease and the terms of this Sublease, the terms of this Sublease
shall control.
5.2.    Except as set forth below, the terms and conditions of this Sublease
shall include all of the terms of the Master Lease and such terms are
incorporated into this Sublease as if fully set forth herein, except that: (i)
each reference in such incorporated sections to “Lease” shall be deemed a
reference to “Sublease”; (ii) each reference to “Landlord” and “Tenant” shall be
deemed a reference to “Sublandlord” and “Subtenant”, respectively, except as
otherwise expressly set forth herein; (iii) with respect to work, services,
repairs, restoration, insurance, indemnities, representations, warranties or the
performance of any other obligation of Landlord under the Master Lease, the sole
obligation of Sublandlord shall be to request the same in writing from Landlord
as and when requested to do so by Subtenant, and to use Sublandlord’s reasonable
efforts (without requiring Sublandlord to spend more than a nominal sum) to
obtain Landlord’s performance; (iv) with respect to any obligation of Subtenant
to be performed under this Sublease, wherever the Master Lease grants to
Sublandlord a specified number of days to perform its obligations under the
Master Lease, except as otherwise provided herein, Subtenant shall have three
(3) fewer days to perform the obligation, including, without limitation, curing
any defaults, if the specified number of days in the Master Lease is six (6) or
more, and Subtenant shall have two (2) fewer days to perform the obligation,
including, without limitation, curing any defaults, if the specified number of
days in the Master Lease is five (5) or less; (v) with respect to any approval
required to be obtained from the “Landlord” under the Master Lease, such consent
must be obtained from both Landlord and Sublandlord, and the approval of
Sublandlord may be withheld if Landlord’s consent is not obtained, but may not
be unreasonably withheld, conditioned or delayed if Landlord’s consent is
obtained; (vi) in any case where the “Landlord” reserves or is granted the right
to manage, supervise, control, repair, alter, regulate the use of, enter or use
the Premises or any areas beneath, above or adjacent thereto, such reservation
or grant of right of entry shall be deemed to be for the benefit of both
Landlord and Sublandlord; (vii) in any case where “Tenant” is to indemnify,
release or waive claims against “Landlord”, such indemnity, release or waiver
shall be deemed to run from Subtenant to both Landlord and Sublandlord; (viii)
in any case where “Tenant” is to execute and deliver certain documents or
notices to “Landlord”, such obligation shall be deemed to run from Subtenant to
both Landlord and Sublandlord; (ix) all payments shall be made to Sublandlord;
(xi) if a request for consent is initiated by Subtenant, Subtenant shall pay all
consent and review fees set forth in the Master Lease to both Landlord and
Sublandlord; (xii) Subtenant shall not have the right to terminate this Sublease
due to casualty or condemnation unless Sublandlord has such right under the
Master Lease; and (xiii) all “profit” under subleases and assignments shall be
paid to Sublandlord, if applicable.
5.3.    This Sublease is and at all times shall be subject and subordinate to
the Master Lease and the rights of Landlord thereunder. Except as otherwise
expressly provided in Section 7 hereof, Subtenant hereby expressly assumes and
agrees: (i) to comply with all provisions of the Master Lease

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which are incorporated hereunder; and (ii) to perform all the obligations on the
part of the “Tenant” to be performed under the terms of the Master Lease during
the Term of this Sublease which are incorporated hereunder. In the event the
Master Lease is terminated for any reason whatsoever, this Sublease shall
terminate simultaneously.
6.    Landlord’s Performance Under Master Lease.
6.1.    Subtenant recognizes that, notwithstanding that the obligations of the
Landlord under the Master Lease shall be deemed the obligations of Sublandlord
as set forth in Section 5 above, Sublandlord is not in a position to render
services or to perform the obligations required of Landlord under the Master
Lease (the “Landlord Exclusive Obligations”). Therefore, notwithstanding
anything to the contrary contained in this Sublease, Subtenant agrees that
performance by Sublandlord of any Landlord Exclusive Obligations hereunder is
conditional upon due performance by the Landlord of its corresponding
obligations under the Master Lease for such Landlord Exclusive Obligations, and
Sublandlord shall not be liable to Subtenant for any default of the Landlord
under the Master Lease with regard to the failure of Landlord to so perform any
such Landlord Exclusive Obligations. Subtenant shall not have any claim against
Sublandlord by reason of the Landlord’s failure or refusal to comply with any of
the provisions of the Master Lease unless such failure or refusal is a result of
Sublandlord’s act or failure to act.
6.2.    Whenever the consent of Landlord shall be required by, or Landlord shall
fail to perform its obligations under, the Master Lease, Sublandlord agrees to
use its commercially reasonable efforts to obtain, without requiring Sublandlord
to spend more than a nominal sum, but at Subtenant’s sole cost and expense as to
any charges from Landlord, such consent and/or performance on behalf of
Subtenant. Sublandlord agrees to forward promptly to Subtenant, upon receipt
thereof by Sublandlord, a copy of any written notice received by Sublandlord
from Landlord or from any governmental authorities, mortgagees or ground
lessors, as and to the extent any of the foregoing relates to the Premises.
Notwithstanding the foregoing, Sublandlord shall not be required to commence any
action against Landlord or incur any liability in connection with its
obligations under this paragraph; provided, however, Sublandlord shall not
impeded Subtenant’s ability to commence any action against Landlord to enforce
any rights under this Sublease or the Master Lease in the event Subtenant so
desires to bring such action and Sublandlord declines to take such action on
Subtenant’s behalf.
6.3.    Sublandlord represents and warrants to Subtenant that, to its current
actual knowledge, (i) the Master Lease is in full force and effect, all
obligations of both Landlord and Sublandlord thereunder have been satisfied and
Sublandlord has neither given nor received a notice of default pursuant to the
Master Lease, (ii) Sublandlord is the holder of the entire interest of the
tenant under the Master Lease; (iii) the copy of the Master Lease attached
hereto as Exhibit A is a true, correct, and complete copy of the Master Lease,
and is in full force and effect in accordance with, and subject to all of the
terms, covenants, conditions and agreements contained therein; (iv) the term of
the Master Lease expires on January 31, 2022; (v) neither Sublandlord nor
Landlord has any right or option to terminate the Master Lease during such term
prior to the expiration thereof for any reason, other than as specifically set
forth in the Master Lease; (vi) the Master Lease has not been modified, amended
or supplemented except as set forth in Exhibit A; and (vii) subject to the
consent of Landlord, Sublandlord has full right, power and authority to make and
enter into this Sublease.

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6.4.    Sublandlord covenants as follows: (i) not to voluntarily terminate the
Master Lease except for the exercise of Sublandlord’s rights to terminate the
Master Lease in the event of a casualty, condemnation or Landlord default
(subject to the last sentence of this paragraph), and (ii) not to modify the
Master Lease so as to materially and adversely affect Subtenant’s rights
hereunder. Notwithstanding the foregoing, in the event circumstances arise that
allow Sublandlord the opportunity to exercise Sublandlord’s right to terminate
the Master Lease due to the event of a casualty, condemnation or Landlord
default, Sublandlord shall notify Subtenant in writing of such opportunity. To
the extent Sublandlord desires to exercise Sublandlord’s right to terminate the
Master Lease, Sublandlord shall provide Subtenant the opportunity to mutually
agree to the concurrent termination of this Sublease, and/or provide Subtenant
the right to communicate directly with Landlord about Subtenant retaining
possession of the Premises pursuant to a direct lease arrangement with Landlord,
notwithstanding Sublandlord’s termination of the Master Lease; provided, that,
the foregoing shall not impede Sublandlord’s ability to exercise its termination
rights.
7.    Variations from Master Lease. The following covenants, agreements, terms,
provisions and conditions of the Master Lease are hereby modified or not
incorporated herein:
7.1.    Rent; Security Deposit. Notwithstanding anything to the contrary set
forth in the Master Lease, the Term of this Sublease and Base Rent and Direct
Expense Share payable under this Sublease, and the amount of the Security
Deposit required of Subtenant, shall be as set forth in Section 3 above.
7.2.    Condition. Notwithstanding anything to the contrary set forth in the
Master Lease, the Sublandlord shall deliver the Premises to Subtenant in its
current “as is” condition, and Subtenant shall accept the Premises in “as-is”
condition without representation or warranty of any kind.
7.3.    Subtenant Improvement Allowance. Sublandlord shall provide to Subtenant
an improvement allowance in the amount of Three Hundred Ninety Seven Thousand
Eight Hundred and No/100 Dollars ($397,800.00), based on $3.00 per rentable
square foot (the “Subtenant Improvement Allowance”). The Subtenant Improvement
Allowance may be used to reimburse Subtenant for costs and expenses incurred by
Subtenant for improvements made to the Premises (including architectural,
engineering and construction related costs), as well as movable furniture, and
for all costs associated with Subtenant’s set up costs (e.g., furniture,
fixtures, equipment, etc.). In the event that the Subtenant Improvement
Allowance is not fully utilized by Subtenant within one (1) year after the
Commencement Date, then such unused amounts shall revert to Sublandlord, and
Subtenant shall have no further rights with respect thereto. Subtenant may
request payments of the Subtenant Improvement Allowance as often as once per
month (a “Payment Request”), and each Payment Request shall be paid by
Sublandlord within thirty (30) days, pursuant to the following terms and
conditions:
(a)    as of the date of any Payment Request, Subtenant shall not be in default
of any term or condition of this Sublease beyond all applicable notice and cure
periods;
(b)    as of the date of any Payment Request, the Premises shall be in lien-free
condition (i.e. no lien has been filed against the Premises in connection with
Subtenant’s Alterations);
(c)    if the Payment Request is for costs or expenses related to Alterations
that require prior consent of Landlord under the Master Lease, such Alterations
shall have previously

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been approved by both Sublandlord and Landlord in accordance with the Master
Lease, and Subtenant shall include with the Payment Request copies of invoices
or other reasonable evidence of the amount of such costs or expenses incurred,
as well as any other items necessary to show compliance with any related
obligations pertaining to such approved Alterations in accordance with the
Master Lease; and
(d)    if the Payment Request is for costs or expenses unrelated to Alterations
requiring prior consent of Landlord under the Master Lease, such Payment Request
shall be accompanied by invoices or other reasonable evidence of the amount of
such costs or expenses incurred by Subtenant.
7.4.    Restoration. Subtenant shall not be responsible for any restoration
obligations existing pursuant to the Master Lease as of the Commencement Date,
it being acknowledged and agreed by the Parties that such restoration
obligations will remain obligations of Sublandlord. Subtenant shall be
responsible for restoration for any Alterations (as defined in the Master Lease)
made to the Premises by Subtenant or at Subtenant’s direction after the Sublease
Effective Date, unless Subtenant receives prior written consent from Landlord
waiving any and all applicable restoration requirements for such Alterations
initiated by Subtenant.
7.5.    Brokers. The Parties hereto represent and warrant to each other that
neither party dealt with any broker or finder in connection with the
consummation of this Sublease except for (a) Darren Morgan and Greg Bisconti of
Cushman & Wakefield of San Diego, Inc., representing Subtenant, and (b) Steve
Center and Chris High of Cushman & Wakefield of San Diego, Inc., representing
Sublandlord. Sublandlord shall pay a leasing commission, in accordance with a
separate written commission agreement. Each Party agrees to indemnify, hold and
save the other party harmless from and against any and all claims for brokerage
commissions or finder’s fees arising out of either of their acts in connection
with this Sublease. The provisions of this Section 7.2 shall survive the
expiration or earlier termination of this Sublease.
7.6.    Insurance Proceeds; Condemnation Awards. Notwithstanding anything
contained in the Master Lease to the contrary, as between Sublandlord and
Subtenant only, all insurance proceeds or condemnation awards received by
Sublandlord under the Master Lease shall be deemed to be the property of
Sublandlord, except for separate awards obtained by and payable to Subtenant for
moving and relocation expenses.
7.7.    Notices. All Notices (as defined in the Master Lease) shall be given in
accordance with Section 29.18 of the Master Lease, except that Notice to
Sublandlord or Subtenant must be sent, transmitted or delivered to the following
addresses:
To Sublandlord:
Entropic Communications, LLC
 
c/o MaxLinear, Inc.
 
5966 La Place Court, Suite 100
 
Carlsbad, California 92008
 
Attn: General Counsel

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With a copy to:        
16275 Laguna Canyon Road, Suite 120
 
Irvine, CA 92618
 
Attn: Sameer V. Rao, Director Finance and Treasurer
 
Tel: (949) 333-0112
 
Email: srao@maxlinear.com

To Subtenant:
Dexcom, Inc.
 
6340 Sequence Drive
 
San Diego, California 92121
 
Attn: Chief Executive Officer

With a copy to:
Dexcom, Inc.
 
6340 Sequence Drive
 
San Diego, California 92121
 
Attn: Legal Department

7.8.
Payments. All amounts payable hereunder by Subtenant shall be payable directly
to Sublandlord at 16275 Laguna Canyon Road, Suite 120, Irvine, CA 92618, Attn:
Sameer V. Rao, Director Finance and Treasurer, Tel: (949) 333-0112, Email:
srao@maxlinear.com; provided, however, at Subtenant’s request, Sublandlord shall
provide payment information necessary for Subtenant to remit payment of sums
under this Lease electronically or via ACH or wire transfer.

7.9.    
(a)    Exclusions. The following provisions from the Master Lease shall not
apply to this Sublease, or shall only apply as modified pursuant to the express
terms and conditions of this Sublease and shall not be incorporated herein:

Original Lease

Article/Section  

Title:
Preamble
 
Summary of Basic Lease Information – Sections 1, 2, 3, 4, 8, 10, 12, 13
Provisions are superseded by Second Amendment to Master Lease and/or this
Sublease

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Sections 1.1.1 (references to Work Letter Agreement and last sentence from
“subject only to” on), 1.1.2
Superseded by Second Amendment
Section 2.1 (second sentence only)
Initial Lease Term.
Section 2.2
Option Term(s)
Section 2.3
Beneficial Occupancy
Section 4.7
Landlord’s Books and Records
Article 22
Letter of Credit
Section 23.4
Tenant’s Signage (Superseded by Second Amendment)
Article 28
Parking (Superseded by Second Amendment)
Section 29.18
Notices (see Section 7.7 above)
Section 29.24
Brokers (see Section 7.5 above)
Section 29.33.5
Indemnifications
Section 29.34
Communication Equipment
Exhibit A
Superseded by Second Amendment
Exhibit B
Work Letter Agreement (see Sections 7.3 and 7.4 above)

Exhibit G
Form of Letter of Credit
Exhibit H
Market Rent Determination Factors
Exhibit J
Prior Tenant Removal Items
 
First Amendment of Master Lease

Article/Section  

Title:
All
First Amendment to Office Lease
 
Second Amendment of Master Lease

Article/Section  

Title:
Article 3
Surrender of the 6290 Premises
Article 4
Lease Term
Article 5
Base Rent

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Article 7
Improvements
Article 8
Signage
Article 9 (last paragraph)
Parking (N/A)
Article 10
Security Deposit
Article 11
Brokers (see Section 7.5 above)
Article 12
Notices
Section 13
Effectiveness of this Second Amendment
Exhibit B
Work Letter
 
Third Amendment of Master Lease

Article/Section  

Title:
Article 2
Increased Improvement Allowance

(b)    Notwithstanding the foregoing, references in the following provisions to
“Landlord” shall mean Landlord under the Master Lease only: Original Lease
Sections 4.2.4, 4.3, 4.4.1, 4.4.2, 6.1, 6.2, 7.1 (first sentence and fifth
sentence only), 7.2, 10.2, Articles 11, 13, 18, 24 (last two sentences only),
Sections 29.5 and 29.33.2 (first sentence only) and Second Amendment Section 9,
amending Section 28.1. In connection with the preceding sentence, Sublandlord
agrees to forward to Subtenant all “Statements” and “Estimate Statements”
provided by Landlord under Sections 4.4.1 or 4.4.2 of the Master Lease.
8.    FF&E. Sublandlord hereby grants to Subtenant, free of charge for the Term
of this Sublease, the right to use those certain existing items of furniture,
fixtures and equipment located within the Premises (the “Selected FF&E”) in an
“as is, where is” condition and without representations or warranties of any
kind which are identified on Exhibit B attached hereto. The Selected FF&E shall
be maintained by Subtenant in the condition received, reasonable wear and tear
excepted and Subtenant shall be responsible for any loss or damage to the same
occurring during the Term. Subtenant shall insure the Selected FF&E under the
property insurance policy required under the Master Lease, as incorporated
herein. Subtenant shall surrender the Selected FF&E to Sublandlord upon the
termination of this Sublease in the same condition as exists as of the
Commencement Date, reasonable wear and tear excepted. Subtenant shall not remove
any of the Selected FF&E from the Premises. Notwithstanding the foregoing,
provided (i) Subtenant has not defaulted under this Sublease and no event has
occurred that with the passing of time or the giving of notice, would constitute
a default by Subtenant under this Sublease and (ii) this Sublease has not
terminated prior to the Expiration Date, which conditions may be waived by
Sublandlord in its sole discretion, then upon the termination of this Sublease,
the Selected FF&E shall become the property of Subtenant, and Subtenant shall
accept the same in its “AS IS, WHERE IS” condition, without representation or
warranty whatsoever. Sublandlord shall have the right to enter the Premises and
remove items of furniture, fixtures and equipment that are not included in the

--------------------------------------------------------------------------------

Selected FF&E, at reasonable times to be coordinated with Subtenant, within
sixty (60) days of the Commencement Date.
9.    Indemnity. Subtenant hereby agrees to indemnify and hold Sublandlord
harmless from and against any and all claims, losses and damages, including,
without limitation, reasonable attorneys’ fees and disbursements, which may at
any time be asserted against Sublandlord by (a) the Landlord for failure of
Subtenant to perform any of the covenants, agreements, terms, provisions or
conditions contained in the Master Lease (solely with respect to the
Premises),which by reason of the provisions of this Sublease Subtenant is
obligated to perform, or (b) any person by reason of Subtenant’s use and/or
occupancy of the Premises. The provisions of this Section 8 shall survive the
expiration or earlier termination of the Master Lease and/or this Sublease,
except to the extent any of the foregoing is caused or by the negligence or
willful misconduct of Sublandlord, its employees, agents or contractors.
10.    Cancellation of Master Lease. In the event of the cancellation or
termination of the Master Lease for any reason whatsoever or of the involuntary
surrender of the Master Lease by operation of law prior to the Expiration Date
of this Sublease, this Sublease shall terminate and be of no further force or
effect, provided, however, that upon the election of Landlord under the Master
Lease, Subtenant agrees to make full and complete attornment to the Landlord
under the Master Lease for the balance of the term of this Sublease and upon the
then executory terms hereof at the option of the Landlord at any time during
Subtenant’s occupancy of the Premises, which attornment shall be evidenced by an
agreement in form and substance reasonably satisfactory to the Landlord.
Subtenant agrees to execute and deliver such an agreement at any time within ten
(10) business days after request of the Landlord, and if Landlord so requests,
Subtenant waives the provisions of any law now or hereafter in effect which may
give Subtenant any right of election to terminate this Sublease or to surrender
possession of the Premises in the event any proceeding is brought by the
Landlord under the Master Lease to terminate the Master Lease.
10.1.    Notwithstanding anything to the contrary herein, Subtenant acknowledges
that, under the Master Lease, both Landlord and Sublandlord have certain
termination and recapture rights, including, without limitation, in Sections 11,
13 and 14.4. Nothing herein shall prohibit Landlord or Sublandlord from
exercising any such rights and neither Landlord nor Sublandlord shall have any
liability to Subtenant as a result thereof. To the extent Sublandlord desires to
exercise any such rights, Sublandlord shall comply with the provisions of
Section 6.4 above.
11.    Certificates. Each party hereto shall at any time and from time to time
as requested by the other party upon not less than ten (10) business days prior
written notice, execute, acknowledge and deliver to the other party, a
commercially reasonable statement in writing certifying that this Sublease is
unmodified and in full force and effect (or if there have been modifications
that the same is in full force and effect as modified and stating the
modifications, if any) certifying the dates to which rent and any other charges
have been paid and stating whether or not, to the knowledge of the person
signing the certificate, that the other party is not in default beyond any
applicable grace period provided herein in performance of any of its obligations
under this Sublease, and if so, specifying each such default of which the signer
may have knowledge, it being intended that any such statement delivered pursuant
hereto may be relied upon by others with whom the party requesting such
certificate may be dealing.
12.    Assignment or Subletting. Subject further to all of the rights of the
Landlord under the Master Lease and the restrictions contained in the Master
Lease, Subtenant shall not be entitled to

--------------------------------------------------------------------------------

assign this Sublease or to sublet all or any portion of the Premises without the
prior written consent of Sublandlord, which consent may be withheld by
Sublandlord in its reasonable discretion.
13.    Repairs. Sublandlord shall have no obligation whatsoever to make or pay
the cost of any alterations, improvements or repairs to the Premises, including,
without limitation, any improvement or repair required to comply with any law,
regulation, building code or ordinance (including the Americans with
Disabilities Act of 1990). Landlord shall be solely responsible for performance
of any repairs required to be performed by Landlord under the terms of the
Master Lease.
14.    Severability. If any term or provision of this Sublease or the
application thereof to any person or circumstances shall, to any extent, be
invalid and unenforceable, the remainder of this Sublease or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each term
or provision of this Sublease shall be valid and be enforced to the fullest
extent permitted by law.
15.    Entire Agreement; Waiver. This Sublease contains the entire agreement
between the parties hereto and shall be binding upon and inure to the benefit of
their respective heirs, representatives, successors and permitted assigns. Any
agreement hereinafter made shall be ineffective to change, modify, waive,
release, discharge, terminate or effect an abandonment hereof, in whole or in
part, unless such agreement is in writing and signed by the parties hereto.
16.    Captions and Definitions. Captions to the Sections in this Sublease are
included for convenience only and are not intended and shall not be deemed to
modify or explain any of the terms of this Sublease.
17.    Further Assurances. The parties hereto agree that each of them, upon the
request of the other party, shall execute and deliver, in recordable form if
necessary, such further documents, instruments or agreements and shall take such
further action that may be necessary or appropriate to effectuate the purposes
of this Sublease.
18.    Governing Law. This Sublease shall be governed by and in all respects
construed in accordance with the internal laws of the State of California.
19.    Hazardous Materials Indemnification. Sublandlord agrees to indemnify,
defend, protect and hold harmless Subtenant from and against any liability,
obligation, damage or costs, including, without limitation, attorneys’ fees and
costs, resulting directly or indirectly from any use, presence, removal or
disposal of any Hazardous Materials or breach of any provision of Section 29.33
of the Master Lease, to the extent such liability, obligation, damage or costs
was a result of the actions caused or permitted by Sublandlord or a Sublandlord
Party. Subtenant agrees to indemnify, defend, protect and hold harmless
Sublandlord from and against any liability, obligation, damage or costs,
including, without limitation, attorneys’ fees and costs, resulting directly or
indirectly from any use, presence, removal or disposal of any Hazardous
Materials or breach of any provision of Section 29.33 of the Master Lease, to
the extent such liability, obligation, damage or costs was a result of the
actions caused or permitted by Subtenant or a Subtenant Party.
[SIGNATURES APPEAR ON FOLLOWING PAGE]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be executed
as of the Sublease Effective Date.

Sublandlord:
 
ENTROPIC COMMUNICATIONS, LLC
a Delaware limited liability company
 
 
By:
/s/ Adam C. Spice
Name:
Adam C. Spice
Its:
Director and CFO

Subtenant:
 
ENTROPIC COMMUNICATIONS, LLC
a Delaware corporation
 
 
By:
/s/ Kevin Sun
Name:
Kevin Sun for Jess Roper
Its:
Senior Director of Finance

--------------------------------------------------------------------------------

EXHIBIT A
to Sublease
MASTER LEASE

[attached]

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

OFFICE LEASE
KILROY REALTY
6290 SEQUENCE DRIVE
[Triple Net Lease]
KILROY REALTY, L.P.,
a Delaware limited partnership,
as Landlord,
and
ENTROPIC COMMUNICATIONS, INC.,
a Delaware corporation,
as Tenant.

--------------------------------------------------------------------------------

TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
Page
 
 
 
ARTICLE 1
 
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
 
4
 
 
 
ARTICLE 2
 
LEASE TERM; OPTION TERMS
 
5
 
 
 
ARTICLE 3
 
BASE RENT
 
10
 
 
 
ARTICLE 4
 
ADDITIONAL RENT
 
10
 
 
 
ARTICLE 5
 
USE OF PREMISES
 
19
 
 
 
ARTICLE 6
 
SERVICES AND UTILITIES
 
20
 
 
 
ARTICLE 7
 
REPAIRS
 
23
 
 
 
ARTICLE 8
 
ADDITIONS AND ALTERATIONS
 
25
 
 
 
ARTICLE 9
 
COVENANT AGAINST LIENS
 
27
 
 
 
ARTICLE 10
 
INSURANCE
 
28
 
 
 
ARTICLE 11
 
DAMAGE AND DESTRUCTION
 
32
 
 
 
ARTICLE 12
 
NONWAIVER
 
34
 
 
 
ARTICLE 13
 
CONDEMNATION
 
35
 
 
 
ARTICLE 14
 
ASSIGNMENT AND SUBLETTING
 
35
 
 
 
ARTICLE 15
 
SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES
 
40
 
 
 
ARTICLE 16
 
HOLDING OVER
 
41
 
 
 
ARTICLE 17
 
ESTOPPEL CERTIFICATES
 
41
 
 
 
ARTICLE 18
 
SUBORDINATION
 
42
 
 
 
ARTICLE 19
 
DEFAULTS; REMEDIES
 
43
 
 
 
ARTICLE 20
 
COVENANT OF QUIET ENJOYMENT
 
46
 
 
 
ARTICLE 21
 
SECURITY DEPOSIT
 
46
 
 
 
ARTICLE 22
 
LETTER OF CREDIT
 
46
 
 
 
ARTICLE 23
 
SIGNS
 
50

 

--------------------------------------------------------------------------------

 
 
 
 
 
 
 
ARTICLE 24
 
COMPLIANCE WITH LAW
53
 
 
 
ARTICLE 25
 
LATE CHARGES
53
 
 
 
ARTICLE 26
 
LANDLORD’S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
54
 
 
 
ARTICLE 27
 
ENTRY BY LANDLORD
54
 
 
 
ARTICLE 28
 
TENANT PARKING
55
 
 
 
ARTICLE 29
 
MISCELLANEOUS PROVISIONS
56
 
 
EXHIBIT “A” – OUTLINE OF PREMISES
 
 
 
EXHIBIT “B” – WORK LETTER AGREEMENT
 
 
 
EXHIBIT “C” – NOTICE OF LEASE TERM DATES
 
 
 
EXHIBIT “D” – RULES AND REGULATIONS
 
 
 
EXHIBIT “E” – FORM OF TENANT’S ESTOPPEL CERTIFICATE
 
 
 
EXHIBIT “F” – RECOGNITION OF COVENANTS, CONDITIONS AND RESTRICTIONS
 
 
 
EXHIBIT “G” – FORM OF LETTER OF CREDIT
 
 
 
EXHIBIT “H” – MARKET RENT DETERMINATION FACTORS
 
 
 
EXHIBIT “I” – ORIGINAL IMPROVEMENT REMOVAL ITEMS
 
 
 
EXHIBIT “J” – PRIOR TENANT REMOVAL ITEMS
 

 

--------------------------------------------------------------------------------

INDEX
 
 
 
  
Page(s)
Abatement Event
22
Accountant
19
Additional Notice
22
Additional Rent
10
Advocate Arbitrators
7
Alterations
25
Applicable Laws
53
Arbitration Agreement
8
Award
9
Bank Prime Loan
54
Base Building
26
Base Rent
10
Briefs
8
Brokers
60
BS Exception
23
Building
4
Building Structure
23
Building Systems
21
CC&Rs
20
Common Areas
5
Communication Equipment
65
Contemplated Effective Date
38
Contemplated Transfer
38
Control,
40
Cosmetic Alterations
26
Damage Termination Date
33
Damage Termination Notice
33
Direct Expenses
10
EBITDA
48
EBITDA Margin
48
Eligibility Period
22
Environmental Laws
63
Estimate
17
Estimate Statement
17
Estimated Direct Expenses
17
Excess
16
Exercise Conditions
6
Exercise Notice
6
Expense Year
10
First Rebuttals
8
Force Majeure
58
Free Cash Flow
48
Gross Profit
48
Gross Profit Margin
48

 

--------------------------------------------------------------------------------

 
 
 
Page(s)
Hazardous Material(s)
63
HVAC
21
Identification Requirements
62
Initial Notice
22
Intent Notice
6
Intention to Transfer Notice
38
Interest Rate
54
Landlord
1
Landlord Parties
28
Landlord Response Date
6
Landlord Response Notice
6
Landlord’s Initial Statements
8
Landlord’s Option Rent Calculation
6
Landlord’s Rebuttal Statement
9
Lease
1
Lease Commencement Date
5
Lease Expiration Date
5
Lease Term
5
Lease Year
5
Lines
62
Mail
59
Net Revenues
48
Neutral Arbitrator
7
New Lease Notice
41
Nine Month Period
38
Nondisturbance Agreement
42
Notices
59
Objectionable Name
52
Operating Expenses
11
Option Rent
6
Option Term
6
Original Improvements
31
Original Tenant
5
Outside Agreement Date
7
Permitted Assignee
6
Permitted Chemicals
63
Permitted Transferee
40
Permitted Use
2
Premises
4
Proposition 13
15
Recapture Notice
38
Reestablishment Notice
48
Renovations
61
Rent
10
Required Thresholds
48

 

--------------------------------------------------------------------------------

 
 
 
Page(s)
Re-Submittal Date
7
Review Period
18
Right Holders
6
Second Rebuttals
8
Security Deposit
46
Sign Specifications
51
Statement
17
Subject Space
36
Summary
1
Tax Expenses
15
Tenant
1
Tenant Parties
28
Tenant’s Initial Statements
8
Tenant’s Option Rent Calculation
6
Tenant’s Rebuttal Statement
9
Tenant’s Share
16
Tenant’s Signage
51
Transfer
39
Transfer Notice
36
Transfer Premium
38
Transferee
36
Transfers
36
Work Letter Agreement
4

 

--------------------------------------------------------------------------------

6290 SEQUENCE DRIVE
OFFICE LEASE
This Office Lease (the “Lease”), dated as of the date set forth in Section 1 of
the Summary of Basic Lease Information (the “ Summary ”), below, is made by and
between KILROY REALTY, L.P., a Delaware limited partnership (“ Landlord ”), and
ENTROPIC COMMUNICATIONS, INC., a Delaware corporation (“ Tenant ”).
SUMMARY OF BASIC LEASE INFORMATION
 
 
 
 
TERMS OF LEASE
 
DESCRIPTION
 
 
1. Date:
 
August 31, 2007.
 
 
2. Premises:
 
 
 
 
2.1 Building:
 
That certain single (1)-story building (the “Building”) located at 6290 Sequence
Drive (Sorrento Mesa), San Diego, California 92121, which Building contains
90,000 rentable square feet of space (inclusive of a 30,000 rentable square foot
mezzanine space).
 
 
2.2 Premises:
 
All of the 90,000 rentable square feet of space located in the Building, as
further set forth in Exhibit A to the Office Lease.
 
 
2.3 Project:
 
The Building is the primary component part of a single-building office project
known as “6290 Sequence Drive,” as further set forth in  Section 1.1.2  of this
Lease.
 
 
3. Lease Term (Article 2):
 
 
 
 
3.1 Length of Term:
 
Seven (7) years and zero (0) months.
 
 
3.2 Lease Commencement Date:
 
The earlier to occur of (i) the date upon which Tenant first commences to
conduct business in the Premises (subject to the beneficial occupancy provisions
set forth in  Section 2.3  of the Lease), and (ii) February 1, 2008 (subject to
any Landlord Delays pursuant to  Section 5.5  of the Work Letter Agreement
attached as Exhibit B  to the Lease).
 
 
3.3 Lease Expiration Date:
 
The last day of the calendar month in which the Seventh (7th) anniversary of the
Lease Commencement Date occurs; provided, however, to the extent the Lease
Commencement Date occurs on the first day of a calendar month, then the Lease
Expiration Date shall be the day immediately preceding the Seventh (7 th )
anniversary of the Lease Commencement Date.
 
 
3.4 Option Term(s):
 
Two (2) five (5)-year options to renew, as more particularly set forth in
Section 2.2 of this Lease.

4. Base Rent (Article 3):
 
 
 
 
 
 
 
 
 
 
 
Lease Year
 
Annual
Base Rent*
 
Monthly Installment
of Base Rent*
 
Monthly Rental Rate per Rentable
Square Foot*
1
 
$
1,890,000.00
 
$
157,500.00
 
$
1.75
2
 
$
1,954,800.00
 
$
162,900.00
 
$
1.81
3
 
$
2,019,600.00
 
$
168,300.00
 
$
1.87
4
 
$
2,095,200.00
 
$
174,600.00
 
$
1.94
5
 
$
2,160,000.00
 
$
180,000.00
 
$
2.00
6
 
$
2,246,400.00
 
$
187,200.00
 
$
2.08
7
 
$
2,322,000.00
 
$
193,500.00
 
$
2.15

 

--------------------------------------------------------------------------------

 
 
 
5. Intentionally Omitted
 
 
 
 
6. Tenant’s Share (Article 4):
 
One hundred percent (100%) of the Building.
 
 
7. Permitted Use (Article 5):
 
Tenant shall use the Premises solely for general office use, data center use,
electronics labs, research and development, engineering and light assembly and
uses incidental thereto (collectively, the “ Permitted Use ”); provided,
however, that notwithstanding anything to the contrary set forth herein above,
and as more particularly set forth in the Lease, Tenant shall be responsible for
operating and maintaining the Premises pursuant to, and in no event may Tenant’s
Permitted Use violate, (A) Landlord’s “Rules and Regulations,” as that term is
set forth in  Section 5.2  of this Lease, (B) all “Applicable Laws,” as that
term is set forth in  Article 24  of this Lease, (C) all applicable zoning,
building codes and the “CC&Rs,” as that term is set forth in  Section 5.3 of
this Lease, and (D) the character of the Project as a first-class office
building Project.
 
 
 
8. Security Deposit (Article 21):
 
$193,500.00.
 
 
9. Parking Pass (Article 28):
 
A total of two hundred fifty-five (255) parking passes to be used in the Project
parking facility, which is inclusive of handicap parking spaces required to
comply with applicable law, regulations, codes and ordinances as of the date of
the Lease. As more particularly set forth in  Article 28 , Tenant’s right to use
such parking passes shall be without charge during the Lease Term, including any
extensions thereof.
 
 
10. Address of Tenant (Section 29.18):
 
Entropic Communications, Inc.
9276 Scranton Road, Suite 200
San Diego, California 92121
Attention: Kurt Noyes
(Prior to Lease Commencement Date)
 
 
and
 
Entropic Communications, Inc.
6290 Sequence Drive (Sorrento Mesa)San Diego,
California 92121
Attention: Kurt Noyes
(After Lease Commencement Date)
 
 
11. Address of Landlord
(Section 29.18):
 
See Section 29.18 of the Lease.
 
 
12. Broker(s) (Section 29.24):
 
 
 
 
Representing Tenant:
 
Irving Hughes
655 W. Broadway, Suite 1650
San Diego, California 92101
Attention: Mr. David Marino
 
Representing Landlord:
 
Burnham Real Estate
4435 Eastgate Mall, Suite 200
San Diego, California 92121
Attention: Mickey Morera
James Duncan
 
 
13. Improvement Allowance
(Section 2 of Exhibit B):
 
$2,250,000.00.

 

--------------------------------------------------------------------------------

ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
1.1Premises, Building, Project and Common Areas.
1.1.1The Premises. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the premises set forth in Section 2.2 of the Summary (the “
Premises ”). The outline of the Premises is set forth in Exhibit A attached
hereto and each floor or floors of the Premises has the number of rentable
square feet as set forth in Section 2.2 of the Summary. The parties hereto agree
that the lease of the Premises is upon and subject to the terms, covenants and
conditions (the “ TCCs ”) herein set forth, and Landlord and Tenant each
covenant as a material part of the consideration for this Lease to keep and
perform each and all of such TCCs by it to be kept and performed and that this
Lease is made upon the condition of such performance. The parties hereto hereby
acknowledge that the purpose of Exhibit A is to show the approximate location of
the Premises in the “ Building ,” as that term is defined in Section 1.1.2 ,
below, only, and such Exhibit is not meant to constitute an agreement,
representation or warranty as to the construction of the Premises, the precise
area thereof or the specific location of the “ Common Areas ,” as that term is
defined in Section 1.1.3 , below, or the elements thereof or of the access ways
to the Premises or the “ Project ,” as that term is defined in Section 1.1.2 ,
below. Except as specifically set forth in this Lease and/or in the Work Letter
Agreement attached hereto as Exhibit B (the “ Work Letter Agreement ”), Landlord
shall not be obligated to provide or pay for any improvement work or services
related to the improvement of the Premises. Tenant also acknowledges that
neither Landlord nor any agent of Landlord has made any representation or
warranty regarding the condition of the Premises, the Building or the Project or
with respect to the suitability of any of the foregoing for the conduct of
Tenant’s business, except as specifically set forth in this Lease and the Work
Letter Agreement. The taking of possession of the Premises by Tenant shall
conclusively establish that the Premises and the Building were at such time in
good and sanitary order, condition and repair, subject only to (i) punchlist
items provided to Landlord in writing within thirty (30) days following
Landlord’s delivery of the Premises to Tenant, (ii) latent defects to the extent
identified and, thereafter, promptly communicated to Landlord, during the first
twelve (12) months of the Lease Term, and (iii) Landlord’s ongoing obligations
set forth in Sections 1.1.3 and  29.33 , and Articles 7 and  24 of this Lease.
1.1.2The Building and The Project. The Premises constitutes the entirety of the
building set forth in Section 2.1 of the Summary (the “ Building ”). The
Building is part of an office project known as “ 6290 Sequence Drive .” The term
“ Project ,” as used in this Lease, shall mean (i) the Building and the Common
Areas, and (ii) the land (which is improved with landscaping, parking facilities
and other improvements) upon which the Building and the Common Areas are
located.
1.1.3Common Areas. Tenant shall have the non-exclusive right to use in common
with other tenants in the Project, and subject to the rules and regulations
referred to in Article 5 of this Lease, those portions of the Project which are
provided, from time to time, for use in common by Landlord, Tenant and any other
tenants of the Project (such areas, together with such other portions of the
Project designated by Landlord, in its discretion, including certain areas
designated for the exclusive use of certain tenants, or to be shared by Landlord
and certain tenants, are collectively referred to herein as the “Common Areas”).
The manner in which the Common Areas are maintained and operated shall be at the
reasonable discretion of Landlord (but at all times in a manner consistent with
a first-class office project) and the use thereof shall be subject to such
rules, regulations and restrictions as Landlord may make from time to time,
provided that such rules, regulations and restrictions do not unreasonably
interfere with the rights granted to Tenant under this Lease and the permitted
use granted under Section 5.1 , below. Landlord reserves the right to close
temporarily, make alterations or additions to, or change the location of
elements of the Project and the Common Areas; provided that no such changes
shall be permitted which materially reduce Tenant’s rights or access hereunder.
Except when and where Tenant’s right of access is specifically excluded in this
Lease, Tenant shall have the right of access to the Premises, the Building, and
the Project parking facility twenty-four (24) hours per day, seven (7) days per
week during the “Lease Term,” as that term is defined in Section 2.1 , below.
1.2Stipulation of Rentable Square Feet of Premises and Building. For purposes of
this Lease, “rentable square feet” of the Premises and Building is hereby
stipulated to be, and shall therefore be deemed, as set forth in Sections 2.1
and 2.2 of the Summary, and no re-measurement of the Premises or Building will
occur at any time during the Lease Term or any extensions thereof.
ARTICLE 2
LEASE TERM; OPTION TERMS
2.1Initial Lease Term. The TCCs and provisions of this Lease shall be effective
as of the date of this Lease. The term of this Lease (the “ Lease Term ”) shall
be as set forth in Section 3.1 of the Summary, shall commence on the date set
forth in Section 3.2 of the Summary (the “ Lease Commencement Date ”), and shall
terminate on the date set forth in Section 3.3 of the Summary (the “ Lease
Expiration Date ”) unless this Lease is sooner terminated as hereinafter
provided. For purposes of this Lease, the term “ Lease Year ” shall mean each
consecutive twelve (12) month period during the Lease Term; provided, however,
that the first Lease Year shall commence on the Lease Commencement Date and end
on the last day of the month in which the first anniversary of the Lease
Commencement Date occurs and the second and each succeeding Lease Year shall
commence on the first day of the next calendar month; and further provided that
the last Lease Year shall end on the Lease Expiration Date. At any time during
the Lease Term, Landlord may deliver to Tenant a notice in the form as set forth
in Exhibit C , attached hereto, as a confirmation only of the information set
forth therein, which Tenant shall execute and return to Landlord within ten
(10) business days of receipt thereof.
2.2Option Term(s).
2.2.1Option Right. Landlord hereby grants the Tenant originally named in this
Lease (the “Original Tenant”), any “Permitted Transferees,” as that term is set
forth in Section 14.8 of this Lease, and to the extent approved by Landlord
pursuant to the TCCs of Article 14 of the Lease, (x) any assignee, or (y) any
subtenant of 100% of the Premises for all or substantial all of the Lease Term,
in either such event approved by Landlord pursuant to the TCCs of Article 14 of
this Lease (such approved assignee or subtenant, a “ Permitted Assignee ”) (the
Original Tenant, Permitted Transferees and any Permitted Assignee are,
collectively, the “ Right Holders ”), two   (2) options (each an “ Option ”) to
extend the Lease Term for the entire Premises, each for a period of five
(5) years (each, an “ Option Term ”). Each option shall be exercisable only by
Notice delivered by Tenant to Landlord as provided below, provided that, as of
the date of delivery of such Notice, (i) Tenant is not then in default under
this Lease (beyond any applicable notice and cure periods), (ii) Tenant has not
been in economic or material non-economic default under this Lease (beyond any
applicable notice and cure periods) more than once during the prior twelve
(12) month period, and (iii) Tenant has not been in economic or material
non-economic default under this Lease (beyond any applicable notice and cure
periods) more than two (2) times during the Lease Term (the foregoing items
(i) through (iii) collectively constituting the “ Exercise Conditions ”). Upon
the proper exercise of each such option to extend, and provided that, as of the
end of the then-applicable Lease Term, there is no then-existing violation of
the Exercise Conditions, the Lease Term, as it applies to the entire Premises,
shall be extended for a period of five (5) years. The rights contained in this
Section 2.2 shall only be exercised by the Right Holders (but not

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any other assignee, sublessee or other transferee of Tenant’s interest in this
Lease) if such entities are in occupancy of no less than seventy-five percent
(75%) of the Premises. If Tenant fails to exercise its first Option, the second
Option shall no longer apply.
2.2.2Option Rent. The Rent payable by Tenant during each Option Term (the
“Option Rent”) shall be equal to the “ Market Rent ,” as that term is defined
in, and determined pursuant to, Exhibit H attached hereto. The calculation of
the Market Rent shall be derived from a review of, and comparison to, the “ Net
Equivalent Lease Rates ” of the “ Comparable Transactions ,” as provided for in
Exhibit H .
2.2.3Exercise of Options. The options contained in this Section 2.2 shall be
exercised by Tenant, if at all, only in the manner set forth in this
Section 2.2.3 . Tenant shall deliver notice (the “ Intent Notice ”) to Landlord
not more than twelve (12) months nor less than nine (9) months prior to the
expiration of the then Lease Term, stating that Tenant intends to exercise its
option. Concurrently with such Intent Notice, Tenant shall deliver to Landlord
Tenant’s calculation of the Market Rent (the “ Tenant’s Option Rent Calculation
”). Landlord shall deliver notice (the “ Landlord Response Notice ”) to Tenant
on or before the date which is thirty (30) days after Landlord’s receipt of the
Intent Notice and Tenant’s Option Rent Calculation (the “ Landlord Response Date
”), stating that (A) Landlord is accepting Tenant’s Option Rent Calculation as
the Market Rent, or (B) rejecting Tenant’s Option Rent Calculation and setting
forth Landlord’s calculation of the Market Rent (the “ Landlord’s Option Rent
Calculation ”). Within ten (10) business days of its receipt of the Landlord
Response Notice, Tenant shall deliver written notice to Landlord (the “ Exercise
Notice ”), which shall set forth Tenant election to either (i) rescind its
Intent Notice, in which event the Lease Term shall expire as then-currently
scheduled and the subject Option (and any remaining Option) shall terminate,
(ii) accept the Market Rent contained in the Landlord’s Option Rent Calculation,
or (iii) reject the Market Rent contained in the Landlord’s Option Rent
Calculation, in which event the parties shall follow the procedure, and the
Market Rent shall be determined as set forth in Section 2.2.4 . Tenant’s failure
to timely deliver the Exercise Notice shall be conclusively deemed to constitute
Tenant’s election to proceed pursuant to alternative (iii) from the immediately
preceding sentence.

2.2.4Determination of Market Rent. In the event Tenant objects or is deemed to
have objected to the Market Rent, Landlord and Tenant shall attempt to agree
upon the Market Rent using reasonable good-faith efforts. If Landlord and Tenant
fail to reach agreement within forty-five (45) days following Tenant’s objection
or deemed objection to the Landlord’s Option Rent Calculation (the “
Re-Submittal Date ”), then Landlord and Tenant (i) shall each, within five
(5) business days following such Re-Submittal Date, re-submit an updated
Tenant’s Option Rent Calculation and Landlord’s Option Rent Calculation,
respectively (provided that to the extent either Landlord or Tenant fail to so
resubmit, they shall be deemed to have resubmitted, without change, the
previously delivered Tenant’s Option Rent Calculation or Landlord’s Option Rent
Calculation, as the case may be), and (ii) shall thereafter attempt to agree
upon the Market Rent using reasonable good-faith efforts. If Landlord and Tenant
fail to reach agreement within fifteen (15) days following the Re-Submittal Date
(the “ Outside Agreement Date ”), then either (A) to the extent the
then-applicable Landlord’s Option Rent Calculation is no more than one hundred
two percent (102%) of the then-applicable Tenant’s Option Rent Calculation, then
the average of the two shall be the Option Rent, or (B) Landlord’s Option Rent
Calculation and Tenant’s Option Rent Calculation, each as most recently
delivered to the other party, shall be submitted to the arbitrators pursuant to
the TCCs of this Section 2.2.4 . The submittals shall be made concurrently with
the selection of the arbitrators pursuant to this Section 2.2.4 and shall be
submitted to arbitration in accordance with Section 2.2.4.1 through  2.2.4.7 of
this Lease, but subject to the conditions, when appropriate, of Section 2.2.3 .
2.2.4.1 Landlord and Tenant shall each appoint one arbitrator who shall by
profession be a commercial real estate lease broker or commercial real estate
lease appraiser who shall have been active over the five (5) year period ending
on the date of such appointment in the leasing (or appraisal, as the case may
be) of the Comparable Buildings. The determination of the arbitrators shall be
limited solely to the issue of whether Landlord’s or Tenant’s submitted Market
Rent, is the closest to the actual Market Rent as determined by the arbitrators,
taking into account the requirements of Section 2.2.2 of this Lease. Each such
arbitrator shall be appointed within fifteen (15) days after the applicable
Outside Agreement Date. Landlord and Tenant may consult with their selected
arbitrators prior to appointment and may select an arbitrator who is favorable
to their respective positions. The arbitrators so selected by Landlord and
Tenant shall be deemed (“ Advocate Arbitrators ”).
2.2.4.2 The two Advocate Arbitrators so appointed shall be specifically required
pursuant to an engagement letter within ten (10) days of the date of the
appointment of the last appointed Advocate Arbitrator agree upon and appoint a
third arbitrator (“ Neutral Arbitrator ”) who shall be a commercial real estate
lease attorney who shall have been active over the five (5) year period ending
on the date of such appointment in the leasing of Comparable Buildings, except
that neither the Landlord or Tenant or either party’s Advocate Arbitrator may,
directly or indirectly, consult with the Neutral Arbitrator prior to or
subsequent to his or her appearance; provided, however, the Neutral Arbitrator
shall retain an appraiser (the “ Neutral Appraiser ”) to assist such Neutral
Arbitrator (which Neutral Appraiser shall be selected by the Advocates
Arbitrators). The Neutral Appraiser shall be retained for the sole purpose of
advising and assisting the Neutral Arbitrator, and such Neutral Appraiser shall
not have an independent vote as the whether Landlord’s or Tenant’s submitted
Market Rent is closest to the Market Rent. In no event shall either the Neutral
Arbitrator or the Neutral Appraiser have represented (or have been engaged to
represent) Landlord or Tenant during the five (5) year period preceding the
Outside Agreement Date or have any business or ownership affiliation with either
of the Advocate Arbitrators during such five (5) year period (as opposed to
having had professional interaction with the same). The Neutral Arbitrator shall
be retained via an engagement letter jointly prepared by Landlord’s counsel and
Tenant’s counsel.
2.2.4.3 The parties shall, in connection with the determination of the Market
Rent, enter into an arbitration agreement (the “ Arbitration Agreement ”) which
shall set forth the following: (i) each party’s final and binding Market Rent
determination, (ii) an agreement to be signed by the Neutral Arbitrator, the
form of which agreement shall be attached as an Exhibit to the Arbitration
Agreement, whereby the Neutral Arbitrator shall agree to undertake the
arbitration and render a decision in accordance with the terms of this Lease, as
modified by the Arbitration Agreement, (iii) instructions to be followed by the
Neutral Arbitrator when conducting such arbitration, which instructions shall be
mutually and reasonably prepared by Landlord and Tenant and which instructions
shall be consistent with the terms and conditions of this Lease, (iv) that
Landlord and Tenant shall each have the right to have its Advocate Arbitrator
submit to the Neutral Arbitrator (with a copy to the other parties), on or
before a date agreed upon by Landlord and Tenant, an advocate statement (and any
other information such Advocate Arbitrator deems relevant), in support of
Landlord’s or Tenant’s respective Market Rent determination (the “ Briefs ”),
(v) that within three (3) business days following the exchange of Briefs by each
of the Advocate Arbitrators, the Advocate Arbitrators representing Landlord and
Tenant shall each have the right to provide the Neutral Arbitrator (with a copy
to the other parties) with a written rebuttal to the other party’s Brief (the “
First Rebuttals ”); provided, however, such First Rebuttals shall be limited to
the facts and arguments raised in the other party’s Brief and shall identify
clearly which argument or fact of the other party’s Brief is intended to be
rebutted, (vi) that within three (3) business days following Landlord’s and/or
Tenant’s receipt of the other party’s First Rebuttal, the Advocate Arbitrators
representing Landlord and Tenant, as applicable, shall have the right to provide
the Neutral Arbitrator (with a copy to the other parties) with a written
rebuttal to the other party’s First Rebuttal (the “ Second Rebuttals ”);
provided, however, such Second Rebuttals shall be limited to the facts and
arguments raised in the other party’s First Rebuttal and shall identify clearly
which argument or fact of the other party’s First Rebuttal is intended to be
rebutted, (vii) the date, time and location of the arbitration, which shall be
mutually and reasonably agreed upon by the Advocate Arbitrators representing
Landlord and Tenant, taking into consideration the schedules of the Landlord,
the Tenant, the Neutral Arbitrator, and the Advocate Appraisers, which date
shall in any event be within fifteen (15) business days following the
appointment of the Neutral Arbitrator, (viii) that no discovery shall take place
in connection with the arbitration, (ix) that the Neutral Arbitrator shall not
be allowed to undertake an independent investigation or consider any factual
information other than presented by the Advocate Arbitrators representing
Landlord or Tenant (except that the Neutral Arbitrator, with representatives
from each of Landlord and Tenant, shall have the right to visit the Comparable
Buildings), (x) the specific persons that shall be allowed to attend the
arbitration, (xi) the Advocate Arbitrator representing Tenant shall have the
right to present oral arguments to the Neutral Arbitrator at the arbitration for
a period of time not to exceed one (1) hour (“ Tenant’s Initial Statements ”),
(xii) following Tenant’s Initial Statement, the Advocate Arbitrator representing
Landlord shall have the right to present oral arguments to the Neutral
Arbitrator at the arbitration for a period of time not to exceed one (1) hour (“
Landlord’s Initial Statements ”), (xiii) following

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Landlord’s Initial Statements, the Advocate Arbitrator representing Tenant shall
have up to thirty (30) minutes to present additional arguments and/or to rebut
the arguments offered in Landlord’s Initial Statements (“ Tenant’s Rebuttal
Statement ”), (xiv) following Tenant’s Rebuttal Statement, the Advocate
Arbitrator representing Landlord shall have up to thirty (30) minutes to present
additional arguments and/or to rebut the arguments offered in Tenant’s Initial
Statements and Tenant’s Rebuttal Statement (“ Landlord’s Rebuttal Statement ”),
(xv) that the Neutral Arbitrator shall render a decision (“ Award ”) indicating
whether Landlord’s or Tenant’s submitted Market Rent is closest to the Market
Rent as determined by the Neutral Arbitrator, (xvi) that following notification
of the Award, the Landlord’s or Tenant’s submitted Market Rent determination,
whichever is selected by the Neutral Arbitrator as being closest to the Market
Rent, shall become the then applicable Market Rent, and (xvii) that the decision
of the Neutral Arbitrator shall be binding on Landlord and Tenant.
2.2.4.4 If either Landlord or Tenant fail to appoint an Advocate Arbitrator
within fifteen (15) days after the applicable Outside Agreement Date, either
party may petition the presiding judge of the Superior Court of San Diego County
to appoint such Advocate Arbitrator subject to the criteria in Section 2.2.4.1
of this Lease, or if he or she refuses to act, either party may petition any
judge having jurisdiction over the parties to appoint such Advocate Arbitrator.
2.2.4.5 If the two Advocate Arbitrators fail to agree upon and appoint the
Neutral Arbitrator, then either party may petition the presiding judge of the
Superior Court of San Diego County to appoint the Neutral Arbitrator, subject to
criteria in Section 2.2.4.1 of this Lease, or if he or she refuses to act,
either party may petition any judge having jurisdiction over the parties to
appoint such arbitrator.
2.2.4.6 The costs of the Neutral Arbitrator and Neutral Appraiser shall be
shared by Landlord and Tenant equally. The costs of the Advocate Arbitrator
representing the Tenant shall be borne by the Tenant. The Costs of the Advocate
Arbitrator representing the Landlord shall be borne by the Landlord. The costs
of petitioning any judge under Section 2.2.4.4 shall be borne by the party who
failed to appoint its Advocate Arbitrator. The costs of petitioning any judge
under Section 2.2.4.5 shall be shared equally by the parties.
2.3Beneficial Occupancy. Tenant shall have the right to occupy the Premises
prior to January 31, 2008 provided that (A) Tenant shall give Landlord at least
ten (10) days’ prior notice of any such occupancy of the Premises, (B) a
temporary certificate of occupancy, or its equivalent, shall have been issued by
the appropriate governmental authorities for each such portion to be occupied,
and (C) all of the terms and conditions of the Lease shall apply as though the
Lease Commencement Date had occurred (although the Lease Commencement Date shall
occur as set forth in Section 3.1 of the Summary and Section 21 of this Lease;
provided, however, (i) to the extent such early occupancy occurs on or following
January 1, 2008, Tenant’s obligation to pay “Base Rent,” as that term is defined
in Article 3 , below, shall not apply in advance of such Lease Commencement
Date, and (ii) to the extent such early occupancy occurs on or before
December 31, 2007, Tenant’s obligation to pay Base Rent shall not apply during,
and the Lease Commencement Date shall not occur until after, the first
thirty-one (31) days of such early occupancy. For purposes of example, if Tenant
were to occupy the Premises pursuant to this Section 2.3 on December 15, 2007,
then its Base Rent payment obligations would commence, and the Lease
Commencement Date would occur, on January 15, 2008.
 

ARTICLE 3
BASE RENT
Tenant shall pay, without prior notice or demand, to Landlord or Landlord’s
agent at the management office of the Project, or, at Landlord’s option, at such
other place as Landlord may from time to time designate in writing, by a check
for currency which, at the time of payment, is legal tender for private or
public debts in the United States of America, base rent (“ Base Rent ”) as set
forth in Section 4 of the Summary, payable in equal monthly installments as set
forth in Section 4 of the Summary in advance on or before the first day of each
and every calendar month during the Lease Term, without any setoff or deduction
whatsoever. The Base Rent for the first full month of the Lease Term which
occurs after the expiration of any free rent period shall be paid at the time of
Tenant’s execution of this Lease. If any Rent payment date (including the Lease
Commencement Date) falls on a day of the month other than the first day of such
month or if any payment of Rent is for a period which is shorter than one month,
the Rent for any such fractional month shall accrue on a daily basis during such
fractional month and shall total an amount equal to the product of (i) a
fraction, the numerator of which is the number of days in such fractional month
and the denominator of which is the actual number of days occurring in such
calendar month, and (ii) the then-applicable Monthly Installment of Base Rent.
All other payments or adjustments required to be made under the TCCs of this
Lease that require proration on a time basis shall be prorated on the same
basis.
ARTICLE 4
ADDITIONAL RENT
4.1General Terms. In addition to paying the Base Rent specified in Article 3 of
this Lease, Tenant shall pay “Tenant’s Share ” of the annual “ Direct Expenses
,” as those terms are defined in Sections 4.2.6 and 4.2.2 , respectively, of
this Lease. Such payments by Tenant, together with any and all other amounts
payable by Tenant to Landlord pursuant to the TCCs of this Lease, are
hereinafter collectively referred to as the “ Additional Rent ,” and the Base
Rent and the Additional Rent are herein collectively referred to as “ Rent .”
All amounts due under this Article 4 as Additional Rent shall be payable for the
same periods and in the same manner as the Base Rent. Without limitation on
other obligations of Tenant which survive the expiration of the Lease Term, the
obligations of Tenant to pay the Additional Rent provided for in this Article 4
shall survive the expiration of the Lease Term.
4.2Definitions of Key Terms Relating to Additional Rent. As used in this
Article 4, the following terms shall have the meanings hereinafter set forth:
4.2.1 Intentionally Deleted.
4.2.2 “Direct Expenses” shall mean “Operating Expenses” and “Tax Expenses.”
4.2.3 “Expense Year” shall mean each calendar year in which any portion of the
Lease Term falls, through and including the calendar year in which the Lease
Term expires, provided that Landlord, upon notice to Tenant, may change the
Expense Year from time to time to any other twelve (12) consecutive month
period, and, in the event of any such change, Tenant’s Share of Direct Expenses
shall be equitably adjusted for any Expense Year involved in any such change. 

4.2.4 “Operating Expenses” shall mean all expenses, costs and amounts of every
kind and nature which Landlord pays or accrues during any Expense Year because
of or in connection with the ownership, management, maintenance, security,
repair, replacement, restoration or operation of the Project, or any portion
thereof, in accordance with sound real estate management and accounting
principles, consistently applied. Without limiting the generality of the
foregoing, Operating Expenses shall specifically include any and all of the
following: (i) the cost of supplying all utilities, the cost of operating,
repairing, maintaining, and renovating the utility, telephone, mechanical,
sanitary, storm drainage, and elevator systems, and the cost of maintenance and
service contracts in connection therewith; (ii) the cost of licenses,
certificates, permits and inspections and the cost of contesting any
governmental enactments which may affect Operating Expenses (to the extent of
the reasonably anticipated savings), and the costs incurred in connection with a
governmentally mandated transportation system management program or similar
program; (iii) the cost of all insurance carried by Landlord in connection with
the Project (provided that Landlord will not carry

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earthquake or flood insurance unless required by its lender); (iv) the cost of
landscaping, relamping, and all supplies, tools, equipment and materials used in
the operation, repair and maintenance of the Project, or any portion thereof;
(v) costs incurred in connection with the parking areas servicing the Project;
(vi) fees and other costs, including management fees (which management fees
shall not exceed five percent (5%) of gross rents), consulting fees, legal fees
and accounting fees, of all contractors and consultants in connection with the
management, operation, maintenance and repair of the Project; (vii) payments
under any equipment rental agreements and the fair rental value of any
management office space which exclusively serves the Building (or a
proportionate amount of such costs based upon the ratio of time actually spent
on the management of the Building); (viii) wages, salaries and other
compensation and benefits, including taxes levied thereon, of all persons (other
than persons generally considered to be higher in rank than the position of
“Property Manager”) engaged in the operation, maintenance and security of the
Project; (ix) costs under any instrument pertaining to the sharing of costs by
the Project such as the CC&Rs identified in Section 5.3 of this Lease, below;
(x) operation, repair, maintenance and replacement (to the extent the repair
cost exceeds replacement cost) of all systems and equipment and components
thereof of the Building; (xi) the cost of janitorial, landscaping, alarm,
security and other services to the Project common Areas, replacement of Common
Area wall and floor coverings, ceiling tiles and fixtures in common areas,
maintenance and replacement of curbs and walkways of the Project and repair to
roofs and re-roofing (membrane only) of the Building; (xii) amortization of the
cost of acquiring or the rental expense of personal property used in the
maintenance, operation and repair of the Project, or any portion thereof (which
amortization calculation shall include interest at the “Interest Rate,” as that
term is set forth in Article 25 of this Lease); (xiii) the cost of capital
improvements or other costs incurred in connection with the Project (A) which
are intended to effect economies in the operation or maintenance of the Project,
or any portion thereof, (B) that are required to comply with mandatory
conservation programs, or (C) that are required under any governmental law or
regulation by a federal, state or local governmental agency, except for capital
repairs, replacements or other improvements to remedy a condition existing prior
to the Lease Commencement Date which an applicable governmental authority, if it
had knowledge of such condition prior to the Lease Commencement Date, would have
then required to be remedied pursuant to then-current governmental laws or
regulations in their form existing as of the Lease Commencement Date and
pursuant to the then-current interpretation of such governmental laws or
regulations by the applicable governmental authority as of the Lease
Commencement Date; provided, however, that any capital expenditure (whether
identified under this item (xiii) or another express provision of this
Section 4.2.4 , above) shall be shall be amortized with interest at the Interest
Rate over its useful life as Landlord shall reasonably determine in accordance
with sound real estate management and accounting principles; and (xiv) costs,
fees, charges or assessments imposed by, or resulting from any mandate imposed
on Landlord by, any federal, state or local government for fire and police
protection, trash removal, community services, or other services which do not
constitute “Tax Expenses” as that term is defined in Section 4.2.5 , below.
Notwithstanding the foregoing, for purposes of this Lease, Operating Expenses
shall not, however, include:
(a) costs, including, without limitation, marketing costs, legal fees, space
planners’ fees, advertising and promotional expenses, and brokerage fees
incurred in connection with the original construction or development, or
original or future leasing of the Project, and costs, including permit, license
and inspection costs, incurred with respect to the installation of improvements
made for new tenants initially occupying space in the Project after the Lease
Commencement Date or incurred in renovating or otherwise improving, decorating,
painting or redecorating vacant space for tenants or other occupants of the
Project;
(b) except as set forth in items (xii), (xiii), and (xiv) above, depreciation,
interest and principal payments on mortgages and other debt costs, if any,
penalties and interest;
(c) costs for which the Landlord is reimbursed or entitled to reimbursement by
any tenant or occupant of the Project or by insurance by its carrier or any
tenant’s carrier or by anyone else, and electric power and other utility costs
attributable to any Project Tenant’s premises (recognizing that Tenant is
directly paying for all such electric power and other utilities attributable to
the Premises pursuant to Article 6 of this Lease);
(d) any bad debt loss, rent loss, or reserves for bad debts or rent loss;
(e) costs associated with the operation of the business of the partnership or
entity which constitutes the Landlord, as the same are distinguished from the
costs of operation of the Project (which shall specifically include, but not be
limited to, accounting costs associated with the operation of the Project).
Costs associated with the operation of the business of the partnership or entity
which constitutes the Landlord include costs of partnership accounting and legal
matters, costs of defending any lawsuits with any mortgagee (except as the
actions of the Tenant may be in issue), costs of selling, syndicating,
financing, mortgaging or hypothecating any of the Landlord’s interest in the
Project, and costs incurred in connection with any disputes between Landlord and
its employees, between Landlord and Project management, or between Landlord and
other tenants or occupants, and Landlord’s general corporate overhead and
general and administrative expenses;

(f) the wages and benefits of any employee who does not devote substantially all
of his or her employed time to the Project unless such wages and benefits are
prorated to reflect time spent on operating and managing the Project vis-a-vis
time spent on matters unrelated to operating and managing the Project; provided,
that in no event shall Operating Expenses for purposes of this Lease include
wages and/or benefits attributable to personnel above the level of Project
manager;
(g) amount paid as ground rental for the Project by the Landlord;
(h) overhead and profit increment paid to the Landlord or to subsidiaries or
affiliates of the Landlord for services in the Project to the extent the same
exceeds the costs of such services rendered by qualified, first-class
unaffiliated third parties on a competitive basis;
(i) any compensation paid to clerks, attendants or other persons in commercial
concessions operated by the Landlord;
(j) rentals and other related expenses incurred in leasing air conditioning
systems, elevators or other equipment which if purchased the cost of which would
be excluded from Operating Expenses as a capital cost, except equipment not
affixed to the Project which is used in providing janitorial or similar services
and, further excepting from this exclusion such equipment rented or leased to
remedy or ameliorate an emergency condition in the Project ;
(k) all items and services for which Tenant or any other tenant in the Project
reimburses Landlord or which Landlord provides selectively to one or more
tenants (other than Tenant) without reimbursement;
(l) costs, other than those incurred in ordinary maintenance and repair, for
sculpture, paintings, fountains or other objects of art;
(m) any costs expressly excluded from Operating Expenses elsewhere in this
Lease;
(n) rent for any office space occupied by Project management personnel to the
extent the size or rental rate of such office space exceeds the size or fair
market rental value of office space occupied by management personnel of the
Comparable Buildings in the vicinity of the Building, with adjustment where
appropriate for the size of the applicable project;
(o) costs to the extent arising from the gross negligence or willful misconduct
of Landlord or its agents, employees, vendors, contractors, or providers of
materials or services;
(p) costs incurred to comply with laws relating to the removal of hazardous
material (as defined under applicable law) which was in existence in the
Building or on the Project prior to the Lease Commencement Date; and costs
incurred to remove, remedy, contain, or treat hazardous material, which
hazardous

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material is brought into the Building or onto the Project after the date hereof
by Landlord, any of Landlord’s agents, employees, contractors or licensees or
any other tenant of the Project;

(q) tax penalties incurred as a result of Landlord’s negligence, inability or
unwillingness to make payments when due or to file any income tax or
informational returns when due
(r) costs incurred to comply with applicable laws with respect to the cleanup,
removal, investigation and/or remediation of any Hazardous Materials (as such
term is defined in Article 5 below) in, on or under the Project and/or the
Buildings to the extent such Hazardous Materials are: (1) in existence as of the
Lease Commencement Date; or (2) introduced onto the Project and/or the Buildings
after the Lease Commencement Date by Landlord or any of Landlord’s agents,
employees, contractors or other tenants in violation of applicable laws in
effect at the date of introduction;
(s) any Tax Expenses;
(t) rentals for items (except when needed in connection with normal repairs and
maintenance of permanent systems) which if purchased, rather than rented, would
constitute a capital improvement specifically excluded above;
(u) costs (including, without limitation, fines, penalties, interest, and costs
of repairs, replacements, alterations and/or improvements) incurred in bringing
the Project into compliance with laws in effect as of the Lease Commencement
Date and as interpreted by applicable governmental authorities as of such date,
including, without limitation, any costs to correct building code violations
pertaining to the initial design or construction of the Buildings or any other
improvements to the Project, to the extent such violations exist as of the Lease
Commencement Date under any applicable building codes in effect and as
interpreted by applicable governmental authorities as of such date;
(v) costs for which Landlord has been compensated by a management fee, to the
extent that the inclusion of such costs in Operating Expenses would result in a
double charge to Tenant;
(w) costs for the initial development or future expansion of the Project; costs
arising from Landlord’s charitable or political contributions;
(x) costs of any “tap fees” or any sewer or water connection fees for the
benefit of any particular tenant of the Project;
(y) “in-house” legal and/or accounting fees any expenses incurred by Landlord
for use of any portions of the Project to accommodate shows, promotions, kiosks,
displays, filming, photography, private events or parties, ceremonies, and
advertising beyond the normal expenses otherwise attributable to providing
services, such as lighting and HVAC to such public portions of the Project in
normal operations of the Project during standard hours of operation; and
(z) any balloons, flowers or other gifts provided to any entity whatsoever, to
include, but not limited to, Tenant, other tenants, employees, vendors,
contractors, prospective tenants and agents.

If Landlord is not furnishing any particular work or service (the cost of which,
if performed by Landlord, would be included in Operating Expenses) to a tenant
who has undertaken to perform such work or service in lieu of the performance
thereof by Landlord, Operating Expenses shall be deemed to be increased by an
amount equal to the additional Operating Expenses which would reasonably have
been incurred during such period by Landlord if it had at its own expense
furnished such work or service to such tenant.
It is understood that Landlord will reduce Operating Expenses by all cash
discounts, trade discounts or quantity discounts actually received by Landlord
in connection with the purchase of any goods, services or utilities in
connection with the operation of the Project. Landlord will generally employ
commercially reasonable efforts to minimize Operating Expenses, taking into
consideration that the Project must be maintained and operated in a first class
manner.
4.2.5Taxes.
4.2.5.1 “Tax Expenses” shall mean all federal, state, county, or local
governmental or municipal taxes, fees, charges or other impositions of every
kind and nature, whether general, special, ordinary or extraordinary,
(including, without limitation, real estate taxes, general and special
assessments, transit taxes, leasehold taxes or taxes based upon the receipt of
rent, including gross receipts or sales taxes applicable to the receipt of rent,
unless required to be paid by Tenant, personal property taxes imposed upon the
fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances,
furniture and other personal property used in connection with the Project, or
any portion thereof), which shall be paid or accrued during any Expense Year
(without regard to any different fiscal year used by such governmental or
municipal authority) because of or in connection with the ownership, leasing and
operation of the Project, or any portion thereof.
4.2.5.2 Tax Expenses shall include, without limitation: (i) Any tax on the rent,
right to rent or other income from the Project, or any portion thereof, or as
against the business of leasing the Project, or any portion thereof; (ii) Any
assessment, tax, fee, levy or charge in addition to, or in substitution,
partially or totally, of any assessment, tax, fee, levy or charge previously
included within the definition of real property tax, it being acknowledged by
Tenant and Landlord that Proposition 13 was adopted by the voters of the State
of California in the June 1978 election (“ Proposition 13 ”) and that
assessments, taxes, fees, levies and charges may be imposed by governmental
agencies for such services as fire protection, street, sidewalk and road
maintenance, refuse removal and for other governmental services formerly
provided without charge to property owners or occupants, and, in further
recognition of the decrease in the level and quality of governmental services
and amenities as a result of Proposition 13, Tax Expenses shall also include any
governmental or private assessments or the Project’s contribution towards a
governmental or private cost-sharing agreement for the purpose of augmenting or
improving the quality of services and amenities normally provided by
governmental agencies; (iii) Any assessment, tax, fee, levy, or charge allocable
to or measured by the area of the Premises or the Rent payable hereunder,
including, without limitation, any business or gross income tax or excise tax
with respect to the receipt of such rent, or upon or with respect to the
possession, leasing, operating, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises, or any portion thereof; and (iv) Any
assessment, tax, fee, levy or charge, upon this transaction or any document to
which Tenant is a party, creating or transferring an interest or an estate in
the Premises.

4.2.5.3 Any costs and expenses (including, without limitation, reasonable
attorneys’ fees) incurred in attempting to protest, reduce or minimize Tax
Expenses shall be included in Tax Expenses in the Expense Year such expenses are
paid, but only to the extent savings to Tax Expenses are reasonably anticipated
to result from such attempts. Except as set forth in Section 4.2.5.4 , below,
refunds of Tax Expenses shall be credited against Tax Expenses and refunded to
Tenant regardless of when received, based on the Expense Year to which the
refund is applicable, provided that in no event shall the amount to be refunded
to Tenant for any such Expense Year exceed the total amount paid by Tenant as
Additional Rent under this Article 4 for such Expense Year. If Tax Expenses for
any period during the Lease Term or any extension thereof are increased after
payment thereof for any reason, including, without limitation, error or
reassessment by applicable governmental or municipal authorities, Tenant shall
pay Landlord upon demand Tenant’s Share of any such increased Tax Expenses
included by Landlord as Building Tax Expenses pursuant to the TCCs of this
Lease. Notwithstanding anything to the contrary contained in this Section 4.2.8
(except as set forth in Section 4.2.8.1 , above), there shall be excluded from
Tax Expenses (i) all excess profits taxes, franchise taxes, gift taxes, capital
stock taxes, inheritance and succession taxes, estate taxes, federal and state
income taxes, and other taxes to the extent applicable to Landlord’s general or
net income (as opposed to rents, receipts or income attributable to operations
at the Project), (ii) any items included as Operating Expenses, (iii) any items
paid by Tenant under Section 4.5 of this Lease, (iv) any Taxes for any time
prior to the Commencement Date or after the later to occur of (A) the expiration
date of

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this Lease, or (B) the date Tenant vacates the Premises pursuant to Articles 15
and 16 hereof, and (v) any special assessments or special taxes as a means of
financing improvements to the Buildings or Project.
4.2.6 “Tenant’s Share” shall mean the percentage set forth in Section 6 of the
Summary.
4.3Allocation of Direct Expenses. The parties acknowledge that in addition to
the Building and Project, Landlord owns adjacent buildings and projects.
Therefore, Landlord and Tenant acknowledge and agree that certain contracts and
corresponding costs (the “ Multi-Project Costs ”), may apply to multiple
projects (including the Project) and portions of such Multi-Project Costs should
equitably be allocated to, and shared between, such projects and their tenants
(including Tenant). Accordingly, as set forth in Section 4.2 above, Direct
Expenses (which consist of Operating Expenses and Tax Expenses) shall also
include a portion of the Multiple Project Costs, which portion shall be
determined by Landlord on an equitable basis, and such portion shall be part of
Direct Expenses for purposes of this Lease. In connection with the foregoing,
Tenant acknowledges and agrees that the Project shares a common driveway with an
adjacent project, which driveway serves both the Project and such adjacent
project and their respective tenants.
4.4Calculation and Payment of Additional Rent. Tenant shall pay to Landlord, in
the manner set forth in Section 4.4.1, below, and as Additional Rent, Tenant’s
Share of Direct Expenses for each Expense Year an amount equal to the excess
(the “ Excess ”).

4.4.1Statement of Actual Building Direct Expenses and Payment by Tenant.
Landlord shall give to Tenant following the end of each Expense Year, a
statement (the “ Statement ”) which shall state in general major categories the
Building Direct Expenses incurred or accrued for such preceding Expense Year,
and which shall indicate the amount of Tenant’s Share of Direct Expenses.
Landlord shall use commercially reasonable efforts to deliver such Statement to
Tenant on or before May 1 following the end of the Expense Year to which such
Statement relates. Upon receipt of the Statement for each Expense Year
commencing or ending during the Lease Term, Tenant shall pay, within thirty
(30) days after receipt of the Statement, the full amount of Tenant’s Share of
Direct Expenses for such Expense Year, less the amounts, if any, paid during
such Expense Year as “Estimated Direct Expenses,” as that term is defined in
Section 4.4.2 , below, and if Tenant paid more as Estimated Direct Expenses than
the actual Tenant’s Share of Direct Expenses (an “ Excess ”), Tenant shall
receive a credit in the amount of such Excess against Rent next due under this
Lease. The failure of Landlord to timely furnish the Statement for any Expense
Year shall not prejudice Landlord or Tenant from enforcing its rights under this
Article 4 . Even though the Lease Term has expired and Tenant has vacated the
Premises, when the final determination is made of Tenant’s Share of Direct
Expenses for the Expense Year in which this Lease terminates, if Tenant’s Share
of Direct Expenses is greater than the amount of Estimated Direct Expenses
previously paid by Tenant to Landlord, Tenant shall, within thirty (30) days
after receipt of the Statement, pay to Landlord such amount, and if Tenant paid
more as Estimated Direct Expenses than the actual Tenant’s Share of Direct
Expenses (again, an Excess), Landlord shall, within thirty (30) days, deliver a
check payable to Tenant in the amount of such Excess. The provisions of this
Section 4.4.1 shall survive the expiration or earlier termination of the Lease
Term. Notwithstanding the immediately preceding sentence, Tenant shall not be
responsible for Tenant’s Share of any Building Direct Expenses attributable to
any Expense Year which are first billed to Tenant more than eighteen (18) months
after the Lease Expiration Date, provided that in any event Tenant shall be
responsible for Tenant’s Share of Direct Expenses levied by any governmental
authority or by any public utility companies at any time following the Lease
Expiration Date which are attributable to any Expense Year.
4.4.2Statement of Estimated Building Direct Expenses. In addition, Landlord
shall give Tenant a yearly expense estimate statement (the “ Estimate Statement
”) which shall set forth in general major categories Landlord’s reasonable
estimate (the “ Estimate ”) of what the total amount of Direct Expenses for the
then-current Expense Year shall be and the estimated Tenant’s Share of Direct
Expenses (the “ Estimated Direct Expenses ”). Landlord shall use commercially
reasonable efforts to deliver such Estimate Statement to Tenant on or before
May 1 following the end of the Expense Year to which such Estimate Statement
relates. The failure of Landlord to timely furnish the Estimate Statement for
any Expense Year shall not preclude Landlord from enforcing its rights to
collect any Estimated Direct Expenses under this Article 4 , nor shall Landlord
be prohibited from revising any Estimate Statement or Estimated Direct Expenses
theretofore delivered to the extent necessary. Thereafter, Tenant shall pay,
within thirty (30) days after receipt of the Estimate Statement, a fraction of
the Estimated Direct Expenses for the then-current Expense Year (reduced by any
amounts paid pursuant to the second to last sentence of this Section 4.4.2 ).
Such fraction shall have as its numerator the number of months which have
elapsed in such current Expense Year, including the month of such payment, and
twelve (12) as its denominator. Until a new Estimate Statement is furnished
(which Landlord shall have the right to deliver to Tenant at any time), Tenant
shall pay monthly, with the monthly Base Rent installments, an amount equal to
one-twelfth (1/12) of the total Estimated Direct Expenses set forth in the
previous Estimate Statement delivered by Landlord to Tenant. Throughout the
Lease Term Landlord shall maintain books and records with respect to Building
Direct Expenses in accordance with generally accepted real estate accounting and
management practices, consistently applied.
4.5Taxes and Other Charges for Which Tenant Is Directly Responsible.
4.5.1 Tenant shall be liable for and shall pay ten (10) days before delinquency,
taxes levied against Tenant’s equipment, furniture, fixtures and any other
personal property located in or about the Premises. If any such taxes on
Tenant’s equipment, furniture, fixtures and any other personal property are
levied against Landlord or Landlord’s property or if the assessed value of
Landlord’s property is increased by the inclusion therein of a value placed upon
such equipment, furniture, fixtures or any other personal property and if
Landlord pays the taxes based upon such increased assessment, which Landlord
shall have the right to do regardless of the validity thereof but only under
proper protest if requested by Tenant, Tenant shall upon demand repay to
Landlord the taxes so levied against Landlord or the proportion of such taxes
resulting from such increase in the assessment, as the case may be.
4.5.2 If the improvements in the Premises, whether installed and/or paid for by
Landlord or Tenant and whether or not affixed to the real property so as to
become a part thereof, are assessed for real property tax purposes at a
valuation higher than the valuation at which improvements conforming to
Landlord’s “building standard” in other space in comparable buildings are
assessed, then the Tax Expenses levied against Landlord or the property by
reason of such excess assessed valuation shall be deemed to be taxes levied
against personal property of Tenant and shall be governed by the provisions of
Section 4.5.1 , above.
4.5.3 Notwithstanding any contrary provision herein, Tenant shall pay prior to
delinquency any (i) rent tax or sales tax, service tax, transfer tax or value
added tax, or any other applicable tax on the rent or services herein or
otherwise respecting this Lease, (ii) taxes assessed upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion of the Project, including
the Project parking facility; or (iii) taxes assessed upon this transaction or
any document to which Tenant is a party creating or transferring an interest or
an estate in the Premises.
4.6 Intentionally deleted.
4.7Landlord’s Books and Records. Upon Tenant’s written request given not more
than one hundred eighty (180) days after Tenant’s receipt of a Statement for a
particular Expense Year, and provided that Tenant is not then in default under
this Lease beyond the applicable cure period provided in this Lease, Landlord
shall furnish Tenant with such reasonable supporting documentation in connection
with said Building Direct Expenses as Tenant may reasonably request. Landlord
shall provide said information to Tenant within sixty (60) days after Tenant’s
written request therefor. Within one hundred eighty (180) days after receipt of
a Statement by Tenant (the “ Review Period ”), if Tenant disputes the amount of
Additional Rent set forth in the Statement, an independent certified public
accountant (which accountant (A) is a member of a regionally recognized
accounting firm, and (B) is not working on a contingency fee basis), designated
and paid for by Tenant, may, after reasonable notice to Landlord and at
reasonable times, inspect Landlord’s records with respect to the Statement at
Landlord’s offices,

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provided that Tenant is not then in default under this Lease (beyond any
applicable notice and cure periods) and Tenant has paid all amounts required to
be paid under the applicable Estimate Statement and Statement, as the case may
be. In connection with such inspection, Tenant and Tenant’s agents must agree in
advance to follow Landlord’s reasonable rules and procedures regarding
inspections of Landlord’s records, and shall execute a commercially reasonable
confidentiality agreement regarding such inspection. Tenant’s failure to dispute
the amount of Additional Rent set forth in any Statement within the Review
Period shall be deemed to be Tenant’s approval of such Statement and Tenant,
thereafter, waives the right or ability to dispute the amounts set forth in such
Statement. If after such inspection, Tenant still disputes such Additional Rent,
a determination as to the proper amount shall be made, at Tenant’s expense, by
an independent certified public accountant (the “ Accountant ”) selected by
Landlord and subject to Tenant’s reasonable approval; provided that if such
determination by the Accountant proves that Direct Expenses were overstated by
more than five percent (5%), then the cost of the Accountant and the cost of
such determination shall be paid for by Landlord. Tenant hereby acknowledges
that Tenant’s sole right to inspect Landlord’s books and records and to contest
the amount of Direct Expenses payable by Tenant shall be as set forth in this
Section 4.6 , and Tenant hereby waives any and all other rights pursuant to
applicable law to inspect such books and records and/or to contest the amount of
Direct Expenses payable by Tenant.
ARTICLE 5
USE OF PREMISES
5.1Permitted Use. Tenant shall use the Premises solely for the Permitted Use set
forth in Section 7 of the Summary and Tenant shall not use or permit the
Premises or the Project to be used for any other purpose or purposes whatsoever
without the prior written consent of Landlord, which may be withheld in
Landlord’s sole discretion.
5.2Prohibited Uses. The uses prohibited under this Lease shall include, without
limitation, use of the Premises or a portion thereof for (i) offices of any
agency or bureau of the United States or any state or political subdivision
thereof; (ii) offices or agencies of any foreign governmental or political
subdivision thereof; (iii) offices of any health care professionals or service
organization; (iv) schools or other training facilities which are not ancillary
to corporate, executive or professional office use; (v) retail or restaurant
uses; or (vi) broadcast communications facilities such as radio and/or
television stations, it being hereby acknowledged that Tenant’s use is related
to communications and Tenant will be sending and receiving communications
signals at and from the Premises. Tenant further covenants and agrees that
Tenant shall not use, or suffer or permit any person or persons to use, the
Premises or any part thereof for any use or purpose contrary to the provisions
of the Rules and Regulations set forth in Exhibit D , attached hereto, or in
violation of the laws of the United States of America, the State of California,
or the ordinances, regulations or requirements of the local municipal or county
governing body or other lawful authorities having jurisdiction over the Project)
including, without limitation, any such laws, ordinances, regulations or
requirements relating to hazardous materials or substances, as those terms are
defined by applicable laws now or hereafter in effect; provided, however,
Landlord shall not enforce, change or modify the Rules and Regulations in a
discriminatory manner and Landlord agrees that the Rules and Regulations shall
not be unreasonably modified or enforced in a manner which will unreasonably
interfere with the normal and customary conduct of Tenant’s business. Tenant
shall not use or allow the Premises to be used for any improper, unlawful or
objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance
in, on or about the Premises.
5.3CC&Rs. Tenant shall comply with all recorded covenants, conditions, and
restrictions (if any) currently affecting the Project. Additionally, Tenant
acknowledges that the Project may be subject to any future covenants,
conditions, and restrictions (the “ CC&Rs ”) which Landlord, in Landlord’s
discretion, deems reasonably necessary or desirable, and Tenant agrees that this
Lease shall be subject and subordinate to such CC&Rs. Landlord shall have the
right to require Tenant to execute and acknowledge, within fifteen (15) business
days of a request by Landlord, a “Recognition of Covenants, Conditions, and
Restriction,” in a form substantially similar to that attached hereto as
Exhibit F , agreeing to and acknowledging the CC&Rs; provided, however, (i) any
such future CC&Rs shall be subject to Tenant’s reasonable review and prior
approval, and (ii) no such future CC&Rs shall be permitted which materially
diminish Tenant’s beneficial use or enjoyment or access, or materially increase
Tenant’s obligation, hereunder.
ARTICLE 6
SERVICES AND UTILITIES
6.1Standard Tenant Services. Landlord shall maintain and operate the Building in
a manner consistent with the Comparable Buildings, and shall keep the Building
Structure and Building Systems in condition and repair consistent with the
Comparable Buildings. In addition, Landlord shall provide, as part of the
Building Structure, (i) adequate electrical wiring to subpanel facilities for
the Building for Tenant’s connection with a minimum capacity of 3000 Amps at
277/480 Volts (three (3)-phase, four (4) wire), and (ii) city water and sewer
stubbed to the Premises.
Notwithstanding the foregoing, Tenant shall pay for all utilities (including
without limitation, electricity, gas, sewer and water) attributable to its use
of the entire Premises and shall also provide its own janitorial and security
services for the Building. Such utility use shall include electricity, water,
and gas use for lighting, incidental use and “HVAC,” as that term is defined
below. All such utility, janitorial and security payments shall be excluded from
Operating Expenses and shall be paid directly by Tenant prior to the date on
which the same are due to the utility provider janitorial company and/or
security company, as applicable. The Premises are separately metered.
Landlord shall not be required to provide any services other than with regard to
its maintenance and repair obligation relating to the Building Structure and the
Common Areas.
6.2Tenant Maintained Building Systems; HVAC. Tenant shall, at Tenant’s sole cost
and expense, (i) maintain the Building’s mechanical, electrical, life safety,
plumbing, fire-sprinkler systems (except to the extent Landlord retains repair
and maintenance responsibility for the portion of such fire-sprinkler system
contained in the Building Structure), (ii) subject to limitations imposed by all
governmental rules, regulations and guidelines applicable thereto, maintain
(itself or through a service provider) heating and air conditioning to the
Premises (“ HVAC ”) (items identified in (i) and (ii) collectively, the “
Building Systems ”), and (iii) maintain the remaining portions of the Premises
which are not part of the “Building Structure,” as that term is set forth in
Article 7 of this Lease to the extent such Building Structure is to be
maintained and repaired by Landlord. Such repair and maintenance costs and
expenses for the other building in the Project shall be the responsibility of
Landlord or the tenants thereof and shall not be included in Direct Expenses
payable by Tenant.
6.3Tenant Maintained Security. Tenant hereby acknowledges that Landlord shall
have no obligation to provide guard service or other security measures for the
benefit of the Premises, the Building or the Project. Any such security measures
for the benefit of the Premises, the Building or the Project shall be provided
by Tenant, at Tenant’s sole cost and expense. Tenant hereby assumes all
responsibility for the protection of Tenant and its agents, employees,
contractors, invitees and guests, and the property thereof, from acts of third
parties, including keeping doors locked and other means of entry to the Premises
closed. Tenant shall be

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entitled to install a separate security system for the Premises (“ Tenant’s
Security System ”), either as an Alteration (pursuant to the TCCs of Article 8 )
or as a part of the initial Improvements being constructed by Tenant (pursuant
to the TCCs of Exhibit B ); provided, however, that the plans and specifications
for Tenant’s Security System shall be subject to Landlord’s reasonable approval,
and the installation of Tenant’s Security System shall otherwise be subject to
the terms and conditions of Article 8 of this Lease and/or the Tenant Work
Letter, as applicable. Tenant shall at all times provide Landlord with a contact
person who can disarm the security system and who is familiar with the functions
of Tenant’s Security System in the event of a malfunction.
6.4Tenant Maintenance Standards. All Tenant maintained Building Systems,
including HVAC, shall be maintained in accordance with manufacturer
specifications by Tenant in a commercially reasonable condition. In addition,
upon request from Landlord, Tenant shall provide to Landlord copies of any
service contracts and records of Tenant’s maintenance of such Building Systems.
6.5Interruption of Use. Except as otherwise provided in Section 6.6 or elsewhere
in this Lease, Tenant agrees that Landlord shall not be liable for damages, by
abatement of Rent or otherwise, for failure to furnish or delay in furnishing
any service (including telephone and telecommunication services), or for any
diminution in the quality or quantity thereof, when such failure or delay or
diminution is occasioned, in whole or in part, by breakage, repairs,
replacements, or improvements, by any strike, lockout or other labor trouble, by
inability to secure electricity, gas, water, or other fuel at the Building or
Project after reasonable effort to do so, by any riot or other dangerous
condition, emergency, accident or casualty whatsoever, by act or default of
Tenant or other parties, or by any other cause beyond Landlord’s reasonable
control; and such failures or delays or diminution shall never be deemed to
constitute an eviction or disturbance of Tenant’s use and possession of the
Premises or relieve Tenant from paying Rent or performing any of its obligations
under this Lease, except as otherwise provided in Section 6.6 or elsewhere in
the Lease. Furthermore, Landlord shall not be liable under any circumstances for
a loss of, or injury to, property or for injury to, or interference with,
Tenant’s business, including, without limitation, loss of profits, however
occurring, through or in connection with or incidental to a failure to furnish
any of the services or utilities as set forth in this Article 6 .

6.6Abatement Event. If (i) Landlord fails to perform the obligations required of
Landlord under the TCCs of this Lease or to otherwise perform an act required by
Landlord to avoid such interference, and (ii) such failure causes all or a
portion of the Premises to be untenantable and unusable by Tenant, and
(iii) such failure relates to (A) the nonfunctioning of any utility service to
the Premises, or (B) a failure to provide access to the Premises, Tenant shall
give Landlord notice (the “ Initial Notice ”), specifying such failure to
perform by Landlord (the “ Abatement Event ”). If Landlord has not cured such
Abatement Event within five (5) business days after the receipt of the Initial
Notice (the “ Eligibility Period ”), Tenant may deliver an additional notice to
Landlord (the “ Additional Notice ”), specifying such Abatement Event and
Tenant’s intention to abate the payment of Rent under this Lease. If Landlord
does not cure such Abatement Event within five (5) business days of receipt of
the Additional Notice, Tenant may, upon written notice to Landlord, immediately
abate Rent payable under this Lease for that portion of the Premises rendered
untenantable and not used by Tenant, for the period beginning on the date five
(5) business days after the Initial Notice to the earlier of the date Landlord
cures such Abatement Event or the date Tenant recommences the use of such
portion of the Premises (or as to all of the Premises if the portion which is
untenantable materially impairs Tenant’s ability to conduct business from the
Premises). Such right to abate Rent shall be Tenant’s sole and exclusive remedy
at law or in equity for a Abatement Event. Except as provided in this
Section 6.4 , nothing contained herein shall be interpreted to mean that Tenant
is excused from paying Rent due hereunder.
6.7Heat Exhaust Venting Unit. Subject to the terms hereof, Tenant shall have the
right to install (either as an Alteration or as part of the initial
Improvements, pursuant to the TCCs of Article 8 or Exhibit B , as the case may
be) and maintain, at Tenant’s sole cost and expense, a heat exhaust venting unit
for the lab portions of the Premises (including duct work and other connections,
as applicable) (“ Exhaust Venting Unit ”); provided: (i) Tenant obtains
Landlord’s prior consent to such Exhaust Venting Unit and all plans and
specifications therefor, which consent shall not be unreasonably withheld,
conditioned or delayed; (ii) the location of such Exhaust Venting Unit shall be
in a location to be approved by Landlord; (iii) Tenant shall be solely
responsible and shall pay for all costs (or charge such costs against the Tenant
Improvement Allowance) of and/or related to such Exhaust Venting Unit,
including, without limitation, the cost of installation, operation and
maintenance, removal, electricity and other utilities (if any) consumed thereby,
and other similar charges, which costs shall be paid by Tenant to Landlord
within thirty (30) days of demand therefor and (vi) Tenant obtains any necessary
governmental approvals from the City of San Diego.
6.8Air Compressors. Subject to the terms hereof, Tenant shall have the right to
install (either as an Alteration or as part of the initial Improvements,
pursuant to the TCCs of Article 8 or Exhibit B , as the case may be) and
maintain, at Tenant’s sole cost and expense, two (2) air compressors in a
location in the Project adjacent to the Building designated by Landlord
(including duct work and other connections, as applicable) (“ Compressors ”),
provided: (i) Tenant obtains Landlord’s prior consent to such Compressors and
all plans and specifications therefor, which consent shall not be unreasonably
withheld, conditioned or delayed; (ii) the location of such Compressors shall be
designated by Landlord after consultation with Tenant; (iii) Tenant shall be
solely responsible and shall pay for all costs (or charge such costs against the
Tenant Improvement Allowance) of and/or related to such Compressors, including,
without limitation, the cost of installation, operation and maintenance,
removal, electricity and other utilities (if any) consumed thereby, and other
similar charges, which costs shall be paid by Tenant to Landlord within thirty
(30) days of demand therefor and (vi) Tenant obtains any necessary governmental
approvals from the City of San Diego.
6.9Overstandard Tenant Use. To the extent Tenant’s uses within the Premises are
at a level above which (i) the presently existing HVAC system, together with
(ii) any supplemental HVAC system installed by (or otherwise on behalf of)
Tenant as part of the Improvements or subsequent Alterations, have the normal
operating capacity to service (i.e., at a level which is anticipated to
materially affect the temperature otherwise maintained by such HVAC systems) or
which would increase the demand for water normally furnished for the Premises
beyond the presently existing capacities therefore (to such extent, the “
Overstandard Tenant Use ”), then Landlord shall have the right to itself
install, or cause Tenant to install (in accordance with the provisions of
Article 8 relating to Alterations) supplementary air conditioning units or other
facilities in the Premises, including supplementary or additional metering
devices, and the cost thereof, including the cost of installation, operation and
maintenance, increased wear and tear on existing equipment and other similar
charges, shall be paid by Tenant (either to Landlord upon billing by Landlord,
or directly, as the case may be).
ARTICLE 7
REPAIRS
7.1In General. Landlord shall maintain in first-class condition and operating
order and keep in good repair and condition the structural portions of the
Building, including the foundation, floor/ceiling slabs, exterior walls, roof
structure (as opposed to roof membrane), curtain wall, exterior glass and
mullions, columns, beams, shafts (including elevator shafts), stairs,
stairwells, elevator cab, men’s and women’s washrooms, underground utilities,
Building mechanical, electrical and telephone closets, and all common and public
areas servicing the Building, including the parking areas, landscaping and
exterior Project signage (collectively, “ Building Structure ”) and the Project
Common Areas. Notwithstanding anything in this Lease to the contrary, Tenant
shall be required to repair the Building Structure to the extent any damage
thereto is caused due to Tenant’s use of the Premises for other than a normal
and customary implementation of its Permitted Use, unless and to the extent such
damage is covered by insurance carried or required to be carried by Landlord
pursuant to Article 10 and to which the waiver of subrogation is applicable
(such obligation to the extent applicable to Tenant as qualified and conditioned
will hereinafter be defined as the “ BS

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Exception ”). Tenant shall, at Tenant’s own expense, keep the Premises and
Building Systems, including all improvements, fixtures and furnishings therein,
and the floor or floors of the Building on which the Premises are located, in
good order, repair and condition at all times during the Lease Term, but such
obligation shall not extend to the Building Structure except pursuant to the BS
Exception. In addition, Tenant shall, at Tenant’s own expense, but under the
supervision and subject to the prior approval of Landlord, and within any
reasonable period of time specified by Landlord, promptly and adequately repair
all damage to the Premises and Building Systems and replace or repair all
damaged, broken, or worn fixtures and appurtenances, but such obligation shall
not extend to the Building Structure except pursuant to the BS Exception;
provided however, that, at Landlord’s option, or if Tenant fails to make such
repairs, Landlord may, after written notice to Tenant and Tenant’s failure to
repair within five (5) days thereafter (unless more than five (5) days is
required to effectuate such repair, in which case Tenant shall have the time
reasonably required to complete the repair, so long as Tenant commences the
repair during the five (5) day period and diligently completes such repair), but
need not, make such repairs and replacements, and Tenant shall pay Landlord the
cost thereof, including a percentage of the cost thereof (to be uniformly
established for the Building and/or the Project), but not to exceed five percent
(5%) of the cost of such work) sufficient to reimburse Landlord for all
overhead, general conditions, fees and other costs or expenses arising from
Landlord’s involvement with such repairs and replacements forthwith upon being
billed for same. Notwithstanding that pursuant to the BS Exception Tenant may be
responsible for certain repairs to the Base Building, Landlord shall
nevertheless make such repairs at Tenant’s expense; provided, however, to the
extent the same are covered by Landlord’s insurance, Tenant shall only be
obligated to pay any deductible in connection therewith. Landlord may, but shall
not be required to, enter the Premises at all reasonable times to make such
repairs, alterations, improvements or additions to the Premises or to the
Project or to any equipment located in the Project as Landlord shall desire or
deem necessary or as Landlord may be required to do by governmental or
quasi-governmental authority or court order or decree; provided, however, except
for (i) emergencies, (ii) repairs, alterations, improvements or additions
required by governmental or quasi-governmental authorities or court order or
decree, or (iii) repairs which are the obligation of Tenant hereunder, any such
entry into the Premises by Landlord shall be performed in a manner so as not to
materially interfere with Tenant’s use of, or access to, the Premises; provided
that, with respect to items (ii) and (iii) above, Landlord shall use
commercially reasonable efforts to not materially interfere with Tenant’s use
of, or access to, the Premises. Tenant hereby waives any and all rights under
and benefits of subsection 1 of Section 1932 and Sections 1941 and 1942 of the
California Civil Code or under any similar law, statute, or ordinance now or
hereafter in effect.
7.2Tenant’s Self-Help Rights. Notwithstanding anything to the contrary set forth
in this Article 7, if Tenant provides written notice to Landlord of the need for
repairs and/or maintenance which are Landlord’s obligation to perform under
Section 7.1 above, and Landlord fails to undertake such repairs and/or
maintenance within a reasonable period of time, given the circumstances, after
receipt of such notice (but in no event earlier than fifteen (15) days after
receipt of such notice except in cases where there is an immediate threat of
material and substantial property damage or immediate threat of bodily injury,
in which case such shorter period of time as is reasonable under the
circumstances), then Tenant may, at its option and without limiting all other
available remedies, proceed to undertake such repairs and/or maintenance upon
delivery of an additional three (3) business days’ notice to Landlord that
Tenant is taking such required action (provided, however, that no additional
notice shall be required in the event of an emergency which threatens life or
where there is imminent danger to property). If such repairs and/or maintenance
were required under the terms of this Lease to be performed by Landlord and are
not performed by Landlord prior to the expiration of such three (3) business day
period (or the initial notice and repair period set forth in the first sentence
of this Section 7.2 in the event of emergencies where no second notice is
required) (the “ Outside Repair Period ”), then Tenant shall be entitled to
reimbursement by Landlord of Tenant’s actual, reasonable, and documented costs
and expenses in performing such maintenance and/or repairs. Such reimbursement
shall be made within thirty (30) days after Landlord’s receipt of Tenant’s
invoice of such costs and expenses, and if Landlord fails to so reimburse Tenant
within such 30-day period, then Tenant shall be entitled to offset against the
Rent payable by Tenant under this Lease the amount of such invoice together with
interest thereon at the Interest Rate, which shall have accrued on the amount of
such invoice during the period from and after Tenant’s delivery of such invoice
to Landlord through and including the earlier of the date Landlord delivers the
payment to Tenant or the date Tenant offsets such amount against the Rent;
provided, however, that notwithstanding the foregoing to the contrary, if
(i) Landlord delivers to Tenant prior to the expiration of the Outside Repair
Period described above, a written objection to Tenant’s right to receive any
such reimbursement based upon Landlord’s good faith claim that such action did
not have to be taken by Landlord pursuant to the terms of this Lease, or
(ii) Landlord delivers to Tenant, within thirty (30) days after receipt of
Tenant’s invoice, a written objection to the payment of such invoice based upon
Landlord’s good faith claim that such charges are excessive (in which case,
Landlord shall reimburse Tenant, within such 30-day period, the amount Landlord
contends would not be excessive), then Tenant shall not be entitled to such
reimbursement or offset against Rent, but Tenant, as its sole remedy, may
proceed to claim a default by Landlord. In the event Tenant undertakes such
repairs and/or maintenance, and such work will affect the Systems and Equipment,
the Base, Shell and Core, any structural portions of the Building, any common
areas or other areas outside the Building and/or the exterior appearance of the
Building or Project (or any portion thereof), Tenant shall use only those
unrelated third party contractors used by Landlord in the Buildings for such
work unless such contractors are unwilling or unable to perform such work at
competitive prices, in which event Tenant may utilize the services of any other
qualified contractor which normally and regularly performs similar work in
comparable first-class buildings in the Sorrento Mesa area of San Diego,
California. Tenant shall comply with the other terms and conditions of this
Lease if Tenant takes the required action, except that Tenant is not required to
obtain Landlord’s consent for such repairs.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1Landlord’s Consent to Alterations. Tenant may not make any improvements,
alterations, additions or changes to the Premises or any mechanical, plumbing or
HVAC facilities or systems pertaining to the Premises (collectively, the “
Alterations ”) without first procuring the prior written consent of Landlord to
such Alterations, which consent shall be requested by Tenant not less than
fifteen (15) business days prior to the commencement thereof, and which consent
shall not be unreasonably withheld by Landlord, provided it shall be deemed
reasonable for Landlord to withhold its consent to any Alteration which
adversely affects the structural portions or the systems or equipment of the
Building or is visible from the exterior of the Building (collectively, the “
Major Alterations ”). Notwithstanding the foregoing, Landlord’s prior consent
shall not be required with respect to any interior Alterations to the Premises
which (i) are not Major Alterations, (ii) cost less than Thirty Thousand Dollars
($30,000.00) for any one (1) job, (iii) do not adversely affect the value of the
Premises or Building, and (iv) do not require a permit of any kind, as long as
(A) Tenant delivers to Landlord notice and a copy of any final plans,
specifications and working drawings for any such Alterations at least ten
(10) days prior to commencement of the work thereof, and (B) the other
conditions of this Article 8 are satisfied including, without limitation,
conforming to Landlord’s rules, regulations and insurance requirements which
govern contractors; provided, however, that with respect to Alterations
consisting of solely painting and carpeting, such Thirty Thousand Dollar
($30,000.00) amount shall be deemed increased to One Hundred Thousand Dollars
($100,000.00) (the “ Cosmetic Alterations ”). The construction of the initial
improvements to the Premises shall be governed by the terms of the Work Letter
Agreement and not the terms of this Article 8. 

8.2Manner of Construction. Landlord may impose, as a condition of its consent to
any and all Alterations or repairs of the Premises or about the Premises, such
requirements as Landlord in its reasonable discretion may deem desirable,
including, but not limited to, the requirement that Tenant utilize for such
purposes only contractors reasonably approved by Landlord, and the requirement
that upon Landlord’s timely request (as more particularly set forth in
Section 8.5 , below), Tenant shall, at Tenant’s expense, remove such Alterations
upon the expiration or any early termination of the Lease Term and return the
affected portion of the Premises to a building standard tenant improved
condition as determined by Landlord. Tenant shall construct such Alterations and
perform such repairs in a good and workmanlike manner, in conformance with any
and all applicable federal, state, county or municipal laws, rules and
regulations and pursuant to a valid building

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permit, issued by the City of San Diego all in conformance with Landlord’s
construction rules and regulations; provided, however, that prior to commencing
to construct any Alteration, Tenant shall meet with Landlord to discuss
Landlord’s design parameters and code compliance issues. In the event Tenant
performs any Alterations in the Premises which require or give rise to
governmentally required changes to the “Base Building,” as that term is defined
below, then Landlord shall, at Tenant’s expense, make such changes to the Base
Building. The “ Base Building ” shall include the structural portions of the
Building, and the public restrooms, elevators, exit stairwells and the systems
and equipment located in the internal core of the Building on the floor or
floors on which the Premises are located. In performing the work of any such
Alterations, Tenant shall have the work performed in such manner so as not to
obstruct access to the Project or any portion thereof, by any other tenant of
the Project, and so as not to obstruct the business of Landlord or other tenants
in the Project. Tenant shall not use (and upon notice from Landlord shall cease
using) contractors, services, workmen, labor, materials or equipment that, in
Landlord’s reasonable judgment, would disturb labor harmony with the workforce
or trades engaged in performing other work, labor or services in or about the
Building or the Common Areas. In addition to Tenant’s obligations under
Article 9 of this Lease, upon completion of any Alterations, Tenant agrees to
cause a Notice of Completion to be recorded in the office of the Recorder of the
County of San Diego in accordance with Section 3093 of the Civil Code of the
State of California or any successor statute, and Tenant shall deliver to the
Project construction manager a reproducible copy of the “as built” drawings of
the Alterations, to the extent applicable, as well as all permits, approvals and
other documents issued by any governmental agency in connection with the
Alterations.
8.3Payment for Improvements. If payment is made directly to contractors, Tenant
shall (i) comply with Landlord’s requirements for final lien releases and
waivers in connection with Tenant’s payment for work to contractors, and
(ii) sign Landlord’s standard contractor’s rules and regulations. If Tenant
orders any work directly from Landlord, Tenant shall pay to Landlord an amount
equal to five percent of the cost of such work to compensate Landlord for all
overhead, general conditions, fees and other costs and expenses arising from
Landlord’s involvement with such work. If Tenant does not order any work
directly from Landlord, Tenant shall reimburse Landlord for Landlord’s
reasonable, actual, out-of-pocket costs and expenses actually incurred in
connection with Landlord’s review of such work.
 
8.4Construction Insurance. In addition to the requirements of Article 10 of this
Lease, in the event that Tenant makes any Alterations, prior to the commencement
of such Alterations, Tenant shall provide Landlord with evidence that Tenant or
its contractor carries “Builder’s All Risk” insurance in an amount reasonably
approved by Landlord covering the construction of such Alterations, and such
other insurance as Landlord may reasonably require, it being understood and
agreed that all of such Alterations shall be insured by Tenant pursuant to
Article 10 of this Lease immediately upon completion thereof. In addition,
Landlord may, in its reasonable discretion, require Tenant to obtain a lien and
completion bond or some alternate form of security satisfactory to Landlord in
an amount sufficient to ensure the lien-free completion of any such Alterations
costing in excess of One Hundred Thousand Dollars ($100,000.00) and naming
Landlord as a co-obligee.
8.5Landlord’s Property. Landlord and Tenant hereby acknowledge and agree that
(i) all Alterations, improvements, fixtures, equipment and/or appurtenances
which may be installed or placed in or about the Premises, from time to time,
shall be at the sole cost of Tenant and shall be and become part of the Premises
and the property of Landlord, and (ii) the Improvements to be constructed in the
Premises pursuant to the TCCs of the Work Letter Agreement shall, upon
completion of the same, be and become a part of the Premises and the property of
Landlord. Furthermore, Landlord may require Tenant, ( x ) with regard to
Alterations, by written notice to Tenant at the time of Landlord’s consent to
such items (or, with respect to Alterations not requiring Landlord’s consent,
within three (3) business days after Tenant’s written notice to Landlord of such
Alterations as provided in Section 8.1 above), ( y ) with regard to the
Improvements constructed pursuant to Exhibit B , by notice that the same
constitute “Removal Items” in accordance with the TCCs of Section 2.4 of such
Exhibit B , and (z) with regard to the “Original Improvements,” as that term is
set forth in Section 10.3.2 , by express inclusion on Exhibit I attached to this
Lease (as so identified, the “ OI Removal Items ”), at Tenant’s expense, to
remove any such timely identified Alterations, Removal Items or OI Removal Items
in the Premises, and to repair any damage to the Premises and Building caused by
such removal and return the affected portion of the Premises to a building
standard tenant improved condition as determined by Landlord. If Tenant fails to
complete such removal and/or to repair any damage caused by the removal of any
Alterations or improvements in the Premises, and returns the affected portion of
the Premises to a building standard tenant improved condition as determined by
Landlord, then at Landlord’s option, either (A) Tenant shall be deemed to be
holding over in the Premises and Rent shall continue to accrue in accordance
with the terms of Article 16 , below, until such work shall be completed, or
(B) Landlord may do so and may charge the cost thereof to Tenant. Tenant hereby
protects, defends, indemnifies and holds Landlord harmless from any liability,
cost, obligation, expense or claim of lien in any manner relating to the
installation, placement, removal or financing of any such Alterations,
improvements, fixtures and/or equipment in, on or about the Premises by or on
behalf of Tenant, which obligations of Tenant shall survive the expiration or
earlier termination of this Lease.
 

ARTICLE 9
COVENANT AGAINST LIENS
Tenant shall keep the Project and Premises free from any liens or encumbrances
arising out of the work performed, materials furnished or obligations incurred
by or on behalf of Tenant, and shall protect, defend, indemnify and hold
Landlord harmless from and against any claims, liabilities, judgments or costs
(including, without limitation, reasonable attorneys’ fees and costs) arising
out of same or in connection therewith. Tenant shall give Landlord notice at
least twenty (20) days prior to the commencement of any such work on the
Premises (or such additional time as may be necessary under applicable laws) to
afford Landlord the opportunity of posting and recording appropriate notices of
non-responsibility. Tenant shall remove any such lien or encumbrance by bond or
otherwise within twenty (20) days after notice by Landlord, and if Tenant shall
fail to do so, Landlord may pay the amount necessary to remove such lien or
encumbrance, without being responsible for investigating the validity thereof.
The amount so paid shall be deemed Additional Rent under this Lease payable upon
demand, without limitation as to other remedies available to Landlord under this
Lease. Nothing contained in this Lease shall authorize Tenant to do any act
which shall subject Landlord’s title to the Building or Premises to any liens or
encumbrances whether claimed by operation of law or express or implied contract.
Any claim to a lien or encumbrance upon the Building or Premises arising in
connection with any such work or respecting the Premises not performed by or at
the request of Landlord shall be null and void, or at Landlord’s option shall
attach only against Tenant’s interest in the Premises and shall in all respects
be subordinate to Landlord’s title to the Project, Building and Premises.
ARTICLE 10
INSURANCE
10.1Indemnification and Waiver. Except to the extent cause by the negligence or
willful misconduct of the Landlord Parties (as defined below), Tenant hereby
assumes all risk of damage to property or injury to persons in, upon or about
the Premises from any cause whatsoever and agrees that Landlord, its partners,
subpartners and their respective officers, agents, servants, employees, and
independent contractors (collectively, “ Landlord Parties ”) shall not be liable
for, and are hereby released from any responsibility for, any damage either to
person or property or resulting from the loss of use thereof, which damage is
sustained by

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Tenant or by other persons claiming through Tenant. Tenant shall indemnify,
defend, protect, and hold harmless the Landlord Parties from any and all loss,
cost, damage, expense and liability (including without limitation court costs
and reasonable attorneys’ fees) incurred in connection with or arising from any
cause in, on or about the Premises, any negligence or willful misconduct of
Tenant or of any person claiming by, through or under Tenant, or of the
contractors, agents, servants, employees, invitees, guests or licensees of
Tenant or any such person, in, on or about the Project or any breach of the TCCs
of this Lease, either prior to, during, or after the expiration of the Lease
Term, provided that the terms of the foregoing indemnity shall not apply to the
negligence or willful misconduct of Landlord or the Landlord parties. Should
Landlord be named as a defendant in any suit brought against Tenant in
connection with or arising out of Tenant’s occupancy of the Premises, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including
without limitation, its actual professional fees such as appraisers’,
accountants’ and attorneys’ fees. Subject to Tenant’s indemnity and the waiver
of subrogation provided below, Landlord shall indemnify, defend, protect, and
hold harmless Tenant, its partners, and their respective officers, agents,
servants, employees, and independent contractors (collectively, “ Tenant Parties
”) from any and all loss, cost, damage, expense and liability (including without
limitation court costs and reasonable attorneys’ fees) arising from the
negligence or willful misconduct of Landlord or the Landlord Parties in, on or
about the Project either prior to or during the Lease Term, and/or as a result
of Landlord’s breach of this Lease, except to the extent caused by the
negligence or willful misconduct of Tenant or the Tenant Parties. Further,
Tenant’s agreement to indemnify Landlord, and Landlord’s agreement to indemnify
Tenant, each pursuant to this Section 10.1 , is not intended and shall not
relieve any insurance carrier of its obligations under policies required to be
carried pursuant to the provisions of this Lease, to the extent such policies
cover the matters subject to the parties’ respective indemnification
obligations; nor shall they supersede any inconsistent agreement of the parties
set forth in any other provision of this Lease. The provisions of this
Section 10.1 shall survive the expiration or sooner termination of this Lease
with respect to any claims or liability arising in connection with any event
occurring prior to such expiration or termination. Notwithstanding anything to
the contrary contained in this Lease, nothing in this Lease shall impose any
obligations on Tenant or Landlord to be responsible or liable for, and each
hereby releases the other from all liability for, consequential damages other
than those consequential damages incurred by Landlord in connection with a
holdover of the Premises by Tenant after the expiration or earlier termination
of this Lease.
10.2Landlord’s Fire, Casualty and Liability Insurance.
10.2.1 Landlord shall maintain Commercial/Comprehensive General Liability
Insurance of at least Five Million Dollars ($5,000,000.00) with respect to the
Building during the Lease Term covering claims for bodily injury, personal
injury and property damage in the Project Common Areas and with respect to
Landlord’s activities in the Premises.
10.2.2 Landlord shall insure the Building and Landlord’s remaining interest in
the Improvements and Alterations with a policy of Physical Damage Insurance
including building ordinance coverage, written on a standard Causes of Loss –
Special Form basis (against loss or damage due to fire and other casualties
covered within the classification of fire and extended coverage, vandalism, and
malicious mischief, sprinkler leakage, water damage and special extended
coverage), covering the full replacement cost of the Base Building, Premises and
other improvements (including coverages for enforcement of Applicable Laws
requiring the upgrading, demolition, reconstruction and/or replacement of any
portion of the Building as a result of a covered loss) without deduction for
depreciation.
10.2.3 Landlord shall maintain Boiler and Machinery/Equipment Breakdown
Insurance covering the Building against risks commonly insured against by a
Boiler & Machinery/Equipment Breakdown policy and such policy shall cover the
full replacement costs, without deduction for depreciation.
10.2.4 The foregoing coverages shall contain commercially reasonable deductible
amounts from such companies, and on such other terms and conditions, as Landlord
may from time to time reasonably determine.
10.2.5 Additionally, at the option of Landlord, such insurance coverage may
include the risk of (i) earthquake, (ii) flood damage and additional hazards,
(iii) a rental loss endorsement for a period of up to two (2) years, (iv) one or
more loss payee endorsements in favor of holders of any mortgages or deeds of
trust encumbering the interest of Landlord in the Building, or any portion
thereof. As to items (i) and (ii) above, such coverage will be carried only if
and to the extent required by the lender on the Building.

10.2.6 Notwithstanding the foregoing provisions of this Section 10.2, the
coverage and amounts of insurance carried by Landlord in connection with the
Building shall, at a minimum, be comparable to the coverage and amounts of
insurance which are carried by reasonably prudent landlords of Comparable
Buildings, and Worker’s Compensation and Employer’s Liability coverage as
required by applicable law. Tenant shall, at Tenant’s expense, comply with all
insurance company requirements pertaining to the use of the Premises of which
Tenant has been notified. If Tenant’s conduct or use of the Premises causes any
increase in the premium for such insurance policies then Tenant shall reimburse
Landlord for any such increase. Tenant, at Tenant’s expense, shall comply with
all rules, orders, regulations or requirements of the American Insurance
Association (formerly the National Board of Fire Underwriters) and with any
similar body.
10.3Tenant’s Insurance. Tenant shall maintain the following coverages in the
following amounts.
10.3.1 Commercial General Liability Insurance covering the insured against
claims of bodily injury, personal injury and property damage (including loss of
use thereof) arising out of Tenant’s operations, and contractual liabilities
(covering the performance by Tenant of its indemnity agreements) including a
Broad Form endorsement covering the insuring provisions of this Lease. Landlord
shall be named as an additional insured as their interests may appear using form
CG2011 or its comparable. An endorsement showing that Tenant’s coverage is
primary and any insurance carried by Landlord shall be excess and
noncontributing. Such insurance shall (i) name Landlord, and any other party the
Landlord so specifies that has a material financial interest in the Project as
an additional insured, including Landlord’s managing agent, if any, and
(ii) specifically cover the liability assumed by Tenant under this Lease,
including, but not limited to, Tenant’s obligations under Section 10.1 of this
Lease. Liability limits shall not be less than:
 
 
 
Bodily Injury and
Property Damage Liability
$5,000,000 each occurrence
$5,000,000 annual aggregate, or any combination of primary insurance and excess
insurance
 
 
Personal Injury Liability
$5,000,000 each occurrence
$5,000,000 annual aggregate, or any combination of primary insurance and excess
insurance
0% Insured’s participation

10.3.2 Property Insurance covering (i) all office furniture, business and trade
fixtures, office equipment, free-standing cabinet work, movable partitions,
merchandise and all other items of Tenant’s property on the Premises installed
by, for, or at the expense of Tenant, (ii) the “Improvements,” as that term is
defined in Section 2.1 of the Work Letter Agreement, and any other improvements
which exist in the Premises as of the Lease Commencement Date (excluding the
Base Building) (the “Original Improvements”), and (iii) all other improvements,
alterations and additions to the Premises installed by or on behalf of Tenant.
Such insurance shall be written on an “all risks” of physical loss or damage
basis, for the full replacement cost value (subject to reasonable deductible
amounts) new without deduction for depreciation of the covered items and in
amounts that meet any co-insurance clauses of the policies of insurance and
shall include coverage

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for damage or other loss caused by fire or other peril including, but not
limited to, vandalism and malicious mischief, theft, water damage of any type,
including sprinkler leakage, bursting or stoppage of pipes, and explosion.
10.3.3 Worker’s Compensation or other similar insurance pursuant to all
applicable state and local statutes and regulations, and Employer’s Liability
Insurance or other similar insurance pursuant to all applicable state and local
statutes and regulations, with minimum limits of One Million and No/100 Dollars
($1,000,000.00) per employee and One Million and No/100 Dollars ($1,000,000.00)
per occurrence.
10.3.4 Commercial Automobile Liability Insurance covering all owned, hired, or
non-owned vehicles with the following limits of liability: One Million Dollars
($1,000,000.00) combined single limit for bodily injury and property damage.
10.3.5 Business Interruption, loss of income and extra expense insurance in such
amounts as will reimburse Tenant for actual direct or indirect loss of earnings
for up to one (1) year attributable to the risks outlined in Section 10.3.2 ,
above.
10.4Form of Policies. The minimum limits of policies of insurance required of
Tenant under this Lease shall in no event limit the liability of Tenant under
this Lease. Such insurance shall (i) be issued by an insurance company having a
rating of not less than A-:VIII in Best’s Insurance Guide or which is otherwise
acceptable to Landlord and licensed to do business in the State of California;
(ii) be in form and content reasonably acceptable to Landlord; (iii) provide
that said insurance shall not be canceled or coverage changed unless thirty
(30) days’ (10 days for nonpayment of premiums) prior written notice shall have
been given to Landlord and any mortgagee of Landlord, the identity of whom has
been provided to Tenant in writing, and (iv) with respect to the insurance
required in Sections 10.3.1 and 10.3.2 above have deductible amounts not
exceeding Fifty Thousand Dollars ($50,000.00). Any insurance required of Tenant
under this Lease may be furnished by Tenant under a blanket policy so long as
and provided such policy: (a) strictly complies with all other terms and
conditions contained in this Lease; and (b) contains an endorsement that with
respect to commercial general liability insurance, identifies with specificity
the particular address of the Premises as being covered under the blanket policy
provides a minimum guaranteed coverage amount of Five Million Dollars
($5,000,000.00) per occurrence for the Premises. Tenant shall deliver said
policy or policies or certificates thereof to Landlord on or before the Lease
Commencement Date and at least thirty (30) days before the expiration dates
thereof. In the event Tenant shall fail to procure such insurance, or to deliver
such policies or certificate, Landlord may, at its option, after written notice
to Tenant and Tenant’s failure to obtain such insurance within five (5) days
thereafter, procure such policies for the account of Tenant, and the cost
thereof shall be paid to Landlord within thirty (30) days after delivery to
Tenant of bills therefor.

10.5Subrogation. Landlord and Tenant intend that their respective property loss
risks shall be borne by reasonable insurance carriers to the extent above
provided, and Landlord and Tenant hereby agree to look solely to, and seek
recovery only from, their respective insurance carriers in the event of a
property loss to the extent that such coverage is agreed to be provided
hereunder. The parties each hereby waive all rights and claims against each
other for such losses, and waive all rights of subrogation of their respective
insurers, provided such waiver of subrogation shall not affect the right to the
insured to recover thereunder. The parties agree that their respective insurance
policies are now, or shall be, endorsed such that the waiver of subrogation
shall not affect the right of the insured to recover thereunder.
10.6Additional Insurance Obligations. Tenant shall carry and maintain during the
entire Lease Term, at Tenant’s sole cost and expense, increased amounts of the
insurance required to be carried by Tenant pursuant to this Article 10 and such
other reasonable types of insurance coverage and in such reasonable amounts
covering the Premises and Tenant’s operations therein, as may be reasonably
requested by Landlord. Notwithstanding the foregoing, Landlord’s request shall
only be considered reasonable if such increased coverage amounts and/or such new
types of insurance are consistent with the requirements of a majority of
Comparable Buildings, and Landlord shall not so increase the coverage amounts or
require additional types of insurance during the first five (5) years of the
Lease Term and thereafter no more often than one time in any five (5) year
period.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1Repair of Damage to Premises by Landlord. Tenant shall promptly notify
Landlord of any material damage to the Premises resulting from fire or any other
casualty. If the Premises, the Building or any Common Areas serving or providing
access to the Premises shall be damaged by fire or other casualty, Landlord
shall use commercially reasonable efforts to promptly and diligently, subject to
reasonable delays for insurance adjustment or other matters beyond Landlord’s
reasonable control, and subject to all other terms of this Article 11 , restore
the Base Building and such Common Areas. Such restoration shall be to
substantially the same condition of the Base Building and the Common Areas prior
to the casualty, except for modifications required by zoning and building codes
and other laws or by the holder of a mortgage on the Building or Project or any
other modifications to the Common Areas deemed desirable by Landlord, which are
consistent with the character of the Project, provided that access to the
Premises and any common restrooms serving the Premises shall not be materially
impaired. Upon the occurrence of any damage to the Premises, Tenant shall at
Tenant’s sole cost and expense, in accordance with the terms and conditions of
Article 8 above, promptly and diligently repair any injury or damage to the
Improvements, Alterations and other any other improvements installed in the
Premises and shall return such Improvements to the condition existing prior to
such damage (subject to any required modifications or modifications reasonably
approved by Landlord). Prior to the commencement of construction, Tenant shall
submit to Landlord, for Landlord’s review and approval, all plans,
specifications and working drawings relating thereto, and Tenant shall select
the contractors to perform such improvement work (subject to Landlord’s
reasonable approval). Landlord shall not be liable for any inconvenience or
annoyance to Tenant or its visitors, or injury to Tenant’s business resulting in
any way from such damage or the repair thereof; provided however, that if such
fire or other casualty shall have damaged the Premises or Common Areas necessary
to Tenant’s occupancy, and the Premises are not occupied by Tenant as a result
thereof, then during the time and to the extent the Premises are unfit for
occupancy, the Rent shall be abated in proportion to the ratio that the amount
of rentable square feet of the Premises which is unfit for occupancy for the
purposes permitted under this Lease bears to the total rentable square feet of
the Premises (or if so much of the Premises are damaged that the remainder of
the Premises is not usable by Tenant, then all of the rent shall abate during
the repairs).
11.2Landlord’s Option to Repair. Notwithstanding the terms of Section 11.1 of
this Lease, Landlord may elect not to rebuild and/or restore Building pertaining
to Landlord’s Restoration Work, and instead terminate this Lease, by notifying
Tenant in writing of such termination within forty-five (45) days after the date
of discovery of the damage, such notice to include a termination date giving
Tenant forty-five (45) days to vacate the Premises, but Landlord may so elect
only if the Building or Project shall be damaged by fire or other casualty or
cause, whether or not the Premises are affected, and one or more of the
following conditions is present: (i) in Landlord’s reasonable judgment, repairs
cannot reasonably be completed within one hundred eighty (180) days after the
date of discovery of the damage (when such repairs are made without the payment
of overtime or other premiums); (ii) the holder of any mortgage on the Building
or Project or ground lessor with respect to the Building or Project shall
require that the insurance proceeds or any portion thereof be used to retire the
mortgage debt, or shall terminate the ground lease, as the case may be;
(iii) the damage is not at least ninety percent (90%) covered by Landlord’s
insurance policies; (iv) Landlord decides to rebuild the Building or Common
Areas so that they will be substantially different structurally or
architecturally; (v) the damage occurs during the last twelve (12) months of the
Lease Term; or (vi) any owner of any other portion of the Project, other than
Landlord, does not intend to repair the damage to such portion of the Project;
provided, however, that if Landlord does not elect to terminate this Lease
pursuant to Landlord’s termination right as provided above, and the repairs
cannot, in the reasonable opinion of Landlord, be completed within one hundred
eighty (180) days after being commenced, Tenant may elect, no earlier than sixty
(60) days after

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the date of the damage and not later than ninety (90) days after the date of
such damage, to terminate this Lease by written notice to Landlord effective as
of the date specified in the notice, which date shall not be less than thirty
(30) days nor more than sixty (60) days after the date such notice is given by
Tenant. Furthermore, if neither Landlord nor Tenant has terminated this Lease,
and the repairs are not actually completed within such 180-day period, Tenant
shall have the right to terminate this Lease during the first five (5) business
days of each calendar month following the end of such period until such time as
the repairs are complete, by notice to Landlord (the “ Damage Termination Notice
”), effective as of a date set forth in the Damage Termination Notice (the “
Damage Termination Date ”), which Damage Termination Date shall not be less than
ten (10) business days following the end of each such month. Notwithstanding the
foregoing, if Tenant delivers a Damage Termination Notice to Landlord, then
Landlord shall have the right to suspend the occurrence of the Damage
Termination Date for a period ending thirty (30) days after the Damage
Termination Date set forth in the Damage Termination Notice by delivering to
Tenant, within five (5) business days of Landlord’s receipt of the Damage
Termination Notice, a certificate of Landlord’s contractor responsible for the
repair of the damage certifying that it is such contractor’s good faith judgment
that the repairs shall be substantially completed within thirty (30) days after
the Damage Termination Date. If repairs shall be substantially completed prior
to the expiration of such thirty-day period, then the Damage Termination Notice
shall be of no force or effect, but if the repairs shall not be substantially
completed within such thirty-day period, then this Lease shall terminate upon
the expiration of such thirty-day period. At any time, from time to time, after
the date occurring sixty (60) days after the date of the damage, Tenant may
request that Landlord inform Tenant of Landlord’s reasonable opinion of the date
of completion of the repairs and Landlord shall respond to such request within
five (5) business days. Notwithstanding the provisions of this Section 11.2 ,
Tenant shall have the right to terminate this Lease under this Section 11.2 only
if each of the following conditions is satisfied: (a) the damage to the Project
by fire or other casualty was not caused by the gross negligence or intentional
act of Tenant or its partners or subpartners and their respective officers,
agents, servants, employees, and independent contractors; (b) Tenant is not then
in default under this Lease; and (c) as a result of the damage, Tenant cannot
reasonably conduct business from the Premises. In the event this Lease is
terminated in accordance with the terms of this Section 11.2 , Tenant shall
assign to Landlord (or to any party designated by Landlord) all insurance
proceeds payable to Tenant under Tenant’s insurance required under items
(ii) and (iii) of Section 10.3.2 of this Lease.
11.3Waiver of Statutory Provisions. The provisions of this Lease, including this
Article 11, constitute an express agreement between Landlord and Tenant with
respect to any and all damage to, or destruction of, all or any part of the
Premises, the Building or the Project, and any statute or regulation of the
State of California, including, without limitation, Sections 1932(2) and 1933(4)
of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Building or the Project.
ARTICLE 12
NONWAIVER
No provision of this Lease shall be deemed waived by either party hereto unless
expressly waived in a writing signed thereby. The waiver by either party hereto
of any breach of any term, covenant or condition herein contained shall not be
deemed to be a waiver of any subsequent breach of same or any other term,
covenant or condition herein contained. The subsequent acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular Rent so accepted, regardless of
Landlord’s knowledge of such preceding breach at the time of acceptance of such
Rent. No acceptance of a lesser amount than the Rent herein stipulated shall be
deemed a waiver of Landlord’s right to receive the full amount due, nor shall
any endorsement or statement on any check or payment or any letter accompanying
such check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord’s right to recover
the full amount due. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant’s right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.

ARTICLE 13
CONDEMNATION
If the whole or any part of the Premises, Building or Project shall be taken by
power of eminent domain or condemned by any competent authority for any public
or quasi-public use or purpose, or if any adjacent property or street shall be
so taken or condemned, or reconfigured or vacated by such authority in such
manner as to require the use, reconstruction or remodeling of any part of the
Premises, Building or Project, or if Landlord shall grant a deed or other
instrument in lieu of such taking by eminent domain or condemnation, Landlord
shall have the option to terminate this Lease effective as of the date
possession is required to be surrendered to the authority. If more than ten
percent (10%) of the rentable square feet of the Building and Tenant’s parking
rights are taken, or if access to the Premises is substantially impaired, in
each case for a period in excess of one hundred eighty (180) days, Tenant shall
have the option to terminate this Lease effective as of the date possession is
required to be surrendered to the authority. Tenant shall not because of such
taking assert any claim against Landlord or the authority for any compensation
because of such taking and Landlord shall be entitled to the entire award or
payment in connection therewith, except that Tenant shall have the right to file
any separate claim available to Tenant for any taking of Tenant’s personal
property and fixtures belonging to Tenant and removable by Tenant upon
expiration of the Lease Term pursuant to the terms of this Lease, and for moving
expenses, so long as such claims do not diminish the award available to
Landlord, its ground lessor with respect to the Building or Project or its
mortgagee, and such claim is payable separately to Tenant. All Rent shall be
apportioned as of the date of such termination. If any part of the Premises
shall be taken, and this Lease shall not be so terminated, the Rent shall be
proportionately abated. Tenant hereby waives any and all rights it might
otherwise have pursuant to Section 1265.130 of The California Code of Civil
Procedure. Notwithstanding anything to the contrary contained in this Article 13
, in the event of a temporary taking of all or any portion of the Premises for a
period of one hundred and eighty (180) days or less, then this Lease shall not
terminate but the Base Rent and the Additional Rent shall be abated for the
period of such taking in proportion to the ratio that the amount of rentable
square feet of the Premises taken bears to the total rentable square feet of the
Premises (or if so much of the Premises are taken that the remainder of the
Premises is not usable by Tenant, then all of the rent shall abate during the
taking). Landlord shall be entitled to receive the entire award made in
connection with any such temporary taking.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1Transfers. Tenant shall not, without the prior written consent of Landlord
(which as more particularly set forth in Section 14.2, below, shall not be
unreasonably withheld, conditioned or delayed), assign, mortgage, pledge,
hypothecate, encumber, or permit any lien to attach to, or otherwise transfer,
this Lease

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or any interest hereunder, permit any assignment, or other transfer of this
Lease or any interest hereunder by operation of law, sublet the Premises or any
part thereof, or enter into any license or concession agreements or otherwise
permit the occupancy or use of the Premises or any part thereof by any persons
other than Tenant and its employees and contractors (all of the foregoing are
hereinafter sometimes referred to collectively as “ Transfers ” and any person
to whom any Transfer is made or sought to be made is hereinafter sometimes
referred to as a “ Transferee ”). If Tenant desires Landlord’s consent to any
Transfer, Tenant shall notify Landlord in writing, which notice (the “ Transfer
Notice ”) shall include (i) the proposed effective date of the Transfer, which
shall not be less than thirty (30) days nor more than one hundred eighty
(180) days after the date of delivery of the Transfer Notice, (ii) a description
of the portion of the Premises to be transferred (the “ Subject Space ”),
(iii) all of the terms of the proposed Transfer and the consideration therefor,
including calculation of the “ Transfer Premium ”, as that term is defined in
Section 14.3 below, in connection with such Transfer, the name and address of
the proposed Transferee, and a copy of all existing executed and/or proposed
documentation pertaining to the proposed Transfer, including all existing
operative documents to be executed to evidence such Transfer or the agreements
incidental or related to such Transfer, provided that Landlord shall have the
right to require Tenant to utilize Landlord’s standard Transfer documents in
connection with the documentation of such Transfer, (iv) current financial
statements of the proposed Transferee certified by an officer, partner or owner
thereof, business credit and personal references and history of the proposed
Transferee and any other information reasonably required by Landlord which will
enable Landlord to determine the financial responsibility, character, and
reputation of the proposed Transferee, nature of such Transferee’s business and
proposed use of the Subject Space and (v) an executed estoppel certificate from
Tenant in the form attached hereto as Exhibit E . Any Transfer made without
Landlord’s prior written consent shall, at Landlord’s option, be null, void and
of no effect, and shall, at Landlord’s option, constitute a default by Tenant
under this Lease. Whether or not Landlord consents to any proposed Transfer,
Tenant shall pay Landlord’s review and processing fees, as well as any
reasonable professional fees (including, without limitation, attorneys’,
accountants’, architects’, engineers’ and consultants’ fees) incurred by
Landlord, within thirty (30) days after written request by Landlord, in an
amount not to exceed Two Thousand Five Hundred and No/100 Dollars ($2,500.00) in
the aggregate, but such limitation of fees shall only apply to the extent such
Transfer is in the ordinary course of business. Landlord and Tenant hereby agree
that a proposed Transfer shall not be considered “in the ordinary course of
business” if such Transfer involves the review of documentation by Landlord on
more than two (2) occasions.
14.2Landlord’s Consent. Landlord shall not unreasonably withhold its consent to
any proposed Transfer of the Subject Space to the Transferee on the terms
specified in the Transfer Notice. Without limitation as to other reasonable
grounds for withholding consent, the parties hereby agree that it shall be
reasonable under this Lease and under any applicable law for Landlord to
withhold consent to any proposed Transfer where one or more of the following
apply:
14.2.1 The Transferee is of a character or reputation or engaged in a business
which is not consistent with the quality of the Building or the Project, or
would be a significantly less prestigious occupant of the Building than Tenant;

14.2.2 The Transferee intends to use the Subject Space for purposes which are
not permitted under this Lease;
14.2.3 The Transferee is either a governmental agency or instrumentality
thereof;
14.2.4 Intentionally deleted;
14.2.5 The Transferee is not a party of reasonable financial worth and/or
financial stability in light of the responsibilities to be undertaken in
connection with the Transfer on the date consent is requested;
14.2.6 The proposed Transfer would cause a violation of another lease for space
in the Project, or would give an occupant of the Project a right to cancel its
lease;
14.2.7 The terms of the proposed Transfer will allow the Transferee to exercise
a right of renewal, right of expansion, right of first offer, or other similar
right held by Tenant (or will allow the Transferee to occupy space leased by
Tenant pursuant to any such right); or
14.2.8 Either the proposed Transferee, or any person or entity which directly or
indirectly, controls, is controlled by, or is under common control with, the
proposed Transferee, (i) occupies space in the Project at the time of the
request for consent, or (ii) is negotiating with Landlord to lease space in the
Project at such time, or (iii) has negotiated with Landlord during the six
(6)-month period immediately preceding the Transfer Notice (and Landlord has
available space in the Project meeting such proposed Transferee’s needs at the
time of the request for consent); or
14.2.9 The Transferee does not intend to occupy the entire Premises and conduct
its business therefrom for a substantial portion of the term of the Transfer.
If Landlord consents to any Transfer pursuant to the terms of this Section 14.2
(and does not exercise any recapture rights Landlord may have under Section 14.4
of this Lease), Tenant may within six (6) months after Landlord’s consent, but
not later than the expiration of said six-month period, enter into such Transfer
of the Premises or portion thereof, upon substantially the same terms and
conditions as are set forth in the Transfer Notice furnished by Tenant to
Landlord pursuant to Section 14.1 of this Lease, provided that if there are any
changes in the terms and conditions from those specified in the Transfer Notice
(i) such that Landlord would initially have been entitled to refuse its consent
to such Transfer under this Section 14.2 , or (ii) which would cause the
proposed Transfer to be at least five percent (5.0%) more favorable to the
Transferee than the terms set forth in Tenant’s original Transfer Notice, Tenant
shall again submit the Transfer to Landlord for its approval and other action
under this Article 14 (including Landlord’s right of recapture, if any, under
Section 14.4 of this Lease). Notwithstanding anything to the contrary in this
Lease, if Tenant or any proposed Transferee claims that Landlord has
unreasonably withheld or delayed its consent under Section 14.2 or otherwise has
breached or acted unreasonably under this Article 14 , their sole remedies shall
be a declaratory judgment and an injunction for the relief sought without any
monetary damages, and Tenant hereby waives all other remedies, including,
without limitation, any right at law or equity to terminate this Lease, on its
own behalf and, to the extent permitted under all applicable laws, on behalf of
the proposed Transferee.

14.3Transfer Premium. If Landlord consents to a Transfer, as a condition thereto
which the parties hereby agree is reasonable, Tenant shall pay to Landlord fifty
percent (50%) of any “Transfer Premium,” as that term is defined in this
Section 14.3 , received by Tenant from such Transferee. “ Transfer Premium ”
shall mean all rent, additional rent or other consideration payable by such
Transferee in connection with the Transfer in excess of the Rent and Additional
Rent payable by Tenant under this Lease during the term of the Transfer on a per
rentable square foot basis if less than all of the Premises is transferred,
after deducting the reasonable expenses incurred by Tenant for (i) any changes,
alterations and improvements to the Premises in connection with the Transfer,
(ii) any free base rent or other economic concessions reasonably provided to the
Transferee, (iii) any brokerage commissions in connection with the Transfer,
(iv) any attorneys’ fees incurred by Tenant in connection with the Transfer,
(v) any lease takeover costs incurred by Tenant in connection with the Transfer,
(vi) any costs of advertising the space which is the subject of the Transfer,
and (vii) any review and processing fees paid to Landlord in connection with
such Transfer (collectively, the “ Transfer Costs ”). “Transfer Premium” shall
also include, but not be limited to, ( x ) key money, bonus money or other cash
consideration paid by Transferee to Tenant in connection with such Transfer, and
( y ) any payment in excess of fair market value for (1) services rendered by
Tenant to Transferee, or (2) for tangible assets (as opposed to intellectual
property), fixtures, inventory, equipment, or furniture transferred by Tenant to
Transferee in connection with such Transfer. In the calculations of the Rent (as
it relates to the Transfer Premium calculated under this Section 14.3 ), the
Rent paid during each annual period for the Subject Space shall be computed
after adjusting such rent to the actual effective rent to be paid, taking into
consideration any and all leasehold concessions granted in connection therewith,
including, but not limited to, any rent credit and improvement allowance. For
purposes of calculating any such effective rent all such concessions shall be
amortized on a straight-line basis over the relevant term.

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14.4Landlord’s Option as to Subject Space. Notwithstanding anything to the
contrary contained in this Article 14, in the event that Tenant contemplates a
Transfer (“ Contemplated Transfer ”), Tenant shall give Landlord notice (the “
Intention to Transfer Notice ”) of such contemplated Transfer (whether or not
the contemplated Transferee or the terms of such contemplated Transfer have been
determined); provided, however, that Landlord hereby acknowledges and agrees
that Tenant shall have no obligation to deliver an Intention to Transfer Notice
hereunder, and Landlord shall have no right to recapture space with respect to
an assignment or sublease pursuant to the terms of Section 14.8 , below. The
Intention to Transfer Notice shall specify the contemplated date of commencement
of the Contemplated Transfer (the “ Contemplated Effective Date ”), and the
contemplated length of the term of such contemplated Transfer, and shall specify
that such Intention to Transfer Notice is delivered to Landlord pursuant to this
Section 14.4 in order to allow Landlord to elect to recapture the Premises for
the remainder of the Lease Term. Thereafter, Landlord shall have the option, by
giving written notice to Tenant (the “ Recapture Notice ”) within twenty
(20) days after receipt of any Intention to Transfer Notice, to recapture all of
the Contemplated Transfer Space. Any recapture under this Section 14.4 shall
cancel and terminate this Lease as of the Contemplated Effective Date. If
Landlord declines, or fails to elect in a timely manner, to recapture the
Premises under this Section 14.4 , then, subject to the other terms of this
Article 14 , for a period of nine (9) months (the “ Nine Month Period ”)
commencing on the last day of such thirty (30) day period, Landlord shall not
have any right to recapture the Premises during the Nine Month Period; provided
however, that any such Transfer shall be subject to the remaining terms of this
Article 14 . If such a Transfer is not so consummated within the Nine Month
Period, Tenant shall again be required to submit a new Intention to Transfer
Notice to Landlord with respect any contemplated Transfer, as provided above in
this Section 14.4 .

14.5Effect of Transfer. If Landlord consents to a Transfer, (i) the TCCs of this
Lease shall in no way be deemed to have been waived or modified, (ii) such
consent shall not be deemed consent to any further Transfer by either Tenant or
a Transferee, (iii) Tenant shall deliver to Landlord, promptly after execution,
an original executed copy of all documentation pertaining to the Transfer in
form reasonably acceptable to Landlord, (iv) Tenant shall furnish upon
Landlord’s request a complete statement, certified by Tenant’s chief financial
officer, setting forth in detail the computation of any Transfer Premium Tenant
has derived and shall derive from such Transfer, and (v) no Transfer relating to
this Lease or agreement entered into with respect thereto, whether with or
without Landlord’s consent, shall relieve Tenant or any guarantor of the Lease
from any liability under this Lease, including, without limitation, in
connection with the Subject Space. Landlord or its authorized representatives
shall have the right at all reasonable times to audit the books, records and
papers of Tenant relating to any Transfer, and shall have the right to make
copies thereof. If the Transfer Premium respecting any Transfer shall be found
understated, Tenant shall, within thirty (30) days after demand, pay the
deficiency, and if understated by more than three percent (3%), Tenant shall pay
Landlord’s costs of such audit.
14.6Additional Transfers. For purposes of this Lease, the term “Transfer” shall
also include (i) if Tenant is a partnership, the withdrawal or change,
voluntary, involuntary or by operation of law, of more than fifty percent
(50%) of the partners, or transfer of more than fifty percent (50%) of
partnership interests, within a twelve (12)-month period, or the dissolution of
the partnership without immediate reconstitution thereof, and (ii) if Tenant is
a closely held corporation ( i.e. , whose stock is not publicly held and not
traded through an exchange or over the counter), (A) the dissolution, merger,
consolidation or other reorganization of Tenant or (B) the sale or other
transfer of an aggregate of more than fifty percent (50%) of the voting shares
of Tenant (other than to immediate family members by reason of gift or death),
within a twelve (12)-month period, or (C) the sale, mortgage, hypothecation or
pledge of an aggregate of more than fifty percent (50%) of the value of the
unencumbered assets of Tenant within a twelve (12)-month period.
14.7Occurrence of Default. Any Transfer hereunder shall be subordinate and
subject to the provisions of this Lease, and if this Lease shall be terminated
during the term of any Transfer, Landlord shall have the right to: (i) treat
such Transfer as cancelled and repossess the Subject Space by any lawful means,
or (ii) require that such Transferee attorn to and recognize Landlord as its
landlord under any such Transfer. If Tenant shall be in default under this
Lease, Landlord is hereby irrevocably authorized, as Tenant’s agent and
attorney-in-fact, to direct any Transferee to make all payments under or in
connection with the Transfer directly to Landlord (which Landlord shall apply
towards Tenant’s obligations under this Lease) until such default is cured. Such
Transferee shall rely on any representation by Landlord that Tenant is in
default hereunder, without any need for confirmation thereof by Tenant. Upon any
assignment, the assignee shall assume in writing all obligations and covenants
of Tenant thereafter to be performed or observed under this Lease. No collection
or acceptance of rent by Landlord from any Transferee shall be deemed a waiver
of any provision of this Article 14 or the approval of any Transferee or a
release of Tenant from any obligation under this Lease, whether theretofore or
thereafter accruing. In no event shall Landlord’s enforcement of any provision
of this Lease against any Transferee be deemed a waiver of Landlord’s right to
enforce any term of this Lease against Tenant or any other person. If Tenant’s
obligations hereunder have been guaranteed, Landlord’s consent to any Transfer
shall not be effective unless the guarantor also consents to such Transfer.
14.8Non-Transfers. Notwithstanding anything to the contrary contained in this
Article 14, provided Tenant is not in default under this Lease (beyond any
applicable notice and cure periods) (i) an assignment or subletting of all or a
portion of the Premises to an affiliate of Tenant (an entity which is controlled
by, controls, or is under common control with, Tenant), (ii) an assignment of
the Premises to an entity which acquires all or substantially all of the assets
or interests (partnership, stock or other) of Tenant, or (iii) an assignment of
the Premises to an entity which is the resulting entity of a merger,
consolidation, public offering, reorganization, or dissolution of Tenant, shall
not be deemed a Transfer under this Article 14 , provided that Tenant notifies
Landlord of any such assignment or sublease and promptly supplies Landlord with
any documents or information requested by Landlord regarding such assignment or
sublease or such affiliate, and further provided that such assignment or
sublease is not a subterfuge by Tenant to avoid its obligations under this Lease
or otherwise effectuate any “release” by Tenant of such obligations. The
transferee under a transfer specified in items (i), (ii) or (iii) above shall be
referred to as a “ Permitted Transferee .” “ Control ,” as used in this
Section 14.8 , shall mean the ownership, directly or indirectly, of at least
fifty-one percent (51%) of the voting securities of, or possession of the right
to vote, in the ordinary direction of its affairs, of at least fifty-one percent
(51%) of the voting interest in, any person or entity. Furthermore, raising of
capital through a sale of stock or interests in Tenant will not be deemed a
Transfer for purposes of this Lease.
ARTICLE 15
SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES
15.1Surrender of Premises. No act or thing done by Landlord or any agent or
employee of Landlord during the Lease Term shall be deemed to constitute an
acceptance by Landlord of a surrender of the Premises unless such intent is
specifically acknowledged in writing by Landlord. The delivery of keys to the
Premises to Landlord or any agent or employee of Landlord shall not constitute a
surrender of the Premises or effect a termination of this Lease, whether or not
the keys are thereafter retained by Landlord, and notwithstanding such delivery
Tenant shall be entitled to the return of such keys at any reasonable time upon
request until this Lease shall have been properly terminated. The voluntary or
other surrender of this Lease by Tenant, whether accepted by Landlord or not, or
a mutual termination hereof, shall not work a merger, and at the option of
Landlord shall operate as an assignment to Landlord of all subleases or
subtenancies affecting the Premises or terminate any or all such sublessees or
subtenancies.
15.2Removal of Tenant Property by Tenant. Upon the expiration of the Lease Term,
or upon any earlier termination of this Lease, Tenant shall, subject to the
provisions of this Article 15 , quit and surrender possession of the Premises to
Landlord in good order and condition, reasonable wear and tear and repairs which
are specifically made the responsibility of Landlord hereunder excepted. Upon
such expiration or termination, Tenant shall, without expense to Landlord,

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remove or cause to be removed from the Premises all debris and rubbish, and such
items of furniture, equipment, business and trade fixtures, free-standing
cabinet work, movable partitions and other articles of personal property owned
by Tenant or installed or placed by Tenant at its expense in the Premises, and
such similar articles of any other persons claiming under Tenant, as Landlord
may, in its sole discretion, require to be removed, and Tenant shall repair at
its own expense all damage to the Premises and Building resulting from such
removal.
ARTICLE 16
HOLDING OVER
If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, with or without the express or implied consent of Landlord,
such tenancy shall be from month-to-month only, and shall not constitute a
renewal hereof or an extension for any further term, and in such case Rent shall
be payable at a monthly rate equal to the product of (i) the Rent applicable
during the last rental period of the Lease Term under this Lease, and (ii) a
percentage equal to one hundred fifty percent (150%). Such month-to-month
tenancy shall be subject to every other applicable term, covenant and agreement
contained herein. Nothing contained in this Article 16 shall be construed as
consent by Landlord to any holding over by Tenant, and Landlord expressly
reserves the right to require Tenant to surrender possession of the Premises to
Landlord as provided in this Lease upon the expiration or other termination of
this Lease. The provisions of this Article 16 shall not be deemed to limit or
constitute a waiver of any other rights or remedies of Landlord provided herein
or at law. If Tenant fails to surrender the Premises upon the termination or
expiration of this Lease, in addition to any other liabilities to Landlord
accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord
harmless from all loss, costs (including reasonable attorneys’ fees) and
liability resulting from such failure, including, without limiting the
generality of the foregoing, any claims made by any succeeding tenant founded
upon such failure to surrender and any lost profits to Landlord resulting
therefrom; provided, however, upon entering into a third-party lease which
affects all or any portion of the Premises, Landlord shall deliver written
notice (the “ New Lease Notice ”) of such lease to Tenant and the terms of the
foregoing indemnity shall not be effective until the later of (i) the date that
occurs thirty (30) days following the date Landlord delivers such New Lease
Notice to Tenant, and (ii) the date which occurs thirty (30) days after the
termination or expiration of this Lease.
ARTICLE 17
ESTOPPEL CERTIFICATES
Within ten (10) business days following a request in writing by Landlord, Tenant
shall execute, acknowledge and deliver to Landlord an estoppel certificate,
which, as submitted by Landlord, shall be substantially in the form of Exhibit E
, attached hereto (or such other form as may be required by any prospective
mortgagee or purchaser of the Project, or any portion thereof), indicating
therein any exceptions thereto that may exist at that time, and shall also
contain any other information reasonably requested by Landlord or Landlord’s
mortgagee or prospective mortgagee. Any such certificate may be relied upon by
any prospective mortgagee or purchaser of all or any portion of the Project.
Tenant shall execute and deliver whatever other instruments may be reasonably
required for such purposes. At any time during the Lease Term, Landlord may
require Tenant to provide Landlord with a current financial statement and
financial statements of the two (2) years prior to the current financial
statement year. Such statements shall be prepared in accordance with generally
accepted accounting principles and, if such is the normal practice of Tenant,
shall be audited by an independent certified public accountant. Failure of
Tenant to timely execute, acknowledge and deliver such estoppel certificate or
other instruments shall constitute an acceptance of the Premises and an
acknowledgment by Tenant that statements included in the estoppel certificate
are true and correct, without exception. Notwithstanding the foregoing, in the
event that (i) stock in the entity which constitutes Tenant under this Lease (as
opposed to an entity that “controls” Tenant, as that term is defined in
Section 14.8 of this Lease, or is under common control with Tenant) is publicly
traded on a national stock exchange, and (ii) Tenant has it own, separate and
distinct 10K and 10Q filing requirements (as opposed to joint filings with an
entity that controls Tenant or is under common control with Tenant), then
Tenant’s obligation to provide Landlord with a copy of its most recent current
financial statement shall be deemed satisfied.
ARTICLE 18
SUBORDINATION
This Lease shall be subject and subordinate to all present and future ground or
underlying leases of the Building or Project and to the lien of any mortgage,
trust deed or other encumbrances now or hereafter in force against the Building
or Project or any part thereof, if any, and to all renewals, extensions,
modifications, consolidations and replacements thereof, and to all advances made
or hereafter to be made upon the security of such mortgages or trust deeds,
unless the holders of such mortgages, trust deeds or other encumbrances, or the
lessors under such ground lease or underlying leases, require in writing that
this Lease be superior thereto. Landlord’s delivery to Tenant of commercially
reasonable non-disturbance agreement(s) (the “ Nondisturbance Agreement ”) in
favor of Tenant from any ground lessor, mortgage holders or lien holders of
Landlord who later come into existence at any time prior to the expiration of
the Lease Term shall be in consideration of, and a condition precedent to,
Tenant’s agreement to be bound by the terms and conditions of this Article 18 .
Landlord shall secure and deliver to Tenant a Non-Disturbance Agreements from,
and executed by, all current Landlord’s Mortgagees for the benefit of Tenant
within thirty (30) days following the full execution and delivery of this Lease.
Subject to Tenant’s receipt of such Nondisturbance Agreement, Tenant covenants
and agrees in the event any proceedings are brought for the foreclosure of any
such mortgage or deed in lieu thereof (or if any ground lease is terminated), to
attorn, without any deductions or set-offs whatsoever, to the lienholder or
purchaser or any successors thereto upon any such foreclosure sale or deed in
lieu thereof (or to the ground lessor), if so requested to do so by such
purchaser or lienholder or ground lessor, and to recognize such purchaser or
lienholder or ground lessor as the lessor under this Lease, provided such
lienholder or purchaser or ground lessor shall agree to accept this Lease and
not disturb Tenant’s occupancy, so long as Tenant timely pays the rent and
observes and performs the TCCs of this Lease to be observed and performed by
Tenant. Landlord’s interest herein may be assigned as security at any time to
any lienholder. Tenant shall, within ten (10) business days of request by
Landlord, execute such further instruments or assurances as Landlord may
reasonably deem necessary to evidence or confirm the subordination or
superiority of this Lease to any such mortgages, trust deeds, ground leases or
underlying leases. Tenant waives the provisions of any current or future
statute, rule or law which may give or purport to give Tenant any right or
election to terminate or otherwise adversely affect this Lease and the
obligations of the Tenant hereunder in the event of any foreclosure proceeding
or sale.
ARTICLE 19
DEFAULTS; REMEDIES
19.1Events of Default. The occurrence of any of the following shall constitute a
default of this Lease by Tenant:

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19.1.1 Any failure by Tenant to pay any Rent or any other charge required to be
paid under this Lease, or any part thereof, when due unless such failure is
cured within three (3) days after notice; or
19.1.2 Except where a specific time period is otherwise set forth for Tenant’s
performance in this Lease, in which event the failure to perform by Tenant
within such time period shall be a default by Tenant under this Section 19.1.2 ,
any failure by Tenant to observe or perform any other provision, covenant or
condition of this Lease to be observed or performed by Tenant where such failure
continues for thirty (30) days after written notice thereof from Landlord to
Tenant; provided that if the nature of such default is such that the same cannot
reasonably be cured within a thirty (30) day period, Tenant shall not be deemed
to be in default if it diligently commences such cure within such period and
thereafter diligently proceeds to rectify and cure such default, but in no event
exceeding a period of time in excess of ninety (90) days after written notice
thereof from Landlord to Tenant; or
19.1.3 To the extent permitted by law, a general assignment by Tenant or any
guarantor of this Lease for the benefit of creditors, or the taking of any
corporate action in furtherance of bankruptcy or dissolution whether or not
there exists any proceeding under an insolvency or bankruptcy law, or the filing
by or against Tenant or any guarantor of any proceeding under an insolvency or
bankruptcy law, unless in the case of a proceeding filed against Tenant or any
guarantor the same is dismissed within sixty (60) days, or the appointment of a
trustee or receiver to take possession of all or substantially all of the assets
of Tenant or any guarantor, unless possession is restored to Tenant or such
guarantor within thirty (30) days, or any execution or other judicially
authorized seizure of all or substantially all of Tenant’s assets located upon
the Premises or of Tenant’s interest in this Lease, unless such seizure is
discharged within thirty (30) days; or
19.1.4 Abandonment or vacation of all or a substantial portion of the Premises
by Tenant coupled with a failure to pay Rent or to reasonably secure the
Premises; or
19.1.5 The failure by Tenant to observe or perform according to the provisions
of Articles 5, 14, 17 or 18 of this Lease where such failure continues for more
than five (5) business days after notice from Landlord; or

19.1.6 Tenant’s failure to occupy the Premises within sixty (60) days after the
Lease Commencement Date.
The notice periods provided herein are in lieu of, and not in addition to, any
notice periods provided by law.
19.2Remedies Upon Default. Upon the occurrence of any event of default by
Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity (all of which remedies shall be distinct, separate
and cumulative), the option to pursue any one or more of the following remedies,
each and all of which shall be cumulative and nonexclusive, without any notice
or demand whatsoever.
19.2.1 Terminate this Lease, in which event Tenant shall immediately surrender
the Premises to Landlord, and if Tenant fails to do so, Landlord may, without
prejudice to any other remedy which it may have for possession or arrearages in
rent, enter upon and take possession of the Premises and expel or remove Tenant
and any other person who may be occupying the Premises or any part thereof,
without being liable for prosecution or any claim or damages therefor; and
Landlord may recover from Tenant the following:
(a) The worth at the time of award of any unpaid rent which has been earned at
the time of such termination; plus
(b) The worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that Tenant proves could have been reasonably
avoided; plus
(c) The worth at the time of award of the amount by which the unpaid rent for
the balance of the Lease Term after the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided; plus
(d) Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom; and
(e) At Landlord’s election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable law.
The term “rent” as used in this Section 19.2 shall be deemed to be and to mean
all sums of every nature required to be paid by Tenant pursuant to the terms of
this Lease, whether to Landlord or to others. As used in
Sections 19.2.1(a) and (b) , above, the “worth at the time of award” shall be
computed by allowing interest at the Interest Rate. As used in Section 19.2.1(c)
, above, the “worth at the time of award” shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%).
19.2.2 Landlord shall have the remedy described in California Civil Code
Section 1951.4 (lessor may continue lease in effect after lessee’s breach and
abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations). Accordingly, if
Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all rent as it becomes due.

19.2.3 Landlord shall at all times have the rights and remedies (which shall be
cumulative with each other and cumulative and in addition to those rights and
remedies available under Sections 19.2.1 and 19.2.2 , above, or any law or other
provision of this Lease), without prior demand or notice except as required by
applicable law, to seek any declaratory, injunctive or other equitable relief,
and specifically enforce this Lease, or restrain or enjoin a violation or breach
of any provision hereof.
19.3Subleases of Tenant. Whether or not Landlord elects to terminate this Lease
on account of any default by Tenant, as set forth in this Article 19 , Landlord
shall have the right to terminate any and all subleases, licenses, concessions
or other consensual arrangements for possession entered into by Tenant and
affecting the Premises or may, in Landlord’s sole discretion, succeed to
Tenant’s interest in such subleases, licenses, concessions or arrangements. In
the event of Landlord’s election to succeed to Tenant’s interest in any such
subleases, licenses, concessions or arrangements, Tenant shall, as of the date
of notice by Landlord of such election, have no further right to or interest in
the rent or other consideration receivable thereunder.
19.4Form of Payment After Default. Following the second (2nd) occurrence of an
economic event of default by Tenant (beyond any applicable notice and cure
periods) occurring within any twelve (12)-month period, Landlord shall have the
right to require that any or all subsequent amounts paid by Tenant to Landlord
hereunder, whether to cure the default in question or otherwise, be paid in the
form of cash, money order, cashier’s or certified check drawn on an institution
acceptable to Landlord, or by other means approved by Landlord, notwithstanding
any prior practice of accepting payments in any different form.
19.5Efforts to Relet. No re-entry or repossession, repairs, maintenance,
changes, alterations and additions, reletting, appointment of a receiver to
protect Landlord’s interests hereunder, or any other action or omission by
Landlord shall be construed as an election by Landlord to terminate this Lease
or Tenant’s right to possession, or to accept a surrender of the Premises, nor
shall same operate to release Tenant in whole or in part from any of Tenant’s
obligations hereunder, unless express written notice of such intention is sent
by Landlord to Tenant. Tenant hereby irrevocably waives any right otherwise
available under any law to redeem or reinstate this Lease.

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19.6Landlord Default. Notwithstanding anything to the contrary set forth in this
Lease, Landlord shall be in default in the performance of any obligation
required to be performed by Landlord pursuant to this Lease if Landlord fails to
perform such obligation within thirty (30) days after the receipt of notice from
Tenant specifying in detail Landlord’s failure to perform; provided, however, if
the nature of Landlord’s obligation is such that more than thirty (30) days are
required for its performance, then Landlord shall not be in default under this
Lease if it shall commence such performance within such thirty (30) day period
and thereafter diligently pursues the same to completion. Upon any such default
by Landlord under this Lease, Tenant may, except as otherwise specifically
provided in this Lease to the contrary, exercise any of its rights provided at
law or in equity. Any award from a court or arbitrator in favor of Tenant
requiring payment by Landlord which is not paid by Landlord within the time
period directed by such award, may be offset by Tenant from Rent next due and
payable under this Lease; provided, however, Tenant may not deduct the amount of
the award against more than fifty percent (50%) of Base Rent next due and owing
(until such time as the entire amount of such judgment is deducted) to the
extent following a foreclosure or a deed-in-lieu of foreclosure.
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
Landlord covenants that Tenant, on paying the Rent, charges for services and
other payments herein reserved and on keeping, observing and performing all the
other TCCs, provisions and agreements herein contained on the part of Tenant to
be kept, observed and performed, shall, during the Lease Term, peaceably and
quietly have, hold and enjoy the Premises subject to the TCCs, provisions and
agreements hereof without interference by any persons lawfully claiming by or
through Landlord. The foregoing covenant is in lieu of any other covenant
express or implied.
ARTICLE 21
SECURITY DEPOSIT
Concurrent with Tenant’s execution of this Lease, Tenant shall deposit with
Landlord a security deposit (the “Security Deposit ”) in the amount set forth in
Section 8 of the Summary, as security for the faithful performance by Tenant of
all of its obligations under this Lease. If Tenant defaults with respect to any
provisions of this Lease, including, but not limited to, the provisions relating
to the payment of Rent, the removal of property and the repair of resultant
damage, Landlord may, without notice to Tenant, but shall not be required to
apply all or any part of the Security Deposit for the payment of any Rent or any
other sum in default and Tenant shall, upon demand therefor, restore the
Security Deposit to its original amount. Any unapplied portion of the Security
Deposit shall be returned to Tenant, or, at Landlord’s option, to the last
assignee of Tenant’s interest hereunder, within sixty (60) days following the
expiration of the Lease Term. Tenant shall not be entitled to any interest on
the Security Deposit. Tenant hereby waives the provisions of Section 1950.7 of
the California Civil Code, or any successor statute.
ARTICLE 22
LETTER OF CREDIT
22.1Delivery of Letter of Credit. Within five (5) business days following the
full execution and delivery of this Lease between the parties, Tenant shall
deliver to Landlord, as protection for the full and faithful performance by
Tenant of all of its obligations under this Lease and for all losses and damages
Landlord may suffer (or which Landlord reasonably estimates that it may suffer)
as a result of any breach or default by Tenant under this Lease, an irrevocable
and unconditional negotiable standby letter of credit (the “ Letter of Credit
”), in a form materially consistent to the form attached hereto as Exhibit G and
containing the terms required herein, payable in the City of San Diego,
California, running in favor of Landlord and issued by Silicon Valley Bank or
another then-solvent, nationally recognized bank with a long term rating of BBB
or higher, under the supervision of the Superintendent of Banks of the State of
California, or a national banking association, in the amount of One Million One
Hundred Sixty-One Thousand and 00/100 Dollars ($1,161,000.00) (the “ Letter of
Credit Amount ”). The Letter of Credit shall (i) be “callable” at sight,
irrevocable and unconditional, (ii) be maintained in effect, whether through
renewal or extension, for the period from the Lease Commencement Date and
continuing until the date (the “ LC Expiration Date ”) that is sixty (60) days
after the expiration of the Lease Term, and Tenant shall deliver a new Letter of
Credit or certificate of renewal or extension to Landlord at least thirty
(30) days prior to the expiration of the Letter of Credit then held by Landlord,
without any action whatsoever on the part of Landlord, (iii) be fully assignable
by Landlord, its successors and assigns, either in connection with a transfer of
Landlord’s interest in this Lease or the Building or in connection with a
mortgage applicable to such Building, (iv) permit partial draws and multiple
presentations and drawings, and (v) be otherwise subject to the Uniform Customs
and Practices for Documentary Credits (1993-Rev), International Chamber of
Commerce Publication #500, or the International Standby Practices-ISP 98,
International Chamber of Commerce Publication #590. In addition to the
foregoing, the form and terms of the Letter of Credit (and the bank issuing the
same (the “ Bank ”)) shall be acceptable to Landlord, in Landlord’s reasonable
discretion. Landlord, or its then managing agent, shall have the right to draw
down an amount up to the face amount of the Letter of Credit if any of the
following shall have occurred or be applicable: (A) such amount is due to
Landlord under the terms and conditions of this Lease, or (B) Tenant has filed a
voluntary petition under the U. S. Bankruptcy Code or any state bankruptcy code
(collectively, “ Bankruptcy Code ”), or (C) an involuntary petition has been
filed against Tenant under the Bankruptcy Code, or (D) the Bank has notified
Landlord that the Letter of Credit will not be renewed or extended through the
LC Expiration Date. The Letter of Credit will be honored by the Bank regardless
of whether Tenant disputes Landlord’s right to draw upon the Letter of Credit.
22.2Transfer of Letter of Credit. The Letter of Credit shall also provide that
Landlord, its successors and assigns, may, at any time and without notice to
Tenant and without first obtaining Tenant’s consent thereto, transfer (one or
more times) its interest in and to the Letter of Credit to another party, person
or entity, regardless of whether or not such transfer is separate from or as a
part of the assignment by Landlord of its rights and interests in and to this
Lease. In the event of a transfer of Landlord’s interest in the Building,
Landlord shall transfer the Letter of Credit, to the transferee and thereupon
Landlord shall, without any further agreement between the parties, be released
by Tenant from all liability therefor, and it is agreed that the provisions
hereof shall apply to every transfer or assignment of said Letter of Credit to a
new landlord. In connection with any such transfer of the Letter of Credit by
Landlord, Tenant shall, at Tenant’s sole cost and expense, execute and submit to
the Bank such applications, documents and instruments as may be necessary to
effectuate such transfer, and Landlord shall be responsible for paying the
Bank’s transfer and processing fees in connection therewith up to a maximum
per-transfer cost of $1,000, with any excess being payable by Tenant.
22.3Conditional Increase/Reduction of L-C Amount.
22.3.1In General. Landlord and Tenant hereby acknowledge and agree that the L-C
Amount is subject to increase and reduction throughout the Lease Term at the end
of each financial quarter as set forth in this Section 22.3 . The starting L-C
Amount shall be in the amount set forth in Section 22.1. Following the Lease
Commencement Date, and throughout the Lease Term, (i) to the extent that Tenant
maintains (and continues to maintain) the Required Thresholds for four
(4) consecutive financial quarters, the then-determined L-C Amount shall be
conditionally reduced by fifty percent (50%), and (ii) to the extent that Tenant
maintains (and continues to maintain) the Required Thresholds for eight
(8) consecutive financial quarters, the then-determined L-C Amount shall be
conditionally

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reduced to $0.00; provided, however, in connection with the foregoing
conditional reductions, only financial quarters commencing following the Lease
Commencement Date may be included in the Required Threshold determination.
Notwithstanding any such conditional reduction, in the event that, following the
completion of each financial quarter throughout the Lease Term (A) Tenant has
failed to satisfy the Required Thresholds, or (B) Tenant fails to timely deliver
the unaudited quarterly financial statements, or the annual audited financial
statements required for Landlord or Tenant to make a determination with regard
to such Required Thresholds, and such failure continues for ten (10) business
days following Landlord’s delivery of written notice to Tenant identifying such
failure, or (C) Tenant is in economic default under the Lease (beyond the
applicable notice and cure periods), then Tenant shall, upon receipt of a
written notice from Landlord (the “ Reestablishment Notice ”), cause the letter
of Credit to be reestablished or reissued (as the case may be) with the full
Letter of Credit Amount.
22.3.2Definitions. For purposes of this Article 22, “EBITDA,” shall mean
earnings before interest, taxes, depreciation and amortization. For purposes of
this Article 22 , “ Free Cash Flow ” shall mean EBITDA less (i) cash interest,
(ii) cash taxes, (iii) rent, (iv) capital expenditures, and (v) change in
working capital (calculated based upon the then most current financials, on a
rolling quarterly basis consisting of the four (4) financial quarters most
recently completed). For purposes of this Article 22 , “ Net Revenues ” shall
mean “Net Revenues” as indicated in the Tenant entity’s audited financial
statements initially submitted to Landlord in connection with the execution of
this Lease. For purposes of this Article 22 , “ EBITDA Margin, ” means a
fraction (indicated as a percentage), where the numerator is then-current
EBITDA, and the denominator is the then-current Net Revenue (each of which shall
be calculated based upon the then most current financials, on a rolling
quarterly basis consisting of the four (4) financial quarters most recently
completed). For purposes of this Article 22 , “ Gross Profit ” means the
then-current Net Revenues less the cost of such Net Revenues (each of which
shall be calculated based upon the then most current financials, on a rolling
quarterly basis consisting of the four (4) financial quarters most recently
completed). For purposes of this Article 22 , “ Gross Profit Margin ” means a
fraction (indicated as a percentage), where the numerator is the then-current
Gross Profit, and the denominator is the then-current Net Revenue (each of which
shall be calculated based upon the then most current financials, on a rolling
quarterly basis consisting of the four (4) financial quarters most recently
completed). For the purposes of this Article 22 , the “ Required Thresholds ”
shall mean, collectively, the maintenance of each of ( x ) Free Cash Flow for
the Tenant entity of $0 to positive dollars, ( y ) an EBITDA Margin for the
Tenant entity of no less than five percent (5.0%), and ( z ) Gross Profit Margin
for the Tenant entity of no less than fifteen percent (15%).
22.3.3FAILURE TO REINSTATE; LIQUIDATED DAMAGES. IN THE EVENT THAT TENANT FAILS,
WITHIN THIRTY (30) DAYS FOLLOWING TENANT’S RECEIPT OF A REESTABLISHMENT NOTICE,
TO CAUSE THE L-C TO BE REESTABLISHED IN THE L-C AMOUNT, THEN TENANT’S MONTHLY
INSTALLMENT OF BASE RENT SHALL BE INCREASED TO ONE HUNDRED TEN PERCENT (110%) OF
ITS OTHERWISE SCHEDULED LEVEL DURING THE PERIOD COMMENCING ON THE DATE WHICH IS
THIRTY (30) DAYS AFTER TENANT’S RECEIPT OF SUCH REESTABLISHMENT NOTICE AND
ENDING ON THE EARLIER TO OCCUR OF (I) THE DATE SUCH L-C IS REESTABLISHED
PURSUANT TO THE TERMS OF THIS SECTION 22.3 , OR (II) THE DATE WHICH IS NINETY
(90) DAYS AFTER THE DATE OF SUCH REESTABLISHMENT NOTICE. IN THE EVENT THAT
TENANT FAILS, DURING SUCH NINETY (90)-DAY PERIOD FOLLOWING THE DATE OF THE
REESTABLISHMENT NOTICE, TO CAUSE THE L-C TO BE REESTABLISHED IN THE L-C AMOUNT,
THEN TENANT’S MONTHLY INSTALLMENT OF BASE RENT SHALL BE INCREASED TO ONE HUNDRED
TWENTY-FIVE PERCENT (125%) OF ITS OTHERWISE SCHEDULED LEVEL DURING THE PERIOD
COMMENCING ON THE DATE WHICH IS NINETY (90) DAYS AFTER THE DATE OF SUCH
REESTABLISHMENT NOTICE AND ENDING ON THE DATE SUCH L-C IS
RE-ISSUED/REESTABLISHED PURSUANT TO THE TERMS OF THIS SECTION 22.3 . THE PARTIES
AGREE THAT IT WOULD BE IMPRACTICABLE AND EXTREMELY DIFFICULT TO ASCERTAIN THE
ACTUAL DAMAGES SUFFERED BY LANDLORD AS A RESULT OF TENANT’S FAILURE TO TIMELY
REESTABLISH THE L-C FOLLOWING THE REESTABLISHMENT NOTICE AS REQUIRED IN THIS
SECTION 22.3 , AND THAT UNDER THE CIRCUMSTANCES EXISTING AS OF THE DATE OF THIS
LEASE, THE LIQUIDATED DAMAGES PROVIDED FOR IN THIS SECTION 22.3.3 REPRESENT A
REASONABLE ESTIMATE OF THE DAMAGES WHICH LANDLORD WILL INCUR AS A RESULT OF SUCH
FAILURE, PROVIDED, HOWEVER, THAT THIS PROVISION SHALL NOT WAIVE OR AFFECT
LANDLORD’S RIGHTS AND TENANT’S INDEMNITY OBLIGATIONS UNDER OTHER SECTIONS OF
THIS LEASE (EXCEPT THAT THE PARTIES SPECIFICALLY AGREE THAT THE FOREGOING
PROVISION WAS AGREED TO IN LIEU OF MAKING FAILURE TO RE-ESTABLISH THE L-C A
DEFAULT UNDER THE LEASE). THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH
LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING
OF CALIFORNIA CIVIL CODE SECTION 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE
LIQUIDATED DAMAGES TO LANDLORD PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671.
THE PARTIES HAVE SET FORTH THEIR INITIALS BELOW TO INDICATE THEIR AGREEMENT WITH
THE LIQUIDATED DAMAGES PROVISION CONTAINED IN THIS SECTION 22.3.3 .
 
 
 
 
 
 
 
 
 
  
 
 
 
  
LANDLORD’S INITIALS
 
 
 
TENANT’S INITIALS

22.4Application of Letter of Credit. Tenant hereby acknowledges and agrees that
Landlord is entering into this Lease in material reliance upon the ability of
Landlord to draw upon the Letter of Credit upon the occurrence of any breach or
default on the part of Tenant under this Lease. If Tenant shall breach any
provision of this Lease or otherwise be in default hereunder (after any
applicable notice and cure period), Landlord may, but without obligation to do
so, and without notice to Tenant, draw upon the Letter of Credit, in part or in
whole, to cure any breach or default of Tenant and/or to compensate Landlord for
any and all damages of any kind or nature sustained or which Landlord reasonably
estimates that it will sustain resulting from Tenant’s breach or default of this
Lease, including, but not limited to, all damages or rent due upon termination
of this Lease pursuant to Section 1951.2 of the California Civil Code. The use,
application or retention of the Letter of Credit, or any portion thereof, by
Landlord shall not prevent Landlord from exercising any other right or remedy
provided by this Lease or by any applicable law, it being intended that Landlord
shall not first be required to proceed against the Letter of Credit, and shall
not operate as a limitation on any recovery to which Landlord may otherwise be
entitled. Tenant agrees not to interfere in any way with payment to Landlord of
the proceeds of the Letter of Credit, either prior to or following a “draw” by
Landlord of any portion of the Letter of Credit, regardless of whether any
dispute exists between Tenant and Landlord as to Landlord’s right to draw upon
the Letter of Credit. No condition or term of this Lease shall be deemed to
render the Letter of Credit conditional to justify the issuer of the Letter of
Credit in failing to honor a drawing upon such Letter of Credit in a timely
manner. Tenant agrees and acknowledges that (i) the Letter of Credit constitutes
a separate and independent contract between Landlord and the Bank, (ii) Tenant
is not a third party beneficiary of such contract, (iii) Tenant has no property
interest whatsoever in the Letter of Credit or the proceeds thereof, and (iv) in
the event Tenant becomes a debtor under any chapter of the Bankruptcy Code,
neither Tenant, any trustee, nor Tenant’s bankruptcy estate shall have any right
to restrict or limit Landlord’s claim and/or rights to the Letter of Credit
and/or the proceeds thereof by application of Section 502(b)(6) of the
U. S. Bankruptcy Code or otherwise.
21.5Letter of Credit not a Security Deposit. Landlord and Tenant acknowledge and
agree that in no event or circumstance shall the Letter of Credit or any renewal
thereof or any proceeds thereof be (i) deemed to be or treated as a “security
deposit” within the meaning of California Civil Code Section 1950.7,
(ii) subject to the terms of such Section 1950.7, or (iii) intended to serve as
a “security deposit” within the meaning of such Section 1950.7. The parties
hereto (A) recite that the Letter of Credit is not intended to serve as a
security deposit and such Section 1950.7 and any and all other laws, rules and
regulations applicable to security deposits in the commercial context (“
Security Deposit Laws ”) shall have no applicability or relevancy thereto and
(B) waive any and all rights, duties and obligations either party may now or, in
the future, will have relating to or arising from the Security Deposit Laws.

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ARTICLE 23
SIGNS
23.1Interior Signage. Subject to Landlord’s reasonable prior written approval,
and provided all signs are in keeping with the quality, design and style of the
Building and Project, Tenant, at its sole cost and expense, may install
identification signage anywhere in the Premises including in the elevator lobby
of the Premises, provided that such signs must not be visible from the exterior
of the Building.

23.2Intentionally Omitted
23.3Prohibited Signage and Other Items. Any signs, notices, logos, pictures,
names or advertisements which are installed and that have not been separately
approved by Landlord may be removed without notice by Landlord at the sole
expense of Tenant. Except as provided in Section 23.4 , Tenant may not install
any signs on the exterior or roof of the Project or the Common Areas. Any signs,
window coverings, or blinds (even if the same are located behind the
Landlord-approved window coverings for the Building), or other items visible
from the exterior of the Premises or Building, shall be subject to the prior
approval of Landlord, in its sole discretion.
23.4Tenant’s Signage. Tenant shall be entitled to install the following signage
in connection with Tenant’s lease of the Premises (collectively, the “ Tenant’s
Signage ”):
 
 
(i)
Exclusive Building-top signage consisting of one (1) building-top sign (maximum
size per building-top sign is 100 square feet pursuant to the signage guidelines
for the Project) identifying Tenant’s name or logo located at the top of the
Building (on the Sequence Drive-facing elevation) in one (1) location;

 
 
(ii)
Exclusive “eyebrow” signage located adjacent to the main entrance of the
Building located directly above either one or both of the entry points into the
Building; and

 
 
(iii)
A monument sign to be located adjacent to the entrance of the Building in a
location, in a design, and with materials and other reasonable parameters to be
approved by Landlord and Tenant in accordance with the TCCs of  Section 23.4.1 ,
below (the “Building Monument Sign”), with exclusive signage thereon. Tenant
hereby acknowledges and agrees that Landlord may, at Landlord’s sole cost and
expense, place a standard “owned and managed” sign on such Building Monument
Sign, provided that such “owned and managed” sign shall not be larger than
Tenant’s signage.

23.4.1Specifications and Permits. Tenant’s Signage shall set forth Tenant’s name
and logo as determined by Tenant in its sole discretion; provided, however, in
no event shall Tenant’s Signage include an “Objectionable Name,” as that term is
defined in Section 23.4.2 , of this Lease. The graphics, materials, color,
design, lettering, lighting, size, illumination, specifications and exact
location of Tenant’s Signage (collectively, the “ Sign Specifications ”) shall
be subject to the prior written approval of Landlord, which approval shall not
be unreasonably withheld, conditioned or delayed, and shall be consistent and
compatible with the quality and nature of the Project and any commercially
reasonable Project-standard signage specifications reasonably promulgated by
Landlord. For purposes of this Section 23.4.1 , the reference to “name” shall
mean name and/or logo. In addition, Tenant’s Signage shall be subject to
Tenant’s receipt of all required governmental permits and approvals and shall be
subject to all Applicable Laws and to any covenants, conditions and restrictions
affecting the Project. Landlord shall use commercially reasonable efforts to
assist Tenant in obtaining all necessary permits and approvals for Tenant’s
Signage. Tenant hereby acknowledges that, notwithstanding Landlord’s approval of
Tenant’s Signage, Landlord has made no representation or warranty to Tenant with
respect to the probability of obtaining all necessary governmental approvals and
permits for Tenant’s Signage. In the event Tenant does not receive the necessary
governmental approvals and permits for Tenant’s Signage, Tenant’s and Landlord’s
rights and obligations under the remaining TCCs of this Lease shall be
unaffected.
23.4.2Objectionable Name. To the extent Tenant desires to change the name and/or
logo set forth on Tenant’s Signage, such name and/or logo shall not have a name
which relates to an entity which is of a character or reputation, or is
associated with a political faction or orientation, which is inconsistent with
the quality of the Project, or which would otherwise reasonably offend a
landlord of the Comparable Buildings (an “ Objectionable Name ”). The parties
hereby agree that the name “Entropic Communications, Inc.” or any reasonable
derivation thereof, shall be deemed not to constitute an Objectionable Name.
23.4.3Termination of Right to Tenant’s Signage. Except as expressly identified
in Sections 23.4(i) and (ii), the rights contained in this Section 23.4 shall be
personal to Tenant or any Permitted Transferee of Tenant, and may only be
exercised by such parties (and not any other assignee, sublessee or other
transferee of the Original Tenant’s interest in this Lease) if they are not in
material default under this Lease (beyond any applicable notice and cure
period).
23.5Cost and Maintenance. The costs of the actual signs comprising Tenant’s
Signage and the installation, design, construction, and any and all other costs
associated with Tenant’s Signage, including, without limitation, utility charges
and hook-up fees, permits, and maintenance and repairs, shall be the sole
responsibility of Tenant. Should Tenant’s Signage require repairs and/or
maintenance, as determined in Landlord’s reasonable judgment, Landlord shall
have the right to provide notice thereof to Tenant and Tenant shall cause such
repairs and/or maintenance to be performed within thirty (30) days after receipt
of such notice from Landlord, at Tenant’s sole cost and expense; provided,
however, if such repairs and/or maintenance are reasonably expected to require
longer than thirty (30) days to perform, Tenant shall commence such repairs
and/or maintenance within such thirty (30) day period and shall diligently
prosecute such repairs and maintenance to completion. Should Tenant fail to
perform such repairs and/or maintenance within the periods described in the
immediately preceding sentence, Landlord shall have the right to cause such work
to be performed and to charge Tenant as Additional Rent for the actual cost of
such work. Upon the expiration or earlier termination of this Lease, Tenant
shall, at Tenant’s sole cost and expense, cause Tenant’s Signage to be removed
and shall cause the areas in which such Tenant’s Signage was located to be
restored to the condition existing immediately prior to the placement of such
Tenant’s Signage (excepting normal wear and tear caused by the sun, rain and
other elements to which such Tenant’s Signage is exposed). If Tenant fails to
timely remove such Tenant’s Signage or to restore the areas in which such
Tenant’s Signage was located, as provided in the immediately preceding sentence,
then Landlord may perform such work, and all actual costs incurred by Landlord
in so performing shall be reimbursed by Tenant to Landlord within thirty
(30) days after Tenant’s receipt of an invoice therefor. The TCCs of this
Section 23.4.4 shall survive the expiration or earlier termination of this
Lease.

ARTICLE 24
COMPLIANCE WITH LAW
Tenant shall not do anything or suffer anything to be done in or about the
Premises or the Project which will in any way conflict with any law, statute,
ordinance or other governmental rule, regulation or requirement now in force or
which may hereafter be enacted or promulgated which is applicable to the
Premises (collectively, “ Applicable Laws ”). At its sole cost and expense,
Tenant shall promptly comply with all such Applicable Laws which relate to
(i) Tenant’s use of the

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Premises for non-general office use, (ii) the Alterations or Improvements in the
Premises, or (iii) the Base Building, but, as to the Base Building, only to the
extent such obligations are triggered by Tenant’s Alterations, the Improvements,
or use of the Premises for non-general office use. Should any standard or
regulation now or hereafter be imposed on Landlord or Tenant by a state, federal
or local governmental body charged with the establishment, regulation and
enforcement of occupational, health or safety standards for employers,
employees, landlords or tenants, then Tenant agrees, at its sole cost and
expense, to comply promptly with such standards or regulations. The judgment of
any court of competent jurisdiction or the admission of Tenant in any judicial
action, regardless of whether Landlord is a party thereto, that Tenant has
violated any of said governmental measures, shall be conclusive of that fact as
between Landlord and Tenant. Landlord shall comply with all Applicable Laws
relating to the Base Building or relating to compliance with laws in effect
prior to the Commencement Date, provided that compliance with such Applicable
Laws is not the responsibility of Tenant under this Lease, and provided further
that Landlord’s failure to comply therewith would either ( x ) prohibit Tenant
from obtaining or maintaining a certificate of occupancy for the Premises, or (
y ) unreasonably and materially affect the safety of Tenant’s employees or
create a significant health hazard for Tenant’s employees, or ( z ) violate a
affirmative mandate (directed specifically to the Project) of an applicable
governmental authority. Landlord shall be permitted to include in Operating
Expenses any costs or expenses incurred by Landlord under this Article 24 to the
extent consistent with the terms of Section 4.2.4 , above.
ARTICLE 25
LATE CHARGES
If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord’s designee when due, then Tenant shall pay to
Landlord a late charge equal to five percent (5%) of the overdue amount plus any
attorneys’ fees incurred by Landlord by reason of Tenant’s failure to pay Rent
and/or other charges when due hereunder; provided, however, with regard to the
first such failure in any twelve (12) month period, Landlord will waive such
late charge to the extent Tenant cures such failure within three (3) days
following Tenant’s receipt of written notice from Landlord that the same was not
received when due. The late charge shall be deemed Additional Rent and the right
to require it shall be in addition to all of Landlord’s other rights and
remedies hereunder or at law and shall not be construed as liquidated damages or
as limiting Landlord’s remedies in any manner. In addition to the late charge
described above, any Rent or other amounts owing hereunder which are not paid
within ten (10) days after the date they are due shall bear interest from the
date when due until paid at the “Interest Rate.” For purposes of this Lease, the
“Interest Rate” shall be an annual rate equal to the lesser of (i) the annual
“Bank Prime Loan” rate cited in the Federal Reserve Statistical Release
Publication H.15(519), published weekly (or such other comparable index as
Landlord and Tenant shall reasonably agree upon if such rate ceases to be
published), plus two (2) percentage points, and (ii) the highest rate permitted
by applicable law.
ARTICLE 26
LANDLORD’S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
26.1Landlord’s Cure. All covenants and agreements to be kept or performed by
Tenant under this Lease shall be performed by Tenant at Tenant’s sole cost and
expense and without any reduction of Rent, except to the extent, if any,
otherwise expressly provided herein. If Tenant shall fail to perform any
obligation under this Lease, and such failure shall continue in excess of the
time allowed under Section 19.1.2 , above, unless a specific time period is
otherwise stated in this Lease, Landlord may, but shall not be obligated to,
make any such payment or perform any such act on Tenant’s part without waiving
its rights based upon any default of Tenant and without releasing Tenant from
any obligations hereunder.
26.2Tenant’s Reimbursement. Except as may be specifically provided to the
contrary in this Lease, Tenant shall pay to Landlord, upon delivery by Landlord
to Tenant of statements therefor: (i) sums equal to expenditures reasonably made
and obligations reasonably incurred by Landlord in connection with the remedying
by Landlord of Tenant’s defaults pursuant to the provisions of Section 26.1 ;
(ii) sums equal to all losses, costs, liabilities, damages and expenses referred
to in Article 10 of this Lease; and (iii) sums equal to all expenditures
reasonably made and obligations reasonably incurred by Landlord in collecting or
attempting to collect the Rent or in enforcing or attempting to enforce any
rights of Landlord under this Lease or pursuant to law, including, without
limitation, all legal fees and other amounts so expended. Tenant’s obligations
under this Section 26.2 shall survive the expiration or sooner termination of
the Lease Term.
ARTICLE 27
ENTRY BY LANDLORD
Landlord reserves the right at all reasonable times (during Building Hours with
respect to items (i) and (ii) below) and upon at least twenty-four (24) hours
prior notice to Tenant (except in the case of an emergency) to enter the
Premises to (i) inspect them; (ii) show the Premises to prospective purchasers,
or to current or prospective mortgagees, ground or underlying lessors or
insurers, or during the last six (6) months of the Lease Term, to prospective
tenants; (iii) post notices of nonresponsibility; or (iv) alter, improve or
repair the Premises or the Building, or for structural alterations, repairs or
improvements to the Building or the Building’s systems and equipment.
Notwithstanding anything to the contrary contained herein, Tenant shall be
entitled, during the Lease Term, to designate certain portions of the Premises
as a “Secured Area” and to control access to such areas as reasonably necessary
to secure such Secured Area(s). The Secured Areas shall be comprised of Tenant’s
lab space and IT room. Landlord and Tenant hereby agree and acknowledge that,
except in the case of an emergency, Landlord shall enter such Secured Areas only
upon one (1) business days’ prior notice to Tenant and only after providing
Tenant with the opportunity to have a representative of Tenant present as an
escort. Landlord and Tenant hereby agree to use commercially reasonable efforts
to schedule any such entries into the Secured Areas by Landlord at times that
are mutually convenient to both Landlord and Tenant, taking into consideration
the nature of Tenant’s operations in the Premises and the nature of the desired
entry. Notwithstanding anything to the contrary contained in this Article 27 ,
Landlord may enter the Premises at any time to (A) perform services required of
Landlord, including janitorial service; (B) take possession due to any breach of
this Lease in the manner provided herein; and (C) perform any covenants of
Tenant which Tenant fails to perform. Landlord may make any such entries without
the abatement of Rent, except as otherwise provided in this Lease, and may take
such reasonable steps as required to accomplish the stated purposes; provided,
however, except for ( x ) emergencies, ( y ) repairs, alterations, improvements
or additions required by governmental or quasi-governmental authorities or court
order or decree, or ( z ) repairs which are the obligation of Tenant hereunder,
any such entry shall be performed in a manner so as not to unreasonably
interfere with Tenant’s use of the Premises and shall be performed after normal
business hours if reasonably practical. With respect to items ( y ) and ( z
) above, Landlord shall use commercially reasonable efforts to not materially
interfere with Tenant’s use of, or access to, the Premises. For each of the
above purposes, Landlord shall at all times have a key with which to unlock all
the doors in the Premises, excluding Tenant’s vaults, safes and special security
areas designated in advance by Tenant. In an emergency, Landlord shall have the
right to use any means that Landlord may deem proper to open the doors in and to
the Premises. Any entry into the Premises by Landlord in the manner hereinbefore
described shall not be deemed to be a forcible or unlawful entry into, or a
detainer of, the Premises, or an actual or constructive eviction of Tenant from
any portion of the Premises. No provision of this Lease shall be construed as
obligating Landlord to perform any repairs, alterations or decorations except as
otherwise expressly agreed to be performed by

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Landlord herein. Landlord will exercise its rights pursuant to this Article 27
in a manner so as to minimize any unreasonable interference with Tenant’s use of
the Premises.
ARTICLE 28
TENANT PARKING
Tenant shall be entitled to utilize, without charge, commencing on the Lease
Commencement Date, the amount of parking passes set forth in Section 9 of the
Summary, on a monthly basis throughout the Lease Term, which parking passes
shall pertain to the Project parking facility. Notwithstanding the foregoing,
Tenant shall be responsible for the full amount of any taxes imposed by any
governmental authority in connection with the renting of such parking passes by
Tenant or the use of the parking facility by Tenant. Tenant’s continued right to
use the parking passes is conditioned upon Tenant abiding by all rules and
regulations which are prescribed from time to time for the orderly operation and
use of the parking facility where the parking passes are located, including any
sticker or other identification system established by Landlord, Tenant’s
exercise of commercially reasonable efforts to cause that Tenant’s employees and
visitors also comply with such rules and regulations. To the extent reasonably
necessary to ensure Tenant’s parking rights hereunder are readily available to
Tenant and its employees, Landlord shall establish a sticker or other
identification system for the Project. Landlord specifically reserves the right
to change the size, configuration, design, layout and all other aspects of the
Project parking facility at any time and Tenant acknowledges and agrees that
Landlord may, without incurring any liability to Tenant and without any
abatement of Rent under this Lease, from time to time, temporarily close-off or
restrict access to the Project parking facility for purposes of permitting or
facilitating any such construction, alteration or improvements; provided that
Landlord will provide Tenant with reasonable substitute parking in such event to
the extent reasonably necessary. Landlord may delegate its responsibilities
hereunder to a parking operator in which case such parking operator shall have
all the rights of control attributed hereby to the Landlord. The parking passes
rented by Tenant pursuant to this Article 28 are provided to Tenant solely for
use by Tenant’s own personnel, employees, agents, contractors or invitees and
such passes may not be transferred, assigned, subleased or otherwise alienated
by Tenant without Landlord’s prior approval.
ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1Terms; Captions. The words “Landlord” and “Tenant” as used herein shall
include the plural as well as the singular. The necessary grammatical changes
required to make the provisions hereof apply either to corporations or
partnerships or individuals, men or women, as the case may require, shall in all
cases be assumed as though in each case fully expressed. The captions of
Articles and Sections are for convenience only and shall not be deemed to limit,
construe, affect or alter the meaning of such Articles and Sections.
29.2Binding Effect. Subject to all other provisions of this Lease, each of the
covenants, conditions and provisions of this Lease shall extend to and shall, as
the case may require, bind or inure to the benefit not only of Landlord and of
Tenant, but also of their respective heirs, personal representatives, successors
or assigns, provided this clause shall not permit any assignment by Tenant
contrary to the provisions of Article 14 of this Lease.
29.3No Air Rights. No rights to any view or to light or air over any property,
whether belonging to Landlord or any other person, are granted to Tenant by this
Lease. If at any time any windows of the Premises are temporarily darkened or
the light or view therefrom is obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Project, the same shall be
without liability to Landlord and without any reduction or diminution of
Tenant’s obligations under this Lease.
29.4Modification of Lease. Should any current or prospective mortgagee or ground
lessor for the Building or Project require a modification of this Lease, which
modification will not cause an increased cost or expense to Tenant or in any
other way materially and adversely change the rights and obligations of Tenant
hereunder, then and in such event, Tenant agrees that this Lease may be so
modified and agrees to execute whatever documents are reasonably required
therefor and to deliver the same to Landlord within ten (10) business days
following a request therefor. At the request of Landlord or any mortgagee or
ground lessor, Tenant agrees to execute a short form of Lease and deliver the
same to Landlord within ten (10) business days following the request therefor.

29.5Transfer of Landlord’s Interest. Tenant acknowledges that Landlord has the
right to transfer all or any portion of its interest in the Project or Building
and in this Lease, and Tenant agrees that in the event of any such transfer,
Landlord shall automatically be released from all liability under this Lease not
accrued as of the date of the transfer and Tenant agrees to look solely to such
transferee for the performance of Landlord’s obligations hereunder after the
date of transfer and such transferee shall be deemed to have fully assumed and
be liable for all obligations of this Lease to be performed by Landlord,
including the return of any Security Deposit, and Tenant shall attorn to such
transferee. Tenant further acknowledges that Landlord may assign its interest in
this Lease to a mortgage lender as additional security and agrees that such an
assignment shall not release Landlord from its obligations hereunder and that
Tenant shall continue to look to Landlord for the performance of its obligations
hereunder.
29.6Prohibition Against Recording. Except as provided in Section 29.4 of this
Lease, neither this Lease, nor any memorandum, affidavit or other writing with
respect thereto, shall be recorded by Tenant or by anyone acting through, under
or on behalf of Tenant.
29.7Landlord’s Title. Landlord’s title is and always shall be paramount to the
title of Tenant. Nothing herein contained shall empower Tenant to do any act
which can, shall or may encumber the title of Landlord.
29.8Relationship of Parties. Nothing contained in this Lease shall be deemed or
construed by the parties hereto or by any third party to create the relationship
of principal and agent, partnership, joint venturer or any association between
Landlord and Tenant.
29.9Application of Payments. To the extent Landlord has delivered a written
notice to Tenant pursuant to the terms of Section 19.1.1 of this Lease (and
until the amounts represented by such notice, together with all other
then-outstanding amounts due and owing under this Lease, are satisfied),
Landlord shall have the right to apply payments received from Tenant against
then-existing payment obligations of Tenant pursuant to this Lease in such order
and amounts as Landlord, in its sole discretion, may elect, regardless of
Tenant’s designation of such payments, it nevertheless being acknowledged that
Tenant may be free to make any such payments “under protest.”
29.10Time of Essence. Time is of the essence with respect to the performance of
every provision of this Lease in which time of performance is a factor.

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29.11Partial Invalidity. If any term, provision or condition contained in this
Lease shall, to any extent, be invalid or unenforceable, the remainder of this
Lease, or the application of such term, provision or condition to persons or
circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
29.12No Warranty. In executing and delivering this Lease, Tenant has not relied
on any representations, including, but not limited to, any representation as to
the amount of any item comprising Additional Rent or the amount of the
Additional Rent in the aggregate or that Landlord is furnishing the same
services to other tenants, at all, on the same level or on the same basis, or
any warranty or any statement of Landlord which is not set forth herein or in
one or more of the exhibits attached hereto.

29.13Landlord Exculpation. The liability of Landlord or the Landlord Parties to
Tenant for any default by Landlord under this Lease or arising in connection
herewith or with Landlord’s operation, management, leasing, repair, renovation,
alteration or any other matter relating to the Project or the Premises shall be
limited solely and exclusively to an amount which is equal to the net interest
of Landlord (following payment of any outstanding liens and/or mortgages,
whether attributable to sales or insurance proceeds or otherwise) in the Project
(including any insurance or rental proceeds which Landlord receives). Neither
Landlord, nor any of the Landlord Parties shall have any personal liability
therefor, and Tenant hereby expressly waives and releases such personal
liability on behalf of itself and all persons claiming by, through or under
Tenant. The limitations of liability contained in this Section 29.13 shall inure
to the benefit of Landlord’s and the Landlord Parties’ present and future
partners, beneficiaries, officers, directors, trustees, shareholders, agents and
employees, and their respective partners, heirs, successors and assigns. Under
no circumstances shall any present or future partner of Landlord (if Landlord is
a partnership), or trustee or beneficiary (if Landlord or any partner of
Landlord is a trust), have any liability for the performance of Landlord’s
obligations under this Lease. Notwithstanding any contrary provision herein,
neither Landlord nor the Landlord Parties shall be liable under any
circumstances for consequential damages.
29.14Entire Agreement. It is understood and acknowledged that there are no oral
agreements between the parties hereto affecting this Lease and this Lease
constitutes the parties’ entire agreement with respect to the leasing of the
Premises and supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements and understandings, if any, between the
parties hereto or displayed by Landlord to Tenant with respect to the subject
matter thereof, and none thereof shall be used to interpret or construe this
Lease. None of the terms, covenants, conditions or provisions of this Lease can
be modified, deleted or added to except in writing signed by the parties hereto.
29.15Right to Lease. Landlord reserves the absolute right to effect such other
tenancies in the Project as Landlord in the exercise of its sole business
judgment shall determine to best promote the interests of the Building or
Project. Tenant does not rely on the fact, nor does Landlord represent, that any
specific tenant or type or number of tenants shall, during the Lease Term,
occupy any space in the Building or Project.
29.16Force Majeure. Any prevention, delay or stoppage due to strikes, lockouts,
labor disputes, acts of God, inability to obtain services, labor, or materials
or reasonable substitutes therefor, governmental actions, civil commotions, fire
or other casualty, and other causes beyond the reasonable control of the party
obligated to perform, except with respect to the obligations imposed with regard
to Rent and other charges to be paid by Tenant pursuant to this Lease
(collectively, a “ Force Majeure ”), notwithstanding anything to the contrary
contained in this Lease, shall excuse the performance of such party for a period
equal to any such prevention, delay or stoppage and, therefore, if this Lease
specifies a time period for performance of an obligation of either party, that
time period shall be extended by the period of any delay in such party’s
performance caused by a Force Majeure.

29.17Waiver of Redemption by Tenant. Tenant hereby waives, for Tenant and for
all those claiming under Tenant, any and all rights now or hereafter existing to
redeem by order or judgment of any court or by any legal process or writ,
Tenant’s right of occupancy of the Premises after any termination of this Lease.
29.18Notices. All notices, demands, statements, designations, approvals or other
communications (collectively, “Notices”) given or required to be given by either
party to the other hereunder or by law shall be in writing, shall be (A) sent by
United States certified or registered mail, postage prepaid, return receipt
requested (“ Mail ”), (B) transmitted by telecopy, if such telecopy is promptly
followed by a Notice sent by nationally recognized overnight courier,
(C) delivered by such a nationally recognized overnight courier, or
(D) delivered personally. Any Notice shall be sent, transmitted, or delivered,
as the case may be, to Tenant at the appropriate address set forth in Section 10
of the Summary, or to such other place as Tenant may from time to time designate
in a Notice to Landlord, or to Landlord at the addresses set forth below, or to
such other places as Landlord may from time to time designate in a Notice to
Tenant. Any Notice will be deemed given (i) three (3) days after the date it is
posted if sent by Mail, (ii) the date the telecopy is transmitted, (iii) the
date the overnight courier delivery is made, or (iv) the date personal delivery
is made or attempted to be made. If Tenant is notified of the identity and
address of Landlord’s mortgagee or ground or underlying lessor, Tenant shall
give to such mortgagee or ground or underlying lessor written notice of any
default by Landlord under the terms of this Lease by registered or certified
mail, and such mortgagee or ground or underlying lessor shall be given a
reasonable opportunity to cure such default prior to Tenant’s exercising any
remedy available to Tenant. As of the date of this Lease, any Notices to
Landlord must be sent, transmitted, or delivered, as the case may be, to the
following addresses:
Kilroy Realty Corporation
12200 West Olympic Boulevard
Suite 200
Los Angeles, California 90064
Attention: Legal Department
with copies to:
Kilroy Realty Corporation
3611 Valley Centre Drive, Suite 550
San Diego, California 92130
Attention: Mr. Brian Galligan
and
Allen Matkins Leck Gamble Mallory & Natsis LLP
1901 Avenue of the Stars, Suite 1800
Los Angeles, California 90067
Attention: Anton N. Natsis, Esq.
29.19Joint and Several. If there is more than one Tenant, the obligations
imposed upon Tenant under this Lease shall be joint and several.

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29.20Authority. Tenant hereby represents and warrants that Tenant is a duly
formed and existing entity qualified to do business in California and that
Tenant has full right and authority to execute and deliver this Lease and that
each person signing on behalf of Tenant is authorized to do so. In such event,
Tenant shall, within ten (10) days after execution of this Lease, deliver to
Landlord satisfactory evidence of such authority and, if a corporation, upon
demand by Landlord, also deliver to Landlord satisfactory evidence of (i) good
standing in Tenant’s state of incorporation and (ii) qualification to do
business in California.
29.21Attorneys’ Fees. In the event that either Landlord or Tenant should bring
suit for the possession of the Premises, for the recovery of any sum due under
this Lease, or because of the breach of any provision of this Lease or for any
other relief against the other, then all costs and expenses, including
reasonable attorneys’ fees, incurred by the prevailing party therein shall be
paid by the other party, which obligation on the part of the other party shall
be deemed to have accrued on the date of the commencement of such action and
shall be enforceable whether or not the action is prosecuted to judgment.
29.22Governing Law; WAIVER OF TRIAL BY JURY. This Lease shall be construed and
enforced in accordance with the laws of the State of California. IN ANY ACTION
OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I) THE
JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA, (II) SERVICE
OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW, AND (III) IN THE INTEREST
OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR
SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE
PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY
REMEDY.
29.23Submission of Lease. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of, option for or option
to lease, and it is not effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant.
29.24Brokers. Landlord and Tenant hereby warrant to each other that they have
had no dealings with any real estate broker or agent in connection with the
negotiation of this Lease, excepting only the real estate brokers or agents
specified in Section 12 of the Summary (the “ Brokers ”), and that they know of
no other real estate broker or agent who is entitled to a commission in
connection with this Lease. Landlord shall pay the Brokers pursuant to the terms
of separate commission agreements. Each party agrees to indemnify and defend the
other party against and hold the other party harmless from any and all claims,
demands, losses, liabilities, lawsuits, judgments, costs and expenses (including
without limitation reasonable attorneys’ fees) with respect to any leasing
commission or equivalent compensation alleged to be owing on account of any
dealings with any real estate broker or agent, other than the Brokers, occurring
by, through, or under the indemnifying party.
29.25Independent Covenants. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
except as otherwise set forth in this Lease, Tenant shall not be entitled to
make any repairs or perform any acts hereunder at Landlord’s expense or to any
setoff of the Rent or other amounts owing hereunder against Landlord.
29.26Project or Building Name and Signage. Landlord shall have the right at any
time to change the name of the Project or Building and to install, affix and
maintain any and all signs on the exterior and on the interior of the Project or
Building as Landlord may, in Landlord’s sole discretion, desire; provided that
so long as Tenant leases the entire Building, Landlord will not place any
Building top signs on the Building and will not place any signs in the Premises
without, in either instance, the prior, written and reasonable consent of
Tenant. Tenant shall not use the name of the Project or Building or use pictures
or illustrations of the Project or Building in advertising or other publicity or
for any purpose other than as the address of the business to be conducted by
Tenant in the Premises, without the prior written consent of Landlord.
29.27Counterparts. This Lease may be executed in counterparts with the same
effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.
29.28Confidentiality. Landlord and Tenant acknowledges that the content of this
Lease and any related documents are confidential information. Except as required
by law, court order or pursuant to good corporate practice, Landlord and Tenant
shall keep such confidential information strictly confidential and shall not
disclose such confidential information to any person or entity other than
Tenant’s or Landlord’s employees, their financial, legal, and space planning
consultants and/or prospective purchasers of their respective businesses.
29.29Transportation Management. Tenant shall fully comply with all present or
future programs intended to manage parking, transportation or traffic in and
around the Building so long as Tenant’s parking rights are not materially
adversely affected, and in connection therewith, Tenant shall take responsible
action for the transportation planning and management of all employees located
at the Premises by working directly with Landlord, any governmental
transportation management organization or any other transportation-related
committees or entities.
29.30Building Renovations. It is specifically understood and agreed that
Landlord has made no representation or warranty to Tenant and has no obligation
and has made no promises to alter, remodel, improve, renovate, repair or
decorate the Premises, Building, or any part thereof and that no representations
respecting the condition of the Premises or the Building have been made by
Landlord to Tenant except as specifically set forth herein or in the Work Letter
Agreement. However, Tenant hereby acknowledges that Landlord is currently
renovating or may during the Lease Term renovate, improve, alter, or modify
(collectively, the “ Renovations ”) the Project, the Building and/or the
Premises including without limitation the parking structure, common areas,
systems and equipment, roof, and structural portions of the same, and in
connection with any Renovations, Landlord may, among other things, erect
scaffolding or other necessary structures in the Building, limit or eliminate
access to portions of the Project, including portions of the common areas, or
perform work in the Building, which work may create noise, dust or leave debris
in the Building. Tenant hereby agrees that such Renovations and Landlord’s
actions in connection with such Renovations shall in no way constitute a
constructive eviction of Tenant nor entitle Tenant to any abatement of Rent.
Landlord shall have no responsibility or for any reason be liable to Tenant for
any direct or indirect injury to or interference with Tenant’s business arising
from the Renovations, nor shall Tenant be entitled to any compensation or
damages from Landlord for loss of the use of the whole or any part of the
Premises or of Tenant’s personal property or improvements resulting from the
Renovations or Landlord’s actions in connection with such Renovations, or for
any inconvenience or annoyance occasioned by such Renovations or Landlord’s
actions. Landlord shall perform such Renovations in compliance with the terms of
this Lease, including, without limitation, the terms of Section 1.1.3 , and
shall use commercially reasonable efforts to have all such work performed on a
continuous basis, and once started, to be completed reasonably expeditiously,
with such work being organized and conducted in a manner which will minimize any
interference to Tenant’s business operations in the Premises.
29.31No Violation. Tenant hereby warrants and represents that neither its
execution of nor performance under this Lease shall cause Tenant to be in
violation of any agreement, instrument, contract, law, rule or regulation by
which Tenant is bound, and Tenant shall protect, defend, indemnify and hold
Landlord

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harmless against any claims, demands, losses, damages, liabilities, costs and
expenses, including, without limitation, reasonable attorneys’ fees and costs,
arising from Tenant’s breach of this warranty and representation.
29.32Communications and Computer Lines. Tenant may install, maintain, replace,
remove or use any communications or computer wires and cables (collectively, the
“ Lines ”) at the Project in or serving the Premises, provided that (i) Tenant
shall obtain Landlord’s prior written consent (not to be unreasonably withheld,
conditioned or delayed), use an experienced and qualified contractor approved in
writing by Landlord, and comply with all of the other provisions of
Articles 7 and 8 of this Lease, (ii) the Lines installed by Tenant (including
riser cables) shall be ( x ) appropriately insulated to prevent excessive
electromagnetic fields or radiation, and ( y ) identified in accordance with the
“Identification Requirements,” as that term is set forth hereinbelow, (iv) any
new or existing Lines servicing the Premises shall comply with all applicable
governmental laws and regulations, (v) as a condition to permitting the
installation of new Lines, Tenant shall remove existing Lines located in or
serving the Premises and repair any damage in connection with such removal, and
(vi) Tenant shall pay all costs in connection therewith. All Lines shall be
clearly marked with adhesive plastic labels (or plastic tags attached to such
Lines with wire) to show Tenant’s name, suite number, telephone number and the
name of the person to contact in the case of an emergency (A) every four feet
(4’) outside the Premises (specifically including, but not limited to, the
electrical room risers and other Common Areas), and (B) at the Lines’
termination point(s) (collectively, the “ Identification Requirements ”).
Landlord reserves the right to require that Tenant remove any Lines located in
or serving the Premises which are installed in violation of these provisions, or
which are at any time (1) are in violation of any Applicable Laws, (2) are
inconsistent with then-existing industry standards (such as the standards
promulgated by the National Fire Protection Association (e.g., such
organization’s “2002 National Electrical Code”)), or (3) otherwise represent a
dangerous or potentially dangerous condition.

29.33Hazardous Substances.
29.33.1Definitions. For purposes of this Lease, the following definitions shall
apply: “Hazardous Material(s)” shall mean any solid, liquid or gaseous substance
or material that is described or characterized as a toxic or hazardous
substance, waste, material, pollutant, contaminant or infectious waste, or any
matter that in certain specified quantities would be injurious to the public
health or welfare, or words of similar import, in any of the “Environmental
Laws,” as that term is defined below, or any other words which are intended to
define, list or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity or reproductive
toxicity and includes, without limitation, asbestos, petroleum (including crude
oil or any fraction thereof, natural gas, natural gas liquids, liquefied natural
gas, or synthetic gas usable for fuel, or any mixture thereof), petroleum
products, polychlorinated biphenyls, urea formaldehyde, radon gas, nuclear or
radioactive matter, medical waste, soot, vapors, fumes, acids, alkalis,
chemicals, microbial matters (such as molds, fungi or other bacterial matters),
biological agents and chemicals which may cause adverse health effects,
including but not limited to, cancers and /or toxicity. “ Environmental Laws ”
shall mean any and all federal, state, local or quasi-governmental laws (whether
under common law, statute or otherwise), ordinances, decrees, codes, rulings,
awards, rules, regulations or guidance or policy documents now or hereafter
enacted or promulgated and as amended from time to time, in any way relating to
(i) the protection of the environment, the health and safety of persons
(including employees), property or the public welfare from actual or potential
release, discharge, escape or emission (whether past or present) of any
Hazardous Materials or (ii) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any Hazardous Materials.
29.33.2Compliance with Environmental Laws. Landlord covenants that during the
Lease Term, Landlord shall comply with all Environmental Laws in accordance
with, and as required by, the TCCs of Article 24 of this Lease. Tenant shall not
sell, use, or store in or around the Premises any Hazardous Materials, except if
stored, properly packaged and labeled, disposed of and/or used in accordance
with applicable Environmental Laws. In addition, Tenant agrees that it:
(i) shall not cause or suffer to occur, the release, discharge, escape or
emission of any Hazardous Materials at, upon, under or within the Premises or
any contiguous or adjacent premises; (ii) shall not engage in activities at the
Premises in violation of Environmental Laws that could result in, give rise to,
or lead to the imposition of liability upon Tenant or Landlord or the creation
of a lien upon the building or land upon which the Premises is located;
(iii) shall notify Landlord promptly following receipt of any knowledge with
respect to any actual release, discharge, escape or emission (whether past or
present) of any Hazardous Materials at, upon, under or within the Premises; and
(iv) shall promptly forward to Landlord copies of all orders, notices, permits,
applications and other communications and reports received by Tenant in
connection with any release, discharge, escape or emission of any Hazardous
Materials at, upon, under or within the Premises or any contiguous or adjacent
premises. However, notwithstanding the preceding restrictions, Landlord agrees
that Tenant may use, store and properly dispose of commonly available household
cleaners and chemicals to maintain the Premises and Tenant’s routine office
operations (such as printer toner and copier toner) and the items permitted by
Section 29.33.3 below (hereinafter the “ Permitted Chemicals ”). Landlord and
Tenant acknowledge that any or all of the Permitted Chemicals described in this
paragraph may constitute Hazardous Materials. However, Tenant may use, store and
dispose of same, provided that in doing so, Tenant fully complies with all
Environmental Laws.

29.33.3Tenant Hazardous Materials. Tenant will (i) obtain and maintain in full
force and effect all Environmental Permits (as defined below) that may be
required from time to time under any Environmental Laws applicable to Tenant or
the Premises and (ii) be and remain in compliance with all terms and conditions
of all such Environmental Permits and with all other Environmental Laws. “
Environmental Permits ” means, collectively, any and all permits, consents,
licenses, approvals and registrations of any nature at any time required
pursuant to, or in order to comply with any Environmental Law. On or before the
Lease Commencement Date and on each annual anniversary of the Commencement Date
thereafter, Tenant agrees to deliver to Landlord a list of all Hazardous
Materials anticipated to be used by Tenant in the Premises and the quantities
thereof. Upon the expiration or earlier termination of this Lease, Tenant agrees
to promptly remove from the Premises, the Building and the Project, at its sole
cost and expense, any and all Hazardous Materials, including any equipment or
systems containing Hazardous Materials, which are installed, brought upon,
stored, used, generated or released upon, in, under or about the Premises, the
Building, and/or the Project or any portion thereof by Tenant and/or any Tenant
Parties (such obligation to survive the expiration or sooner termination of this
Lease). Nothing in this Lease shall impose any liability on Tenant for any
Hazardous Materials in existence on the Premises, Building or Project prior to
the Lease Commencement Date or brought onto the Premises, Building or Project
after the Lease Commencement Date by any third parties not under Tenant’s
control.
29.33.4Landlord’s Right of Environmental Audit. Landlord may, upon reasonable
notice to Tenant, be granted access to and enter the Premises no more than once
annually to perform or cause to have performed an environmental inspection, site
assessment or audit. Such environmental inspector or auditor may be chosen by
Landlord, in its sole discretion, and be performed at Landlord’s sole expense.
To the extent that the report prepared upon such inspection, assessment or
audit, indicates the presence of Hazardous Materials brought onto the Premises
by or on behalf of Tenant in violation of Environmental Laws, or provides
recommendations or suggestions to prohibit the release, discharge, escape or
emission of any Hazardous Materials brought onto the Premises by or on behalf of
Tenant at, upon, under or within the Premises, or to comply with any
Environmental Laws, Tenant shall promptly, at Tenant’s sole expense, comply with
such recommendations or suggestions, including, but not limited to performing
such additional investigative or subsurface investigations or remediation(s) as
recommended by such inspector or auditor (taking into account all legal
requirements and applicable governmental agency recommendations).
Notwithstanding the above, if at any time, Landlord has actual notice or
reasonable cause to believe that Tenant has violated, or permitted any
violations of any Environmental Law, then Landlord will be entitled to perform
its environmental inspection, assessment or audit at any time, notwithstanding
the above mentioned annual limitation, and Tenant must reimburse Landlord for
the cost or fees incurred for such as Additional Rent if a violation is
discovered.
29.33.5Indemnifications. Landlord agrees to indemnify, defend, protect and hold
harmless the Tenant Parties from and against any liability, obligation, damage
or costs, including without limitation, attorneys’ fees and costs, resulting
directly or indirectly from any use, presence, removal or disposal of any
Hazardous Materials to the extent such liability, obligation, damage or costs
was a result of actions caused or knowingly permitted by Landlord or a Landlord

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Party. Tenant agrees to indemnify, defend, protect and hold harmless the
Landlord Parties from and against any liability, obligation, damage or costs,
including without limitation, attorneys’ fees and costs, resulting directly or
indirectly from any use, presence, removal or disposal of any Hazardous
Materials or breach of any provision of this section, to the extent such
liability, obligation, damage or costs was a result of actions caused or
permitted by Tenant or a Tenant Party.
29.34Communication Equipment. Subject to all governmental laws, rules and
regulations, Tenant and Tenant’s contractors (which shall first be reasonably
approved by Landlord) shall have the right and access to install, repair,
replace, remove, operate and maintain three (3) so-called “satellite dish” or
other similar devices, such as antennae no greater than thirty-six (36) inches
in diameter and weighing no more than fifty (50) pounds each, together with all
cable, wiring, conduits and related equipment (collectively, “ Communication
Equipment ”), for the purpose of receiving and sending radio, television,
computer, telephone or other communication signals, at a location on the roof of
the Building designated by Landlord and reasonably approved by Tenant. There
shall be no rental charge, license fee or similar charge to Tenant for the right
to install and maintain such Communication Equipment at the Building during the
initial Lease Term or any extension thereof. Further, Tenant shall have the
right of access, consistent with this Section 29.34 , to the area where the
Communication Equipment is located for the purposes of maintaining, repairing,
testing and replacing the same. Landlord shall have the right to require Tenant
to relocate the Communication Equipment at any time to another location on the
roof of the Building. Unless Landlord elects to perform such penetrations at
Tenant’s sole cost and expense, Tenant shall retain Landlord’s designated
roofing contractor to make any necessary penetrations and associated repairs to
the roof in order to preserve Landlord’s roof warranty. Tenant’s installation
and operation of the Communication Equipment shall be governed by the following
terms and conditions:
29.34.1 Tenant’s right to install, replace, repair, remove, operate and maintain
the Communication Equipment shall be subject to all Applicable Laws and Landlord
makes no representation that such Applicable Laws permit such installation and
operation;
29.34.2 All plans and specifications for the Communication Equipment shall be
subject to Landlord’s reasonable approval;
29.34.3 All costs of installation, operation and maintenance of the
Communication Equipment and any necessary related equipment (including, without
limitation, costs of obtaining any necessary permits and connections to the
Building’s electrical system) shall be borne by Tenant;
29.34.4 It is expressly understood that Tenant’s rights are superior to any
later users of the roof area and subject to the foregoing, Landlord retains the
right to use the roof of the Building for any purpose whatsoever (including
granting rights to third parties to utilize any portion of the roof not utilized
by Tenant); provided that at this time there are no other roof users and so long
as Tenant leases the entire Building, no other users will be permitted without
Tenant’s reasonable prior consent.

29.34.5 Tenant shall use the Communication Equipment so as not to damage the
Project or interfere with the normal operation of the Project and Tenant hereby
agrees to indemnify, defend and hold Landlord harmless from and against any and
all claims, costs, damages, expenses and liabilities (including attorneys’ fees)
arising out of Tenant’s failure to comply with the provisions of this
Section 29.34.5 , except to the extent same is caused by the gross negligence or
willful misconduct of Landlord which is not covered by the insurance carried by
Tenant under this Lease (or which would not be covered by the insurance required
to be carried by Tenant under this Lease);
29.34.6 For the purposes of determining Tenant’s obligations with respect to its
use of the roof of the Building herein provided, all of the provisions of this
Lease relating to compliance with requirements as to insurance, indemnity, and
compliance with laws shall apply to the installation, use and maintenance of the
Communication Equipment; provided, however, Tenant shall only be provided access
to the roof after prior written notice to Landlord and subject to Landlord’s
reasonable rules and restrictions regarding access (including, at Landlord’s
option, the requirement that Tenant be accompanied by a representative of
Landlord during such access). Landlord shall not have any obligations with
respect to the Communication Equipment. Landlord makes no representation that
the Communication Equipment will be able to receive or transmit communication
signals without interference or disturbance (whether or not by reason of any
pre-existing installation or use of similar equipment by others on the roof of
adjacent buildings or projects) and Tenant agrees that Landlord shall not be
liable to Tenant therefor;
29.34.7 Tenant shall (i) be solely responsible for any damage caused as a result
of the Communication Equipment, (ii) promptly pay any tax, license or permit
fees charged pursuant to any laws or regulations in connection with the
installation, maintenance or use of the Communication Equipment and comply with
all precautions and safeguards required by all applicable governmental
authorities, and (iii) pay for all necessary repairs, replacements to or
maintenance of the Communication Equipment;
29.34.8 The Communication Equipment shall remain the sole property of Tenant.
Tenant shall remove the Communication Equipment and related equipment at
Tenant’s sole cost and expense upon the expiration or sooner termination of this
Lease or upon the imposition of any governmental law or regulation which may
require removal, and shall repair the Building upon such removal to the extent
required by such work of removal. If Tenant fails to remove the Communication
Equipment and repair the Building upon the expiration or earlier termination of
this Lease, Landlord may do so at Tenant’s expense. The provisions of this
Section 24.32.8 shall survive the expiration or earlier termination of this
Lease;
29.34.9 The Communication Equipment shall be deemed to constitute a portion of
the Premises for purposes of Article 10 of this Lease;
29.34.10 Tenant, at Tenant’s sole cost and expense, shall install and maintain
such fencing and other protective equipment and/or visual screening on or about
the Communication Equipment as Landlord may reasonably determine;

29.34.11 If any of the conditions set forth in this Section 29.34 are not
complied with by Tenant, then without limiting Landlord’s rights and remedies it
may otherwise have under this Lease, at law and/or in equity, Tenant shall
correct such noncompliance within five (5) business days after receipt of notice
(or such longer period as may be reasonably required as long as Tenant commences
such correction within such five (5) business day period and diligently
prosecutes the same to completion). If Tenant fails to correct any such
noncompliance within such five (5) day period (as may be extended), then, at
Landlord’s option, Tenant shall immediately discontinue its use of such
Communication Equipment and remove the same in accordance with the terms hereof;
and
29.34.12 Tenant’s rights under this Section 29.34 with respect to the
Communication Equipment shall be personal to the Original Tenant or any
Permitted Transferee, and may only be utilized by the Original Tenant or such
Permitted Transferee (and may not be exercised or utilized by any other
assignee, sublessee or other transferee of the Original Tenant’s interest in
this Lease or the Premises) if the Original Tenant occupies the entire Premises
then leased by Original Tenant.
[signature page immediately follows]
 

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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed
the day and date first above written.

''LANDLORD''
 
KILROY REALTY, L.P.,
a Delaware limited partnership
 
By:
KILROY REALTY CORPORATION,
 
a Maryland corporation,
 
general partner
 
 
By:
/s/ Jeffrey C. Hawken
Name:
Jeffrey C. Hawken
Its:
Executive Vice President, Chief Operating Officer
 
 
By:
/s/ John T.Fucci
Name:
John T.Fucci
Its:
Sr. Vice President, Asset Management

"TENANT"
 
ENTROPIC COMMUNICATIONS, INC
a Delaware corporation
 
By:
/s/ Kurt Noyes
Name:
Kurt Noyes
Its:
VP Finance
 
 
By:
/s/ David Lyle
Name:
David Lyle
Its:
CFO

 

 

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EXHIBIT A
6290 SEQUENCE DRIVE
OUTLINE OF PREMISES
[ATTACHED]
 

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EXHIBIT B
6290 SEQUENCE DRIVE
WORK LETTER AGREEMENT
This Work Letter Agreement (this “Work Letter”) shall set forth the terms and
conditions relating to the construction of the Premises. This Work Letter is
essentially organized chronologically and addresses the issues of the
construction of the Premises, in sequence, as such issues will arise during the
actual construction of the Premises. All references in this Work Letter to
Articles or Sections of “this Lease” shall mean the relevant portions of
Articles 1 through 29 of the Office Lease to which this Work Letter is attached
as Exhibit B , and all references in this Work Letter to Sections of “this Work
Letter” shall mean the relevant portions of Sections 1 through 5 of this Work
Letter.
SECTION 1
DELIVERY OF THE PREMISES AND BASE BUILDING
1.1 Base Building as Constructed by Landlord. Upon the full execution and
delivery of this Lease by Landlord and Tenant, Landlord shall deliver the
Premises and “Base Building,” as that term is defined in Section 8.2 of the
Lease, to Tenant, and Tenant shall accept the Premises and Base Building from
Landlord in their presently existing, “as-is” condition. Notwithstanding the
foregoing, Landlord shall enforce the provisions of its existing lease with the
prior tenant of the Premises with regard to its removal and restoration of the
items so identified on Exhibit J to the Lease, specifically including, but not
limited to, the application of any security deposit therefor, to the extent held
by Landlord from such prior tenant and in accordance with the terms and
conditions of such Lease.
SECTION 2
IMPROVEMENTS
2.1 Improvement Allowance. Tenant shall be entitled to a one-time improvement
allowance (the “Improvement Allowance”) in the amount of Two Million Two Hundred
Fifty Thousand and 00/100 Dollars ($2,250,000.00) ( i.e. , $25.00 per rentable
square foot of the Premises) for the costs relating to the initial design and
construction of the improvements, which are permanently affixed to the Premises
(the “ Improvements ”). In no event shall Landlord be obligated to make
disbursements pursuant to this Work Letter in the event that Tenant fails to
timely pay any portion of the “Over-Allowance Amount,” as that term is defined,
and within the time frames more particularly set forth, in Section 4.2.1 , nor
shall Landlord be obligated to pay a total amount which exceeds the Improvement
Allowance. Notwithstanding the foregoing or any contrary provision of this
Lease, all Improvements shall be deemed Landlord’s property under the terms of
this Lease. Any unused portion of the Improvement Allowance remaining as of
July 31, 2008, shall remain with Landlord and Tenant shall have no further right
thereto.
2.2 Disbursement of the Improvement Allowance.
2.2.1 Improvement Allowance Items. Except as otherwise set forth in this Work
Letter, the Improvement Allowance shall be disbursed by Landlord (each of which
disbursements shall be made pursuant to Landlord’s disbursement process,
including, without limitation, Landlord’s receipt of invoices for all costs and
fees described herein) only for the following items and costs (collectively the
“ Improvement Allowance Items ”):
2.2.1.1 Payment of the fees of the “Architect” and the “Engineers,” as those
terms are defined in Section 3.1 of this Work Letter, which fees shall,
notwithstanding anything to the contrary contained in this Work Letter, not
exceed an aggregate amount equal to Two and 50/100 00/100 Dollars ($2.50) per
rentable square foot of the Premises, and payment of the third-party fees
actually and reasonably incurred (the reasonableness of which shall be
determined in light of the nature of particular Construction Drawings being
submitted by Landlord to its consultants for review) by Landlord in connection
with the preparation and review of the “Construction Drawings,” as that term is
defined in Section 3.1 of this Work Letter;
2.2.1.2 The payment of plan check, permit and license fees relating to
construction of the Improvements;
2.2.1.3 The cost of construction of the Improvements, including, without
limitation, testing and inspection costs and costs of utilities. In no event
shall Tenant or its contractor be charged for parking, access, freight elevator
use or similar items in connection with the Improvements;
2.2.1.4 The cost of any changes in the Base Building when such changes are
required by the Construction Drawings, such cost to include all direct
architectural and/or engineering fees and expenses incurred in connection
therewith;
2.2.1.5 The cost of any changes to the Construction Drawings or Improvements
required by all applicable building codes (the “ Code ”);
2.2.1.6 The cost of the “Coordination Fee,” as that term is defined in
Section 4.2.2.1 of this Work Letter;
2.2.1.7 Sales and use taxes; and
2.2.1.8 The actual cost of installing telephone and data cabling, moving costs,
furniture, fixtures and equipment (including UPS equipment and installation);
provided, however, in no event shall more than a portion of the Improvement
Allowance equal to $5.00 per rentable square foot of the Premises be allocated
to, and reimbursed against, the Improvement Allowance Items set forth in this
Section 2.2.1.8 .
2.2.2 Disbursement of Improvement Allowance. During the construction of the
Improvements, Landlord shall make monthly disbursements of the Improvement
Allowance for Improvement Allowance Items and shall authorize the release of
monies as follows.

2.2.2.1 Monthly Disbursements. On or before the day of each calendar month, as
reasonably determined by Landlord, during the construction of the Improvements,
Tenant shall deliver to Landlord: (i) a request for payment of the “Contractor,”
as that term is defined in Section 4.1.1 of this Work Letter, approved by
Tenant, in a form to be provided by Landlord, showing the schedule, by trade, of
percentage of completion of the Improvements in the Premises, detailing the
portion of the work completed and the portion not completed; (ii) invoices from
all of “Tenant’s Agents,” as that term is defined in Section 4.1.2 of this Work
Letter, for labor rendered and materials delivered to the Premises;
(iii) executed mechanic’s lien releases from all of Tenant’s Agents which shall
comply with the appropriate provisions, as reasonably determined by Landlord, of
California Civil Code Section 3262(d); and (iv) all other information reasonably
requested by Landlord. Tenant’s request for payment shall constitute, to
Tenant’s then-existing actual knowledge, Tenant’s acceptance and approval of the
work furnished and/or the materials supplied as set forth in Tenant’s payment
request; provided, however, the parties acknowledge that in no event shall the
Contractor be a third-party beneficiary with regard to any such acceptance and
approval under this sentence. Thereafter, Landlord shall deliver a check to
Tenant

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made jointly payable to Contractor and Tenant (or solely to Tenant to the extent
Tenant has previously paid in full to Contractor the amounts corresponding to
such request for payment) in payment of the lesser of: (A) “Landlord’s Ratio,”
as that term is set forth below, of the amounts so requested by Tenant, as set
forth in this Section 2.2.2.1 , above, less a ten percent (10%) retention (the
aggregate amount of such retentions to be known as the “ Final Retention ”), and
(B) the balance of any remaining available portion of the Improvement Allowance
(not including the Final Retention), provided that Landlord does not dispute any
request for payment based on non-compliance of any work with the “Approved
Working Drawings,” as that term is defined in Section 3.4 below, or due to any
substandard work, or for any other reasonably substantiated reason, it being
hereby acknowledged that Tenant shall pay “Tenant’s Ratio,” as that term is set
forth below, of the corresponding amounts so requested by Tenant, less a similar
ten (10%) retention. Landlord’s payment of such amounts shall not be deemed
Landlord’s approval or acceptance of the work furnished or materials supplied as
set forth in Tenant’s payment request.
2.2.2.2 Final Retention. Subject to the provisions of this Work Letter, a check
for the Final Retention payable jointly to Tenant and Contractor shall be
delivered by Landlord to Tenant following the substantial completion of
construction of the Improvements, provided that (i) Tenant delivers to Landlord
properly executed mechanic’s lien releases in compliance with both California
Civil Code Section 3262(d)(2) and either Section 3262(d)(3) or
Section 3262(d)(4) from all of Tenant’s Agents, (ii) Landlord has determined
that no substandard work exists which adversely affects the mechanical,
electrical, plumbing, heating, ventilating and air conditioning, life-safety or
other systems of the Building, the curtain wall of the Building, the structure
or exterior appearance of the Building, (iii) Architect delivers to Landlord a
certificate, in a form reasonably acceptable to Landlord, certifying that the
construction of the Improvements in the Premises has been substantially
completed, and , (iv) Tenant records a valid Notice of Completion in accordance
with the requirements of Section 4.3 of this Work Letter, and (v) a certificate
of occupancy (or its equivalent) has been issued for the Premises. Upon
substantial completion of the Improvements, and in conjunction with the Final
Retention and disbursement thereof, as set forth in this Section 2.2.2.2 ,
above, Tenant shall perform a final costs analysis to determine the actual
“Final Costs” of the Improvements so constructed. Thereafter, Tenant shall
submit such analysis to Landlord for Landlord’s verification and approval. In
the event it is determined that there remains any unpaid portion of the
Improvement Allowance (in addition to the Final Retention), Tenant shall submit
to Landlord an invoice for such amount (which excess shall in no event exceed
the amount paid by Tenant as an Over-Allowance Amount or supplement thereto) and
Landlord shall promptly pay such unpaid portion of the Improvement Allowance to
Tenant (but only to the extent otherwise reimbursable hereunder for Improvement
Allowance Items).
2.2.2.3 Other Terms. Landlord shall only be obligated to make disbursements from
the Improvement Allowance to the extent costs are incurred by Tenant for
Improvement Allowance Items. All Improvement Allowance Items for which the
Improvement Allowance has been made available shall be deemed Landlord’s
property under the terms of this Lease.
2.3 Building Standards. Landlord has established or may establish specifications
for certain Building standard components to be used in the construction of the
Improvements in the Premises. The quality of Improvements shall be equal to or
of greater quality than the quality of such Building standards. Removal
requirements regarding the Improvements are addressed in Article 8 of this Lease
and Section 2.4 below.
2.4 Removal of Improvements. Landlord hereby acknowledges and agrees that given
the nature of the Improvements identified in the Final Space Plan (as that term
is defined in Section 3.2 , below) and/or otherwise deemed approved by Landlord
based upon all of the documentation relating to such Improvements which have
been provided by Tenant to Landlord on or before the date of this Lease, except
with respect to those certain configuration elements of Tenant’s server room and
corresponding rooftop equipment expressly identified by Landlord in connection
with its approval of the Final Working Drawings (as that term is defined in
Section 3.3 , below) (as so identified, collectively, the “ Removal Items ”),
Tenant shall not be obligated to remove from the Premises any other Improvements
pursuant to the TCCs of Section 8.5 of the Lease.
SECTION 3
CONSTRUCTION DRAWINGS
3.1 Selection of Architect/Construction Drawings. Subject to Landlord’s
approval, which approval shall not be unreasonably withheld, delayed, or
conditioned, Tenant shall select and retain an architect/space planner (the “
Architect ”) to prepare the “Construction Drawings,” as that term is defined in
this Section 3.1 ; provided, however, Landlord herby pre-approves Gensler as
space planner. Tenant shall retain engineering consultants reasonably approved
by Landlord (the “ Engineers ”) to prepare all plans and engineering working
drawings relating to the structural, mechanical, electrical, plumbing, HVAC,
lifesafety, and sprinkler work in the Premises. The plans and drawings to be
prepared by Architect and the Engineers hereunder shall be known collectively as
the “ Construction Drawings .” All Construction Drawings shall comply with the
drawing format and specifications determined by Landlord, and shall be subject
to Landlord’s approval; provided, however, Landlord shall only disapprove any
such Construction Drawing to the extent of a “Design Problem,” as that term is
defined below. Tenant and Architect shall verify, in the field, the dimensions
and conditions as shown on the relevant portions of the Base Building plans, and
Tenant and Architect shall be solely responsible for the same, and Landlord
shall have no responsibility in connection therewith. Landlord’s review of the
Construction Drawings as set forth in this Section 3 , shall be for its sole
purpose and shall not imply Landlord’s review of the same, or obligate Landlord
to review the same, for quality, design, Code compliance or other like matters.
Accordingly, notwithstanding that any Construction Drawings are reviewed by
Landlord or its space planner, architect, engineers and consultants, and
notwithstanding any advice or assistance which may be rendered to Tenant by
Landlord or Landlord’s space planner, architect, engineers, and consultants,
Landlord shall have no liability whatsoever in connection therewith and shall
not be responsible for any omissions or errors contained in the Construction
Drawings, and Tenant’s waiver and indemnity set forth in this Lease shall
specifically apply to the Construction Drawings. A “ Design Problem ” is defined
as, and shall be deemed to exist if there could be (i) an affect on the exterior
appearance of the Building, (ii) a material, adverse affect on the Base Building
portions of the Premises Buildings (including without limitation the Building
Structure), (iii) a material adverse affect on the Building Systems or the
operation and maintenance thereof, or (iv) any failure to comply with Applicable
Laws. Notwithstanding anything to the contrary contained herein, Landlord
acknowledges that Tenant’s security systems are fundamental to its business
operations in the Premises, and Landlord shall reasonably cooperate with Tenant,
at no material extra cost to Landlord, to permit such security systems to be
installed in the Premises in accordance with Tenant’s reasonable security
requirements.
3.2 Final Space Plan. Tenant shall supply Landlord with four (4) copies signed
by Tenant of its final space plan for the Premises before any architectural
working drawings or engineering drawings have been commenced. The final space
plan (the “ Final Space Plan ”) shall include a layout and designation of all
offices, rooms and other partitioning, their intended use, and equipment to be
contained therein. Landlord may request clarification or more specific drawings
for special use items not included in the Final Space Plan. Landlord shall
advise Tenant within five (5) business days after Landlord’s receipt of the
Final Space Plan for the Premises if the same is unsatisfactory or incomplete in
any respect; provided, however, Landlord shall only disapprove such Final Space
Plans to the extent of a Design Problem. Landlord shall set forth with
reasonable specificity in what respect the Final Space Plan is unsatisfactory or
incomplete (based upon a commercially reasonable standard). If Tenant is so
advised, Tenant shall promptly cause the Final Space Plan to be revised to
correct any deficiencies or other matters Landlord may reasonably require, and
immediately thereafter Architect shall promptly re-submit the Final Space Plan
to Landlord for its approval. Such procedure shall continue (except that the
time frame to consent to any revisions shall be shortened to three (3) business
days) until the Final Space Plan is approved by Landlord.

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3.3 Final Working Drawings. After the Final Space Plan has been approved by
Landlord, Tenant shall supply the Engineers with a complete listing of standard
and non-standard equipment and specifications, including, without limitation,
B.T.U. calculations, electrical requirements and special electrical receptacle
requirements for the Premises, to enable the Engineers and the Architect to
complete the “Final Working Drawings” (as that term is defined below) in the
manner as set forth below. Upon the approval of the Final Space Plan by Landlord
and Tenant, Tenant shall promptly cause the Architect and the Engineers to
complete the architectural and engineering drawings for the Premises, and
Architect shall compile a fully coordinated set of architectural, structural,
mechanical, electrical and plumbing working drawings in a form which is complete
to allow subcontractors to bid on the work and to obtain all applicable permits
(collectively, the “Final Working Drawings”) and shall submit the same to
Landlord for Landlord’s approval. Tenant shall supply Landlord with four
(4) copies signed by Tenant of such Final Working Drawings. Landlord shall
advise Tenant within five (5) business days after Landlord’s receipt of all of
the Final Working Drawings, either (i) approve the Final Working Drawings,
(ii) approve the Final Working Drawings subject to specified conditions, which
conditions must be stated in a reasonably clear and complete manner, and shall
only be conditions reasonably intended to address a potential Design Problem, or
(iii) disapprove and return the Construction Drawings to Tenant with requested
revisions; provided, however, Landlord shall only disapprove such Final Working
Drawings to the extent of a Design Problem. If Landlord disapproves the Final
Working Drawings, Tenant may resubmit the Final Working Drawings to Landlord at
any time, and Landlord shall approve or disapprove the resubmitted Final Working
Drawings, based upon the criteria set forth in this Section 3.3 , within three
(3) business days after Landlord receives such resubmitted Final Working
Drawings. Such procedure shall be repeated until the Final Working Drawings are
approved.
3.4 Approved Working Drawings. The Final Working Drawings shall be approved by
Landlord (the “Approved Working Drawings ”) prior to the commencement of
construction of the Premises by Tenant. After approval by Landlord of the Final
Working Drawings, Tenant may submit the same to the appropriate municipal
authorities for all applicable building permits. Tenant hereby agrees that
neither Landlord nor Landlord’s consultants shall be responsible for obtaining
any building permit or certificate of occupancy for the Premises and that
obtaining the same shall be Tenant’s responsibility; provided, however, that
Landlord shall cooperate with Tenant in executing permit applications and
performing other ministerial acts reasonably necessary to enable Tenant to
obtain any such permit or certificate of occupancy. No changes, modifications or
alterations in the Approved Working Drawings may be made without the prior
written consent of Landlord, which consent may not be unreasonably withheld.
SECTION 4
CONSTRUCTION OF THE IMPROVEMENTS
4.1 Tenant’s Selection of Contractors.
4.1.1 The Contractor. A general contractor shall be retained by Tenant to
construct the Improvements. Such general contractor (“ Contractor ”) shall be
selected by Tenant from a list of general contractors mutually and reasonably
agreed upon by Landlord, and Tenant shall deliver to Landlord notice of its
selection of the Contractor upon such selection; provided, however, Landlord
hereby pre-approves ROEL.
4.1.2 Tenant’s Agents. All subcontractors, laborers, materialmen, and suppliers
used by Tenant (such subcontractors, laborers, materialmen, and suppliers, and
the Contractor to be known collectively as “ Tenant’s Agents ”) must be approved
in writing by Landlord, which approval shall not be unreasonably withheld or
delayed and which approval shall, if withheld or conditioned with regard to any
such Tenant’s Agents, be made within two (2) business days following Landlord’s
receipt of the corresponding request for such approval from Tenant. If Landlord
does not approve any of Tenant’s proposed subcontractors, laborers, materialmen
or suppliers, Tenant shall submit other proposed subcontractors, laborers,
materialmen or suppliers for Landlord’s written approval.
4.2 Construction of Improvements by Tenant’s Agents.
4.2.1 Construction Contract; Cost Budget. Tenant shall engage the Contractor
pursuant to a mutually approved contract form (collectively, the “ Contract ”).
Prior to the commencement of the construction of the Improvements, and after
Tenant has accepted all bids for the Improvements, Tenant shall provide Landlord
with a detailed breakdown, by trade, of the final costs to be incurred or which
have been incurred, as set forth more particularly in Sections 2.2.1.1 through
2.2.1.8 , above, in connection with the design and construction of the
Improvements to be performed by or at the direction of Tenant or the Contractor,
which costs form a basis for the amount of the Contract (the “ Final Costs ”).
Prior to the commencement of construction of the Improvements, Tenant shall
determine the amount (the “ Over-Allowance Amount ”) by which the Final Costs
exceed the Tenant Improvement Allowance. Tenant will also determine the ratio of
the Over-Allowance Amount to the Improvement Allowance (e.g., if the
Over-Allowance Amount were to be Five Hundred Sixty-Two Thousand Five Hundred
Dollars ($562,500.00), the ratio would be twenty percent (20%) Over-Allowance
Amount and eighty percent (80%) Tenant Improvement Allowance). The ratio
applicable to the Over-Allowance Amount may be referred to herein as “ Tenant’s
Ratio ”) and the ratio applicable to the Tenant Improvement Allowance may be
referred to herein as “Landlord’s Ratio.” Tenant’s determination of the
Over-Allowance Amount, Tenant’s Ratio and Landlord’s Ratio are subject to
Landlord’s reasonable approval. The Over-Allowance Amount shall be disbursed by
Landlord in accordance with Section 2.2 above. In the event that, after the
Final Costs have been delivered by Tenant to Landlord, the costs relating to the
design and construction of the Improvements shall change, any additional costs
necessary to such design and construction in excess of the Final Costs, shall be
paid by Tenant to Landlord immediately as an addition to the Over-Allowance
Amount or at Landlord’s option, Tenant shall make payments for such additional
costs out of its own funds, but Tenant shall continue to provide Landlord with
the documents described in Sections 2.2.2.1(i) , (ii) , (iii)  and (iv)  of this
Work Letter, above, for Landlord’s approval, prior to Tenant paying such costs.
4.2.2 Tenant’s Agents.
4.2.2.1 Landlord’s General Conditions for Tenant’s Agents and Improvement Work.
Tenant’s and Tenant’s Agent’s construction of the Improvements shall comply with
the following: (i) the Improvements shall be constructed in strict accordance
with the Approved Working Drawings; (ii) Tenant’s Agents shall submit schedules
of all work relating to the Improvements to Contractor and Contractor shall,
within five (5) business days of receipt thereof, inform Tenant’s Agents of any
changes which are necessary thereto, and Tenant’s Agents shall adhere to such
corrected schedule; and (iii) Tenant shall abide by all reasonable rules made by
Landlord’s Building manager with respect to the use of freight, loading dock and
service elevators, storage of materials and any other matter in connection with
this Work Letter, including, without limitation, the construction of the
Improvements. Tenant shall pay a logistical coordination fee (the “ Coordination
Fee ”) to Landlord in an amount equal to Thirty Thousand and 00/100 Dollars
($30,000.00), which Coordination Fee shall be for services relating to the
coordination of the construction of the Improvements.

4.2.2.2 Indemnity. Tenant’s indemnity of Landlord as set forth in this Lease
shall also apply with respect to any and all costs, losses, damages, injuries
and liabilities related in any way to any negligence or willful misconduct of
Tenant or Tenant’s Agents, or anyone directly or indirectly employed by any of
them, or in connection with Tenant’s non-payment of any amount arising out of
the Improvements and/or Tenant’s disapproval of all or any portion of any
request for payment.
4.2.2.3 Requirements of Tenant’s Agents. Each of Tenant’s Agents shall guarantee
to Tenant and for the benefit of Landlord that the portion of the Improvements
for which it is responsible shall be free from any defects in workmanship and
materials for a period of not less than one (1) year from the date of

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completion thereof. Each of Tenant’s Agents shall be responsible for the
replacement or repair, without additional charge, of all work done or furnished
in accordance with its contract that shall become defective within one (1) year
after the completion of the work performed by such contractor or subcontractors.
The correction of such work shall include, without additional charge, all
additional expenses and damages incurred in connection with such removal or
replacement of all or any part of the Improvements, and/or the Building and/or
common areas that may be damaged or disturbed thereby. All such warranties or
guarantees as to materials or workmanship of or with respect to the Improvements
shall be contained in the Contract or subcontract and shall be written such that
such guarantees or warranties shall inure to the benefit of both Landlord and
Tenant, as their respective interests may appear, and can be directly enforced
by either. Tenant covenants to give to Landlord any assignment or other
assurances which may be necessary to effect such right of direct enforcement.
4.2.2.4 Insurance Requirements.
4.2.2.4.1 General Coverages. All of Tenant’s Agents shall carry worker’s
compensation insurance covering all of their respective employees, and shall
also carry public liability insurance, including property damage, all with
limits, in form and with companies as are reasonably required by Landlord.
4.2.2.4.2 Special Coverages. Tenant shall cause its Contractor to carry
“Builder’s All Risk” insurance in an amount approved by Landlord covering the
construction of the Improvements, and such other insurance as Landlord may
reasonably require, it being understood and agreed that the Improvements shall
be insured by Tenant pursuant to this Lease immediately upon completion thereof.
Such insurance shall be in amounts and shall include such extended coverage
endorsements as may be reasonably required by Landlord, and in form and with
companies as are required to be carried by Tenant as set forth in this Lease.
4.2.2.4.3 General Terms. Certificates for all insurance carried pursuant to this
Section 4.2.2.4 shall be delivered to Landlord before the commencement of
construction of the Improvements and before the Contractor’s equipment is moved
onto the site. All such policies of insurance must contain a provision that the
company writing said policy will give Landlord thirty (30) days prior written
notice (10 days for nonpayment of premiums) of any cancellation or lapse of the
effective date or any reduction in the amounts of such insurance. In the event
that the Improvements are damaged by any cause during the course of the
construction thereof, Tenant shall cause the same to be repaired at no cost to
Landlord or by application of the Improvement Allowance. Tenant’s Agents shall
maintain all of the
foregoing insurance coverage in force until the Improvements are fully completed
and accepted by Landlord, except for any Products and Completed Operation
Coverage insurance required by Landlord, which is to be maintained for ten
(10) years following completion of the work and acceptance by Landlord and
Tenant. All policies carried under this Section 4.2.2.4 shall name Landlord and
Tenant s additional insureds, as their interests may appear, as well as
Contractor and Tenant’s Agents. All insurance, except Workers’ Compensation,
maintained by Tenant’s Agents shall preclude subrogation claims by the insurer
against anyone insured thereunder. Such insurance shall provide that it is
primary insurance as respects the owner and that any other insurance maintained
by owner is excess and noncontributing with the insurance required hereunder.
The requirements for the foregoing insurance shall not derogate from the
provisions for indemnification of Landlord by Tenant under Section 4.2.2.2 of
this Work Letter.
4.2.3 Governmental Compliance. The Improvements shall comply in all respects
with the following: (i) the Code and other state, federal, city or
quasi-governmental laws, codes, ordinances and regulations, as each may apply
according to the rulings of the controlling public official, agent or other
person; (ii) applicable standards of the American Insurance Association
(formerly, the National Board of Fire Underwriters) and the National Electrical
Code; and (iii) building material manufacturer’s specifications.
4.2.4 Inspection by Landlord. Landlord shall have the right to inspect the
Improvements at all times, provided however, that Landlord’s failure to inspect
the Improvements shall in no event constitute a waiver of any of Landlord’s
rights hereunder nor shall Landlord’s inspection of the Improvements constitute
Landlord’s approval of the same. Should Landlord disapprove any portion of the
Improvements, Landlord shall notify Tenant in writing of such disapproval and
shall specify the items disapproved. Any defects or deviations in, and/or
disapproval by Landlord of, the Improvements shall be rectified by Tenant at no
expense to Landlord.
4.2.5 Meetings. Commencing upon the execution of this Lease, Tenant shall hold
weekly meetings at a reasonable time, with the Architect and the Contractor
regarding the progress of the preparation of Construction Drawings and the
construction of the Improvements, which meetings shall be held at a location
designated by Landlord and reasonably approved by Tenant, and Landlord and/or
its agents shall receive prior notice of, and shall have the right to attend,
all such meetings, and, upon Landlord’s request, certain of Tenant’s Agents
shall attend such meetings. In addition, minutes shall be taken at all such
meetings, a copy of which minutes shall be promptly delivered to Landlord. One
such meeting each month shall include the review of Contractor’s current request
for payment.
4.3 Notice of Completion; Copy of Record Set of Plans. Within twenty (20) days
after completion of construction of the Improvements, Tenant shall cause a
Notice of Completion to be recorded in the office of the Recorder of the county
in which the Building is located in accordance with Section 3093 of the Civil
Code of the State of California or any successor statute, and shall furnish a
copy thereof to Landlord upon such recordation. If Tenant fails to do so,
Landlord may execute and file the same as Tenant’s agent for such purpose, at
Tenant’s sole cost and expense. At the conclusion of construction, (i) Tenant
shall cause the Architect and Contractor (A) to update the Approved Working
Drawings as necessary to reflect all changes made to the Approved Working
Drawings during the course of construction, (B) to certify to the best of their
knowledge that the “record-set” of as-built drawings are true and correct, which
certification shall survive the expiration or termination of this Lease, and
(C) to deliver to Landlord two (2) sets of copies of such record set of drawings
within one hundred twenty (120) days following issuance of a certificate of
occupancy for the Premises, and (ii) Tenant shall deliver to Landlord a copy of
all warranties, guaranties, and operating manuals and information relating to
the improvements, equipment, and systems in the Premises.
SECTION 5
MISCELLANEOUS
5.1 Tenant’s Representative. Tenant has designated Mr. Kurt Noyes as its sole
representative with respect to the matters set forth in this Work Letter, who
shall have full authority and responsibility to act on behalf of the Tenant as
required in this Work Letter.
5.2 Landlord’s Representative. Landlord has designated Mr. Richard Mount and
Ms. Lauren Phillips as its sole representatives with respect to the matters set
forth in this Work Letter, who, until further notice to Tenant, shall have full
authority and responsibility to act on behalf of the Landlord as required in
this Work Letter.
5.3 Time of the Essence in This Work Letter. Unless otherwise indicated, all
references herein to a “number of days” shall mean and refer to calendar days.
If any item requiring approval is timely disapproved by Landlord, the procedure
for preparation of the document and approval thereof shall be repeated until the
document is approved by Landlord.

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5.4 Tenant’s Lease Default. Notwithstanding any provision to the contrary
contained in the Lease or this Work Letter, if any economic or material,
non-economic default (beyond any applicable notice and cure periods) by Tenant
under the Lease or this Work Letter (including, without limitation, any failure
by Tenant to fund any portion of the Over-Allowance Amount) occurs at any time
on or before the substantial completion of the Improvements, then (i) in
addition to all other rights and remedies granted to Landlord pursuant to the
Lease, Landlord shall have the right to withhold payment of all or any portion
of the Improvement Allowance, and (ii) all other obligations of Landlord under
the terms of the Lease and this Work Letter shall be forgiven until such time as
such default is cured pursuant to the terms of the Lease.
5.5 Landlord Delays. In the event that there are any actual delays in the
completion of the Improvements caused by Landlord or the Landlord Parties, then
after (A) written notice to Landlord setting forth with reasonable detail the
existence and nature of such delay, and (B) the expiration of a two (2) business
day cure period following Landlord’s receipt of such notice without the remedy
thereof, any such delay shall thereafter be deemed a “Landlord Delay.” In
addition, if Landlord fails to approve any matter during the time periods
expressly specified in this Work Letter Agreement therefore, such failure shall
immediately (following the outside date for Landlord’s response) constitute a
Landlord Delay (to the extent actual delays in the completion of the
Improvements ultimately result therefrom). In addition, to the extent that
Landlord does not deliver possession of the Premises to Tenant on or before
October 1, 2007, then for each day occurring thereafter until the actual date of
delivery of possession, the same shall constitute a Landlord Delay (to the
extent actual delays in the completion of the Improvements ultimately result
therefrom). Any actual Landlord Delays under this Section 5.5 may result in an
extension of the Lease Commencement Date, as defined in Section 3.2 of the
Summary, by extending the outside Lease Commencement Date of February 1, 2008 by
an equivalent number of days as such Landlord Delays. Notwithstanding anything
contained in this Section 5.5 , in no event shall Tenant be obligated to employ
extraordinary efforts or incur extraordinary expenses (e.g., overtime), to
overcome any Landlord Delays.
 

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EXHIBIT C
6290 SEQUENCE DRIVE
NOTICE OF LEASE TERM DATES
 
To:
_______________________

_______________________
_______________________
_______________________
 
 
Re:
Office Lease dated ____________, 200__ between ____________________, a
_____________________ (“Landlord”), and _______________________, a
_______________________ (“Tenant”) concerning Suite ______ on floor(s)
__________ of the office building located at ____________________________,
_______________, California.

Gentlemen:
In accordance with the Office Lease (the “Lease”), we wish to advise you and/or
confirm as follows:
 
 
1.
The Lease Term shall commence on or has commenced on ______________ for a term
of __________________ ending on __________________.

 
 
2.
Rent commenced to accrue on __________________, in the amount of
________________.

 
 
3.
If the Lease Commencement Date is other than the first day of the month, the
first billing will contain a pro rata adjustment. Each billing thereafter, with
the exception of the final billing, shall be for the full amount of the monthly
installment as provided for in the Lease.

 
 
4.
Your rent checks should be made payable to __________________ at
___________________.

 
 
5.
The exact number of rentable/usable square feet within the Premises is
____________ square feet.

 

 
6.
Tenant’s Share as adjusted based upon the exact number of usable square feet
within the Premises is ________%.

 
 
 
 
“Landlord”:
 
__________________________________________,
a    ________________________________________
 
 
By:
 
 
 
 
Its:    ___________________________________

Agreed to and Accepted
as of ____________, 200__.
 
 
 
 
“Tenant”:
 
__________________________________________
a    ________________________________________
By:
 
________________________________________
 
 
Its:    ___________________________________

 

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EXHIBIT D
6290 SEQUENCE DRIVE
RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Project. In the event of any
conflict between the Rules and Regulations and the other provisions of this
Lease, the latter shall control.
1. Safes and other heavy objects shall, if considered necessary by Landlord,
stand on supports of such thickness as is necessary to properly distribute the
weight. Landlord will not be responsible for loss of or damage to any such safe
or property in any case. Any damage to any part of the Building, its contents,
occupants or visitors by moving or maintaining any such safe or other property
shall be the sole responsibility and expense of Tenant.
2. The requirements of Tenant will be attended to only upon application at the
management office for the Project or at such office location designated by
Landlord. Employees of Landlord shall not perform any work or do anything
outside their regular duties unless under special instructions from Landlord.
3. No sign, advertisement, notice or handbill shall be exhibited, distributed,
painted or affixed by Tenant on any part of the Premises or the Building without
the prior written consent of the Landlord. Tenant shall not disturb, solicit,
peddle, or canvass any occupant of the Project and shall cooperate with Landlord
and its agents of Landlord to prevent same.
4. The toilet rooms, urinals, wash bowls and other apparatus shall not be used
for any purpose other than that for which they were constructed, and no foreign
substance of any kind whatsoever shall be thrown therein. The expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by the tenant who, or whose servants, employees, agents, visitors or
licensees shall have caused same.
5. Tenant shall not overload the floor of the Premises.
6. Tenant shall not use or keep in or on the Premises, the Building, or the
Project any kerosene, gasoline, explosive material, corrosive material, material
capable of emitting toxic fumes, or other inflammable or combustible fluid
chemical, substitute or material. Tenant shall provide material safety data
sheets for any Hazardous Material used or kept on the Premises.
7. Tenant shall not use, keep or permit to be used or kept, any foul or noxious
gas or substance in or on the Premises, or permit or allow the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Project by reason of noise, odors, or vibrations, or interfere
with other tenants or those having business therein, whether by the use of any
musical instrument, radio, phonograph, or in any other way. Tenant shall not
throw anything out of doors, windows or skylights or down passageways.
8. Tenant shall not bring into or keep within the Building or the Premises any
animals, birds, aquariums, or bring into or keep within the Building bicycles or
other vehicles.
9. No cooking shall be done or permitted on the Premises, nor shall the Premises
be used for the storage of merchandise, for lodging or for any improper,
objectionable or immoral purposes. Notwithstanding the foregoing, Underwriters’
laboratory-approved equipment and microwave ovens may be used in the Premises
for heating food and brewing coffee, tea, hot chocolate and similar beverages
for employees and visitors, provided that such use is in accordance with all
applicable federal, state, county and city laws, codes, ordinances, rules and
regulations.
10. The Premises shall not be used for manufacturing or for the storage of
merchandise unless, and except to the extent, such manufacturing or storage may
be incidental to the use of the Premises provided for in the Summary. Tenant
shall not occupy or permit any portion of the Premises to be occupied as an
office for a messenger-type operation or dispatch office, public stenographer or
typist, or for the manufacture or sale of liquor, narcotics, or tobacco in any
form, or as a medical office, or as a barber or manicure shop, or as an
employment bureau without the express prior written consent of Landlord.
11. Landlord reserves the right to exclude or expel from the Project any person
who, in the judgment of Landlord, is intoxicated or under the influence of
liquor or drugs, or who shall in any manner do any act in violation of any of
these Rules and Regulations.
12. Tenant, its employees and agents shall not loiter in or on the entrances,
corridors, sidewalks, lobbies, courts, halls, stairways, elevators, vestibules
or any Common Areas for the purpose of smoking tobacco products, nor in any way
obstruct such areas, and shall use them only as a means of ingress and egress
for the Premises. Furthermore, in no event shall Tenant, its employees or agents
smoke tobacco products within the Building or within seventy-five feet (75’) of
any entrance into the Building or into any other Project building.
13. Tenant shall store all its trash and garbage within the interior of the
Premises. No material shall be placed in the trash boxes or receptacles if such
material is of such nature that it may not be disposed of in the ordinary and
customary manner of removing and disposing of trash and garbage in San Diego,
California without violation of any law or ordinance governing such disposal.
All trash, garbage and refuse disposal shall be made only through entry-ways and
elevators provided for such purposes at such times as Landlord shall designate.
If the Premises is or becomes infested with vermin as a result of the use or any
misuse or neglect of the Premises by Tenant, its agents, servants, employees,
contractors, visitors or licensees, Tenant shall forthwith, at Tenant’s expense,
cause the Premises to be exterminated from time to time to the satisfaction of
Landlord and shall employ such licensed exterminators as shall be approved in
writing in advance by Landlord.
14. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
15. No awnings or other projection shall be attached to the outside walls of the
Building without the prior written consent of Landlord, and no curtains, blinds,
shades or screens shall be attached to or hung in, or used in connection with,
any window or door of the Premises other than Landlord standard drapes. All
electrical ceiling fixtures hung in the Premises or spaces along the perimeter
of the Building must be fluorescent and/or of a quality, type, design and a warm
white bulb color approved in advance in writing by Landlord. Neither the
interior nor exterior of any windows shall be coated or otherwise sunscreened
without the prior

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written consent of Landlord. Tenant shall be responsible for any damage to the
window film on the exterior windows of the Premises and shall promptly repair
any such damage at Tenant’s sole cost and expense. Tenant shall keep its window
coverings closed during any period of the day when the sun is shining directly
on the windows of the Premises. Prior to leaving the Premises for the day,
Tenant shall draw or lower window coverings and extinguish all lights. Tenant
shall abide by Landlord’s regulations concerning the opening and closing of
window coverings which are attached to the windows in the Premises, if any,
which have a view of any interior portion of the Building or Building Common
Areas.
16. The sashes, sash doors, skylights, windows, and doors that reflect or admit
light and air into the halls, passageways or other public places in the Building
shall not be covered or obstructed by Tenant, nor shall any bottles, parcels or
other articles be placed on the windowsills.
17. Tenant must comply with requests by the Landlord concerning the informing of
their employees of items of importance to the Landlord.
18. Tenant must comply with any applicable “NO-SMOKING” ordinance of the State
of California, County of San Diego and/or City of San Diego. If Tenant is
required under the ordinance to adopt a written smoking policy, a copy of said
policy shall be on file in the office of the Building.
19. Tenant hereby acknowledges that Landlord shall have no obligation to provide
guard service or other security measures for the benefit of the Premises, the
Building or the Project. Tenant hereby assumes all responsibility for the
protection of Tenant and its agents, employees, contractors, invitees and
guests, and the property thereof, from acts of third parties, including keeping
doors locked and other means of entry to the Premises closed, whether or not
Landlord, at its option, elects to provide security protection for the Project
or any portion thereof. Tenant further assumes the risk that any safety and
security devices, services and programs which Landlord elects, in its sole
discretion, to provide may not be effective, or may malfunction or be
circumvented by an unauthorized third party, and Tenant shall, in addition to
its other insurance obligations under this Lease, obtain its own insurance
coverage to the extent Tenant desires protection against losses related to such
occurrences. Tenant shall cooperate in any reasonable safety or security program
developed by Landlord or required by law.
20. No auction, liquidation, fire sale, going-out-of-business or bankruptcy sale
shall be conducted in the Premises without the prior written consent of
Landlord.
21. No tenant shall use or permit the use of any portion of the Premises for
living quarters, sleeping apartments or lodging rooms.
22. Tenant shall install and maintain, at Tenant’s sole cost and expense, an
adequate, visibly marked and properly operational fire extinguisher next to any
duplicating or photocopying machines or similar heat producing equipment, which
may or may not contain combustible material, in the Premises.
Landlord reserves the right at any time to change or rescind any one or more of
these Rules and Regulations, or to make such other and further reasonable Rules
and Regulations as in Landlord’s judgment may from time to time be necessary for
the management, safety, care and cleanliness of the Premises, Building, the
Common Areas and the Project, and for the preservation of good order therein, as
well as for the convenience of other occupants and tenants therein. Landlord may
waive any one or more of these Rules and Regulations for the benefit of any
particular tenants, but no such waiver by Landlord shall be construed as a
waiver of such Rules and Regulations in favor of any other tenant, nor prevent
Landlord from thereafter enforcing any such Rules or Regulations against any or
all tenants of the Project. Tenant shall be deemed to have read these Rules and
Regulations and to have agreed to abide by them as a condition of its occupancy
of the Premises.
 

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EXHIBIT E
6290 SEQUENCE DRIVE
FORM OF TENANT’S ESTOPPEL CERTIFICATE
The undersigned as Tenant under that certain Office Lease (the “Lease”) made and
entered into as of ___________, 200 ___ by and between _______________ as
Landlord, and the undersigned as Tenant, for Premises on the ______________
floor(s) of the office building located at ______________, _______________,
California ____________, certifies as follows:
1. Attached hereto as Exhibit A is a true and correct copy of the Lease and all
amendments and modifications thereto. The documents contained in Exhibit A
represent the entire agreement between the parties as to the Premises.
2. The undersigned currently occupies the Premises described in the Lease, the
Lease Term commenced on __________, and the Lease Term expires on ___________,
and the undersigned has no option to terminate or cancel the Lease or to
purchase all or any part of the Premises, the Building and/or the Project.
3. Base Rent became payable on ____________.
4. The Lease is in full force and effect and has not been modified, supplemented
or amended in any way except as provided in Exhibit A.
5. Tenant has not transferred, assigned, or sublet any portion of the Premises
nor entered into any license or concession agreements with respect thereto
except as follows:
6. Tenant shall not, for a period of third (30) days following the date hereof,
modify the documents contained in Exhibit A without the prior written consent of
Landlord’s mortgagee.
7. All monthly installments of Base Rent, all Additional Rent and all monthly
installments of estimated Additional Rent have been paid when due through
___________. The current monthly installment of Base Rent is $             .
8. To the undersigned’s knowledge, all conditions of the Lease to be performed
by Landlord necessary to the enforceability of the Lease have been satisfied and
Landlord is not in default thereunder. In addition, the undersigned has not
delivered any notice to Landlord regarding a default by Landlord thereunder.
9. No rental has been paid more than thirty (30) days in advance and no security
has been deposited with Landlord except as provided in the Lease.
10. To the undersigned’s knowledge, as of the date hereof, there are no existing
defenses or offsets, or, to the undersigned’s knowledge, claims or any basis for
a claim, that the undersigned has against Landlord.
11. If Tenant is a corporation or partnership, each individual executing this
Estoppel Certificate on behalf of Tenant hereby represents and warrants that
Tenant is a duly formed and existing entity qualified to do business in
California and that Tenant has full right and authority to execute and deliver
this Estoppel Certificate and that each person signing on behalf of Tenant is
authorized to do so.
12. There are no actions pending against the undersigned under the bankruptcy or
similar laws of the United States or any state.
13. To the undersigned’s knowledge, other than in compliance with all applicable
laws and incidental to the ordinary course of the use of the Premises, the
undersigned has not used or stored any hazardous substances in the Premises.
14. To the undersigned’s knowledge, all tenant improvement work to be performed
by Landlord under the Lease has been completed in accordance with the Lease and
has been accepted by the undersigned and all reimbursements and allowances due
to the undersigned under the Lease in connection with any tenant improvement
work have been paid in full.
The undersigned acknowledges that this Estoppel Certificate may be delivered to
Landlord or to a prospective mortgagee or prospective purchaser, and
acknowledges that said prospective mortgagee or prospective purchaser will be
relying upon the statements contained herein in making the loan or acquiring the
property of which the Premises are a part and that receipt by it of this
certificate is a condition of making such loan or acquiring such property.
Executed at ______________ on the ____ day of ___________, 200 ___ .
 
 
 
 
“Tenant”:
 
___________________________________________,
a
 
________________________________________
 
 
By:
 
________________________________________
 
 
Its:______________________________________
 
 
By:
 
_________________________________________
 
 
Its:______________________________________

 

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EXHIBIT F
6290 SEQUENCE DRIVE
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
ALLEN MATKINS LECK GAMBLE
& MALLORY LLP
1901 Avenue of the Stars, 18th Floor
Los Angeles, California 90067
Attention: Anton N. Natsis, Esq.
RECOGNITION OF COVENANTS,
CONDITIONS, AND RESTRICTIONS
This Recognition of Covenants, Conditions, and Restrictions (this “Agreement”)
is entered into as of the __ day of ________, 200__, by and between
__________________ (“ Landlord ”), and ________________ (“ Tenant ”), with
reference to the following facts:
A. Landlord and Tenant entered into that certain Office Lease Agreement dated
_____, 200__ (the “Lease”). Pursuant to the Lease, Landlord leased to Tenant and
Tenant leased from Landlord space (the “ Premises ”) located in an office
building on certain real property described in Exhibit A attached hereto and
incorporated herein by this reference (the “ Property ”).
B. The Premises are located in an office building located on real property which
is part of an area owned by Landlord containing approximately ___ (__) acres of
real property located in the City of ____________, California (the “ Project ”),
as more particularly described in Exhibit B attached hereto and incorporated
herein by this reference.
C. Landlord, as declarant, has previously recorded, or proposes to record
concurrently with the recordation of this Agreement, a Declaration of Covenants,
Conditions, and Restrictions (the “ Declaration ”), dated ________________,
200__, in connection with the Project.
D. Tenant is agreeing to recognize and be bound by the terms of the Declaration,
and the parties hereto desire to set forth their agreements concerning the same.
NOW, THEREFORE, in consideration of (a) the foregoing recitals and the mutual
agreements hereinafter set forth, and (b) for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows,
1. Tenant’s Recognition of Declaration. Notwithstanding that the Lease has been
executed prior to the recordation of the Declaration, Tenant agrees to recognize
and by bound by all of the terms and conditions of the Declaration, but only to
the extent the terms, conditions and restrictions set forth in such Declaration
do not (i) prohibit Tenant’s operations in the Premises for the uses permitted
under the Lease, (ii) materially increase Tenant’s monetary obligations or
liability under such Lease, or (iii) decrease Tenant’s rights under such Lease.
2. Miscellaneous.
2.1 This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, estates, personal representatives,
successors, and assigns.
2.2 This Agreement is made in, and shall be governed, enforced and construed
under the laws of, the State of California.
2.3 This Agreement constitutes the entire understanding and agreements of the
parties with respect to the subject matter hereof, and shall supersede and
replace all prior understandings and agreements, whether verbal or in writing.
The parties confirm and acknowledge that there are no other promises, covenants,
understandings, agreements, representations, or warranties with respect to the
subject matter of this Agreement except as expressly set forth herein.
2.4 This Agreement is not to be modified, terminated, or amended in any respect,
except pursuant to any instrument in writing duly executed by both of the
parties hereto.
2.5 In the event that either party hereto shall bring any legal action or other
proceeding with respect to the breach, interpretation, or enforcement of this
Agreement, or with respect to any dispute relating to any transaction covered by
this Agreement, the losing party in such action or proceeding shall reimburse
the prevailing party therein for all reasonable costs of litigation, including
reasonable attorneys’ fees, in such amount as may be determined by the court or
other tribunal having jurisdiction, including matters on appeal.
2.6 All captions and heading herein are for convenience and ease of reference
only, and shall not be used or referred to in any way in connection with the
interpretation or enforcement of this Agreement.
2.7 If any provision of this Agreement, as applied to any party or to any
circumstance, shall be adjudged by a court of competent jurisdictions to be void
or unenforceable for any reason, the same shall not affect any other provision
of this Agreement, the application of such provision under circumstances
different form those adjudged by the court, or the validity or enforceability of
this Agreement as a whole.
2.8 Time is of the essence of this Agreement.
2.9 The Parties agree to execute any further documents, and take any further
actions, as may be reasonable and appropriate in order to carry out the purpose
and intent of this Agreement, but only to the extent the same does not
(i) materially increase Tenant’s monetary obligations or liability under such
Lease, or (ii) decrease Tenant’s rights under such Lease.
2.10 As used herein, the masculine, feminine or neuter gender, and the singular
and plural numbers, shall each be deemed to include the others whenever and
whatever the context so indicates.
 

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SIGNATURE PAGE OF RECOGNITION OF
COVENANTS, CONDITIONS AND RESTRICTIONS
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
 
 
 
 
“Landlord”:
 
___________________________________________,
a
 
________________________________________
 
 
By:
 
________________________________________
 
 
Its:______________________________________
 
“Tenant”:
 
___________________________________________,
a
 
________________________________________
 
 
By:
 
________________________________________
 
 
Its:______________________________________
 
 
By:
 
________________________________________
 
 
Its:______________________________________
 
 
 

 

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EXHIBIT G
6290 SEQUENCE DRIVE
FORM OF LETTER OF CREDIT
[ATTACHED]
 

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EXHIBIT H
6290 SEQUENCE DRIVE
MARKET RENT DETERMINATION FACTORS
When determining Market Rent, the following rules and instructions shall be
followed.
1.RELEVANT FACTORS. The “Comparable Transactions” shall be the “Net Equivalent
Lease Rates” per rentable square foot, at which tenants, are, pursuant to
transactions consummated within the period occurring between twelve (12) months
and six (6) months prior to the commencement of the Option Term (provided that
if there are not enough Comparable Transactions to make a determination of
Market Rent, then such period shall be extended to the period occurring between
twenty-four (24) months and six (6) months prior to the commencement of the
Option Term), leasing non-sublease, non-encumbered space comparable in location
and quality to the Premises and consisting of an entire building containing not
less than 50,000 rentable square feet for a term of between and including
five (5) and ten (10) years, in an arm’s-length transaction, which comparable
space is located in “Comparable Buildings.” The terms of the Comparable
Transactions shall be calculated as a “Net Equivalent Lease Rate” pursuant to
the terms of this Exhibit H , and shall take into consideration only the
following terms and concessions: (i) the rental rate and escalations for the
Comparable Transactions, (ii) the amount of parking rent per parking permit paid
in the Comparable Transactions, if any, (iii) operating expense and tax
protection granted in such Comparable Transactions such as a base year or
expense stop (although for each such Comparable Transaction the base rent shall
be adjusted to a triple net base rent using reasonable estimates of operating
expenses and taxes as determined by Landlord for each such Comparable
Transaction); (iv) rental abatement concessions, if any, being granted such
tenants in connection with such comparable space, (v) any “Option Term
Improvement Allowance,” as defined herein below, to be provided by Tenant in
connection with each Option as compared to the improvements or allowances
provided or to be provided in the Comparable Transactions, taking into account
the contributory value of the existing improvements in the Premises, such value
to be based upon the age, design, quality of finishes, and layout of the
existing improvements, and (vi) all other monetary concessions (including the
value of any signage), if any, being granted such tenants in connection with
such Comparable Transactions. Notwithstanding any contrary provision hereof, in
determining the Market Rent, no consideration shall be given to any period of
rental abatement, if any, granted to tenants in Comparable Transactions in
connection with the design, permitting and construction of tenant improvements.
The Market Rent shall include adjustment of the stated size of the Premises
based upon the standards of measurement utilized in the Comparable Transactions.
2.TENANT SECURITY. The Market Rent shall additionally include a determination as
to whether, and if so to what extent, Tenant must provide (or continue to
provide) Landlord with financial security, such as an enhanced security deposit,
a letter of credit (such as the Letter of Credit) or guaranty, for Tenant’s Rent
obligations during the Option Term. Such determination shall be made by
reviewing the extent of financial security then generally being imposed in
Comparable Transactions from tenants of comparable financial condition and
credit history to the then existing financial condition and credit history of
Tenant (with appropriate adjustments to account for differences in the
then-existing financial condition of Tenant and such other tenants, and giving
reasonable consideration to Tenant’s prior performance history during the Lease
Term).
3.IMPROVEMENT ALLOWANCE. Notwithstanding anything to the contrary set forth in
this Exhibit H, once the Market Rent for each Option Term is determined as a Net
Equivalent Lease Rate, if in connection with such determination, it is deemed
that Tenant is entitled to a improvement or comparable allowance for the
improvement of the Premises (the total dollar value of such allowance, the “
Option Term Improvement Allowance ”), Landlord shall pay the Option Term
Improvement Allowance to Tenant pursuant to a reasonable disbursement procedure
(consistent with the terms of Section 2.2.1 of the Work Letter Agreement) and
the terms of Article 8 of this Lease, and, as set forth in Section 5 , below, of
this Exhibit H , the rental rate component of the Market Rent shall be increased
to be a rental rate which takes into consideration that Tenant will receive
payment of such Option Term Improvement Allowance and, accordingly, such payment
with interest shall be factored into the base rent component of the Market Rent.
4.COMPARABLE BUILDINGS. For purposes of this Lease, the term “Comparable
Buildings” shall mean first-class single-tenant occupancy office buildings
comparable to the Building in terms of (based upon the date of completion of
construction or major renovation), design characteristics, quality of
construction, level of services and amenities, size and appearance, and parking
areas and are located in the “Sorrento Mesa” submarket of San Diego, California
(the “ Comparable Area ”).
5.METHODOLOGY FOR REVIEWING AND COMPARING THE COMPARABLE TRANSACTIONS. In order
to analyze the Comparable Transactions based on the factors to be considered in
calculating Market Rent, and given that the Comparable Transactions may vary in
terms of length of term, rental rate, concessions, etc., the following steps
shall be taken into consideration to “adjust” the objective data from each of
the Comparable Transactions. By taking this approach, a “Net Equivalent Lease
Rate” for each of the Comparable Transactions shall be determined using the
following steps to adjust the Comparable Transactions, which will allow for an
“apples to apples” comparison of the Comparable Transactions.
5.1. The contractual rent payments for each of the Comparable Transactions
should be arrayed monthly or annually over the lease term. All Comparable
Transactions should be adjusted to simulate a net rent structure, wherein the
tenant is responsible for the payment of all property operating expenses in a
manner consistent with this Lease. This results in the estimate of Net
Equivalent Rent received by each landlord for each Comparable Transaction being
expressed as a periodic net rent payment.
5.2 Any free rent or similar inducements received over time should be deducted
in the time period in which they occur, resulting in the net cash flow arrayed
over the lease term.
5.3 The resultant net cash flow from the lease should be then discounted (using
an 8% annual discount rate) to the lease commencement date, resulting in a net
present value estimate.
5.4 From the net present value, up front inducements (improvements allowances
and other concessions) should be deducted. These items should be deducted
directly, on a “dollar for dollar” basis, without discounting since they are
typically incurred at lease commencement, while rent (which is discounted) is a
future receipt.
5.5 The net present value should then amortized back over the lease term as a
level monthly or annual net rent payment using the same annual discount rate of
8.0% used in the present value analysis. This calculation will result in a
hypothetical level or even payment over the option period, termed the “Net
Equivalent Lease Rate” (or constant equivalent in general financial terms).

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6.USE OF NET EQUIVALENT LEASE RATES FOR COMPARABLE TRANSACTIONS. The Net
Equivalent Lease Rates for the Comparable Transactions shall then be used to
reconcile, in a manner usual and customary for a real estate appraisal process,
to a conclusion of Market Rent which shall be stated as a Net Equivalent Lease
Rate applicable to each year of the Option Term.
 

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EXHIBIT I
6290 SEQUENCE DRIVE
ORIGINAL IMPROVEMENT REMOVAL ITEMS
[ATTACHED]
 

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EXHIBIT J
6290 SEQUENCE DRIVE
PRIOR TENANT REMOVAL ITEMS
[ATTACHED]
 

FIRST AMENDMENT TO OFFICE LEASE

This FIRST AMENDMENT TO OFFICE LEASE ("First Amendment") is made and entered
into as of the 24th day of July, 2012, by and between KILROY REALTY, L.P., a
Delaware limited partnership ("Landlord"), and ENTROPIC COMMUNICATIONS, INC., a
Delaware corporation ("Tenant").

RECITALS

A. Landlord and Tenant entered into that certain Office Lease dated August 31,
2007 (the "Lease"), whereby Landlord leases to Tenant and Tenant leases from
Landlord those certain premises consisting of 90,000 rentable square feet
("Premises") comprising the entirety of that certain office building located at
6290 Sequence Drive (Sorrento Mesa), San Diego, California ("Building").

B. Landlord and Tenant desire to amend the Lease as hereinafter provided.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

1. Capitalized Terms. All capitalized terms when used herein shall have the same
meaning as is given such terms in the Lease unless expressly superseded by the
terms of this First Amendment.

2. Letter of Credit. Landlord and Tenant hereby acknowledge and agree that, as
of the date of this Lease, Section 22.3.2 shall be deleted and be of no further
force or effect and shall be replaced with the following:

"22.3.2 Definitions. For purposes of this Article 22, "EBITDA," shall mean
earnings before interest, taxes, depreciation and amortization. For purposes of
this Article 22, "Free Cash Flow" shall mean EBITDA less (i) cash interest, (ii)
cash taxes, (iii) rent, (iv) capital expenditures, (v) change in working

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capital (which would include long term marketable securities), and (vi) non-cash
stock based compensation (calculated based upon the then most current
financials, on a rolling quarterly basis consisting of the four (4) financial
quarters most recently completed). For purposes hereof, "Tangible Net Worth"
shall mean total tangible assets (not including goodwill as an asset) computed
in accordance with generally accepted accounting principles less total
liabilities computed in accordance with generally accepted accounting
principles. For the purposes of this Article 22, the "Required Thresholds" shall
mean, collectively, the maintenance of each of (x) Free Cash Flow for the Tenant
entity of $0 to positive dollars, and (y) a Tangible Net Worth for the Tenant
entity of no less than Two Hundred and Fifty Million and 00/100 Dollars
($250,000,000.00)."

3. No Broker. Landlord and Tenant hereby warrant to each other that they have
had no dealings with any real estate broker or agent in connection with the
negotiation of this First Amendment, and that they know of no other real estate
broker or agent who is entitled to a commission in connection with this First
Amendment. Each party agrees to indemnify and defend the other party against and
hold the other party harmless from any and all claims, demands, losses,
liabilities, lawsuits, judgments, and costs and expenses (including, without
limitation, reasonable attorneys' fees) with respect to any leasing commission
or equivalent compensation alleged to be owing on account of the indemnifying
party's dealings with any real estate broker or agent, other than the Broker,
occurring by, through, or under the indemnifying party. The terms of this
Section 3 shall survive the expiration or earlier termination of this First
Amendment.

4. No Further Modification. Except as set forth in this First Amendment, all of
the terms and provisions of the Lease shall apply with respect to the Expansion
Premises and shall remain unmodified and in full force and effect.

[Signatures follow on next page]

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IN WITNESS WHEREOF, this First Amendment has been executed as of the day and
year first above written.

''LANDLORD''
 
"TENANT"
 
 
 
KILROY REALTY, L.P.,
 
ENTROPIC COMMUNICATIONS, INC
a Delaware limited partnership
 
a Delaware corporation
 
 
 
By:
KILROY REALTY CORPORATION,
 
 
 
 
a Maryland corporation,
 
 
 
 
general partner
 
 
 
 
 
 
 
 
By:
/s/ Jeffrey C. Hawken
 
By:
/s/ Patrick C. Henry
Name:
Jeffrey C. Hawken
 
Name:
Patrick C. Henry
Its:
Executive Vice President, Chief Operating Officer
 
Its:
CEO
 

 
 
 
By:
/s/ A. Christian Krogh
 
By:
/s/ David Lyle
Name:
A. Christian Krogh
 
Name:
David Lyle
Its:
Vice President, Asset Management
 
Its:
CFO

AMENDED AND RESTATED SECOND AMENDMENT TO OFFICE LEASE

This AMENDED AND RESTATED SECOND AMENDMENT TO OFFICE LEASE (“Second Amendment”)
is made and entered into as of October 16, 2013 (the "Effective Date"), by and
between KILROY REALTY, L.P., a Delaware limited partnership ("Landlord"), and
ENTROPIC COMMUNICATIONS, INC., a Delaware corporation (“Tenant").

RECITALS:

A. Landlord and Tenant are parties to that certain Office Lease dated August 31,
2007 (the "Office Lease"), as amended by that certain First Amendment to Office
Lease dated July 24, 2012 (the "First Amendment") (the Office Lease and the
First Amendment shall collectively be referred to as the "Lease"), whereby
Landlord leases to Tenant and Tenant leases from Landlord 90,000 rentable square
feet of space (the "6290 Premises") comprising the entirety of that certain
building located at 6290 Sequence Drive, San Diego, California (the "6290
Building"). The 6290 Building, together with the parking facilities servicing
the 6290 Building, any outside plaza areas appurtenant thereto, the land upon
which the 6290 Building is located (which is improved with landscaping and other
improvements), and the "6350 Building" (as that term is defined in Recital D
below), together with the parking facilities serving the 6350 Building and the
land upon which such 6350 Building is located, and other improvements
surrounding either of the aforementioned buildings which are designated from
time to time by Landlord as common areas

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appurtenant to or servicing such buildings, and the land upon which any of the
foregoing are situated, are herein sometimes collectively referred to as the
"Project."

B. Landlord, and Tenant previously entered into that certain Second Amendment to
Office Lease dated February 21, 2013 (the "6260 Second Amendment"), whereby
Landlord and Tenant agreed to relocate and substitute the entirety of the
existing 6290 Premises with the entirety of that certain building located at
6260 Sequence Drive, San Diego, California (the "6260 Substitute Premises").
Landlord and Tenant desire to rescind the 6260 Second Amendment in its entirety,
as Tenant shall not be relocating to the 6260 Substitute Premises.

C. Subject to the foregoing, from and after the "Effective Date", this Second
Amendment shall amend, restate and supersede the terms of the 6260 Second
Amendment in its entirety.

D. Landlord and Tenant desire to amend the Lease to eliminate the 6290 Premises
and substitute in its place the entirety of that certain building comprising
132,600 rentable square feet of space (the "6350 Substitute Premises") located
at 6350 Sequence Drive, San Diego, California, as the space leased by Tenant
under the Lease (the “6350 Building”) (which 6350 Building is also located in,
and constitutes part of, the Project), as such 6350 Substitute Premises is more
particularly delineated on Exhibit A attached hereto and made a part hereof, and
to make other modifications to the Lease, and in connection therewith, Landlord
and Tenant desire to amend the Lease as hereinafter provided.

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AGREEMENT:

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

1. Capitalized Terms. All capitalized terms when used herein shall have the same
meaning as is given such terms in the Lease unless expressly superseded by the
terms of this Second Amendment.

2. Substitution of 6350 Substitute Premises for the 6290 Premises. Subject to
the provisions of Section 13, below, effective as of the date (the “6350
Substitute Premises Commencement Date”) which is the later of August 1, 2014 or
the date which is five (5) months following Landlord’s delivery of the 6350
Substitute Premises to Tenant, (x) the Lease shall terminate and be of no
further force or effect with respect to the 6290 Premises, and (y) Tenant shall
lease from Landlord, and Landlord shall lease to Tenant, the 6350 Substitute
Premises upon the terms and conditions set forth in the Lease, as hereby
amended. Consequently, effective upon the 6350 Substitute Premises Commencement
Date, the 6350 Substitute Premises shall be substituted for the 6290 Premises
and all references in the Lease (as hereby amended), to the “Premises” shall
mean and refer instead to the 6350 Substitute Premises. Additionally, as of the
6350 Substitute Premises Commencement Date, all references in the Lease to the
“Building” shall be deemed to refer the 6350 Building (rather than the 6290
Building). The required evidence of insurance coverage as set forth in Article
10 of the Office Lease pertaining to the 6350 Substitute Premises must be
delivered to Landlord on or before the date Tenant and/or its employees,
contractors and/or agents first enter the 6350 Substitute Premises for
occupancy, construction of improvements, alterations, or any other move­in
activities. For purposes of the Lease (as amended), the "rentable square feet"
of the Premises and Building are hereby stipulated to be, and shall therefore be
deemed, as set forth in Recital D of this Second Amendment, and no
re­-measurement of the Premises or Building will occur at any time during the
Lease Term or any extensions thereof.

3. Surrender of 6290 Premises.

3.1 In General. Subject to the provisions of Sections 3.2, below, Tenant hereby
agrees to vacate the 6290 Premises and surrender and deliver exclusive
possession of the 6290 Premises to Landlord on or before the 6350 Substitute
Premises Commencement Date in accordance with the provisions of the Lease as
herein amended and, thereafter, Tenant shall have no further obligations with
respect to the 6290 Premises except with respect to the period of Tenant’s
tenancy prior to the 6350 Substitute Premises Commencement Date, and those
obligations which expressly survive the expiration or earlier termination of the
Lease. In the event that Tenant fails to vacate the 6290 Premises and surrender
and deliver exclusive possession of the 6290 Premises to Landlord on or before
the 6350 Substitute Premises Commencement Date in accordance with the provisions
of the Lease as hereby amended, then Tenant shall be deemed to be in holdover of
the 6290 Premises and shall be subject to the terms of Section 3.2 of this
Second Amendment.
3.2 Permitted Holdover/Holdover.

3.2.1 Initial 60­-Day Permitted Holdover Period. Notwithstanding any provision
to the contrary contained herein, Tenant shall have the right, pursuant to the
terms of this Section 3.2.1, to holdover in the 6290 Premises for no more than
sixty (60) days after the occurrence of the 6350

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Substitute Premises Commencement Date (such applicable period being referred to
herein as the "Initial 60­Day Permitted Holdover Period"). In connection
therewith, (A) Tenant shall endeavor to give Landlord prior written notice of
its intent to holdover in the 6290 Premises for the Initial 60­-Day Permitted
Holdover Period, (B) Tenant shall have no obligation during such Initial 60­-Day
Permitted Holdover Period to protect, defend, indemnify and hold Landlord
harmless from any loss, costs and liability resulting from Tenant's failure to
surrender the 6290 Premises upon the 6350 Substitute Premises Commencement Date,
(C) Tenant shall not be liable to Landlord for the payment or reimbursement of
any legal fees incurred by Landlord in connection with Tenant's holdover in the
6290 Premises during the Initial 60-­Day Permitted Holdover Period, and (D) no
Base Rent or Direct Expenses shall be payable by the Tenant to the Landlord
during such Initial 60­-Day Permitted Holdover Period. Except as specifically
set forth in this Section 3.2 to the contrary (i.e., in the event Tenant duly
delivers the "Subsequent 60-­Day Permitted Holdover Notice" (as that term is
defined in Section 3.2.2 below)), all of the obligations under Article 16 of the
Office Lease shall apply following the expiration or earlier termination of the
Initial 60­-Day Permitted Holdover Period including, but not limited to,
Tenant's obligation to protect, defend, indemnify and hold Landlord harmless
from any loss, costs (including reasonable attorneys' fees) and liability
resulting from Tenant's failure to surrender the 6290 Premises upon the
termination or expiration of the Lease.

3.2.2 Subsequent 30-­Day Permitted Holdover Period. Notwithstanding any
provision to the contrary contained herein, to the extent Tenant delivers, on or
before the date which is thirty (30) days prior to the expiration date of the
Initial 60-­Day Permitted Holdover Period, written notice to Landlord (the
"Subsequent 30-­Day Permitted Holdover Notice") setting forth Tenant's
requirement for another limited holdover in the 6290 Premises of no more than
thirty (30) days (such applicable period being referred to herein as the
"Subsequent 30­-Day Permitted Holdover Period"), (A) Tenant shall have no
obligation during such Subsequent 30-­Day Permitted Holdover Period to protect,
defend, indemnify and hold Landlord harmless from any loss, costs and liability
resulting from Tenant's failure to surrender the 6290 Premises upon the
termination or expiration of the Initial 60­-Day Permitted Holdover Period, (B)
Tenant shall not be liable to Landlord for the payment or reimbursement of any
legal fees incurred by Landlord in connection with Tenant's holdover in the 6290
Premises during the Subsequent 30­-Day Permitted Holdover Period, and (C) Base
Rent during such Subsequent 30-­Day Permitted Holdover Period shall be payable
at a monthly rate equal to that payable for the 6290 Premises during the last
full calendar month of the Lease Term (not including the Initial 60-­Day
Permitted Holdover Period) (i.e., an amount equal to One Hundred Eighty­ Seven
Thousand Two Hundred and 00/100 Dollars ($187,200.00)), and Tenant shall have no
obligation to pay Direct Expenses during the Subsequent 30­Day Permitted
Holdover Period. All of the obligations under Article 16 of the Office Lease
shall apply following the expiration or earlier termination of the Subsequent
30­Day Permitted Holdover Period including, but not limited to, Tenant's
obligation to protect, defend, indemnify and hold Landlord harmless from any
loss, costs (including reasonable attorneys' fees) and liability resulting from
Tenant's failure to surrender the 6290 Premises upon the termination or
expiration of the Lease. Notwithstanding any provision to the contrary contained
herein, Tenant expressly acknowledges and agrees that the provisions of this
Section 3.2.2 shall only apply to the extent Tenant has previously exercised its
rights under Section 3.2.1 above, and has delivered the Initial 60-­Day
Permitted Holdover Notice.

3.2.3 In General/Holdover 90 Days after the 6350 Substitute Premises
Commencement Date. If (a) Tenant has not exercised its right to holdover in the
6290 Premises during the Initial 60­-Day Permitted Holdover Period and holds
over after the occurrence of the 6350 Substitute Premises Commencement Date, (b)
Tenant exercises its right to hold over in the 6290 Premises during the Initial
60­-Day Permitted Holdover Period (but not the Subsequent 30-­Day Permitted
Holdover Period) and Tenant holds over in the 6290 Premises after the expiration
of the Initial 60­-Day Permitted Holdover Period, or (c) Tenant exercises its
right to hold over in the 6290 Premises during the Initial 60-Day Permitted
Holdover

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Period and the Subsequent 30-Day Permitted Holdover Period, and Tenant holds
over in the 6290 Premises after the expiration of the Subsequent 30­-Day
Permitted Holdover Period, then in each of the above­referenced instances the
provisions of Article 16 of the Office Lease shall apply with full force and
effect and the Rent then­payable by Tenant to Landlord shall be as set forth in
Article 16 of the Office Lease. Notwithstanding any provision to the contrary
contained in the Lease (including, but not limited to, the last sentence of
Article 16 of the Office Lease), if Tenant is in holdover in the 6290 Premises
as contemplated by the foregoing items (a), (b) or (c), Landlord and Tenant
expressly acknowledge and agree that Landlord's requirement to deliver a New
Lease Notice in order for the provisions of the last sentence of Article 16 of
the Office Lease to apply shall be waived with respect to Tenant's holding over
in the 6290 Premises (i.e., following the occurrence of the events contemplated
by items (a), (b) or (c) above, Tenant shall protect, defend, indemnify and hold
Landlord harmless from all loss, costs (including reasonable attorneys' fees)
and liability resulting from its failure to surrender the 6290 Premises,
including, without limiting the generality of the foregoing, any claims made by
any succeeding tenant founded upon such failure to surrender and any lost
profits to Landlord resulting therefrom).

3.3 Representations of Tenant. Tenant represents and warrants to Landlord that
(a) Tenant has not heretofore assigned or sublet all or any portion of its
interest in the Lease or in the 6290 Premises; (b) no other person, firm or
entity has any right, title or interest in the Lease or in the 6290 Premises
through Tenant; (c) Tenant has the full right, legal power and actual authority
to enter into this Second Amendment and to terminate the Lease with respect to
the 6290 Premises without the consent of any person, firm or entity; and (d)
Tenant has the full right, legal power and actual authority to bind Tenant to
the terms and conditions hereof. Tenant further represents and warrants to
Landlord that as of the date hereof there are no, and as of the 6350 Substitute
Premises Commencement Date, there shall not be, any mechanic’s liens or other
liens encumbering all or any portion of the 6290 Premises, by virtue of any act
or omission on the part of Tenant, its predecessors, contractors, agents,
employees, successors or assigns for which Tenant has not made adequate
provisions for payment and provided Landlord reasonable evidence thereof.
Notwithstanding the termination of the Lease with respect to the 6290 Premises,
the representations and warranties set forth in this Section 3.3 shall survive
the 6350 Substitute Premises Commencement Date and Tenant shall be liable to
Landlord for any inaccuracy or any breach thereof.

4. Lease Term.

4.1 Extension of Lease Term. Landlord and Tenant acknowledge that the Lease Term
is currently scheduled to expire on January 31, 2015, pursuant to the terms of
the Lease. Notwithstanding any provision to the contrary in the Lease, the Lease
Term is hereby extended for a period of seven (7) years commencing on February
1, 2015, and ending January 31, 2022 (the "Extended Term"), unless sooner
terminated as provided in the Lease, as hereby amended. For purposes hereof, the
term "Lease Expiration Date" shall mean and otherwise refer to January 31, 2022.

4.2 Option to Extend Lease Term. Notwithstanding any provision to the contrary
contained in the Lease (as amended), Landlord and Tenant acknowledge and agree
that the Extended Term provided herein shall, although not entirely consistent
with the first (1st) Option Term identified in Section 2.2 of the Office Lease,
nevertheless be deemed to represent the first (1st) of Tenant's two (2) options
to extend the Lease Term as provided in Section 2.2 of the Office Lease, and
that effective as of the date of this Second Amendment, Tenant shall continue to
have only one (1) option to extend the Lease Term for a period of five (5) years
in accordance with, and pursuant to the terms of, Section 2.2 of the Office
Lease.

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5. Base Rent. Notwithstanding any provision to the contrary contained in the
Lease, as hereby amended, prior to 6350 Substitute Premises Commencement Date,
Tenant shall continue to pay Base Rent for the 6290 Premises in accordance with
the terms of Article 3 of the Office Lease. Commencing on the 6350 Substitute
Premises Commencement Date, and continuing through the Lease Expiration Date,
Tenant shall pay to Landlord monthly installments of Base Rent for the 6350
Substitute Premises as follows:

Period During
Lease Term

Annualized
Base Rent
Monthly
Installment
of Base Rent
Monthly Base Rent per Rentable Square Foot
6350 Substitute Premises
Commencement Date-
January 31, 2015

$2,322,000.00

$193,500.00

$1.46
February 1, 2015 -
 January 31, 2016

$2,864,160.00

$238,680.00

$1.80
February 1, 2016 - ­
 January 31, 2017

$2,964,405.60

$247,033.80

$1.86
February 1, 2017 -
­ January 31, 2018

$3,068,159.80

$255,679.98

$1.93
February 1, 2018 -
­ January 31, 2019

$3,175,545.39

$264,628.78
                   $2.00
February 1, 2019 -
­ January 31, 2020

$3,286,689.48

$273,890.79

   $2.07
February 1, 2020 -
­ January 31, 2021

$3,401,723.61

$283,476.97

   $2.14
February 1, 2021 -
­ January 31, 2022

$3,520,783.94

$293,398.66

  $2.21
* The amounts identified in the column entitled "Monthly Base Rent per Rentable
Square Foot" are rounded amounts provided for informational purposes only.

6. Tenant’s Share of Direct Expenses. Notwithstanding any provision to the
contrary contained in the Lease, as hereby amended, prior to the 6350 Substitute
Premises Commencement Date, Tenant shall continue to pay Direct Expenses for the
6290 Premises in accordance with the terms of Article 4 of the Office Lease.
Commencing on the 6350 Substitute Premises Commencement Date, and continuing
through the Lease Expiration Date, Tenant shall pay to Landlord Direct Expenses
for the 6350 Substitute Premises in accordance with the terms of Article 4 of
the Office Lease (i.e., on a "triple­net" basis); provided, however, Tenant's
Share shall be one hundred percent (100%) of the 6350 Building.

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7. Improvements.

7.1 In General. Except as specifically set forth in this Second Amendment and
the Work Letter attached hereto as Exhibit B (the "Work Letter"), Landlord shall
not be obligated to provide or pay for any improvement work or services related
to the improvement of the 6350 Substitute Premises, and Tenant shall accept the
6350 Substitute Premises in its presently existing, “as­is” condition. Tenant
also acknowledges that neither Landlord nor any agent of Landlord has made any
representation or warranty regarding the condition of the 6350 Substitute
Premises, the 6350 Building or the Project or with respect to the suitability of
any of the foregoing for the conduct of Tenant's business, except as
specifically set forth in the Lease (as hereby amended) and the Work Letter.
Notwithstanding any provision to the contrary contained in the Lease (as hereby
amended), Landlord may, by written notice to Tenant given concurrently with
Landlord's approval of any "Improvements" (as that term is defined in Section
2.1 of the Work Letter), require Tenant, at Tenant's expense, to remove any
Improvements prior to the expiration or earlier termination of the Lease Term
and to repair any damage to the 6350 Substitute Premises caused by such removal.
Notwithstanding any provision to the contrary contained herein, Landlord and
Tenant expressly acknowledge and agree that the provisions of the Work Letter
Agreement attached to the Office Lease as Exhibit B shall be inapplicable with
respect to the 6350 Substitute Premises, and that any and all references to the
Improvement Allowance set forth in the Office Lease shall be inapplicable with
respect to the 6350 Substitute Premises.

7.2 Condition of 6350 Building. Notwithstanding any provision to the contrary
set forth in the Lease or this Second Amendment, Landlord shall, at Landlord's
sole cost and expense, deliver the 6350 Substitute Premises to Tenant with the
roof, and all Building Systems serving and within the 6350 Substitute Premises,
in good working condition, and Landlord covenants that (A) such Building Systems
located within the 6350 Building have recently been operated, (B) such Building
Systems located within the 6350 Building have been regularly serviced, and (C)
such Building Systems located within the 6350 Building and the 6350 Building's
roof have a remaining useful life extending beyond the Extended Term identified
in this Second Amendment. If, within the first (1st) year following Landlord's
delivery of the 6350 Substitute Premises to Tenant, it is discovered that
Landlord failed to deliver the 6350 Substitute Premises in compliance with the
obligations listed in the immediately preceding sentence, then Landlord shall,
at its sole cost and expense and without reimbursement of any kind by Tenant
(but only to the extent it receives notice from Tenant within such one (1) year
period), make any repairs and/or replacements necessary to put the Building
Systems serving the 6350 Substitute Premises or the roof of the 6350 Building in
the condition required by the immediately preceding sentence. Without limiting
any of the foregoing provisions, Landlord and Tenant acknowledge and agree that
Landlord shall be undertaking certain tests in the 6350 Substitute Premises to
determine if any of the Building Systems located within the 6350 Building are
impacted by MIC (the "6350 Substitute Premises MIC Tests"). Based on the results
of the 6350 Substitute Premises MIC Tests, Landlord shall perform any required
corrective actions to remediate any MIC found in the 6350 Substitute Premises
prior to the 6350 Substitute Premises Commencement Date; and further, in an
effort to reduce the likelihood of any future MIC issues, Landlord hereby
agrees, at Landlord's sole cost and expense, prior to its delivery of the 6350
Substitute Premises to the Tenant, to (i) introduce a MIC inhibitor chemical
into the Building Systems located in the 6350 Building, and (ii) establish a
commercially reasonable testing mechanism designed to detect future MIC issues
in the Building Systems located in the 6350 Building; provided, however, the
cost of any ongoing MIC prevention measures undertaken by the Landlord (e.g.,
ongoing testing, monitoring and inspecting) shall be chargeable to the Tenant as
a component of the Operating Expenses payable by the Tenant to the Landlord
pursuant to the terms of the Lease. In connection with Landlord's MIC prevention
measures, Tenant hereby agrees to notify Landlord prior to opening or modifying
the sprinkler system located within the Building. If Tenant opens or otherwise
modifies such sprinkler system, Tenant shall, at Tenant's sole cost and expense,
be responsible for

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re­ filling the same with an acceptable MIC inhibitor chemical and restoring
Landlord's testing mechanism so that it functions as it did prior to Tenant
opening and/or modifying the sprinkler system.

7.3 6350 Building Applicable Laws.

7.3.1 In General. Landlord covenants that as of the 6350 Substitute
Premises Commencement Date, the 6350 Substitute Premises and the parking areas
serving the 6350 Building, shall be in material compliance with all Applicable
Laws in effect as of the 6350 Substitute Premises Commencement Date (which
Applicable Laws shall include, without limitation, the Americans with
Disabilities Act as applied by local governmental entities to the Building). If,
within the first (1st) year following Landlord’s delivery of the 6350 Substitute
Premises to Tenant, it is discovered that Landlord failed to deliver the 6350
Substitute Premises in material compliance with all Applicable Laws in effect as
of the 6350 Substitute Premises Commencement Date as
required by the immediately preceding sentence, Landlord shall, at its sole cost
and expense and without reimbursement from Tenant of any kind, correct any
material deficiency in such condition promptly following receipt of written
notice thereof from Tenant within such one (1) year period if and to the extent
(A) each such compliance with Applicable Laws obligation is not required as a
result of the misconduct, breach, fault or negligence of Tenant or any of the
other Tenant Parties, (B) Landlord's failure to comply with such Applicable Laws
would prohibit Tenant from obtaining or maintaining a certificate of occupancy
for the 6350 Substitute Premises, or create a significant health hazard for
Tenant's employees, or would unreasonably and materially affect (x) the
operation of Tenant's business from the 6350 Substitute Premises, or (y) the
safety of Tenant's employees, and (C) is not the responsibility of Tenant under
the Lease (as amended); provided, however, to the extent compliance work is
undertaken by Landlord which is not required pursuant to the foregoing, the
costs incurred in connection therewith shall be subject to the Operating Expense
provisions of the Lease (i.e., such costs shall only be includable in Operating
Expenses and passed through to the Tenant to the extent permitted by the Lease).
Any such work by Landlord needed to bring the 6350 Substitute Premises and/or
the parking areas serving the 6350 Building into material compliance with all
Applicable Laws ("Landlord's Compliance Work") may be undertaken at the same
time Tenant constructs the Improvements in the 6350 Substitute Premises pursuant
to the provisions of the Work Letter, and Tenant shall promptly and diligently
cooperate and comply with Landlord’s construction schedule for such work.

7.2 Condition of 6350 Building. Notwithstanding any provision to the contrary
set forth in the Lease or this Second Amendment, Landlord shall, at Landlord's
sole cost and expense, deliver the 6350 Substitute Premises to Tenant with the
roof, and all Building Systems serving and within the 6350 Substitute Premises,
in good working condition, and Landlord covenants that (A) such Building Systems
located within the 6350 Building have recently been operated, (B) such Building
Systems located within the 6350 Building have been regularly serviced, and (C)
such Building Systems located within the 6350 Building and the 6350 Building's
roof have a remaining useful life extending beyond the Extended Term identified
in this Second Amendment. If, within the first (1st) year following Landlord's
delivery of the 6350 Substitute Premises to Tenant, it is discovered that
Landlord failed to deliver the 6350 Substitute Premises in compliance with the
obligations listed in the immediately preceding sentence, then Landlord shall,
at its sole cost and expense and without reimbursement of any kind by Tenant
(but only to the extent it receives notice from Tenant within such one (1) year
period), make any repairs and/or replacements necessary to put the Building
Systems serving the 6350 Substitute Premises or the roof of the 6350 Building in
the condition required by the immediately preceding sentence. Without limiting
any of the foregoing provisions, Landlord and Tenant acknowledge and agree that
Landlord shall be undertaking certain tests in the 6350 Substitute Premises to
determine if any of the Building Systems located within the 6350 Building are
impacted by MIC (the "6350 Substitute Premises MIC Tests"). Based on the results
of the 6350 Substitute Premises MIC Tests, Landlord shall perform any required
corrective actions to remediate

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any MIC found in the 6350 Substitute Premises prior to the 6350 Substitute
Premises Commencement Date; and further, in an effort to reduce the likelihood
of any future MIC issues, Landlord hereby agrees, at Landlord's sole cost and
expense, prior to its delivery of the 6350 Substitute Premises to the Tenant, to
(i) introduce a MIC inhibitor chemical into the Building Systems located in the
6350 Building, and (ii) establish a commercially reasonable testing mechanism
designed to detect future MIC issues in the Building Systems located in the 6350
Building; provided, however, the cost of any ongoing MIC prevention measures
undertaken by the Landlord (e.g., ongoing testing, monitoring and inspecting)
shall be chargeable to the Tenant as a component of the Operating Expenses
payable by the Tenant to the Landlord pursuant to the terms of the Lease. In
connection with Landlord's MIC prevention measures, Tenant hereby agrees to
notify Landlord prior to opening or modifying the sprinkler system located
within the Building. If Tenant opens or otherwise modifies such sprinkler
system, Tenant shall, at Tenant's sole cost and expense, be responsible for re­
filling the same with an acceptable MIC inhibitor chemical and restoring
Landlord's testing mechanism so that it functions as it did prior to Tenant
opening and/or modifying the sprinkler system.

7.3 6350 Building Applicable Laws.

7.3.1 In General. Landlord covenants that as of the 6350 Substitute
Premises Commencement Date, the 6350 Substitute Premises and the parking areas
serving the 6350 Building, shall be in material compliance with all Applicable
Laws in effect as of the 6350 Substitute Premises Commencement Date (which
Applicable Laws shall include, without limitation, the Americans with
Disabilities Act as applied by local governmental entities to the Building). If,
within the first (1st) year following Landlord’s delivery of the 6350 Substitute
Premises to Tenant, it is discovered that Landlord failed to deliver the 6350
Substitute Premises in material compliance with all Applicable Laws in effect as
of the 6350 Substitute Premises Commencement Date as
required by the immediately preceding sentence, Landlord shall, at its sole cost
and expense and without reimbursement from Tenant of any kind, correct any
material deficiency in such condition promptly following receipt of written
notice thereof from Tenant within such one (1) year period if and to the extent
(A) each such compliance with Applicable Laws obligation is not required as a
result of the misconduct, breach, fault or negligence of Tenant or any of the
other Tenant Parties, (B) Landlord's failure to comply with such Applicable Laws
would prohibit Tenant from obtaining or maintaining a certificate of occupancy
for the 6350 Substitute Premises, or create a significant health hazard for
Tenant's employees, or would unreasonably and materially affect (x) the
operation of Tenant's business from the 6350 Substitute Premises, or (y) the
safety of Tenant's employees, and (C) is not the responsibility of Tenant under
the Lease (as amended); provided, however, to the extent compliance work is
undertaken by Landlord which is not required pursuant to the foregoing, the
costs incurred in connection therewith shall be subject to the Operating Expense
provisions of the Lease (i.e., such costs shall only be includable in Operating
Expenses and passed through to the Tenant to the extent permitted by the Lease).
Any such work by Landlord needed to bring the 6350 Substitute Premises and/or
the parking areas serving the 6350 Building into material compliance with all
Applicable Laws ("Landlord's Compliance Work") may be undertaken at the same
time Tenant constructs the Improvements in the 6350 Substitute Premises pursuant
to the provisions of the Work Letter, and Tenant shall promptly and diligently
cooperate and comply with Landlord’s construction schedule for such work.

identifying Tenant's name or logo located at the top of the 6350 Building
(on the east­facing elevation facing Sequence Drive) in one (1) location;

(ii) Exclusive "eyebrow" signage located adjacent to the main entrance of the
Building located directly above either one or both of the entry points into the
6350 Building; and

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(iii) One (1) slot on the monument sign (which monument sign may be installed by
Tenant to serve the 6350 Building), in a design, and with materials and other
reasonable parameters to be approved by Landlord and Tenant in accordance with
the TCCs of Section 23.4.1, below (the "Tenant's Monument Signage"). Tenant
hereby acknowledges and agrees that Landlord may, at Landlord's sole cost and
expense, place a standard "owned and managed" sign on such 6350 Building
Monument Sign, provided that such "owned and managed" sign shall not be larger
than Tenant's signage."

The remaining provisions of Article 23 shall apply to Tenant's Signage as the
same has been defined in this Section 8. For clarification purposes, Landlord
and Tenant hereby expressly acknowledge and agree that Tenant shall, as of the
6350 Substitute Premises Commencement Date, have no signage rights with respect
to the 6290 Building.

9. Parking. Section 9 of the Summary attached to the Office Lease shall be
deleted as of the 6350 Substitute Premises Commencement Date. In addition,
Article 28 of the Office Lease shall, as of the 6350 Substitute Premises
Commencement Date, be deleted in its entirety and replaced with the following:

"28.1 In General. Tenant shall be entitled to utilize, without charge,
commencing on the "6350 Substitute Premises Commencement Date" (as that term is
defined in Section 2.1 of that certain Second Amendment dated October 16, 2013
(the "Second Amendment")), all of the parking spaces located in the area
identified on Exhibit A attached to the Second Amendment as the "6350 Building
Parking Area", which shall not be less than 3.6 spaces per rentable square foot
of the Substitute Premises. Notwithstanding the foregoing, Tenant shall be
responsible for the full amount of any taxes imposed by any governmental
authority in connection with the renting of such parking spaces by Tenant or the
use of the 6350 Building Parking Area by Tenant. Tenant's continued right to use
the 6350 Building Parking Area is conditioned upon (i) Tenant abiding by all
rules and regulations which are prescribed from time to time for the orderly
operation and use of the 6350 Building Parking Area, including any sticker or
other identification system established by Landlord, and (ii) Tenant's exercise
of commercially reasonable efforts to cause that

Tenant's employees and visitors also comply with such rules and regulations. To
the extent reasonably necessary to ensure Tenant's parking rights hereunder are
readily available to Tenant and its employees, Landlord shall establish a
sticker or other identification system for the Project. Landlord specifically
reserves the right to change the size, configuration, design, layout and all
other aspects of the Project parking facility at any time and Tenant
acknowledges and agrees that Landlord may, without incurring any liability to
Tenant and without any abatement of Rent under this Lease, from time to time,
temporarily close­off or restrict access to the Project parking facility for
purposes of permitting or facilitating any such construction, alteration or
improvements; provided, however, Landlord will provide Tenant with reasonable
substitute parking in such event to the extent reasonably necessary.
Notwithstanding the foregoing, except as may be required in order to comply with
Applicable Laws or the requirements of a governmental authority (including, a
court

--------------------------------------------------------------------------------

having jurisdiction over the Project) or otherwise in connection with
construction, alterations or improvements pertaining to the 6350 Building
Parking Area (as more particularly contemplated by Article 28 of the Lease),
Landlord shall not reduce the 6350 Building Parking Area such that it is smaller
than that identified on Exhibit A attached to the Second Amendment or otherwise
relocate portions of the 6350 Building Parking Area to be used at an offsite
location. Landlord may delegate its responsibilities hereunder to a parking
operator in which case such parking operator shall have all the rights of
control attributed hereby to the Landlord. The parking spaces rented by Tenant
in the 6350 Building Parking Area pursuant to this Section 28.1 are provided to
Tenant solely for use by Tenant's own personnel, employees, agents, contractors
or invitees and such spaces may not be transferred, assigned, subleased or
otherwise alienated by Tenant without Landlord's prior approval except in
connection with an assignment or sublease approved by Landlord or otherwise
permitted pursuant to the terms of the Lease."

For clarification purposes, Landlord and Tenant hereby expressly acknowledge and
agree that Tenant shall, as of the 6350 Substitute Premises Commencement Date,
have no parking rights with respect to the 6290 Building (including, but not
limited to, with respect to any or all of the 6290 Building parking facilities);
provided, however, to the extent Tenant continues to occupy the 6290 Building
during the Initial 60-­Day Permitted Holdover Period (as more particularly
contemplated by Section 3.2.1 of this Second Amendment) and the Subsequent
30­Day Permitted Holdover Period (as more particularly contemplated by Section
3.2.2 of this Second Amendment), Tenant's parking rights with respect to the
6290 Building shall terminate and be of no further force or effect as of the
expiration of the Initial 60-Day Permitted Holdover Period or the Subsequent
30-­Day Permitted Holdover Period (as the case may be).

10. Security Deposit. Notwithstanding any provision to the contrary contained in
the Lease, the Security Deposit held by Landlord pursuant to the Lease, as
amended hereby, shall equal Two Hundred Ninety­Three Thousand Three Hundred
Ninety-­Eight and 66/100 Dollars ($293,398.66). Landlord and Tenant acknowledge
that, in accordance with Article 21 of the Lease, Tenant has previously
delivered the sum of One Hundred Ninety-­Three Thousand Five Hundred and 00/100
Dollars ($193,500.00) (the "Existing Security Deposit") to Landlord as security
for the faithful performance by Tenant of the terms, covenants and conditions of
the Lease. Concurrently with Tenant's execution of this Second Amendment, Tenant
shall deposit with Landlord an amount equal to Ninety­-Nine Thousand Eight
Hundred Ninety-­Eight and 66/100 Dollars ($99,898.66) to be held by Landlord as
a part of the Security Deposit. To the extent that the total amount held by
Landlord at any time aas security for the Lease, as hereby amended, is less than
Two Hundred Ninety­-Three Thousand Three Hundred Ninety-Eight and 66/100 Dollars
($293,398.66), Tenant shall pay the difference to Landlord within ten (10) days
following Tenant's receipt of notice thereof from Landlord.

11. Brokers. Landlord and Tenant hereby warrant to each other that they have had
no dealings with any real estate broker or agent in connection with the
negotiation of this Second Amendment other than Hughes Marino (the "Broker"),
and that they know of no other real estate broker or agent who is entitled to a
commission in connection with this Second Amendment. Each party agrees to
indemnify and defend the other party against and hold the other party harmless
from any and all claims, demands, losses, liabilities, lawsuits, judgments,
costs and expenses (including without limitation reasonable attorneys' fees)
with respect to any leasing commission or equivalent compensation alleged to be
owing on account of any dealings with any real estate broker or agent, other
than the Broker, occurring by, through, or

--------------------------------------------------------------------------------

under the indemnifying party. The terms of this Section 11 shall survive the
expiration or earlier termination of the term of the Lease, as hereby amended.

12. Notices. Notwithstanding anything to the contrary contained in the Lease, as
of the date of this Second Amendment, any Notices to Landlord or Tenant must be
sent, transmitted, or delivered, as the case may be, to the following addresses:

--------------------------------------------------------------------------------

If to Landlord:
 
 
Kilroy Realty, L.P.
 
c/o Kilroy Realty Corporation
 
12200 West Olympic Boulevard, Suite 200
 
Los Angeles, California 90064
 
Attention: Legal Department
 
 
 
with copies to:
 
 
 
Kilroy Realty Corporation
 
12200 West Olympic Boulevard,
 
Suite 200
 
Los Angeles, California 90064
 
Attention: Mr John Fucci
 
 
 
and
 
 
 
Kilroy Realty Corporation
 
3611 Valley Centre Drive, Suite 550
 
San Diego, California 92130
 
Attention: Mr. Brian Galligan
 
 
 
and
 
 
 
Allen Matkins Leck Gamble Mallory & Natsis LLP
 
1901 Avenue of the Stars, Suite 1800
 
Los Angeles, California 90067
 
Attention: Anton N. Natsis, Esq.
 
 
if to Tenant:
 
 
Entropic Communications, Inc.
 
6290 Sequence Drive
 
San Diego, CA 92121
 
Attention: Mr. Trevor Renfield(Prior to 6350 Substitute
 
Premises Commencement Date)
 
 
 
with copies to:
 
 
 
Entropic Communications, Inc.
 
6290 Sequence Drive
 
San Diego, CA 92121
 
Attention: General Counsel(Prior to 6350 Substitute
 
Premises Commencement Date)
 
 
 
 

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Entropic Communications, Inc.
 
6350 Sequence Drive
 
San Diego, CA 92121
 
Attention: Trevor Renfield(After 6350 Substitute
 
Premises Commencement Date)
 
 
 
with copies to:
 
 
 
Entropic Communications, Inc.
 
6350 Sequence Drive
 
San Diego, CA 92121
 
Attention: General Counsel(After 6350 Substitute
 
Premises Commencement Date)

13. Effectiveness of this Second Amendment. Landlord and Tenant hereby
acknowledge that the 6350 Substitute Premises is currently occupied by a third
party tenant (the "Existing Tenant") pursuant to an existing lease (the
"Existing Lease") between Landlord and such Existing Tenant. Consequently,
Tenant expressly acknowledges and agrees that
notwithstanding the full execution and delivery of this Second Amendment between
Landlord and Tenant, this Second Amendment is expressly conditioned upon the
termination of the Existing Lease. The termination of the Existing Lease is
scheduled to occur on February 28, 2014 (the "Scheduled Existing Lease
Expiration Date"). Once the Scheduled Existing Lease Expiration Date has
occurred, Landlord shall, to the extent the Existing Tenant has not vacated the
6350 Substitute Premises following such Scheduled Existing Lease Expiration
Date, use its best, commercially reasonable efforts (including promptly filing
an unlawful detainer action) to cause the Existing Tenant to vacate the 6350
Substitute Premises as soon as possible. Notwithstanding any provision to the
contrary contained herein, the parties hereto expressly acknowledge and agree
that the Landlord shall have no liability whatsoever to Tenant relating to or
arising from Landlord’s delay in delivering the 6350 Substitute Premises to
Tenant unless Landlord breaches its obligation to use its best, commercially
reasonable efforts (including promptly filing an unlawful detainer action) to
cause the Existing Tenant to vacate the 6350 Substitute Premises as soon as
possible following the Scheduled Existing Lease Expiration Date; provided that
if Landlord shall have failed to deliver the Substitute Premises to Tenant by
May 1, 2014, Tenant shall have the right to elect not to lease the Substitute
Premises, such election to be made by written notice to Landlord no later than
May 2, 2014 and if Tenant exercises such right, then this Second Amendment and
the 6260 Second Amendment shall be of no further force or effect, and the Lease,
as amended by the First Amendment, shall continue in full force and effect in
accordance with its terms.

14. Water Sensors. Effective as of the date of this Second Amendment and
pertaining to the 6350 Substitute Premises only (as opposed to the 6290
Premises), the following Section 29.35 is added at the end of Section 29.34 of
the Office Lease:

"29.35 Water Sensors. Tenant shall, at Tenant's sole cost and expense (except as
expressly described in Section 2.4 of the Work Letter attached as Exhibit B to
the Second Amendment), be responsible for promptly installing web­-enabled
wireless water leak sensor devices designed to alert the Tenant on a twenty­four
(24) hour seven (7) day per week basis if a water leak is occurring in the
Premises (which water sensor device(s) located in the Premises shall be referred
to herein as "Water

--------------------------------------------------------------------------------

SensorsWater Sensors"). The Water Sensors shall be installed in any areas in the
Premises where water is utilized (such as sinks, pipes, faucets, water heaters,
coffee machines, ice machines, water dispensers and water fountains), and in
locations that may be designated from time to time by Landlord (the "Sensor
AreasSensor Areas"). In connection with any Alterations affecting or relating to
any Sensor Areas, Landlord may require Water Sensors to be installed or updated
in Landlord's sole and absolute discretion. With respect to the installation of
any such Water Sensors, Tenant shall obtain Landlord's prior written consent,
use an experienced and qualified contractor reasonably designated by Landlord,
and comply with all of the other provisions of Article 8 of this Lease. Tenant
shall, at Tenant's sole cost and expense, pursuant to Article 7 of this Lease
keep any Water Sensors located in the Premises (whether installed by Tenant or
someone else) in good working order, repair and condition at all times during
the Lease Term and comply with all of the other provisions of Article 7 of this
Lease. Notwithstanding any provision to the contrary contained herein, Landlord
has neither an obligation to monitor, repair or otherwise maintain the Water
Sensors, nor an obligation to respond to any alerts it may receive from the
Water Sensors or which may be generated from the Water Sensors. Upon the
expiration of the Lease Term, or immediately following any earlier termination
of this Lease, Landlord reserves the right to require Tenant, at Tenant's sole
cost and expense, to remove all Water Sensors installed by Tenant, and repair
any damage caused by such removal; provided, however, if the Landlord does not
require the Tenant to remove the Water Sensors as contemplated by the foregoing,
then Tenant shall leave the Water Sensors in place together with all necessary
user information such that the same may be used by a future occupant of the
Premises (e.g., the water sensors shall be unblocked and ready for use by a
third­party). If Tenant is required to remove the Water Sensors pursuant to the
foregoing and Tenant fails to complete such removal and/or fails to repair any
damage caused by the removal of any Water Sensors, Landlord may do so and may
charge the reasonable cost thereof to Tenant."

15. No Further Modification. Except as set forth in this Second Amendment, all
of the terms and provisions of the Lease shall apply with respect to the 6350
Substitute Premises and shall remain unmodified and in full force and effect.

[Signatures follow on next page]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, this Second Amendment has been executed as of the day and
year first above written.

''LANDLORD''
 
"TENANT"
 
 
 
KILROY REALTY, L.P.,
 
ENTROPIC COMMUNICATIONS, INC
a Delaware limited partnership
 
a Delaware corporation
 
 
 
By:
KILROY REALTY CORPORATION,
 
 
 
 
a Maryland corporation,
 
 
 
 
general partner
 
 
 
 
 
 
 
 
By:
/s/ Brian Galligan
 
By:
/s/ Patrick C. Henry
Name:
Brian Galligan
 
Name:
Patrick C. Henry
Its:
SVP
 
Its:
CEO
 
 
 
 
 
By:
/s/ Jeffrey C. Hawken
 
By:
/s/ David Lyle
Name:
Jeffrey C. Hawken
 
Name:
David Lyle
Its:
Executive Vice President, Chief Operating Officer
 
Its:
CFO

EXHIBIT A

6350 SEQUENCE DRIVE, SAN DIEGO

OUTLINE OF 6350 SUBSTITUTE PREMISES AND 6350 BUILDING PARKING AREA

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[a32ndamendmententropi_image1.jpg]

EXHIBIT B

6350 SEQUENCE DRIVE, SAN DIEGO

WORKLETTER

This Work Letter shall set forth the terms and conditions relating to the
construction of the improvements in the 6350 Substitute Premises, which shall be
referred to in this Work Letter as the "Premises." This Work Letter is
essentially organized chronologically and addresses the issues of the
construction of the improvements in the Premises desired by Tenant, in sequence,
as such issues will arise during the actual construction thereof. All references
in this Work Letter to Articles or Sections of "this Amendment" shall mean the
relevant portion of Sections 1 through 15 of the Second Amendment to which this
Work Letter is attached as Exhibit B and of which this Work Letter forms a part,
all references in this Work Letter to Articles or Sections of "this Lease" shall
mean the relevant portions of Articles 1 through 29 of the Lease being

--------------------------------------------------------------------------------

amended by this Amendment, and all references in this Work Letter to Sections of
"this Work Letter" shall mean the relevant portions of Sections 1 through 5 of
this Work Letter.

SECTION 1

DELIVERY OF THE PREMISES AND BASE BUILDING

Promptly following the termination of the Existing Lease and Existing Tenant's
surrender of the Premises to Landlord, Landlord shall deliver the 6350 Building
to Tenant, and Tenant shall, except as expressly set forth in this Amendment,
accept the 6350 Building from Landlord in its presently existing, "as-­is"
condition.

SECTION 2 IMPROVEMENTS

2.1 Improvement Allowance. Tenant shall be entitled to a one­time improvement
allowance (the
"Improvement Allowance") in the amount of Four Million Six Hundred Thousand
Forty­-One and
00/100 Dollars ($4,641,000) (i.e., $35.00 per rentable square foot of the
Premises) for the costs relating to the initial design and construction of the
improvements desired by Tenant or otherwise necessitated thereby, which are
permanently affixed to the Premises (the "Improvements"). In no event shall
Landlord be obligated to make disbursements pursuant to this Work Letter in the
event that Tenant fails to timely pay any portion of the "Over­-Allowance
Amount," as that term is defined in, and within the time frames more
particularly set forth in, Section 4.2.1, nor shall Landlord be obligated to pay
a total amount which exceeds the Improvement Allowance. Notwithstanding the
foregoing or any contrary provision of this Lease, all Improvements shall be
deemed Landlord's property under the terms of this Lease. Any unused portion of
the Improvement Allowance remaining as of July 1, 2015 (the "Improvement
Allowance Sunset Date"), shall remain with Landlord and Tenant shall have no
further right thereto; provided, however, such Improvement Allowance Sunset date
shall be extended on a day ­ for­day basis for each day of any "Landlord Delay"
(as that term is defined in Section 5.5 below).

2.2 Disbursement of the Improvement Allowance.

2.2.1 Improvement Allowance Items. Except as otherwise set forth in this Work
Letter, the Improvement Allowance shall be disbursed by Landlord (each of which
disbursements shall be made pursuant to Landlord's disbursement process,
including, without limitation, Landlord's receipt of invoices for all costs and
fees described herein) only for the following items and costs (collectively the
"Improvement Allowance Items"):

2.2.1.1 Payment of the fees of the "Architect" and the "Engineers," as those
terms are defined in Section 3.1 of this Work Letter, which fees shall,
notwithstanding anything to the contrary contained in this Work Letter, not
exceed an aggregate amount equal to Two and 50/100 Dollars ($2.50) per rentable
square foot of the Premises, and payment of the third­-party fees actually and
reasonably incurred (the reasonableness of which shall be determined in light of
the nature of particular Construction Drawings being submitted by Landlord to
its consultants for review) by Landlord in connection with

--------------------------------------------------------------------------------

the preparation and review of the "Construction Drawings," as that term is
defined in Section 3.1 of this Work Letter;

2.2.1.2 The payment of plan check, permit and license fees relating to
construction of the Improvements;

2.2.1.3 The cost of construction of the Improvements, including, without
limitation, testing and inspection costs and costs of utilities. In no event
shall Tenant or its contractor be charged for parking, access, freight elevator
use or similar items in connection with the Improvements;

2.2.1.4 The cost of any changes in the Base Building when such changes are
required by the Construction Drawings, such cost to include all direct
architectural and/or engineering fees and expenses incurred in connection
therewith;

2.2.1.5 The cost of any changes to the Construction Drawings or Improvements
required by all applicable building codes (the "Code");

2.2.1.6 The cost of the "Coordination Fee," as that term is defined in
Section 4.2.2.1 of this Work Letter;

2.2.1.7 Sales and use taxes;

2.2.1.8 The cost of space plans and constructions drawings for the 6260
Substitute Premises; and

2.2.1.9 The actual cost of installing telephone and data cabling, and moving
costs; provided, however, in no event shall more than a portion of the
Improvement Allowance equal to Five and 00/100 Dollar ($5.00) per rentable
square foot of the Premises be allocated to, and reimbursed against, the
Improvement Allowance Items set forth in this Section 2.2.1.8.

2.2.2 Disbursement of Improvement Allowance. During the construction of the
Improvements, Landlord shall make monthly disbursements of the Improvement
Allowance for Improvement Allowance Items and shall authorize the release of
monies as follows.

2.2.2.1 Monthly Disbursements. On or before the twentieth (20th) day of each
calendar month during the construction of the Improvements (or such other date
as Landlord may designate), Tenant shall deliver to Landlord: (i) a request for
payment of the "Contractor," as that term is defined in Section 4.1.1 of this
Work Letter, approved by Tenant, in a form to be provided by Landlord, showing
the schedule, by trade, of percentage of completion of the Improvements in the
Premises, detailing the portion of the work completed and the portion not
completed; (ii) invoices from all of "Tenant's Agents," as that term is defined
in Section 4.1.2 of this Work Letter, for labor rendered and materials delivered
to the Premises; (iii) executed mechanic's lien releases from all of Tenant's
Agents which shall comply with the appropriate provisions, as reasonably
determined by Landlord, of California Civil Code Sections 8132, 8134, 8136 and
8138; and (iv) all other information reasonably requested by Landlord. Tenant's
request for

--------------------------------------------------------------------------------

payment shall constitute, to Tenant's then­existing actual knowledge, Tenant's
acceptance and approval of the work furnished and/or the materials supplied as
set forth in Tenant's payment request; provided, however, the parties
acknowledge that in no event shall the Contractor be a third-­party beneficiary
with regard to any such acceptance and approval under this sentence. Thereafter,
Landlord shall deliver a check to Tenant made jointly payable to Contractor and
Tenant (or solely to Tenant to the extent Tenant has previously paid in full to
Contractor the amounts corresponding to such request for payment) in payment of
the lesser of: (A) "Landlord's Ratio," as that term is set forth below, of the
amounts so requested by Tenant, as set forth in this Section 2.2.2.1, above,
less a ten percent (10%) retention (the aggregate amount of such retentions to
be known as the "Final Retention"), and (B) the balance of any remaining
available portion of the Improvement Allowance (not including the Final
Retention), provided that Landlord does not dispute any request for payment
based on non­compliance of any work with the "Approved Working Drawings," as
that term is defined in Section 3.4 below, or due to any substandard work, or
for any other reasonably substantiated reason, it being hereby acknowledged that
Tenant shall pay "Tenant's Ratio," as that term is set forth below, of the
corresponding amounts so requested by Tenant, less a similar ten (10%)
retention. Landlord's payment of such amounts shall not be deemed Landlord's
approval or acceptance of the work furnished or materials supplied as set forth
in Tenant's payment request.

2.2.2.2 Final Retention. Subject to the provisions of this Work Letter, a check
for the Final Retention payable jointly to Tenant and Contractor shall be
delivered by Landlord to Tenant following the substantial completion of
construction of the Improvements, provided that (i) Tenant delivers to Landlord
properly executed mechanic's lien releases in compliance with both California
Civil Code Section 8134 and either Section 8136 or Section 8138 from all of
Tenant's Agents, (ii) Landlord has determined that no substandard work exists
which adversely affects the mechanical, electrical, plumbing, heating,
ventilating and air conditioning, life­safety or other systems of the 6350
Building, the curtain wall of the 6350 Building, the structure or exterior
appearance of the 6350 Building, (iii) Architect delivers to Landlord a
certificate, in a form reasonably acceptable to Landlord, certifying that the
construction of the Improvements in the Premises has been substantially
completed, (iv) Tenant records a valid Notice of Completion in accordance with
the requirements of Section 4.3 of this Work Letter, (v) Tenant delivers to
Landlord 2.2.2 Disbursement of Improvement Allowance. During the construction of
the Improvements, Landlord shall make monthly disbursements of the Improvement
Allowance for Improvement Allowance Items and shall authorize the release of
monies as follows.

2.2.2.1 Monthly Disbursements. On or before the twentieth (20th) day of each
calendar month during the construction of the Improvements (or such other date
as Landlord may designate), Tenant shall deliver to Landlord: (i) a request for
payment of the "Contractor," as that term is defined in Section 4.1.1 of this
Work Letter, approved by Tenant, in a form to be provided by Landlord, showing
the schedule, by trade, of percentage of completion of the Improvements in the
Premises, detailing the portion of the work completed and the portion not
completed; (ii) invoices from all of "Tenant's Agents," as that term is defined
in Section 4.1.2 of this Work Letter, for labor rendered and materials delivered
to the Premises; (iii) executed mechanic's lien releases from all of Tenant's
Agents which shall comply with the appropriate provisions, as reasonably
determined by Landlord, of California Civil Code Sections 8132, 8134, 8136 and
8138; and (iv) all other information reasonably requested by Landlord. Tenant's
request for payment shall constitute, to Tenant's then­existing actual
knowledge, Tenant's acceptance and approval of the work furnished and/or the
materials supplied as set forth in Tenant's payment request; provided, however,
the parties acknowledge that in no event shall the Contractor be a third-­party
beneficiary with regard to any such acceptance and approval under this sentence.
Thereafter, Landlord shall deliver

--------------------------------------------------------------------------------

a check to Tenant made jointly payable to Contractor and Tenant (or solely to
Tenant to the extent Tenant has previously paid in full to Contractor the
amounts corresponding to such request for payment) in payment of the lesser of:
(A) "Landlord's Ratio," as that term is set forth below, of the amounts so
requested by Tenant, as set forth in this Section 2.2.2.1, above, less a ten
percent (10%) retention (the aggregate amount of such retentions to be known as
the "Final Retention"), and (B) the balance of any remaining available portion
of the Improvement Allowance (not including the Final Retention), provided that
Landlord does not dispute any request for payment based on non­compliance of any
work with the "Approved Working Drawings," as that term is defined in Section
3.4 below, or due to any substandard work, or for any other reasonably
substantiated reason, it being hereby acknowledged that Tenant shall pay
"Tenant's Ratio," as that term is set forth below, of the corresponding amounts
so requested by Tenant, less a similar ten (10%) retention. Landlord's payment
of such amounts shall not be deemed Landlord's approval or acceptance of the
work furnished or materials supplied as set forth in Tenant's payment request.

2.2.2.2 Final Retention. Subject to the provisions of this Work Letter, a check
for the Final Retention payable jointly to Tenant and Contractor shall be
delivered by Landlord to Tenant following the substantial completion of
construction of the Improvements, provided that (i) Tenant delivers to Landlord
properly executed mechanic's lien releases in compliance with both California
Civil Code Section 8134 and either Section 8136 or Section 8138 from all of
Tenant's Agents, (ii) Landlord has determined that no substandard work exists
which adversely affects the mechanical, electrical, plumbing, heating,
ventilating and air conditioning, life­safety or other systems of the 6350
Building, the curtain wall of the 6350 Building, the structure or exterior
appearance of the 6350 Building, (iii) Architect delivers to Landlord a
certificate, in a form reasonably acceptable to Landlord, certifying that the
construction of the Improvements in the Premises has been substantially
completed, (iv) Tenant records a valid Notice of Completion in accordance with
the requirements of Section 4.3 of this Work Letter, (v) Tenant delivers to
Landlord and specifications determined by Landlord, and shall be subject to
Landlord's approval; provided, however, Landlord shall only disapprove any such
Construction Drawing to the extent of a "Design Problem," as that term is
defined below. Landlord expressed no objection to its former tenant's delivery
of a copy of certain "as­built" drawings of the 6350 Building to Tenant.
Landlord makes no representation as to the accuracy of any "as built" drawings
pertaining to the 6350 Building. Landlord's review of the Construction Drawings
as set forth in this Section 3, shall be for its sole purpose and shall not
imply Landlord's review of the same, or obligate Landlord to review the same,
for quality, design, Code compliance or other like matters. Accordingly,
notwithstanding that any Construction Drawings are reviewed by Landlord or its
space planner, architect, engineers and consultants, and notwithstanding any
advice or assistance which may be rendered to Tenant by Landlord or Landlord's
space planner, architect, engineers, and consultants, Landlord shall have no
liability whatsoever in connection therewith and shall not be responsible for
any omissions or errors contained in the Construction Drawings, and Tenant's
waiver and indemnity set forth in this Lease shall specifically apply to the
Construction Drawings. A "Design Problem" is defined as, and shall be deemed to
exist if there could be (i) an effect on the exterior appearance of the 6350
Building, (ii) a material, adverse affect on the Base Building portions of the
Premises or 6350 Building (including without limitation the Building Structure
located in the 6350 Building), (iii) a material adverse affect on the Building
Systems located in the 6350 Building or the operation and maintenance thereof,
or (iv) any failure to comply with Applicable Laws (other than pre-existing
failures to so comply to the extent the same are Landlord's obligations pursuant
to the express terms and conditions of the Second Amendment). Notwithstanding
anything to the contrary contained herein, Landlord acknowledges that Tenant’s
security systems are fundamental to its business operations in the Premises, and
Landlord shall reasonably cooperate with

--------------------------------------------------------------------------------

Tenant, at no material extra cost to Landlord, to permit such security systems
to be installed in the Premises in accordance with Tenant’s reasonable security
requirements.

3.2 Final Space Plan. Tenant shall supply Landlord with four (4) hard copies
signed by Tenant of its final space plan, along with other renderings or
illustrations reasonably required by Landlord, to allow Landlord to understand
Tenant's design intent, for the Premises before any architectural working
drawings or engineering drawings have been commenced, and concurrently with
Tenant's delivery of such hard copies, Tenant shall send to Landlord via
electronic mail one (1) .pdf electronic copy of such final space plan. The final
space plan (the "Final Space Plan") shall include a layout and designation of
all offices, rooms and other partitioning, their intended use, and equipment to
be contained therein. Landlord may request clarification or more specific
drawings for special use items not included in the Final Space Plan. Landlord
shall advise Tenant within five (5) business days after Landlord's receipt of
the Final Space Plan for the Premises if the same is unsatisfactory or
incomplete in any respect; provided, however, Landlord shall only disapprove
such Final Space Plans to the extent of a Design Problem. Landlord shall set
forth with reasonable specificity in what respect the Final Space Plan is
unsatisfactory or incomplete (based upon a commercially reasonable standard). If
Tenant is so advised, Tenant shall promptly cause the Final Space Plan to be
revised to correct any deficiencies or other matters Landlord may reasonably
require, and immediately thereafter Architect shall promptly re­submit the Final
Space Plan to Landlord for its approval. Such procedure shall continue (except
that the time frame to consent to any revisions shall be shortened to three (3)
business days) until the Final Space Plan is approved by Landlord. If Landlord
has not timely approved the Final Space Plan within the applicable time period
set forth above, Tenant shall have the right to send a "reminder notice" to
Landlord, which conspicuously indicates that Landlord's continued failure to
respond may result in the deemed approval of the Final Space Plan most recently
delivered to Landlord (which notice shall be delivered to Landlord pursuant to
the terms of the Lease, shall clearly state the following in bold: "LANDLORD'S
FAILURE TO RESPOND WITHIN THREE (3) BUSINESS DAYS SHALL RESULT IN THE DEEMED
APPROVAL OF THE FINAL SPACE PLAN," and shall also be sent via electronic mail to
the Landlord's representative set forth in Section 5.2 below). If Landlord fails
to respond to Tenant regarding the Final Space Plan within three (3) business
days after its receipt of the reminder notice identified in the preceding
sentence, then the Final Space Plan shall be deemed to have been approved by
Landlord; provided, however, in no event shall such "deemed approval" occur to
the extent the parties are in discussions regarding the nature of the Final
Space Plan, the details contained therein or the specifications pertaining
thereto.

3.3 Final Working Drawings. After the Final Space Plan has been approved by
Landlord, Tenant shall supply the Engineers with a complete listing of standard
and non­standard equipment and specifications, including, without limitation,
B.T.U. calculations, electrical requirements and special electrical receptacle
requirements for the Premises, to enable the Engineers and the Architect to
complete the "Final Working Drawings" (as that term is defined below) in the
manner as set forth below. Upon the approval of the Final Space Plan by Landlord
and Tenant, Tenant shall promptly cause the Architect and the Engineers to
complete the architectural and engineering drawings for the Premises, and
Architect shall compile a fully coordinated set of architectural, structural,
mechanical, electrical and plumbing working drawings in a form which is complete
to allow subcontractors to bid on the work and to obtain all applicable permits
(collectively, the "Final Working Drawings") and shall submit the same to
Landlord for Landlord's approval. Tenant shall supply Landlord with four (4)
hard copies signed by Tenant of the Final Working Drawings, and concurrently
with Tenant's delivery of such hard copies, Tenant shall send to Landlord via
electronic mail one (1) .pdf electronic copy of such Final Working Drawings.
Landlord shall advise Tenant within five (5)

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business days after Landlord's receipt of all of the Final Working Drawings,
either (i) approve the Final Working Drawings, (ii) approve the Final Working
Drawings subject to specified conditions, which conditions must be stated in a
reasonably clear and complete manner, and shall only be conditions reasonably
intended to address a potential Design Problem, or (iii) disapprove and return
the Construction Drawings to Tenant with requested revisions; provided, however,
Landlord shall only disapprove such Final Working Drawings to the extent of a
Design Problem. If Landlord disapproves the Final Working Drawings, Tenant may
resubmit the Final Working Drawings to Landlord at any time, and Landlord shall
approve or disapprove the resubmitted Final Working Drawings, based upon the
criteria set forth in this Section 3.3, within three (3) business days after
Landlord receives such resubmitted Final Working Drawings. Such procedure shall
be repeated until the Final Working Drawings are approved. If Landlord has not
timely approved the Final Working Drawings within the applicable time period set
forth above, Tenant shall have the right to send a "reminder notice" to
Landlord, which conspicuously indicates that Landlord's continued failure to
respond may result in the deemed approval of the Final Working Drawings most
recently delivered to Landlord (which notice shall be delivered to Landlord
pursuant to the terms of the Lease, shall clearly state the following in bold:
"LANDLORD'S FAILURE TO RESPOND WITHIN THREE (3) BUSINESS DAYS SHALL RESULT IN
THE DEEMED APPROVAL OF THE FINAL WORKING DRAWINGS," and shall also be sent via
electronic mail to the Landlord's representative set forth in Section 5.2
below). If Landlord fails to respond to Tenant regarding the Final Working
Drawings within three (3) business days after its receipt of the reminder notice
identified in the preceding sentence, then the Final Working Drawings shall be
deemed to have been approved by Landlord; provided, however, in no event shall
such "deemed approval" occur to the extent the parties are in discussions
regarding the nature of the Final Working Drawings, the details contained
therein or the specifications pertaining thereto.

3.4 Approved Working Drawings. The Final Working Drawings shall be approved by
Landlord (the "Approved Working Drawings") prior to the commencement of
construction of the Premises by Tenant. After approval by Landlord of the Final
Working Drawings, Tenant may submit the same to the appropriate municipal
authorities for all applicable building permits. Tenant hereby agrees that
neither Landlord nor Landlord's consultants shall be responsible for obtaining
any building permit or certificate of occupancy for the Premises and that
obtaining the same shall be Tenant's responsibility; provided, however, that
Landlord shall cooperate with Tenant in executing permit applications and
performing other ministerial acts reasonably necessary to enable Tenant to
obtain any such permit or certificate of occupancy. No changes, modifications or
alterations in the Approved Working Drawings may be made without the prior
written consent of Landlord, which consent may not be unreasonably withheld,
conditioned or delayed.

3.5 Electronic Approvals. Notwithstanding any provision to the contrary
contained in the Lease or this Work Letter, Landlord may, in Landlord's sole and
absolute discretion, transmit or otherwise deliver any of the approvals required
under this Work Letter via electronic mail to Tenant's representative identified
in Section 5.1 of this Work Letter, or by any of the other means identified in
Section 29.18 of this Lease.

SECTION 4

CONSTRUCTION OF THE IMPROVEMENTS

4.1 Tenant's Selection of Contractors.

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4.1.1 The Contractor. A general contractor shall be retained by Tenant to
construct the Improvements. Such general contractor ("Contractor") shall be
selected by Tenant from a list of experienced and reputable general contractors
mutually and reasonably agreed upon by Landlord, and Tenant shall deliver to
Landlord notice of its selection of the Contractor upon such selection;
provided, however, the Contractor shall be qualified and experienced in
first­class office/electronic lab build­outs in San Diego County.

4.1.2 Tenant's Agents. All subcontractors, laborers, materialmen, and suppliers
used by Tenant (such subcontractors, laborers, materialmen, and suppliers, and
the Contractor to be known collectively as "Tenant's Agents") must be approved
in writing by Landlord, which approval shall not be unreasonably withheld or
delayed and which approval shall, if withheld or conditioned with regard to any
such Tenant's Agents, be made within two (2) business days following Landlord's
receipt of the corresponding request for such approval from Tenant. If Landlord
does not approve any of Tenant's proposed subcontractors, laborers, materialmen
or suppliers, Tenant shall submit other proposed subcontractors, laborers,
materialmen or suppliers for Landlord's written approval. If Landlord has not
timely approved any of Tenant's Agents within the applicable time period set
forth above, Tenant shall have the right to send a "reminder notice" to
Landlord, which conspicuously indicates that Landlord's continued failure to
respond may result in the deemed approval of the particular Tenant's Agents
(which notice shall be delivered to Landlord pursuant to the terms of the Lease,
shall clearly state the following in bold: "LANDLORD'S FAILURE TO RESPOND WITHIN
THREE (3) BUSINESS DAYS SHALL RESULT IN THE DEEMED APPROVAL OF THE TENANT'S
AGENTS," and shall also be sent via electronic mail to the Landlord's
representative set forth in Section 5.2 below). If Landlord fails to respond to
Tenant regarding the particular Tenant's Agents within three (3) business days
after its receipt of the reminder notice identified in the preceding sentence,
then those Tenant's Agents expressly identified in the reminder notice shall be
deemed to have been approved by Landlord; provided, however, in no event shall
such "deemed approval" occur to the extent the parties are in discussions
regarding the Tenant's Agents or Landlord has requested information regarding
the Tenant's Agents which has not yet been provided.

4.2 Construction of Improvements by Tenant's Agents.

4.2.1 Construction Contract; Cost Budget.

4.2.1.1 Construction Contract. Tenant shall engage the Contractor pursuant to a
mutually approved contract form (collectively, the "Contract"). Landlord shall
advise Tenant within five (5) business days after Landlord's receipt of the
final form of the Contract, that it is either (i) approving the Contract, (ii)
approving the Contract subject to specified conditions, which conditions must be
stated in a reasonably clear and complete manner, or (iii) disapproving and
returning the Contract to Tenant with requested revisions. If Landlord
disapproves the Contract, Tenant may resubmit the Contract to Landlord at any
time, and Landlord shall approve or disapprove the resubmitted Contract within
three (3) business days after Landlord receives such resubmitted Contract. Such
procedure shall be repeated until the Contract is approved. If Landlord has not
timely approved the Contract within the applicable time period set forth above,
Tenant shall have the right to send a "reminder notice" to Landlord, which
conspicuously indicates that Landlord's continued failure to respond may result
in the deemed approval of the Contract most recently delivered to Landlord
(which notice shall be delivered to Landlord pursuant to the terms of the Lease,
shall clearly state the following in bold: "LANDLORD'S FAILURE TO RESPOND WITHIN
THREE (3) BUSINESS DAYS SHALL RESULT IN THE DEEMED APPROVAL OF THE CONTRACT,"
and shall

--------------------------------------------------------------------------------

also be sent via electronic mail to the Landlord's representative set forth in
Section 5.2 below). If Landlord fails to respond to Tenant regarding the
Contract within three (3) business days after its receipt of the reminder notice
identified in the preceding sentence, then the Contract shall be deemed to have
been approved by Landlord; provided, however, in no event shall such "deemed
approval" occur to the extent the parties are in discussions regarding the
Contract, the provisions thereof or the details contained therein.

4.2.1.2 Cost Budget. Prior to the commencement of the construction of the
Improvements, and after Tenant has accepted all bids for the Improvements,
Tenant shall provide Landlord with a detailed breakdown, by trade, of the final
costs to be incurred or which have been incurred, as set forth more particularly
in Sections 2.2.1.1 through 2.2.1.8, above, in connection with the design and
construction of the Improvements to be performed by or at the direction of
Tenant or the Contractor, which costs form a basis for the amount of the
Contract (the "Final Costs"). Prior to the commencement of construction of the
Improvements, Tenant shall determine the amount (the "Over­- Allowance Amount")
by which the Final Costs exceed the Improvement Allowance. Tenant will also
determine the ratio of the Over­-Allowance Amount to the Final Costs (e.g., if
the Over­-Allowance Amount were to be One Million One Hundred Seventy­-Four
Thousand Eight Hundred Twenty­-Four and 00/100 Dollars ($1,174,824.00), the
ratio would be sixteen point six percent (16.6%) Over­-Allowance Amount and
eighty­three point four percent (83.4%) Improvement Allowance). The ratio
applicable to the Over­-Allowance Amount may be referred to herein as "Tenant's
Ratio") and the ratio applicable to the Improvement Allowance may be referred to
herein as "Landlord's Ratio." Tenant's determination of the Over-­Allowance
Amount, Tenant's Ratio and Landlord's Ratio are subject to Landlord's reasonable
approval. Tenant shall pay Tenant's Ratio of the amounts due to the Contractor
at the same time Landlord makes its monthly disbursement of the Landlord's Ratio
of the amounts due to the Contractor in accordance with Section 2.2 above. In
the event that, after the Final Costs have been delivered by Tenant to Landlord,
the costs relating to the design and construction of the Improvements shall
increase in a way that results in the Final Costs being in excess of the
Improvement Allowance (or otherwise further increases the amount by which the
Final Costs are in excess of the Improvement Allowance), such excess shall be
paid by Tenant out of its own funds, but Tenant shall continue to provide
Landlord with the documents described in Sections 2.2.2.1(i), (ii), (iii) and
(iv) of this Work Letter, above, for Landlord's approval, prior to Tenant paying
such costs.

4.2.2 Tenant's Agents.

4.2.2.1 Landlord's General Conditions for Tenant's Agents and Improvement Work.
Tenant's and Tenant's Agent's construction of the Improvements shall comply with
the following: (i) the Improvements shall be constructed in strict accordance
with the Approved Working Drawings; (ii) Tenant's Agents shall submit schedules
of all work relating to the Improvements to Contractor and Contractor shall,
within five (5) business days of receipt thereof, inform Tenant's Agents of any
changes which are necessary thereto, and Tenant's Agents shall use commercially
reasonable efforts to adhere to such corrected schedule; and (iii) Tenant shall
abide by all reasonable rules made by Landlord's Building manager with respect
to the use of freight, loading dock and service elevators, storage of materials
and any other matter in connection with this Work Letter, including, without
limitation, the construction of the Improvements. Tenant shall pay a logistical
coordination fee (the "Coordination Fee") to Landlord in an amount equal to
Fifteen Thousand and 00/100 Dollars ($15,000.00), which Coordination Fee shall
be for services relating to the coordination of the construction of the
Improvements.

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4.2.2.2 Indemnity. Tenant's indemnity of Landlord as set forth in this Lease
shall also apply with respect to any and all costs, losses, damages, injuries
and liabilities related in any way to any negligence or willful misconduct of
Tenant or Tenant's Agents, or anyone directly or indirectly employed by any of
them, or in connection with Tenant's non­payment of any amount arising out of
the Improvements and/or Tenant's disapproval of all or any portion of any
request for payment.

4.2.2.3 Requirements of Tenant's Agents. Each of Tenant's Agents shall guarantee
to Tenant and for the benefit of Landlord that the portion of the Improvements
for which it is responsible shall be free from any defects in workmanship and
materials for a period of not less than one (1) year from the date of completion
thereof. Each of Tenant's Agents shall be responsible for the replacement or
repair, without additional charge, of all work done or furnished in accordance
with its contract that shall become defective within one (1) year after the
completion of the work performed by such contractor or subcontractors. The
correction of such work shall include, without additional charge, all additional
expenses and damages incurred in connection with such removal or replacement of
all or any part of the Improvements, and/or the 6350 Building and/or common
areas that may be damaged or disturbed thereby. All such warranties or
guarantees as to materials or workmanship of or with respect to the Improvements
shall be contained in the Contract or subcontract and shall be written such that
such guarantees or warranties shall inure to the benefit of both Landlord and
Tenant, as their respective interests may appear, and can be directly enforced
by either. Tenant covenants to give to Landlord any assignment or other
assurances which may be necessary to effect such right of direct enforcement,
provided that Tenant's rights are not diminished.

4.2.2.4 Insurance Requirements.

4.2.2.4.1 General Coverages. All of Tenant's Agents shall carry worker's
compensation insurance covering all of their respective employees, and shall
also carry public liability insurance, including property damage, all with
limits, in form and with companies as are reasonably required by Landlord.

4.2.2.4.2 Special Coverages. Tenant shall cause its Contractor to carry
"Builder's All Risk" insurance in an amount approved by Landlord covering the
construction of the Improvements, and such other insurance as Landlord may
reasonably require, it being understood and agreed that the Improvements shall
be insured by Tenant pursuant to this Lease immediately upon completion thereof.
Such insurance shall be in amounts and shall include such extended coverage
endorsements as may be reasonably required by Landlord, including, but not
limited to, the requirement that all of Tenant's Agents shall carry excess
liability and Products and Completed Operation Coverage insurance, each in
amounts not less than $5,000,000 per incident, $5,000,000 in aggregate, and in
form and with companies as are required to be carried by Tenant as set forth in
this Lease, as amended.

4.2.2.4.3 General Terms. Certificates for all insurance carried pursuant to this
Section 4.2.2.4 shall be delivered to Landlord before the commencement of
construction of the Improvements and before the Contractor's equipment is moved
onto the site. All such policies of insurance must contain a provision that the
company writing said policy will give Landlord thirty (30) days prior written
notice (ten (10) days for nonpayment of premiums) of any cancellation or lapse
of the effective date or any reduction in the amounts of such insurance. In the
event that the Improvements are damaged by any cause during the course of the
construction thereof, Tenant shall cause the same to be repaired at no cost to
Landlord or by application of the Improvement Allowance. Tenant's Agents shall
maintain all of the

--------------------------------------------------------------------------------

foregoing insurance coverage in force until the Improvements are fully completed
and accepted by Landlord, except for any Products and Completed Operation
Coverage insurance required by Landlord, which is to be maintained for ten (10)
years following completion of the work and acceptance by Landlord and Tenant.
All policies carried under this Section 4.2.2.4 shall name Landlord and Tenant
as additional insureds, as their interests may appear, as well as Contractor and
Tenant's Agents. All insurance, except Workers' Compensation, maintained by
Tenant's Agents shall preclude subrogation claims by the insurer against anyone
insured thereunder. Such insurance shall provide that it is primary insurance as
respects the owner and that any other insurance maintained by owner is excess
and noncontributing with the insurance required hereunder. The requirements for
the foregoing insurance shall not derogate from the provisions for
indemnification of Landlord by Tenant under Section 4.2.2.2 of this Work Letter.

4.2.3 Governmental Compliance. The Improvements shall comply in all respects
with the following: (i) the Code and other state, federal, city or
quasi­governmental laws, codes, ordinances and regulations, as each may apply
according to the rulings of the controlling public official, agent or other
person; (ii) applicable standards of the American Insurance Association
(formerly, the National Board of Fire Underwriters) and the National Electrical
Code; and (iii) building material manufacturer's specifications.

4.2.4 Inspection by Landlord. Landlord shall have the right to inspect the
Improvements at all times, provided however, that Landlord's failure to inspect
the Improvements shall in no event constitute a waiver of any of Landlord's
rights hereunder nor shall Landlord's inspection of the Improvements constitute
Landlord's approval of the same. Should Landlord disapprove any portion of the
Improvements, Landlord shall notify Tenant in writing of such disapproval and
shall specify the items disapproved. Any defects or deviations in, and/or
disapproval by Landlord of, the Improvements shall be rectified by Tenant at no
expense to Landlord.

4.2.5 Meetings. Commencing upon the execution of this Amendment, Tenant shall
hold weekly meetings at a reasonable time, with the Architect and the Contractor
regarding the progress of the preparation of Construction Drawings and the
construction of the Improvements, which meetings shall be held at a location
reasonably and mutually designated by Tenant and Landlord, and Landlord and/or
its agents shall receive prior notice of, and shall have the right to attend,
all such meetings, and, upon Landlord's request, certain of Tenant's Agents
shall attend such meetings. In addition, minutes shall be taken at all such
meetings, a copy of which minutes shall be promptly delivered to Landlord. One
such meeting each month shall include the review of Contractor's current request
for payment.

4.3 Notice of Completion; Copy of Record Set of Plans. Within twenty (20) days
after completion of construction of the Improvements, Tenant shall cause a
Notice of Completion to be recorded in the office of the Recorder of the county
in which the 6350 Building is located in accordance with Section 8182 of the
Civil Code of the State of California or any successor statute, and shall
furnish a copy thereof to Landlord upon such recordation. If Tenant fails to do
so, Landlord may execute and file the same as Tenant's agent for such purpose,
at Tenant's sole cost and expense. At the conclusion of construction, (i) Tenant
shall cause the Architect and Contractor (A) to update the Approved Working
Drawings as necessary to reflect all changes made to the Approved Working
Drawings during the course of construction, (B) to certify to the best of their
knowledge that the "record­-set" of as­-built drawings are true and correct,
which certification shall survive the expiration or termination of this Lease,
and (C) to deliver to Landlord two (2) sets of copies of such record set of
drawings within one hundred twenty (120) days following issuance of a
certificate of occupancy for the Premises, and (ii) Tenant shall deliver to
Landlord a copy of all warranties,

--------------------------------------------------------------------------------

guaranties, and operating manuals and information relating to the improvements,
equipment, and systems in the Premises.

SECTION 5 MISCELANEOUS

5.1 Tenant's Representative. Tenant has designated Mr. Michael Rosen, Global
Facilities Manager, as its sole representative with respect to the matters set
forth in this Work Letter (whose e­mail address for the purposes of this Work
Letter is Michael.Rosen@entropic.com and phone number is (858) 768­-3869), who
shall have full authority and responsibility to act on behalf of the Tenant as
required in this Work Letter.

5.2 Landlord's Representative. Landlord has designated Mr. Jake Brehm (whose
e­mail address for the purposes of this Work Letter is jbrehm@kilroyrealty.com
and phone number is (858) 523­-0300) as its sole representative with respect to
the matters set forth in this Work Letter, who, until further notice to Tenant,
shall have full authority and responsibility to act on behalf of the Landlord as
required in this Work Letter.

5.3 Time of the Essence in This Work Letter. Unless otherwise indicated, all
references herein to a "number of days" shall mean and refer to calendar days.
If any item requiring approval is timely disapproved by Landlord, the procedure
for preparation of the document and approval thereof shall be repeated until the
document is approved by Landlord.

5.4 Tenant's Lease Default. Notwithstanding any provision to the contrary
contained in the Lease or this Work Letter, if any economic or material,
non­economic default (beyond any applicable notice and cure periods) by Tenant
under the Lease or this Work Letter (including, without limitation, any failure
by Tenant to fund any portion of the Over­-Allowance Amount) occurs at any time
on or before the substantial completion of the Improvements, then (i) in
addition to all other rights and remedies granted to Landlord pursuant to the
Lease, Landlord shall have the right to withhold payment of all or any portion
of the Improvement Allowance, and (ii) all other obligations of Landlord under
the terms of the Lease and this Work Letter shall be forgiven until such time as
such default is cured pursuant to the terms of the Lease.

5.5 Landlord Delays. In the event that there are any actual delays in the
completion of the Improvements caused by Landlord or the Landlord Parties, then
after (A) written notice to Landlord setting forth with reasonable detail the
existence and nature of such delay, and (B) the expiration of a two (2) business
day cure period following Landlord's receipt of such notice without the remedy
thereof, any such delay shall thereafter be deemed a "Landlord Delay." In
addition, if Landlord fails to approve any matter during the time periods
expressly specified in this Work Letter Agreement therefor, such failure shall
immediately (following the outside date for Landlord's response) constitute a
Landlord Delay (to the extent actual delays in the completion of the
Improvements ultimately result therefrom). Any actual Landlord Delays under this
Section 5.5 shall result in an extension of the 6350 Substitute Premises
Commencement Date, as defined in Section 2.1 of the Second Amendment, by
extending the outside 6350 Substitute Premises Commencement Date of five (5)
months from Landlord's delivery of the Premises to Tenant by an equivalent
number of days for such Landlord Delays. Notwithstanding anything contained in
this Section 5.5, in no event shall Tenant be obligated to employ extraordinary
efforts or incur extraordinary expenses (e.g., overtime), to overcome any
Landlord Delays.

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THIRD AMENDMENT TO OFFICE LEASE

This THIRD AMENDMENT TO OFFICE LEASE ("Third Amendment") is made and entered
into as of July 31, 2014 (the "Effective Date"), by and between KILROY REALTY,
L.P., a Delaware limited partnership ("Landlord"), and ENTROPIC COMMUNICATIONS,
INC., a Delaware corporation ("Tenant").

RECITALS:

A. Landlord and Tenant are parties to that certain Office Lease dated August 31,
2007 (the "Office Lease"), as amended by that certain First Amendment to Office
Lease dated July 24, 2012 (the "First Amendment"), and that certain Amended and
Restated Second Amendment to Office Lease dated September 27, 2013 (the "Second
Amendment") (the Office Lease, the First Amendment and the Second Amendment
shall collectively be referred to as the "Lease"), whereby Landlord leases to
Tenant and Tenant leases from Landlord the entirety of that certain building
comprising 132,600 rentable square feet of space (the "Premises") located at
6350 Sequence Drive, San Diego, California (the "Building").

B. Landlord and Tenant desire to amend the Lease on the terms and conditions set
forth in this Third Amendment.

AGREEMENT:

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

1. Capitalized Terms. All capitalized terms when used herein shall have the same
meaning as is given such terms in the Lease unless expressly superseded by the
terms of this Third Amendment.

2. Increased Improvement Allowance. Notwithstanding any provision to the
contrary set forth in the Lease, effective as of the date of the full execution
and delivery of this Third Amendment, the "Improvement Allowance" set forth in
Section 2.1 of the Work Letter attached to the Second Amendment as Exhibit B,
shall be increased by an amount equal to $214,608.80 (the "Increased Improvement
Allowance"), such that the total Improvement Allowance under the Lease shall
equal $4,855,608.80. The Increased Improvement Allowance shall be disbursed by
Landlord as part of the Improvement Allowance, in accordance with the terms and
conditions of Section 2 of the Work Letter attached to the Second Amendment as
Exhibit B.

3. Slab Moisture Issue; Waiver and Release. The parties acknowledge and agree
that prior to the date of this Third Amendment, as part of Tenant's construction
of the

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Improvements, Tenant performed certain work to the concrete slab of the ground
floor of the Building in order to remedy a moisture issue (the "Slab Moisture
Issue"), which work included coating the slab with a sealer, and the removal and
re-pouring of some of the concrete in the slab.

In consideration of the payment of the Increased Improvement Allowance, and for
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Tenant, on behalf of itself and its successors, assigns, agents,
heirs, employees, executors, co-trustees and/or representatives, and each of
them, hereby generally release and forever discharge Landlord, and its
respective past, present, future affiliates, subsidiaries, officers, directors,
partners, joint venturers, predecessors, successors, assigns, agents, heirs,
employees, attorneys, trustees and/or representatives (collectively, the
"Released Parties") and each of them, from any and all claims, demands, damages,
debts, obligations, losses, causes of action, costs, expenses, attorneys fees,
liabilities and indemnities of any nature whatsoever, Tenant has, had or may
cause to have or claim to have as of the date hereof, against the Released
Parties, for arising out of, based on or related to the Slab Moisture Issue.
Nothing in the Lease shall be construed as requiring Landlord to perform any
work relating to the Slab Moisture Issue, or to reimburse Tenant for the
performance of work relating to the Slab Moisture Issue (other than the payment
of the Increased Improvement Allowance).

Tenant further expressly waives all rights it may have or may claim to have that
any claim, demand, obligation and/or cause of action has, as a result of
ignorance, oversight or error, been omitted from the terms of this release and
hereby expressly waive all rights Tenant may have or claim to have under the
provisions of California Civil Code Section 1542 or equivalent statutory or
decisional authority or law of another jurisdiction. Section 1542 provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HA VE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

4. No Further Modification. Except as set forth in this Third Amendment, all of
the terms and provisions of the Lease shall apply with respect to the Premises
and shall remain unmodified and in full force and effect.

[Signatures follow on next page]

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IN WITNESS WHEREOF, this Third Amendment has been executed as of the day and
year first above written.

''LANDLORD''
 
"TENANT"
 
 
 
KILROY REALTY, L.P.,
 
ENTROPIC COMMUNICATIONS, INC
a Delaware limited partnership
 
a Delaware corporation
 
 
 
By:
KILROY REALTY CORPORATION,
 
 
 
 
a Maryland corporation,
 
 
 
 
general partner
 
 
 
 
 
 
 
 
By:
/s/ Robert E. Palmer
 
By:
/s/ Chris Stewart
Name:
Robert E. Palmer
 
Name:
Chris Stewart
Its:
Senior Vice President, Operations
 
Its:
Vice President, Finance
 
 
 
 
 
By:
/s/ John T. Fucci
 
By:
/s/ Lance W. Bridges
Name:
John T. Fucci
 
Name:
Lance W. Bridges
Its:
Senior. Vice President,
Asset Management
 
Its:
Senior Vice President &
General Counsel

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October 8, 2014

Entropic Communications, Inc. Attn: Chris Stewart
6350 Sequence Drive
San Diego, CA 92121

RE: 6350 SEQUENCE DRIVE, SAN DIEGO, CA 92121
THIRD AMENDMENT TO OFFICE LEASE

To Whom It May Concern:

Enclosed please find one (1) fully executed "Third Amendment To Office Lease"
for the above referenced property for you records.
Should you have any questions, please feel free to call me at 858-523-2218.
Sincerely,
KILROY REAL TY CORPORATION

Shawrie McGoff
Property Coordinator

Enclosure

EXHIBIT Bto Sublease
SELECTED FF&E

IT Equipment List
 
 
Description
QTY
Location
CPI 2 Post TELECO racks (IDF) With vertical cable management
5
2nd Floor Data Center
CPI 2 Post TELECO racks (IDF1.1) With vertical cable management
5
1st Floor IDF 1.1
CPI 2 Post TELECO racks (IDF1.2) With vertical cable management
5
1st Floor IDF 1.2
CPI 2 Post TELECO racks (IDF2.1) With vertical cable management
5
2nd Floor IDF 2.1
Sharp Aquos 60'  LED TV's
16
1st and 2nd Floor Conference rooms

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Sharp Aquos 70'  LED TV's
3
2nd and 2nd Floor Conference rooms
Sharp Aquos 80'  LED TV's
1
Working Lounge 1st Floor
Crestron/Polycomm AV system
4
1st and 2nd Floor Conference rooms, Cantina
Hitachi 5500 WXGA projector
1
1st Floor Conference room
 
 
 
 
 
 
Furniture and Equipment List
 
 
Description
QTY
Location
Island Desk
109
1st and 2nd floor
L Desk
43
1st and 2nd floor
Round Tables
17
1st and 2nd floor
Book Shelves
117
1st and 2nd floor
Lateral Book Shelves
8
1st and 2nd floor
Lateral File Cabinets
7
1st and 2nd floor
Conference room tables 3'x5'
1
1st and 2nd floor
Conference room tables 3'x6'
3
1st and 2nd floor
Conference room tables 4'x8'
6
1st and 2nd floor
Conference room tables 4'x10'
2
1st and 2nd floor
Conference room tables 5'x16
1
1st and 2nd floor
Conference room tables 4' round
1
1st and 2nd floor
Conference room tables 2'x6'
18
1st floor
Conference room tables U Shape 12'x14" round
1
2nd Floor Boardroom
Stackable Chairs
100
1st Floor Cantina
White Board: Various Sizes
100
1st and 2nd floor
Cork Boards: Various Sizes
50
1st and 2nd floor
 
 
 
Refrigerators GE GFE29HSDSS
7
2nd and 2nd floor
Refrigerators GE GTH2Z
2
3rd and 2nd floor
Refrigerators GE Profile
2
Cantina 1st Floor
Refrigerators Kenmore
1
Cantina 1st Floor
Soda Coolers Turbo Air
4
1st and 2nd floor
Toaster Ovens Oster
2
1st and 2nd floor
Wire Cage 18'x8'x8'
1
Warehouse
 
 
 
Bosch Survellance System
1
1st and 2nd floor
C-Cure Secuirty card system with Workstation
1
1st and 2nd floor
Trane BMS System
1
1st and 2nd floor
 
 
 
Gym Equipment
 
 
Sprint Exercise Bikes
2
1st Floor Gym
Eliptical Machines
2
1st Floor Gym

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Weight rack
1
1st Floor Gym
Pull up/ Dip station
1
1st Floor Gym
Cybex station Cables
1
1st Floor Gym
Body Solid bench press
1
1st Floor Gym
Sit Up station
1
1st Floor Gym
Incline Bench
2
1st Floor Gym
Weight Bench
1
1st Floor Gym
Exercise Balls
2
1st Floor Gym
Dumbbells 10 - 60# (2 Each) Set
1
1st Floor Gym
Curling Bench with Bar
1
1st Floor Gym
Torque Fitness Station
1
1st Floor Gym