EXHIBIT 10.2

KILROY CENTRE DEL MAR
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
RETROPHIN, INC., a Delaware corporation ("Tenant").
SUMMARY OF BASIC LEASE INFORMATION
TERMS OF LEASE
DESCRIPTION
1.Date:
April 12, 2019.
2.Premises:
(Article 1)
 
2.1Building:
That certain building (the "Building") located at 3611 Valley Centre Drive, San
Diego, California 92130, which Building contains 132,426 rentable square feet of
space.
2.2Premises:
77,242 rentable (73,418 usable) square feet of space consisting of (i) 24,409
rentable square feet of space comprising the entirety of the second (2nd) floor
of the Building, (ii) 26,463 rentable square feet of space comprising the
entirety of the third (3rd) floor of the Building, and (iii) 26,370 rentable
square feet of space comprising the entirety of the fourth (4th) floor of the
Building, as further depicted on Exhibit A to the Office Lease.
2.3Project:
The Building is part of an office project known as "Kilroy Centre Del Mar," as
further set forth in Section 1.1.2 of this Lease.
3.Lease Term
(Article 2):
 
3.1Length of Term:
Approximately seven (7) years and seven (7) months.
3.2Lease Commencement Date:
The earlier to occur of (i) the date upon which Tenant first commences to
conduct business in the Premises, and (ii) the date which is 150 days (as such
150 day period may be extended in the event of "Landlord Delay" as that term is
defined in Section 5.7 of the Work Letter) following Landlord's delivery of
possession of the Premises to Tenant (in no event deemed to occur earlier than
April 1, 2020), which Lease Commencement Date is anticipated to be October 1,
2020.
 
 
3.3Lease Expiration Date:
The last day of the ninety-first (91st) full calendar month of the Lease Term.
3.4Option Term:
One (1) five (5)-year option to renew, as more particularly set forth in
Section 2.2 of this Lease.
 
 

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

4.Base Rent (Article 3)◊◊:
 
Period During Lease Term
Annual
Base Rent*
Monthly
Installment
of Base Rent*
Monthly
Rental Rate
per Rentable
Square Foot**
Lease Commencement Date through Lease Month 12
$4,356,448.80◊
$363,037.40◊
$4.70
Lease Month 13 through Lease Month 24
$4,487,142.24
$373,928.52
$4.84
Lease Month 25 through Lease Month 36
$4,621,756.56
$385,146.38
$4.99
Lease Month 37 through Lease Month 48
$4,760,409.24
$396,700.77
$5.14
Lease Month 49 through Lease Month 60
$4,903,221.48
$408,601.79
$5.29
Lease Month 61 through Lease Month 72
$5,050,318.08
$420,859.84
$5.45
Lease Month 73 through Lease Month 84
$5,201,827.68
$433,485.64
$5.61
Lease Month 85 through Lease Expiration Date
$5,357,882.52
$446,490.21
$5.78
*The initial Monthly Installment of Base Rent amount was calculated by
multiplying the initial Monthly Rental Rate per Rentable Square Foot amount by
the number of rentable square feet of space in the Premises, and the initial
Annual Base Rent amount was calculated by multiplying the initial Monthly
Installment of Base Rent amount by twelve (12). In all subsequent Base Rent
payment periods during the Lease Term commencing on the first (1st) day of the
full calendar month that is Lease Month 13, the calculation of each Monthly
Installment of Base Rent amount reflects an annual increase of three percent
(3%) and each Annual Base Rent amount was calculated by multiplying the
corresponding Monthly Installment of Base Rent amount by twelve (12).
◊Subject to the terms set forth in Section 3.2 below, the Base Rent attributable
to the seven (7) month period commencing on the first (1st) day of the second
(2nd) full calendar month of the Lease Term and ending on the last day of the
eighth (8th) full calendar month of the Lease Term shall be abated.
**The amounts identified in the column entitled "Monthly Rental Rate per
Rentable Square Foot" are rounded amounts and are provided for informational
purposes only.
◊◊The foregoing Base Rent schedule shall apply unless Tenant elects to continue
to lease its currently existing premises prior to the Lease Commencement Date
hereunder, pursuant to Section 1.4 below.
5.Base Year
(Article 4):
Calendar year 2021; provided, however, electricity is separately metered and
directly paid by Tenant to the applicable utility provider or, at Landlord's
option, to Landlord.
6.Tenant's Share
(Article 4):
Approximately 58.3284%.
7.Permitted Use
(Article 5):
Tenant shall use the Premises solely for general office use and uses incidental
thereto (the "Permitted Use"); provided, however, that notwithstanding anything
to the contrary set forth hereinabove, 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) first-class office standards
in the market in which the Project is located.
8.Security Deposit
(Article 21):
$446,490.21.
9.Parking Pass Ratio
(Article 28):
Four (4) unreserved parking passes for every 1,000 rentable square feet of the
Premises (for a total of 308 parking spaces with respect to the initial
Premises), of which up to six (6) passes may be converted to the reserved
parking passes.

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

10.Address of Tenant
(Section 29.18):
Retrophin, Inc.
3721 Valley Centre Drive
Suite 200
San Diego, CA 92130
Attention: Laura Clague
Telephone Number:(760) 237-4124
(Prior to Lease Commencement Date)
Retrophin, Inc.
3611 Valley Centre Drive
Suite 400
San Diego, CA 92130
Attention: Laura Clague
Telephone Number: (760) 237-4124
(After Lease Commencement Date)]
With a copy to:

Cooley LLP
4401 Eastgate Mall
San Diego, California 92121
Attn: Samantha M. LaPine
 
 
11.Address of Landlord
(Section 29.18):
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
3661 Valley Centre Drive, Suite 250
San Diego, California 92130
Attention: Mr. Nelson Ackerly

and

Allen Matkins Leck Gamble Mallory & Natsis LLP
1901 Avenue of the Stars, Suite 1800
Los Angeles, California 90067
Attention: Anton N. Natsis, Esq.

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

12.Brokers
(Section 29.24):

Representing Tenant:
Cushman & Wakefield

Representing Landlord:
CBRE, Inc.
13.Improvement Allowance
(Section 2 of Exhibit B):
$75.00 per rentable square foot of the Premises for a total of $5,793,150.00.

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

ARTICLE 1

PREMISES, BUILDING, PROJECT, AND COMMON AREAS
1.1    Premises, Building, Project and Common Areas.
1.1.1    The 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 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 Tenant covenants 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 accessways 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 in
the Work Letter attached hereto as Exhibit B (the " Work Letter"), Tenant shall
accept the Premises in its existing "as-is" condition and 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. 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. Landlord agrees to deliver possession of the Premises to
Tenant promptly following the vacation of the Premises by the existing tenant.
1.1.2    The Building and the Project. The Premises is a part of the building
set forth in Section 2.1 of the Summary (the "Building"). The Building is part
of an office project known as "Kilroy Centre Del Mar." The term "Project," as
used in this Lease, shall mean (i) the Building and the Common Areas, (ii) the
land (which is improved with landscaping, parking structures and/or facilities
and other improvements) upon which the Building and the Common Areas are
located, (iii) the other office buildings located adjacent to the Building and
the land upon which such adjacent office buildings are located, and (iv) at
Landlord's discretion, any additional real property, areas, land, buildings or
other improvements added thereto.
1.1.3    Common 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 Common Areas shall consist of the "Project
Common Areas" and the "Building Common Areas" (as both of those terms are
defined below). The term "Project Common Areas," as used in this Lease, shall
mean the portion of the Project designated as such by Landlord. The term
"Building Common Areas," as used in this Lease, shall mean the portions of the
Common Areas located within the Building designated as such by Landlord. The
manner in which the Common Areas are maintained and operated shall be at the
sole discretion of Landlord and the use thereof shall be subject to such
reasonable 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. 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.
1.2    Stipulation of Rentable Square Feet of Premises and Building. For
purposes of this Lease, "rentable square feet" of the Premises shall be deemed
as set forth in Section 2.2 of the Summary and the rentable square feet of the
Building shall be deemed as set forth in Section 2.1 of the Summary, and is not
subject to remeasurement by either party during the initial Lease Term.
1.3    Right of First Offer. Landlord hereby grants to the named Tenant in this
Lease (the "Original Tenant") and its "Permitted Transferee Assignee," as that
term is set forth in Section 14.8 of this Lease, a one-time right of first offer
with respect to all of the rentable space in the Project (the "First Offer
Space"). Notwithstanding the foregoing, such first offer right of Tenant shall
commence only following the expiration or earlier termination of the existing
leases of the First Offer Space (including renewals of any such lease,
irrespective of whether any such renewal is currently set forth in such lease or
is subsequently granted or agreed upon, and regardless of whether such renewal
is consummated pursuant to a lease amendment or a new lease), and Landlord shall
use commercially reasonable efforts to notify Tenant following its receipt of
notification of non-renewal of the lease(s) of the existing tenant(s). Such
right of first offer shall be subordinate to all rights of other tenants of the
Project, which rights relate to the First Offer Space and are set forth in
leases of space in the Project existing as of the date hereof, including,
without limitation, any expansion, first offer, first refusal, first negotiation
and other rights, regardless of whether such rights are executed strictly in
accordance with their respective terms or pursuant to a lease amendment or a new
lease (the "Superior Rights"). Notwithstanding any contrary provision in the
lease of any Superior Right Holder, such rights of

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

any Superior Right Holder shall continue to be Superior Rights in the event that
such Superior Right Holder's lease is renewed or otherwise modified (and
irrespective of whether any such renewal is currently set forth in such lease or
is subsequently granted or agreed upon, and regardless of whether such renewal
is consummated pursuant to a lease amendment or a new lease). All such tenants
of the First Offer Space, and all such third party tenants in the Project
holding Superior Rights, are collectively referred to as the "Superior Right
Holders". Landlord covenants to Tenant that all Superior Right Holders are
listed in Exhibit J attached hereto. Notwithstanding anything in this Section
1.3 to the contrary, Landlord acknowledges and agrees that (i) any future rights
granted to existing tenants of the Project after the date of this Lease and (ii)
rights granted to future tenants of the Project from and after the date of this
Lease, shall not be considered Superior Rights. Tenant's right of first offer
shall be on the terms and conditions set forth in this Section 1.3.
1.3.1    Procedure for Offer. Subject to the terms of this Section 1.3, Landlord
shall notify Tenant (the "First Offer Notice") from time to time when the First
Offer Space or any portion thereof will become available for lease to third
parties, subject to the rights of any Superior Right Holder. Pursuant to such
First Offer Notice, Landlord shall offer to lease to Tenant the then available
First Offer Space. The First Offer Notice shall describe the space so offered to
Tenant the "First Offer Rent" (as that term is defined in Section 1.3.3 below),
and other fundamental material economic terms upon which Landlord is willing to
lease such space to Tenant. In no event shall Landlord have the obligation to
deliver a First Offer Notice (and Tenant shall have no right to exercise its
right under this Section 1.3) to the extent that the "First Offer Commencement
Date," as that term is defined in Section 1.3.5 below, is anticipated by
Landlord to occur on a date when less than two (2) full calendar years remain in
the Lease Term (the "ROFO Expiration").
1.3.2    Procedure for Acceptance. If Tenant wishes to exercise Tenant's right
of first offer with respect to the space described in the First Offer Notice,
then within ten (10) business days of delivery of the First Offer Notice to
Tenant, Tenant shall deliver notice to Landlord (the "First Offer Exercise
Notice") of Tenant's election to exercise its right of first offer with respect
to the entire space described in the First Offer Notice on the terms contained
in such notice. If Tenant does not so notify Landlord within such ten (10)
business day period, then Landlord shall be free to lease the space described in
the First Offer Notice to anyone to whom Landlord desires on any terms Landlord
desires. Notwithstanding anything to the contrary contained herein, Tenant must
elect to exercise its right of first offer, if at all, with respect to all of
the space offered by Landlord to Tenant at any particular time, and Tenant may
not elect to lease only a portion thereof. Notwithstanding anything to the
contrary, in connection with any First Offer Notice where the "First Offer
Commencement Date," as that term is defined in Section 1.3.5 below, is
anticipated by Landlord to occur on a date when less than two (2) full calendar
years remain in the Lease Term, Tenant shall have no right to exercise its right
under this Section 1.3, unless, and to the extent, Tenant, concurrently and
timely delivers the "Exercise Notice," as that term is defined in Section 2.2.3
below, electing to extend the initial Lease Term, pursuant to Section 2.2.3
below.
1.3.3    First Offer Space Rent. The "Rent," as that term is defined in
Section 4.1 of this Lease, payable by Tenant for the First Offer Space (the
"First Offer Rent") shall be equal to the lesser of (i) the "Market Rent," as
that term is defined in, and determined pursuant to, Exhibit H attached hereto,
for the First Offer Space, and (ii) the Monthly Rental Rate per rentable square
foot of the Premises set forth in the Base Rent schedule in Section 4 of the
Summary at the time of the First Offer Commencement Date multiplied by the
rentable square feet of the First Offer Space, and such First Offer Rent shall
increase by three percent (3%) annually. Notwithstanding the foregoing, and
regardless of otherwise applicable Market Rents, with respect to the 20,751
rentable square feet of premises on the fifth (5th) floor of the Building (the
"Fifth Floor First Offer Space"), the Rent payable by Tenant for the Fifth Floor
First Offer space shall equal the then applicable Monthly Rental Rate per
rentable square foot of the Premises, with all scheduled increases, as set forth
in the Rent Schedule in Section 4 of the Summary at the time of the First Offer
Commencement Date multiplied by the rentable square feet of the Fifth Floor
First Offer Space. If Tenant exercises the right of first offer in accordance
with Section 1.4.2 above, but concurrently with such exercise, in good faith
objects to Landlord's determination of the First Offer Rent, then Landlord and
Tenant shall, within thirty (30) days after Landlord's receipt of Tenant's
exercise notice, meet and attempt to agree upon the First Offer Rent (the "First
Offer Meeting"). If Landlord and Tenant do not reach agreement as to the First
Offer Rent, within thirty (30) days after the First Offer Meeting (the "First
Offer Rent Outside Agreement Date"), then each party shall, within ten (10)
business days following the First Offer Rent Outside Agreement Date, make a
separate determination of the First Offer Rent and such determinations shall be
submitted to arbitration in accordance with Sections 2.2.4.1 through 2.2.4.4,
below.
1.3.4    Construction In First Offer Space. Tenant shall take the First Offer
Space in its "as is" condition, and the construction of improvements in the
First Offer Space shall comply with the terms of Article 8 of this Lease. Any
improvement allowance to which Tenant may be entitled shall be as set forth in
the First Offer Notice.
1.3.5    Amendment to Lease. If Tenant timely exercises Tenant's right to lease
the First Offer Space as set forth herein, then Landlord and Tenant shall within
thirty (30) days thereafter execute an amendment to the Lease for such First
Offer Space upon the terms and conditions as set forth in the First Offer Notice
and this Section 1.3. The rentable square footage of any First Offer Space
leased by Tenant shall be determined by Landlord in accordance with Landlord's
then current standard of measurement for the Building. Tenant shall commence
payment of rent for the First Offer Space, and the term of Tenant's lease of the
First Offer Space shall commence, upon the date of delivery of the First Offer
Space to Tenant (the "First Offer Commencement Date") and shall terminate
coterminously with the end of the Lease Term, as the same may be extended
pursuant to the terms of Section 2.2, below.
1.3.6    Termination of Right of First Offer. Tenant's rights under this
Section 1.3 shall be personal to the Original Tenant and any Permitted
Transferee Assignee, and may only be exercised by the Original Tenant or any
such Permitted Transferee Assignee (and not any other assignee, sublessee or
other transferee of the Original Tenant's interest in the Lease) if the Original
Tenant or any Permitted Transferee Assignee

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

occupies the entire Premises. The right of first offer granted herein shall
terminate as to particular First Offer Space upon Tenant's failure to timely
exercise its right of first offer with respect to such particular First Offer
Space. Tenant shall not have the right to lease First Offer Space, as provided
in this Section 1.3, if, as of the date of the attempted exercise of any right
of first offer by Tenant, or, at Landlord's option, as of the scheduled date of
delivery of such First Offer Space to Tenant, Tenant is in monetary or material
non-monetary default under the Lease (beyond the applicable notice and cure
periods), or Tenant has previously been in default under the Lease (beyond the
expiration of any applicable notice and cure period set forth in the Lease).
1.4    Existing Premises Continuation Option. Landlord and Tenant are parties to
that certain Office Lease dated July 27, 2016, (as amended, the "Existing
Lease"), whereby Tenant leases from Landlord and Landlord leases to Tenant
certain space, as more particularly described in the Existing Lease and defined
thereunder as the Existing Premises and the Swing Space Premises. Pursuant to
the Existing Lease, the lease for the Existing Premises and the Swing Space is
scheduled to expire on the date immediately preceding the date hereunder.
Pursuant to the Second Amendment to Office Lease, Tenant can elect to continue
to lease all or a portion of the Existing Premises. In the event Tenant fails to
timely elect to continue to lease the Existing Premises, the Base Rent schedule
set forth in Section 4 of the Summary of this Lease shall apply. In the event
Tenant timely elects to continue to lease a portion of the Existing Premises,
the Base Rent schedule in Section 4 of the Summary of this Lease shall be
deleted and replaced with the Alternative Base Rent Schedule attached as Exhibit
I-1 to this Lease. In the event Tenant timely elects to continue to lease the
entirety of the Existing Premises, the Base Rent schedule in Section 4 of the
Summary of this Lease shall be deleted and replaced with the Alternative Base
Rent Schedule attached as Exhibit I-2 to this Lease.
ARTICLE 2

LEASE TERM; OPTION TERM
2.1    Initial 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 or extended pursuant to the terms of Section 2.2 below. For
purposes of this Lease, the term "Lease Year" shall mean each consecutive twelve
(12) calendar 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 (or if the Lease Commencement Date is the first day of a calendar
month, then the first Lease Year shall commence on the Lease Commencement Date
and end on the day immediately preceding the first anniversary of the Lease
Commencement Date), 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. For purposes of this Lease,
the term "Lease Month" shall mean each succeeding calendar month during the
Lease Term; provided that the first Lease Month shall commence on the Lease
Commencement Date and shall end on the last day of the first (1st) full calendar
month of the Lease Term and that the last Lease Month shall expire 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 five (5) days of receipt thereof.
2.2    Option Term.
2.2.1    Option Right. Landlord hereby grants the Original Tenant and its
Permitted Transferee Assignee, one (1) option to extend the Lease Term for the
entire Premises by a period of five (5) years (the "Option Term"). Such option
shall be exercisable only by "Notice" (as that term is defined in Section 29.18
of this Lease) 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 the applicable notice and cure periods), (ii) Tenant
has not been in default under this Lease (beyond the applicable notice and cure
periods) more than once during the prior twelve (12) month period, and
(iii) Tenant has not been in default under this Lease (beyond the applicable
notice and cure periods) more than twice during the prior Lease Term. Upon the
proper exercise of such option to extend, and provided that, at Landlord's
election, as of the end of the Lease Term, (A) Tenant is not in default under
this Lease (beyond the applicable notice and cure periods), (B) Tenant has not
been in default under this Lease (beyond the applicable notice and cure periods)
more than once during the prior twelve (12) month period, and (C) Tenant has not
been in default under this Lease (beyond the applicable notice and cure periods)
more than twice during the prior Lease Term, then 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 Original
Tenant or its Permitted Transferee Assignee (and not any other assignee,
sublessee or other transferee of the Original Tenant's interest in this Lease)
if Original Tenant and/or its Permitted Transferee Assignee is in occupancy of
the entire then-existing Premises.
2.2.2    Option Rent. The Rent payable by Tenant during the Option Term (the
"Option Rent") shall be equal to the Market Rent; provided, however, that the
Market Rent for each Lease Year during the Option Term, shall be equal to the
amount set forth on a "Market Rate Schedule," as that term is defined below. The
"Market Rate Schedule" shall be derived from the Market Rent for the Option Term
as determined pursuant to Exhibit H, attached hereto, as follows: (i) the Market
Rent for the first Lease Year of the Option Term shall be equal to the sum of
(a) the Market Rent, as determined pursuant to Exhibit H, (b) the amount of
Direct Expenses applicable to the Premises, as reasonably determined by
Landlord, for the calendar year in which the Option Term commences, and (c) an
amount equal to the monthly amortization reimbursement payment for the

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

"Renewal Allowance" (as defined in Section 3 of Exhibit H to this Lease) to be
paid by Landlord in connection with Tenant's lease of the Premises for the
Option Term, with such Renewal Allowance being amortized at a reasonable rate of
return to Landlord based on the rates of return then being received by the
landlords of the "Comparable Buildings" as that term is set forth in Section 4
of Exhibit H attached hereto, in connection with improvement allowances then be
granted by such landlords, and (ii) the Market Rent for each subsequent Lease
Year shall be equal to one hundred three percent (103%) of the prior Lease
Year's Market Rent. 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.
2.2.3    Exercise of Option. The option 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. Tenant shall deliver notice (the "Exercise Notice") to Landlord not
more than fifteen (15) months (unless in connection with Tenant's earlier
delivery of a First Offer Exercise Notice pursuant to Section 1.3.2 above) nor
less than twelve (12) months prior to the expiration of the initial Lease Term,
stating that Tenant is exercising its option. Concurrently with such Exercise
Notice, Tenant shall deliver to Landlord Tenant's calculation of the Market Rent
(the "Tenant's Preliminary Option Rent Calculation"). Landlord shall deliver
notice (the "Landlord Preliminary Response Notice") to Tenant on or before the
date which is thirty (30) days after Landlord's receipt of the Exercise Notice
and Tenant's Option Rent Calculation, 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 may, at its option,
accept the Market Rent contained in the Landlord's Option Rent Calculation. If
Tenant does not affirmatively accept or Tenant rejects the Market Rent specified
in the Landlord's Option Rent Calculation, the parties shall follow the
procedure set forth in Section 2.2.4 below, and the Market Rent shall be
determined in accordance with the terms of Section 2.2.4 below.
2.2.4    Determination of Market Rent. In the event Tenant timely and
appropriately exercises its option to extend the Lease but rejects the Option
Rent set forth in Landlord's Preliminary Option Rent Calculation pursuant to
Section 2.2.3, above, then Landlord and Tenant shall attempt to agree upon the
Option Rent using their best good-faith efforts. If Landlord and Tenant fail to
reach agreement within thirty (30) days following Tenant's objection or deemed
objection to the Landlord's Preliminary Option Rent Calculation, then Landlord
and Tenant shall each deliver to one another updated option rent calculations
(alternatively, the "Landlord's Final Option Rent Calculation" and the "Tenant's
Final Option Rent Calculation") within five (5) business days following the
expiration of such thirty (30) day period; provided, however, to the extent
either party fails to timely deliver such Landlord's Final Option Rent
Calculation or Tenant's Final Option Rent Calculation, as the case may be, then
the same shall be deemed to equal the previously submitted Landlord's
Preliminary Option Rent Calculation or Tenant's Preliminary Option Rent
Calculation, as applicable. If Landlord and Tenant fail to reach agreement
within five (5) business days following the delivery (or deemed delivery) of the
Landlord's Final Option Rent Calculation and Tenant's Final Option Rent
Calculation to each other (the "Outside Agreement Date"), then Landlord's Final
Option Rent Calculation and Tenant's Final Option Rent Calculation, each as
previously delivered to the other party, shall be submitted to the arbitrators
pursuant to the TCCs of this Section 2.2.4. The submittals of the Landlord's
Option Rent Calculation and Tenant's Option Rent Calculation 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 an MAI commercial real estate appraiser whom shall have been
active over the five (5) year period ending on the date of such appointment in
the appraisal of first class office in the Comparable Area. The determination of
the arbitrators shall be limited solely to the issue of whether Landlord's Final
Option Rent Calculation or Tenant's Final Option Rent Calculation 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 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 to agree upon and
appoint a neutral third arbitrator ("Neutral Arbitrator") who shall be qualified
under the same criteria set forth hereinabove for qualification of the two
Advocate Arbitrators except that neither the Landlord or Tenant or either
party's Advocate Arbitrator may, directly or indirectly, consult with the
Neutral Arbitrator prior to subsequent to his or her appearance. 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 three arbitrators shall within thirty (30) days of the
appointment of the Neutral Arbitrator reach a decision as to Market Rent and
determine whether the Landlord's Final Option Rent Calculation or Tenant's Final
Option Rent Calculation, as submitted pursuant to this Section 2.2.4, is closest
to Market Rent as determined by the arbitrators and simultaneously publish a
ruling ("Award") indicating whether Landlord's Final Option Rent Calculation or
Tenant's Final Option Rent Calculation is closest to the Market Rent as
determined by the arbitrators. Following notification of the Award, the
Landlord's Final Option Rent Calculation or Tenant's Final Option Rent
Calculation, whichever is selected by the arbitrators as being closest to Market
Rent, shall become the then applicable Market Rent.
2.2.4.4    The Award issued by the majority of the three arbitrators shall,
subject to the TCCs of Section 2.2.5, below, be binding upon Landlord and
Tenant.
2.2.4.5    If either Landlord or Tenant fail to appoint an Advocate Arbitrator
within fifteen (15) days after the 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.
2.2.4.6    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.
2.2.4.7    Each party shall pay the cost of its Advocate Arbitrator and the cost
of the Neutral Arbitrator shall be paid by Landlord and Tenant equally.
2.2.4.1    In the event that the Option Rent shall not have been determined
pursuant to the terms hereof prior to the commencement of the Option Term,
Tenant shall continue to pay the Base Rent applicable as of the end of the Lease
Term, and upon the final determination of the Option Rent, the payments made by
Tenant shall be reconciled with the actual amounts due, and the appropriate
party shall make any corresponding payment to the other party.
ARTICLE 3

BASE RENT
3.1    In General. 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. In accordance with Section 4 of the Summary,
any increases in Base Rent shall occur on the first day of the applicable Lease
Month. The parties acknowledge, however, that Tenant shall pay Base Rent for
each "calendar month" of the Lease Term (or a prorated portion of a "calendar
month", as applicable), even though the first "Lease Month" may pertain to a
period longer than one (1) calendar month. 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
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.
3.2    Base Rent Abatement. Provided that no event of default is occurring
during the seven (7) month period commencing on the first (1st) day of the
second (2nd) full calendar month of the Lease Term and ending on the last day of
the eighth (8th) full calendar month of the Lease Term (the "Base Rent Abatement
Period"), Tenant shall not be obligated to pay any Base Rent otherwise
attributable to the Premises during such Base Rent Abatement Period (the "Base
Rent Abatement"). Landlord and Tenant acknowledge that the aggregate amount of
the Base Rent Abatement equals $2,541,261.80 (i.e., $363,037.40 per month),
which amount is subject to decrease in the event Tenant keeps a portion of its
existing premises as provided in Section 1.4 above . Tenant acknowledges and
agrees that during such Base Rent Abatement Period, such abatement of Base Rent
for the Premises shall have no effect on the calculation of any future increases
in Base Rent or Direct Expenses payable by Tenant pursuant to the terms of this
Lease, which increases shall be calculated without regard to such Base Rent
Abatement. Additionally, Tenant shall be obligated to pay all "Additional Rent"
(as that term is defined in Section 4.1 of this Lease) during the Base Rent
Abatement Period. Tenant acknowledges and agrees that the foregoing Base Rent
Abatement has been granted to Tenant as additional consideration for entering
into this Lease, and for agreeing to pay the Base Rent and perform the terms and
conditions otherwise required under this Lease. If Tenant shall be in default
under this Lease prior to or during such Base Rent Abatement Period and shall
fail to cure such default within the notice and cure period, if any, permitted
for cure pursuant to this Lease, or if this Lease, is terminated for any reason
other than Landlord's breach of this Lease, then the dollar amount of the
unapplied portion of the Base Rent Abatement as of the date of such default or
termination, as the case may be, shall be converted to a credit to be applied to
the Base Rent applicable at the end of the Lease Term and Tenant shall
immediately be obligated to begin paying Base Rent for the Premises in full. The
foregoing Base Rent Abatement right set forth in this Section 3.2 shall be
personal to the Original Tenant and shall only apply to the extent that the
Original Tenant (and not any assignee, or any sublessee or other transferee of
the Original Tenant's interest in this Lease) is the Tenant under this Lease
during such Base Rent Abatement Period.

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

ARTICLE 4

ADDITIONAL RENT
4.1    In General. 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, which are in excess of the amount of Direct Expenses applicable to the
"Base Year," as that term is defined in Section 4.2.1, below; provided, however,
that in no event shall any decrease in Direct Expenses for any "Expense Year"
(as that term is defined in Section 4.2.3, below) below Direct Expenses for the
Base Year entitle Tenant to any decrease in Base Rent or any credit against sums
due under 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; provided, however, the
parties hereby acknowledge that the first monthly installment of Tenant's Share
of any "Estimated Excess," as that term is set forth in, and pursuant to the
terms and conditions of, Section 4.4.2 of this Lease, shall first be due and
payable for the calendar month occurring immediately following the expiration of
the Base Year. 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.
4.2    Definitions 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    "Base Year" shall mean the period set forth in Section 5 of the
Summary.
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, renovation, restoration or operation of the
Project, or any portion thereof, in accordance with sound real estate management
and accounting practices, 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 (but excluding the cost
of electricity services consumed in the Premises and the premises of other
tenants of the Building and any other buildings in the Project (since Tenant is
separately paying for the cost of electricity services pursuant to Section 6.1.2
of the Lease)), the cost of operating, repairing, replacing, maintaining,
renovating and restoring 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, 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; (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, consulting fees, legal fees and accounting fees, of all
contractors and consultants in connection with the management, operation,
maintenance, replacement, renovation, repair and restoration of the Project;
(vii) payments under any equipment rental agreements and the fair rental value
of any management office space; (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 "Senior Asset
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; (x) operation, repair, maintenance, renovation, replacement and
restoration of all systems and equipment and components thereof of the Project;
(xi) the cost of janitorial, alarm, security and other services, replacement,
renovation, restoration and repair of wall and floor coverings, ceiling tiles
and fixtures in common areas, maintenance, replacement, renovation, repair and
restoration of curbs and walkways, repair to roofs and re-roofing;
(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, but not
to exceed 8%); (xiii) the cost of capital improvements or other costs incurred
in connection with the Project (A) which are reasonably anticipated by Landlord
to effect economies in the operation or maintenance of the Project, or any
portion thereof, or reduce current or future Operating Expenses (but only to the
extent of reasonably anticipated savings in Operating Expenses on a net basis),
(B) that are required to comply with present mandatory conservation programs,
(C) which are replacements or modifications of nonstructural items located in
the Common Areas required to keep the Common Areas in good order or condition,
(D) 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, (E) which are required in order for the
Project, or any portion thereof, to obtain or maintain a certification under the
U.S. Green Building Council's Leadership in Energy and Environmental Design
("LEED"), or other applicable certification agency in connection with Landlord's
sustainability practices for the Project (as such sustainability practices are
to be determined by Landlord, in its sole and absolute discretion, from time to
time), or (F) that relate to the safety or security of the Project; provided,
however, that any capital expenditure shall be amortized with interest at the
Interest Rate (but not to exceed 8%) over its useful life as Landlord shall
reasonably determine in accordance with sound real estate management and
accounting practices, consistently applied, or with respect to those items
included under item (A) above, their recovery/payback period as Landlord shall
reasonably determine in accordance with sound real estate management and
accounting practices, consistently applied; (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; (xv) payments under
any easement, license, operating agreement, declaration, restrictive covenant,
or instrument pertaining to the sharing of costs by the Project and (xvi) costs
of any additional services not provided to the Project as of the Lease
Commencement Date but which are thereafter provided by Landlord in connection
with its prudent management of the Project. Notwithstanding the foregoing, for
purposes of this Lease, Operating Expenses shall not, however, include:
(a)    costs, including 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 (excluding, however, such
costs relating to any common areas of the Project or parking facilities);
(b)    except as set forth in items (xii), and (xiii) 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 by any tenant or occupant of
the Project or by insurance by its carrier or any tenant's carrier or by anyone
else (except to the extent of deductibles), and electric power costs for which
any tenant directly contracts with the local public service company;
(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
Senior Asset 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, provided that any compensation
paid to any concierge or parking attendants at the Project shall be includable
as an Operating Expense;
(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," as that term is defined in Section 4 of Exhibit H to
this Lease, 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 or substance (as defined under applicable law) which was in existence
in the Building or on the Project prior to the Lease Commencement Date, to the
extent the same was of such a nature that a federal, state, local or municipal
governmental authority, if it had then had knowledge of the presence of such
hazardous material or substance, in the state, and under the conditions that it
then existed in the Building or on the Project, would have then required the
removal of such hazardous material or substance or other remedial or containment
action with respect thereto; and costs incurred to remove, remedy, contain, or
treat hazardous material or substance, which hazardous material or substance is
brought into the Building or onto the Project after the date hereof by Landlord
or any other tenant of the Project and is of such a nature, at that time, that a
federal, state, local or municipal governmental authority, if and to the extent
it had then had knowledge of the presence of such hazardous material or
substance, in the state, and under the conditions, that it then exists in the
Building or on the Project, would have then required the removal of such
hazardous material or substance or other remedial or containment action with
respect thereto;
(q)    costs incurred to comply with Applicable Laws for violations in existence
in the Building or on the Project prior to the Lease Commencement Date, to the
extent the same was of such a nature that a federal, state, local or municipal
governmental authority, if it had then had knowledge of the presence of such
violation in the Building or on the Project, would have then required the remedy
thereof;
(r)    capital expenditures other than those expressly permitted pursuant to
item (xiii) of Section 4.2.7 above;
(s)    advertising and promotional expenses; and
(t)    any profit related to the excess collection of Operating Expenses or
collection of Operating Expenses in excess of 100% of the actual Operating
Expenses.
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. If the Project is not at least
ninety-five percent (95%) occupied during all or a portion of the Base Year or
any Expense Year, Landlord shall make an appropriate adjustment to the
components of Operating Expenses for such year to determine the amount of
Operating Expenses that would have been incurred had the Project been
ninety-five percent (95%) occupied; and the amount so determined shall be deemed
to have been the amount of Operating Expenses for such year. Operating Expenses
for the Base Year shall not include market-wide cost increases (including
utility rate increases) due to extraordinary circumstances, including, but not
limited to, Force Majeure, boycotts, strikes, conservation surcharges, embargoes
or shortages, or amortized costs. In no event shall each of the components of
Direct Expenses for any Expense Year related to utility costs, Tax Expenses,
Project services costs or Project insurance costs be less than each of the
corresponding components of Direct Expenses related to such utility costs, Tax
Expenses, Project services costs and Project insurance costs in the Base Year.
Landlord shall not (i) make a profit by charging items to Operating Expenses
that are otherwise also charged separately to others and (ii) subject to
Landlord's right to adjust the components of Operating Expenses described above
in this paragraph, collect Operating Expenses from Tenant and all other tenants
in the Building in an amount in excess of what Landlord incurs for the items
included in Operating Expenses.
4.2.5    Taxes.
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 (including, without limitation,
the land upon which the Building and the parking facility adjacent to the
Building are located).
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; (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; and (v) all of the real estate taxes and assessments imposed upon
or with respect to the Building and all of the real estate taxes and assessments
imposed on the land and improvements comprising the Project.
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. Landlord agrees that such challenges of Tax Expenses shall be made in good
faith. 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 an increase in Tax Expenses 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 4.2.5 (except as set forth in
Section 4.2.5.2, 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, and (iv) any fees, penalties, interest or other
expenses incurred as a result of the late payment of any Tax Expense (unless due
to the actions or omissions of Tenant). Notwithstanding anything to the contrary
set forth in this Lease, only Landlord may institute proceedings to reduce Tax
Expenses and the filing of any such proceeding by Tenant without Landlord's
consent shall constitute an event of default by Tenant under this Lease.
Notwithstanding the foregoing, Landlord shall not be obligated to file any
application or institute any proceeding seeking a reduction in Tax Expenses.
4.2.5.4    Notwithstanding anything to the contrary set forth in this Lease, the
amount of Tax Expenses for the Base Year and any Expense Year shall be
calculated without taking into account any decreases in real estate taxes
obtained in connection with Proposition 8, and, therefore, the Tax Expenses in
the Base Year and/or an Expense Year may be greater than those actually incurred
by Landlord, but shall, nonetheless, be the Tax Expenses due under this Lease;
provided that (i) any costs and expenses incurred by Landlord in securing any
Proposition 8 reduction shall not be included in Direct Expenses for purposes of
this Lease, and (ii) tax refunds under Proposition 8 shall not be deducted from
Tax Expenses, but rather shall be the sole property of Landlord. Landlord and
Tenant acknowledge that this Section 4.2.5.4 is not intended to in any way
affect (A) the inclusion in Tax Expenses of the statutory two percent (2.0%)
annual maximum allowable increase in Tax Expenses (as such statutory increase
may be modified by subsequent legislation), or (B) the inclusion or exclusion of
Tax Expenses pursuant to the terms of Proposition 13, which shall be governed
pursuant to the terms of Sections 4.2.5.1 through 4.2.5.3, above.
4.2.6    "Tenant's Share" shall mean the percentage set forth in Section 6 of
the Summary.
4.3    Allocation of Direct Expenses.
4.3.1    Method of Allocation. The parties acknowledge that the Building is a
part of a multi-building project and that the costs and expenses incurred in
connection with the Project (i.e. the Direct Expenses) should be shared between
the tenants of the Building and the tenants of the other buildings in the
Project. Accordingly, as set forth in Section 4.2 above, Direct Expenses (which
consists of Operating Expenses and Tax Expenses) are determined annually for the
Project as a whole, and a portion of the Direct Expenses, which portion shall be
reasonably determined by Landlord on an equitable basis, shall be allocated to
the tenants of the Building (as opposed to the tenants of any other buildings in
the Project) and such portion shall be the Direct Expenses for purposes of this
Lease. Such portion of Direct Expenses allocated to the tenants of the Building
shall include all Direct Expenses attributable solely to the Building and an
equitable portion of the Direct Expenses attributable to the Project as a whole.
4.3.1    Cost Pools. Landlord shall have the right, from time to time, to
equitably allocate some or all of the Direct Expenses for the Project among
different portions or occupants of the Project (the "Cost Pools"), in Landlord's
discretion. Such Cost Pools may include, but shall not be limited to, the office
space tenants of a building of the Project or of the Project, and the retail
space tenants of a building of the Project or of the Project. The Direct
Expenses within each such Cost Pool shall be allocated and charged to the
tenants within such Cost Pool in an equitable manner.
4.4    Calculation and Payment of Additional Rent. If for any Expense Year
ending or commencing within the Lease Term, Tenant's Share of Direct Expenses
for such Expense Year exceeds Tenant's Share of Direct Expenses applicable to
the Base Year, then Tenant shall pay to Landlord, in the manner set forth in
Section 4.4.1, below, and as Additional Rent, an amount equal to the excess (the
"Excess").

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

4.4.1    Statement of Actual 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 Direct Expenses
incurred or accrued for the particular Expense Year, and which shall indicate
the amount of the Excess. 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, if an Excess is
present, Tenant shall pay, within thirty (30) days after receipt of the
Statement, the full amount of the Excess for such Expense Year, less the
amounts, if any, paid during such Expense Year as "Estimated Excess," as that
term is defined in Section 4.4.2, below, and if Tenant paid more as Estimated
Excess than the actual Excess, Tenant shall receive a credit in the amount of
Tenant's overpayment 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 an Excess is present, Tenant
shall, within thirty (30) days after receipt of the Statement, pay to Landlord
such amount, and if Tenant paid more as Estimated Excess than the actual Excess,
Landlord shall, within thirty (30) days, deliver a check payable to Tenant in
the amount of the overpayment. 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 Direct Expenses attributable to any Expense Year which are first
billed to Tenant more than eighteen (18) calendar months after the Lease
Expiration Date, provided that in any event Tenant shall be responsible for
Tenant's Share of Direct Expenses which (x) were levied by any governmental
authority or by any public utility companies, and (y) Landlord had not
previously received an invoice therefor and which are currently due and owing
(i.e., costs invoiced for the first time regardless of the date when the work or
service relating to this Lease was performed), at any time following the Lease
Expiration Date which are attributable to any Expense Year.
4.4.2    Statement of Estimated Direct Expenses. In addition, Landlord shall
endeavor to 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 excess (the
"Estimated Excess") as calculated by comparing the Direct Expenses for such
Expense Year, which shall be based upon the Estimate, to the amount of Direct
Expenses for the Base Year. 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 Additional Rent under this Article 4, nor
shall Landlord be prohibited from revising any Estimate Statement or Estimated
Excess 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 Excess 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 Excess set forth in the previous
Estimate Statement delivered by Landlord to Tenant. Throughout the Lease Term
Landlord shall maintain records with respect to Direct Expenses in accordance
with sound real estate management and accounting practices, consistently
applied.
4.5    Taxes 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 the Building 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    Landlord's Records. Upon Tenant's written request given not more than
ninety (90) 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 notice and cure period provided in this Lease, specifically
including, but not limited to, the timely payment of Additional Rent (whether or
not a component thereof is the subject of the audit contemplated herein),
Landlord shall furnish Tenant with such reasonable supporting documentation
pertaining to the calculation of the Excess set forth in the Statement as Tenant
may reasonably request. Landlord shall provide said documentation pertaining to
the relevant Excess to Tenant within thirty (30) days after Tenant's written
request therefor. Within one hundred eighty (180) days after receipt of a
Statement by Tenant (the "Audit

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

Period"), Tenant shall have the right, within the Audit Period, after reasonable
notice to Landlord and at reasonable times, to cause an independent certified
public accountant which is not paid on a contingency basis and which is mutually
approved by Landlord and Tenant (the "Accountant") to complete an audit of
Landlord's records with respect to the Excess set forth in the Statement at
Landlord's corporate offices, provided that (i) Tenant is not then in default
under this Lease (beyond the applicable notice and cure periods provided under
this Lease), (ii) Tenant has paid all amounts required to be paid under the
applicable Estimate Statement and Statement (however, Tenant may pay such
amounts under protest), and (iii) a copy of the audit agreement between Tenant
and its particular certified public accounting firm has been delivered to
Landlord prior to the commencement of the audit. Such audit by the Accountant
shall be final and binding upon Landlord and Tenant. If Landlord and Tenant
cannot mutually agree as to the identity of the Accountant within thirty (30)
days after Tenant notifies Landlord that Tenant desires an audit to be
performed, then the Accountant shall be one of the "Big 4" accounting firms or
other national or regional accounting firm, which is not paid on a contingency
basis and which is selected by Tenant and reasonably approved by Landlord. In
connection with such audit, Tenant and the Accountant must agree in advance to
follow Landlord's reasonable rules and procedures regarding an audit of the
aforementioned Landlord records, and shall execute a commercially reasonable
confidentiality agreement regarding such audit. Any audit report prepared by the
Accountant shall be delivered concurrently to Landlord and Tenant within the
Audit Period. Tenant's failure to audit the any Expenses set forth in a
Statement within the Audit Period shall be deemed to be Tenant's approval of
such Statement and Tenant, thereafter, waives the right or ability to audit the
amounts set forth in such Statement. If such audit reveals that Landlord has
over-charged Tenant, then within thirty (30) days after the results of such
audit are made available to Landlord, Landlord shall reimburse to Tenant the
amount of such over-charge. If the audit reveals that the Tenant was
under-charged, then within thirty (30) days after the results of such audit are
made available to Tenant, Tenant shall reimburse to Landlord the amount of such
under-charge. Tenant agrees to pay the cost of such audit unless it is
subsequently determined that Landlord's original Statement which was the subject
of such audit was in error to Tenant's disadvantage by five percent (5%) or more
of the total Operating Expenses which was the subject of such audit. The payment
by Tenant of any amounts pursuant to this Section 4 shall not preclude Tenant
from questioning the correctness of any Statement provided by Landlord at any
time during the Audit Period, but the failure of Tenant to object thereto and
commence its inspection and have the Accountant commence the audit as described
above prior to the expiration of the Audit Period shall be conclusively deemed
Tenant's approval of the Statement in question and the amount of Direct Expenses
shown thereon. Tenant hereby acknowledges that Tenant's sole right to audit
Landlord's 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 audit such records and/or to
contest the amount of Direct Expenses payable by Tenant.
ARTICLE 5

USE OF PREMISES
5.1    Permitted 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 and absolute discretion.
5.2    Prohibited 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) communications firms such as radio and/or television stations.
Tenant's use shall not result in an occupancy density for the Premises which is
greater than five (5) persons per 1,000 rentable square feet of the Premises.
Tenant further covenants and agrees that it 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 rules and regulations promulgated by Landlord from time
to time ("Rules and Regulations"), the current set of which (as of the date of
this Lease) is attached to this Lease as Exhibit D; 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 do
or permit anything to be done in or about the Premises which, in Landlord’s
reasonable discretion, will in any way damage the reputation of the Project or
unreasonably obstruct or interfere with the rights of other tenants or occupants
of the Building, or 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.
5.3    CC&Rs. Tenant shall comply with all recorded covenants, conditions, and
restrictions 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. Notwithstanding anything to the contrary herein,
Tenant shall only be required to abide by, and have this Lease subject to, any
such future CC&Rs to the extent such future CC&Rs do not (i) adversely affect
Tenant's rights under this Lease, (ii) adversely affect Tenant's use of the
Premises for the Permitted Use, or (iii) increase Tenant's monetary obligations
under this Lease, in more than a de minimis manner.

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

ARTICLE 6

SERVICES AND UTILITIES
6.1    Standard Tenant Services. Landlord shall provide the following services
on all days (unless otherwise stated below) during the Lease Term.
6.1.1    Subject to reasonable changes implemented by Landlord and all
governmental rules, regulations and guidelines applicable thereto, Landlord
shall provide heating, ventilation and air conditioning ("HVAC") when necessary
for normal comfort for normal office use in the Premises from 7:00 A.M. to 6:00
P.M. Monday through Friday, and 9:00 A.M. to 1:00 P.M. on Saturday
(collectively, the "Building Hours"), except for the date of observation of New
Year's Day, President's Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, Christmas Day and, at Landlord's discretion, other locally or
nationally recognized holidays (collectively, the "Holidays").
6.1.2    Landlord shall provide adequate electrical wiring and facilities and
power for normal general office use as reasonably determined by Landlord.
Notwithstanding any provision to the contrary contained in this Lease, Tenant
shall pay directly to the utility company pursuant to the utility company's
separate meters (or to Landlord in the event Landlord provides submeters instead
of the utility company's meters), the cost of all electricity, gas, water and
sewer services provided to and/or consumed in the Premises (including normal and
excess consumption and including the cost of electricity to operate the HVAC air
handlers), which electricity, gas, water and sewer services shall be separately
metered (as described above or otherwise equitably allocated and directly
charged by Landlord to Tenant and other tenants of the Building). Tenant shall
pay such cost (including the cost of such meters or submeters) within ten (10)
days after demand and as Additional Rent under this Lease (and not as part of
the Operating Expenses). Landlord shall designate the utility provider from time
to time.
6.1.3    As part of Operating Expenses, Landlord shall replace lamps, starters
and ballasts for Building standard lighting fixtures within the Premises. In
addition, Tenant shall bear the cost of replacement of lamps, starters and
ballasts for non-Building standard lighting fixtures within the Premises.
6.1.4    Landlord shall provide city water from the regular Building outlets for
drinking, lavatory and toilet purposes in the Building Common Areas.
6.1.5    Landlord shall provide janitorial services to the Premises, except the
date of observation of the Holidays, in and about the Premises and window
washing services in a manner consistent with other Comparable Buildings.
6.1.6    Landlord shall provide nonexclusive, non-attended automatic passenger
elevator service during the Building Hours, and shall have at least one elevator
available at all other times. Landlord shall provide nonexclusive freight
elevator service subject to scheduling by Landlord.
Tenant shall cooperate fully with Landlord at all times and abide by all
regulations and requirements that Landlord may reasonably prescribe for the
proper functioning and protection of the HVAC, electrical, mechanical and
plumbing systems.
6.2    Overstandard Tenant Use. Tenant shall not, without Landlord's prior
written consent, use heat-generating machines, machines other than normal
fractional horsepower office machines, or equipment or lighting other than
Building standard lights in the Premises, which may substantially affect the
temperature otherwise maintained by the air conditioning system or increase the
water normally furnished for the Premises by Landlord pursuant to the terms of
Section 6.1 of this Lease. If such consent is given, Landlord shall have the
right to require installation of 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 to Landlord upon billing by Landlord. If Tenant
uses water, electricity, heat or air conditioning in excess of that supplied by
Landlord pursuant to Section 6.1 of this Lease, Tenant shall pay to Landlord,
upon billing, the cost of such excess consumption, the cost of the installation,
operation, and maintenance of equipment which is installed in order to supply
such excess consumption, and the cost of the increased wear and tear on existing
equipment caused by such excess consumption; and Landlord may install devices to
separately meter any increased use and in such event Tenant shall pay the
increased cost directly to Landlord, including the cost of such additional
metering devices. Tenant's use of electricity shall never exceed the capacity of
the feeders to the Project or the risers or wiring installation, and subject to
the terms of Section 29.32, below, and as otherwise consistent with specifically
identified elements of the Improvements (e.g., server rooms and ancillary
electrical and HVAC equipment relating thereto) contained on the "Approved
Working Drawings" (as that term is defined in the Work Letter), Tenant shall not
otherwise install or use or permit the installation or use of any computer or
electronic data processing equipment in the Premises (other than typical desk
top computers and ancillary equipment (as opposed to computer servers or similar
equipment), without the prior written consent of Landlord. If Tenant desires to
use heat, ventilation or air conditioning during hours other than those for
which Landlord is obligated to supply such utilities pursuant to the terms of
Section 6.1 of this Lease, Tenant shall give Landlord such prior notice, if any,
as Landlord shall from time to time establish as appropriate, of Tenant's
desired use in order to supply such utilities, and Landlord shall supply such
utilities to Tenant at the “Actual Cost” (defined below) thereof (which shall be
treated as Additional Rent) as Landlord shall from time to time establish; which
Actual Cost as of the date hereof is $50.00 per hour. For the purpose of this
Section 6.2, “Actual Cost” shall mean the actual

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

cost, including reasonable depreciation (attributable to such after-hours usage)
and administrative charges (to the extent not duplicative of Operating
Expenses), incurred, and as reasonably determined, by Landlord without charge
for overhead or profit, provided that, notwithstanding the foregoing, any amount
actually charged to Landlord by any third party unaffiliated with Landlord for
the supply of such utilities to Tenant shall be deemed part of Landlord’s
"Actual Cost".
6.3    Interruption of Use. 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 6.4, Article 11 or
Article 13 below. 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.
6.4    Abatement Event. If (i) Landlord fails to perform the obligations
required of Landlord under the TCCs of this Lease, (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 the heat, ventilation,
and air conditioning system in the Premises, the electricity in the Premises,
the nonfunctioning of the elevator 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 three (3)
business days after the receipt of the Initial Notice, 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 three (3) 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 three (3) 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. Such right to abate Rent
shall be Tenant's sole and exclusive remedy at law or in equity for an 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.
ARTICLE 7

REPAIRS
Landlord shall maintain in good condition and operating order and keep in good
repair and condition the structural portions of the Building, including the
foundation, floor/ceiling slabs, 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,
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 Base
Building mechanical, electrical, life safety, plumbing, sprinkler systems and
HVAC systems which were not constructed by Tenant Parties (collectively, the
"Building Systems") and the Project Common Areas. Notwithstanding anything in
this Lease to the contrary, Tenant shall be required to repair the Building
Structure and/or the Building Systems to the extent caused due to Tenant's use
of the Premises for other than normal and customary business office operations,
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/BS Exception").
Tenant shall, at Tenant's own expense, keep the Premises, including all
improvements, fixtures, equipment, interior window coverings, and furnishings
therein, and the floor or floors of the Building on which the Premises is
located, in good order, repair and condition at all times during the Lease Term,
but such obligation shall not extend to the Building Structure and the Building
Systems except pursuant to the BS/BS Exception. In addition, Tenant shall, at
Tenant's own expense, but under the supervision and subject to the prior
approval of Landlord for any repairs reasonably expected to cost more than
$5,000 or reasonably expected to impact the Building Structure or Building
Systems, and within any reasonable period of time specified by Landlord,
promptly and adequately repair all damage to the Premises and replace or repair
all damaged, broken, or worn fixtures and appurtenances, but such obligation
shall not extend to the Building Structure and the Building Systems except
pursuant to the BS/BS Exception, except for damage caused by ordinary wear and
tear or beyond the reasonable control of Tenant; 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, 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 in excess of
ten percent (10%) per annum) 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. Landlord may, but shall not be required to, enter the Premises at all
reasonable times (in accordance with the terms of Article 27 below) 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. For the
avoidance of doubt, if a particular Building System is beyond its useful life
such that it is inoperative or otherwise requires ongoing repairs materially in
excess of normal and customary maintenance, Landlord shall replace such Building
System (regardless of whether such Building System is shared or exclusively
serves the Premises and regardless of whether such Building System was modified
as part of the Improvements), and the cost of such replacement shall be included
in Operating Expenses (to the extent allowed by Article 4 of this Lease) and
amortized pursuant to Section 4.2.4(xiii) of this Lease, subject to the BS/BS
Exception.
ARTICLE 8

ADDITIONS AND ALTERATIONS
8.1    Landlord'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. Notwithstanding the
foregoing, Tenant shall be permitted to make Alterations following ten (10)
business days' notice to Landlord, but without Landlord's prior consent, to the
extent that such Alterations do not (i) adversely affect the systems and
equipment of the Building, exterior appearance of the Building, or structural
aspects of the Building, (ii) adversely affect the value of the Premises or
Building, (iii) require a building or construction permit, or (iv) cost more
than Three Hundred Thousand and 00/100 Dollars ($300,000.00) for a particular
job of work (the "Cosmetic Alterations"). The construction of the initial
improvements to the Premises shall be governed by the terms of the Work Letter
and not the terms of this Article 8.
8.2    Manner 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 any
removal and/or restoration obligations required to be performed pursuant to the
TCCs of Section 8.5 of this Lease. If Landlord shall give its consent, the
consent shall be deemed conditioned upon Tenant acquiring a permit to do the
work from appropriate governmental agencies, the furnishing of a copy of such
permit to Landlord prior to the commencement of the work, and the compliance by
Tenant with all conditions of said permit in a prompt and expeditious manner. If
such Alterations will involve the use of or disturb hazardous materials or
substances existing in the Premises, Tenant shall notify Landlord prior to
performing such Alterations and comply with Landlord's rules and regulations
concerning such hazardous materials or substances. 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, local or
municipal laws, ordinances, rules and regulations and pursuant to a valid
building permit, issued by the city in which the Building is located (or other
applicable governmental authority), 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. Since all or a portion of the Project is or may become in the future
certified under the LEED rating system (or other applicable certification
standard) (all in Landlord's sole and absolute discretion), Tenant expressly
acknowledges and agrees that without limitation as to other grounds for Landlord
withholding its consent to any proposed Alteration, Landlord shall have the
right to withhold its consent to any proposed Alteration in the event that such
Alteration is not compatible with such certification or recertification of the
Project under such LEED rating system (or other applicable certification
standard). 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 is 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 retain any union trades to the extent designated by
Landlord. Further, 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 8182 of the Civil Code of the
State of California or any successor statute, and as a condition precedent to
the enforceability and validity of Landlord's consent, Tenant shall deliver to
the management office for the Project a reproducible copy of the "as built" and
CAD 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.
8.3    Payment for Improvements. With respect to payments to be made to Tenant's
contractors for any Alterations, 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. In addition, in connection with all Alterations, Tenant
shall pay Landlord an oversight fee equal to five percent (5%) of the cost of
the work, and reimburse Landlord for Landlord's reasonable, actual,
out-of-pocket costs and expenses actually incurred

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

in connection with Landlord's review of such work, provided Landlord agrees the
foregoing oversight fee shall not apply to or be charged in connection with
Cosmetic Alterations.
8.4    Construction 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 carries "Builder's 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 such Alterations and naming
Landlord as a co-obligee.
8.5    Landlord'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 (excluding Tenant's
removable trade fixtures, furniture or non-affixed office equipment), 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" (as that term
is defined in Section 2.1 of the Work Letter) to be constructed in the Premises
pursuant to the TCCs of the Work Letter shall, upon completion of the same, be
and become a part of the Premises and the property of Landlord. Furthermore,
Landlord may, by written notice to Tenant (x) with respect to Improvements,
concurrently with Landlord’s approval of the same in accordance with Section 3.4
of the Work Letter, (y) with respect to any Alterations, concurrent with
Landlord’s approval thereof, and (z) with respect to any Cosmetic Alterations,
within ten (10) business days following Tenant’s notice of such Cosmetic
Alterations as required by Section 10.1 above (with any non-response by Landlord
within such ten (10) business day period deemed Landlord’s election to not
require removal of such Cosmetic Alterations), require Tenant, at Tenant's
expense, to remove any Alterations or improvements in the Premises (including,
without limitation, the Improvements), 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 improved condition as reasonably determined by
Landlord prior to the end of the Lease Term; provided, however, Landlord hereby
agrees that Tenant shall only be required to remove to remove any Alterations or
improvements in the Premises which are "Specialty Improvements" (defined
hereinbelow). "Specialty Improvements" means any Alterations or Improvements
other than normal and customary general office improvements. Notwithstanding the
foregoing, "Specialty Improvements" (1) shall not include conference rooms but
(2) shall include (a) any Alterations or Tenant Improvements which affect the
Base Building, (b) any showers, restrooms, washrooms or similar facilities in
the Premises that are not part of the Base Building, (c) any raised floors,
racking systems, classrooms, internal stairwells, high density filing systems,
and (d) any "Lines" (as that term is defined in Section 29.26 below). 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/or to return the
affected portion of the Premises to a building standard 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, and/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, 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 five (5) 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

INDEMNIFICATION AND INSURANCE
10.1    Indemnification and Waiver. Except to the extent arising from the
negligence or willful misconduct of the Landlord or the "Landlord Parties" (as
that term is 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, and employees (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 Tenant or by other persons claiming
through Tenant. Except to the extent arising from the negligence or willful
misconduct of the Landlord or the Landlord Parties, Tenant shall indemnify,
defend, protect, and hold harmless the Landlord Parties from and against 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: (a) any causes in, or on the Premises; (b) the use or occupancy of
the Premises by Tenant or any person claiming under Tenant; (c) any activity,
work, or thing done, or permitted or suffered by Tenant in or about the
Premises; (d) any acts, omission, or negligence of Tenant or any person claiming
under Tenant, or the contractors, agents, employees, invitees, or visitors of
Tenant or any such person, in, on or about the Project (collectively, "Tenant
Parties"); (e) any breach, violation, or non-performance by Tenant or any person
claiming under Tenant or the employees, agents, contractors, invitees, or
visitors of Tenant or any such person of any term, covenant, or provision of
this Lease or any law, ordinance, or governmental requirement of any kind;
(f) any injury or damage to the person, property, or business of Tenant, its
employees, agents, contractors, invitees, visitors, or any other person entering
upon the Premises under the express or implied invitation of Tenant; or (g) the
placement of any personal property or other items within the Premises. 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 indemnification
obligations set forth above and the waiver of subrogation provided below,
Landlord shall indemnify, defend, protect, and hold harmless Tenant from any and
all loss, cost, damage, expense, and liability (including, without limitation,
court costs and reasonable attorneys' fees) to the extent arising from the gross
negligence or willful misconduct of Landlord or the Landlord Parties in, on or
about the Project either prior to or during the Lease Term, provided that the
terms of the foregoing indemnity shall not apply to the negligence or willful
misconduct of Tenant. Notwithstanding anything to the contrary set forth in this
Lease, either party's agreement to defend and indemnify the other party as set
forth in this Section 10.1 shall be ineffective to the extent the matters for
which such party agreed to defend and indemnify the other party are covered by
insurance required to be carried by the non-indemnifying party pursuant to this
Lease. 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 by Tenant pursuant to the provisions of this
Lease, to the extent such policies cover the matters subject to Tenant's
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.
10.2    Tenant's Compliance With Landlord's Fire and Casualty Insurance. Tenant
shall, at Tenant's expense, comply with Landlord's insurance company
requirements pertaining to the use of the Premises. 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.
10.3    Tenant's Insurance. Throughout the Lease Term, Tenant shall maintain the
following coverages in the following amounts. The required evidence of coverage
must be delivered to Landlord on or before the date required under
Section 10.4(I) sub-sections (x) and (y), or Section 10.4(II) below (as
applicable). Such policies shall be for a term of at least one (1) year, or the
length of the remaining term of this Lease, whichever is less.
10.3.1    Commercial General Liability Insurance, including Broad Form
contractual liability covering the insured against claims of bodily injury,
personal injury and property damage (including loss of use thereof) based upon
or arising out of Tenant's operations, occupancy or maintenance of the Project
and all areas appurtenant thereto. Such insurance shall be written on an
"occurrence" basis. Landlord and any other party the Landlord so specifies that
has a material financial interest in the Project, including Landlord's managing
agent, ground lessor and/or lender, if any, shall be named as additional
insureds as their interests may appear using Insurance Service Organization's
form CG2011 or a comparable form approved by Landlord. Tenant shall provide an
endorsement or policy excerpt showing that Tenant's coverage is primary and any
insurance carried by Landlord shall be excess and non-contributing. The coverage
shall also be extended to include damage caused by heat, smoke or fumes from a
hostile fire. The policy shall not contain any intra-insured exclusions as
between insured persons or organizations. This policy shall include coverage for
all liabilities assumed under this Lease as an insured contract for the
performance of all of Tenant's indemnity obligations under this Lease. The
limits of said insurance shall not, however, limit the liability of Tenant nor
relieve Tenant of any obligation hereunder. Limits of liability insurance shall
not be less than the following; provided, however, such limits may be achieved
through the use of an Umbrella/Excess Policy:

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

Bodily Injury and
Property Damage Liability
$5,000,000 each occurrence
Personal Injury and Advertising Liability
$5,000,000 each occurrence
Tenant Legal Liability/Damage to Rented Premises Liability
$2,000,000.00

10.3.2Property Insurance covering (i) all office furniture, personal property,
business and trade fixtures, office equipment, free-standing cabinet work,
movable partitions, merchandise and all other items of Tenant's business
personal property on the Premises installed by, for, or at the expense of
Tenant, (ii) the Improvements, 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 Alterations performed in the Premises.
Such insurance shall be written on a Special Form basis, for the full
replacement cost value (subject to reasonable deductible amounts), 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 for
(a) all perils included in the CP 10 30 04 02 Coverage Special Form, (b) water
damage from any cause whatsoever, including, but not limited to, sprinkler
leakage, bursting, leaking or stoppage of any pipes, explosion, and backup or
overflow from sewers or drains, and (c) terrorism (to the extent such terrorism
insurance is available as a result of the Terrorism Risk Insurance Act of 2002
(Pub. L. 107-297, 116 Stat. 2322), the Terrorism Risk Insurance Program
Reauthorization Act of 2005 (Pub. l. 109‑144), and the Terrorism Risk Insurance
Program Reauthorization Act of 2007 (Pub. L. 110‑160, 121 Stat. 183), any
successor statute or regulation, or is otherwise available at commercially
reasonable rates).
10.3.2.1    Increase in Project's Property Insurance. Tenant shall pay for any
increase in the premiums for the property insurance of the Project if said
increase is caused by Tenant's acts, omissions, use or occupancy of the
Premises.
10.3.2.2    Property Damage. Tenant shall use the proceeds from any such
insurance for the replacement of personal property, trade fixtures,
Improvements, Original Improvements and Alterations.
10.3.2.3    No Representation of Adequate Coverage. Landlord makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Tenant's property, business operations or
obligations under this Lease.
10.3.2.4    Property Insurance Subrogation. Landlord and Tenant intend that
their respective property loss risks shall be borne by insurance carriers to the
extent above provided (and, in the case of Tenant, by an insurance carrier
satisfying the requirements of Section 10.4(i) below), 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. Landlord and Tenant hereby represent
and warrant that their respective "all risk" property insurance policies include
a waiver of (i) subrogation by the insurers, and (ii) all rights based upon an
assignment from its insured, against Landlord and/or any of the Landlord Parties
or Tenant and/or any of the Tenant Parties (as the case may be) in connection
with any property loss risk thereby insured against. Tenant will cause all
subtenants and licensees of the Premises claiming by, under, or through Tenant
to execute and deliver to Landlord a waiver of claims similar to the waiver in
this Section 10.3.2.4 and to obtain such waiver of subrogation rights
endorsements. If either party hereto fails to maintain the waivers set forth in
items (i) and (ii) above, the party not maintaining the requisite waivers shall
indemnify, defend, protect, and hold harmless the other party for, from and
against any and all claims, losses, costs, damages, expenses and liabilities
(including, without limitation, court costs and reasonable attorneys' fees)
arising out of, resulting from, or relating to, such failure.
10.3.3    Business Income Interruption for one year (1) plus Extra Expense
insurance in such amounts as will reimburse Tenant for actual direct or indirect
loss of earnings attributable to the risks outlined in Section 10.3.2 above.
10.3.4    Worker's Compensation or other similar insurance pursuant to all
applicable state and local statutes and regulations, and Employer's Liability
with minimum limits of not less than $1,000,000 each accident/employee/disease.
10.3.5    Commercial Automobile Liability Insurance covering all Owned (if any),
Hired, or Non-owned vehicles with limits not less than $1,000,000 combined
single limit for bodily injury and property damage.
10.4    Form 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 an
AM Best rating of not less than A‑X (or to the extent AM Best ratings are no
longer available, then a similar rating from another comparable rating agency),
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 and complying with the requirements of Section 10.3 (including,
Sections 10.3.1 through 10.3.5), (iii) Tenant shall not do or permit to be done
anything which invalidates the required insurance policies, and (iv) provide
that said insurance shall not be canceled or coverage changed unless thirty
(30) days' 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. Tenant shall deliver said policy or policies or certificates thereof
and applicable endorsements which meet the requirements of this Article 10 to
Landlord on or before (I) the earlier to occur of: (x) the Lease Commencement
Date, and (y) the date Tenant and/or its employees, contractors and/or agents
first enter the

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

Premises for occupancy, construction of improvements, alterations, or any other
move-in activities, and (II) five (5) business days after the renewal of such
policies. In the event Tenant shall fail to procure such insurance, or to
deliver such policies or certificates and applicable endorsements, 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 sole benefit of Landlord, and the cost thereof shall
be paid to Landlord after delivery to Tenant of bills therefor.
10.5    Additional 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.
10.6    Third-Party Contractors. Tenant shall obtain and deliver to Landlord,
Third Party Contractor's certificates of insurance and applicable endorsements
at least seven (7) business days prior to the commencement of work in or about
the Premises by any vendor or any other third-party contractor (collectively, a
"Third Party Contractor"). All such insurance shall (a) name Landlord as an
additional insured under such party's liability policies as required by
Section 10.3.1 above and this Section 10.6, (b) provide a waiver of subrogation
in favor of Landlord under such Third Party Contractor's commercial general
liability insurance, (c) be primary and any insurance carried by Landlord shall
be excess and non-contributing, and (d) comply with Landlord's minimum insurance
requirements.
ARTICLE 11

DAMAGE AND DESTRUCTION
11.1    Repair of Damage to Premises by Landlord. If the Base Building or any
Common Areas serving or providing access to the Premises shall be damaged by a
fire or any other casualty (collectively, a "Casualty"), Landlord shall 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 (provided
Landlord shall restore the Improvements to the extent Landlord delivers a
“Landlord Repair Notice” as that term is defined below). Such restoration shall
be to substantially the same condition of the Base Building and the Common Areas
(and Improvements, to the extent applicable) 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. Tenant shall
promptly notify Landlord upon the occurrence of any damage to the Premises
resulting from a Casualty, and Tenant shall promptly inform its insurance
carrier of any such damage. Upon notice (the "Landlord Repair Notice") to Tenant
from Landlord, 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, and
Landlord shall repair any injury or damage to the Improvements and the Original
Improvements installed in the Premises and shall return such Improvements and
the Original Improvements to their original condition; provided that if the cost
of such repair by Landlord exceeds the amount of insurance proceeds received by
Landlord from Tenant's insurance carrier, as assigned by Tenant, the cost of
such repairs shall be paid by Tenant to Landlord prior to Landlord's
commencement of repair of the damage. In the event that Landlord does not
deliver the Landlord Repair Notice within sixty (60) days following the date the
Casualty becomes known to Landlord, Tenant shall, at its sole cost and expense,
repair any injury or damage to the Improvements and the Original Improvements
installed in the Premises and shall return such Improvements and Original
Improvements to their original condition, and in such event, Tenant shall not be
required to assign Tenant’s insurance proceeds under items (ii) and (iii) of
Section 10.3.2 of this Lease to Landlord. Whether or not Landlord delivers a
Landlord Repair Notice, 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 Landlord shall select
the contractors to perform such improvement work. 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 Casualty shall have damaged the Premises or
Common Areas necessary to Tenant's occupancy, and the Premises is not occupied
by Tenant as a result thereof, then during the time and to the extent the
Premises is 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. In the event that Landlord shall not
deliver the Landlord Repair Notice, Tenant's right to rent abatement pursuant to
the preceding sentence shall terminate as of the date which is reasonably
determined by Landlord to be the date Tenant should have completed repairs to
the Premises assuming Tenant used reasonable due diligence in connection
therewith.
11.2    Landlord's Option to Repair. Notwithstanding the terms of Section 11.1
of this Lease, Landlord may elect not to rebuild and/or restore the Premises,
Building and/or Project, and instead terminate this Lease, by notifying Tenant
in writing of such termination within sixty (60) days after the date of
discovery of the damage, such notice to include a termination date giving Tenant
sixty (60) days to vacate the Premises, but Landlord may so elect only if the
Building or Project shall be damaged by Casualty, whether or not the Premises is
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 fully 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
then-applicable Lease Term (i.e., to the extent Tenant has timely and validly
exercised its option to

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

extend the Lease Term for the Option Term set forth in Section 2.2 above, this
item (v) shall not be applicable until the last twelve (12) months of the Option
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 the Premises and/or access thereto are materially
damaged by Casualty, and Landlord does not elect to terminate this Lease
pursuant to Landlord's termination right as provided above, and either the
repairs cannot, in the reasonable opinion of Landlord, be completed within one
hundred eighty (180) days after being commenced or the damage occurs during the
last twelve (12) months of the Lease Term, Tenant may elect, no earlier than
sixty (60) days after 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 sixty
(60) days of the date that Landlord originally estimated for completion in
"Landlord's Repair Estimate Notice" (as that term is defined hereinbelow), then
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 ("Landlord's Repair Estimate Notice"). 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 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; (c) as a result of the
damage, Tenant cannot reasonably conduct business from the Premises; and, (d) as
a result of the damage to the Project, Tenant does not occupy or use the
Premises at all. 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.
11.3    Waiver 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
twenty-five percent (25%) of the rentable square feet of the Premises is 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. Landlord
shall be entitled to receive the entire award made in connection with any such
temporary taking.
ARTICLE 14

ASSIGNMENT AND SUBLETTING
14.1    Transfers. Tenant shall not, without the prior written consent of
Landlord, assign, mortgage, pledge, hypothecate, encumber, or permit any lien to
attach to, or otherwise transfer, this Lease 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 or entity 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 consent document in connection with any consent to
such Transfer; further provided that Landlord, at Tenant or any Transferee’s
request, shall enter into a commercially reasonable confidentiality agreement
with respect to such documents, (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 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 substantially 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, provided that such costs and expenses shall
not exceed Two Thousand Five Hundred and No/100 Dollars ($2,500.00) for the
negotiation of Transfer related documentation 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 particular proposed
Transfer involves the review of documentation by Landlord on more than two (2)
occasions for such specific Transfer.
14.2    Landlord's Consent. Landlord shall not unreasonably withhold or
condition its consent to any proposed Transfer of the Subject Space to the
Transferee on the terms specified in the Transfer Notice. Landlord shall
endeavor to provide notice of its determination regarding a Transfer Notice
within thirty (30) days following receipt of the same. 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, in Landlord’s reasonable judgment, of a character
or reputation or engaged in a business which is not consistent with the quality
of the Building or the Project;
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    The Transferee does not have the 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, in Landlord’s reasonable
judgment;
14.2.5    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;
14.2.6    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
14.2.7    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 actively negotiating with Landlord to lease
space in the Project at such time, or (iii) has negotiated with Landlord during
the twelve (12)-month period immediately preceding the Transfer Notice;
provided, however, it shall only be deemed reasonable for Landlord to withhold
its consent to a Transfer pursuant to this Section 14.2.7 to the extent Landlord
has then-available space in the Project for such proposed Transferee.
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 (6)-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
material 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 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 this Section 14.2 or otherwise has breached or acted
unreasonably under this Article 14, their sole remedies shall be a suit for
contract damages or declaratory judgment and an injunction for the relief sought
without any monetary damages, and Tenant hereby waives the provisions of
Section 1995.310 of the California Civil Code, or any successor statute, and 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. Tenant shall indemnify,
defend and hold harmless Landlord from any and all liability, losses, claims,
damages, costs, expenses, causes of action and proceedings involving any third
party or parties (including without limitation Tenant's proposed subtenant or
assignee) who claim they were damaged by Landlord's wrongful withholding or
conditioning of Landlord's consent; provided, however, that the foregoing
indemnity shall not apply to the extent that Landlord's withholding or
conditioning of consent shall be adjudged by a court of competent jurisdictions
to be wrongful.
14.3    Transfer 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, and (iii) any brokerage commissions in connection
with the Transfer. "Transfer Premium" shall also include, but not be limited to,
key money, bonus money or other cash consideration paid by Transferee to Tenant
in connection with such Transfer, and any payment in excess of fair market value
for services rendered by Tenant to Transferee or for assets, fixtures,
inventory, equipment, or furniture transferred by Tenant to Transferee in
connection with such Transfer.
14.4    Landlord's Option as to Subject Space. Notwithstanding anything to the
contrary contained in this Article 14, if at any time Tenant desires a
determination as to whether or not Landlord intends to exercise its rights under
this Section 14.4 in connection with a contemplated Transfer of all or a portion
of the Premises for which Landlord’s consent is required, then Tenant may give
Landlord notice ("Intention to Transfer Notice") of such contemplated Transfer.
The Intention to Transfer Notice shall specify the portion of and amount of
rentable square feet of the Premises which Tenant intends to Transfer (the
"Contemplated Transfer Space"), 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 notify Tenant whether Landlord will
elect to recapture the Contemplated Transfer Space for the term set forth in the
Intention to Transfer Notice. In the event Tenant delivers an Intention to
Transfer Notice

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

to Landlord and if such proposed Transfer would result in Tenant or a Permitted
Transferee occupying less than seventy-five percent (75%) of the rentable square
footage of the Premises following the consummation of such proposed Transfer for
the then-remaining balance of the Term, Landlord shall have the option, by
giving written notice (the "Recapture Notice") to Tenant within thirty (30) days
after receipt of such Intention to Transfer Notice, to recapture the
Contemplated Transfer Space. Such Recapture Notice shall cancel and terminate
this Lease with respect to the Contemplated Transfer Space as of the effective
date proposed in the Intention to Transfer Notice. In the event of a recapture
by Landlord, if this Lease shall be canceled with respect to less than the
entire Premises, the Rent reserved herein shall be prorated on the basis of the
number of rentable square feet retained by Tenant in proportion to the number of
rentable square feet contained in the Contemplated Transfer Space, and this
Lease as so amended shall continue thereafter in full force and effect, and upon
request of either party, the parties shall execute written confirmation of the
same. Notwithstanding the foregoing sentence, however, if Landlord delivers a
Recapture Notice to Tenant, Tenant may, within ten (10) business days after
Tenant's receipt of such Recapture Notice, deliver written notice to Landlord
indicating that Tenant is rescinding its request for consent to the proposed
Transfer, in which case such Transfer shall not be consummated and this Lease
shall remain in full force and effect as to the portion of the Premises that was
the subject of the proposed Transfer. If Landlord declines, or fails to elect in
a timely manner to recapture the Contemplated Transfer Space 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
Contemplated Transfer Space with respect to any Transfer made during the Nine
Month Period, provided that any such Transfer is substantially on the terms set
forth in the Intention to Transfer Notice, and provided further 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 (or if a Transfer is
so consummated, then upon the expiration of the term of any Transfer of such
Contemplated Transfer Space consummated within such 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.
The foregoing recapture right shall not be applicable with respect to a transfer
to a Permitted Transferee, as that term is defined below in Section 14.8.
14.5    Effect 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 an independent certified
public accountant, or 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, as
transferee, relating to any Transfer. Prior to receiving any financial
statements, Landlord shall execute and deliver to Tenant a commercially
reasonable confidentiality agreement relating thereto. 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.
14.6    Additional Transfers. Subject to the terms of Section 14.8 below, 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%) or more of the partners, or transfer of
more than fifty percent (50%) or more 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%) or more 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%) or more of the value of the unencumbered assets of Tenant
within a twelve (12)-month period.
14.7    Occurrence 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
(beyond the applicable notice and cure periods), 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.
14.8    Deemed Consent Transfers. Notwithstanding anything to the contrary
contained in this Lease, (A) 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 as of the date of this Lease),
(B) a sale of corporate shares of capital stock in Tenant in connection with an
initial public offering of Tenant's stock on a nationally-recognized stock
exchange, (C) an assignment of the Lease to an entity which acquires all or
substantially all of the stock or assets of Tenant, or (D) an assignment of the
Lease to an entity which is the resulting entity of a merger or consolidation of
Tenant during the Lease Term, shall not be deemed a Transfer requiring
Landlord's consent under this Article 14, or require the payment of any Transfer
Premium pursuant to Section 14.3 above (any

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

such assignee or sublessee described in items (A) through (D) of this
Section 14.8 hereinafter referred to as a "Permitted Transferee"), provided that
(i) Tenant shall use commercially reasonable, diligent efforts to deliver to
Landlord, at least fifteen (15) days prior to the effective date of any such
assignment or sublease (or as soon as is thereafter practicable or legally
permitted pursuant to applicable law and/or applicable disclosure restrictions
imposed by the SEC or similar regulatory agency) and promptly supplies Landlord
with any documents or information reasonably requested by Landlord regarding
such Transfer or Permitted Transferee as set forth above, (ii) Tenant is not in
default, beyond the applicable notice and cure period, and such assignment or
sublease is not a subterfuge by Tenant to avoid its obligations under this
Lease, (iii) in connection with items (C) and (D) above only, such Permitted
Transferee shall have a tangible net worth (not including goodwill as an asset)
computed in accordance with generally accepted accounting principles ("Net
Worth") at least equal to the Net Worth of Tenant on the day immediately
preceding either the effective date of such assignment or sublease or such
earlier date when components of the underlying transaction otherwise commenced
or took effect, (v) no assignment or sublease relating to this Lease, whether
with or without Landlord's consent, shall relieve Tenant from any liability
under this Lease, and (vi) the liability of such Permitted Transferee under
either an assignment or sublease shall be joint and several with Tenant. An
assignee of Tenant's entire interest in this Lease who qualifies as a Permitted
Transferee may also be referred to herein as a "Permitted Transferee Assignee."
"Control," as used in this Section 14.8, shall mean the ownership, directly or
indirectly, of more than fifty percent (50%) of the voting securities of, or
possession of the right to vote, in the ordinary direction of its affairs, of
more than fifty percent (50%) of the voting interest in, any person or entity.
ARTICLE 15

SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES
15.1    Surrender 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.
15.2    Removal 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 broom clean, good condition and repair as when Tenant took
possession and as thereafter improved by Landlord and/or Tenant, reasonable wear
and tear and repairs which are specifically made the responsibility of Landlord
hereunder excepted. Upon such expiration or termination, in addition to Tenant's
obligations under Section 29.32, below, Tenant shall, without expense to
Landlord, 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, server and telephone equipment, 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 reasonable 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 with the express
written 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 Base Rent shall be payable at a monthly rate of (A) one hundred
twenty-five percent (125%) of the Base Rent applicable during the last rental
period of the Lease Term under this Lease for the first two (2) months
immediately following the expiration or earlier termination of this Lease, and
(B) two hundred percent (200%) of the Base Rent applicable during the last
rental period of the Lease Term under this Lease thereafter. Such month-to-month
tenancy shall be subject to every other applicable term, covenant and agreement
contained herein. If Tenant holds over after the expiration of the Lease Term
without the express written consent of Landlord, such tenancy shall be a tenancy
at sufferance, and shall not constitute a renewal hereof or an extension for any
further term, and in such case daily damages in any action to recover possession
of the Premises shall be calculated at a daily rate equal to (i) one hundred
twenty-five percent (125%) of the Base Rent applicable during the last rental
period of the Lease Term under this Lease for the first two (2) months
immediately following the expiration or earlier termination of this Lease, and
(ii) two hundred percent (200%) of the Base Rent applicable during the last
rental period of the Lease Term under this Lease (calculated on a per diem
basis) thereafter.  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 vacate and deliver 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 holds over without Landlord's express
written

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

consent, and tenders payment of rent for any period beyond the expiration of the
Lease Term by way of check (whether directly to Landlord, its agents, or to a
lock box) or wire transfer, Tenant acknowledges and agrees that the cashing of
such check or acceptance of such wire shall be considered inadvertent and not be
construed as creating a month-to-month tenancy, provided Landlord refunds such
payment to Tenant promptly upon learning that such check has been cashed or wire
transfer received. Tenant acknowledges that any holding over without Landlord’s
express written consent may compromise or otherwise affect Landlord's ability to
enter into new leases with prospective tenants regarding the Premises. 
Therefore, if Tenant fails to vacate and deliver 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 and against all claims made by any succeeding tenant
founded upon such failure to vacate and deliver, and any losses suffered by
Landlord, including lost profits, resulting from such failure to vacate and
deliver. Tenant agrees that any proceedings necessary to recover possession of
the Premises, whether before or after expiration of the Lease Term, shall be
considered an action to enforce the terms of this Lease for purposes of the
awarding of any attorney’s fees in connection therewith.
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, provided that any such forms or
requests do not materially modify the TCCs of this Lease. 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
commercially reasonable instruments may be reasonably required for such
purposes. At any time during the Lease Term (but not more than once in any
calendar year unless in connection with the sale or proposed sale, or the
financing/refinancing, of the Project or any portion thereof), 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.
ARTICLE 18

SUBORDINATION
As of the date of this Lease, there are no ground or underlying leases, nor any
mortgage, trust deed or other like encumbrances in force against the Building or
Project. 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. 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 commercially reasonable 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; provided that any subordination agreement
requested must include non-disturbance provisions consistent with this Article
18. 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
19.1    Events of Default. The occurrence of any of the following shall
constitute a default of this Lease by Tenant:

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

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 five (5) business 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 sixty (60) days after
written notice thereof from Landlord to Tenant; or
19.1.3    To the extent permitted by law, (i) Tenant or any guarantor of this
Lease being placed into receivership or conservatorship, or becoming subject to
similar proceedings under Federal or State law, or (ii) a general assignment by
Tenant or any guarantor of this Lease for the benefit of creditors, or (iii) 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 (iv) the filing by or against Tenant or any guarantor of any proceeding
under an insolvency or bankruptcy law, unless in the case of such a proceeding
filed against Tenant or any guarantor the same is dismissed within sixty (60)
days, or (v) 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 (vi) 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 (as defined by Applicable Laws, including California Civil
Code Section 1951.3 and any successor statute) of all or a substantial portion
of the Premises by Tenant; 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 two (2) 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, as the same may be extended by (i) delays in the
permitting process in connection with the Improvements (but only to the extent
such delays occurred notwithstanding Tenant's commercially reasonable efforts
and Tenant's timely submittal and diligent efforts to receive the same), (ii)
events of Force Majeure, and (iii) a "Landlord Delay" (as that term is defined
in Section 5.7 of the Work Letter) (the resulting date, the "Occupancy Outside
Date").
The notice periods provided herein are in lieu of, and not in addition to, any
notice periods provided by law.
19.2    Remedies 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 for 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, specifically including but not limited to, brokerage commissions and
advertising expenses incurred, expenses of remodeling the Premises or any
portion thereof for a new tenant, whether for the same or a different use, and
any special concessions made to obtain a new tenant; and
(e)    At Landlord's election, such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time by applicable law.
The term "rent" as used in this Section 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.
19.3    Subleases 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.
19.4    Form of Payment After Default. Following the occurrence of an event of
default by Tenant, 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.
19.5    Efforts 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.
19.6    Landlord 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
Prior to the later of (a) April 1, 2020, and (b) the date of Landlord's delivery
of the Premises to Tenant, Tenant shall deposit with Landlord any necessary fund
required to cause the security deposit (the "Security Deposit") to total the
amount set forth in Section 8 of the Summary after application

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

of any "Excess Security Deposit," as defined in the Existing Lease, which total
Security Deposit shall be held by Landlord 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 ninety-five (95) days following the expiration of the Lease
Term (provided that if Landlord determines, in its reasonable business judgment,
that Tenant does not pose a then present risk of being in default pursuant to
Section 19.1.3 below, then Landlord shall use commercially reasonable efforts to
return the Security Deposit within thirty (30) days following the expiration of
the Lease Term). Tenant shall not be entitled to any interest on the Security
Deposit. Tenant hereby irrevocably waives and relinquishes any and all rights,
benefits, or protections, if any, Tenant now has, or in the future may have,
under Section 1950.7 of the California Civil Code, any successor statute, and
all other provisions of law, now or hereafter in effect, including, but not
limited to, any provision of law which (i) establishes the time frame by which a
landlord must refund a security deposit under a lease, or (ii) provides that a
landlord may claim from a security deposit only those sums reasonably necessary
to remedy defaults in the payment of rent, to repair damage caused by a tenant,
or to clean the subject premises. Tenant acknowledges and agrees that (A) any
statutory time frames for the return of a security deposit are superseded by the
express period identified in this Article 21, above, and (B) rather than be so
limited, Landlord may claim from the Security Deposit (i) any and all sums
expressly identified in this Article 21, above, and (ii) any additional sums
reasonably necessary to compensate Landlord for any and all losses or damages
caused by Tenant's 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.
ARTICLE 22

SUBSTITUTION OF OTHER PREMISES
Landlord shall have no express right to relocate Tenant during the Lease Term
(or any Option Term).
ARTICLE 23

SIGNS
23.1    Full Floors. Subject to Landlord's prior written approval, in its sole
discretion, and provided all signs are in keeping with the quality, design and
style of the Building and Project, Tenant, if the Premises comprise an entire
floor of the Building, 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.
23.2    Multi-Tenant Floors. If other tenants occupy space on the floor on which
the Premises is located, Tenant's initial identifying signage (as opposed to any
replacement identifying signage, which shall be at Tenant's sole cost) shall be
provided by Landlord, at Landlord's cost, and such signage shall be comparable
to that used by Landlord for other similar floors in the Building and shall
comply with Landlord's Building standard signage program.
23.3    Building Directory. A building directory is located in the lobby of the
Building. Tenant shall have the right, at Landlord's sole cost and expense as to
Tenant's initial name strip, to designate one (1) name strip on such directory,
and any subsequent changes to Tenant's name strip shall be at Tenant's sole cost
and expense following Tenant's receipt of Landlord's consent thereto (which
consent may be withheld in Landlord's sole and absolute discretion).
23.4    Prohibited 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. 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.
23.5    Tenant'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"):
(a)    Non-exclusive Building-top signage consisting of one (1) Building-top
sign identifying Tenant's name or logo located in substantially the same
location as the existing Acadia Pharmaceuticals Building-top sign on the
Building as of the date of this Lease; and

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

(b)    Tenant shall be entitled to install one (1) slot identifying Tenant's
name or logo on the currently-existing monument serving the Building in one (1)
location reasonably designated by Landlord.
23.5.1    Tenant's Signage Specifications and Permits. Tenant's Signage shall
set forth Tenant's name or logo as determined by Tenant; provided, however, in
no event shall Tenant's Signage include an "Objectionable Name or Logo," as that
term is defined in Section 23.5.2, 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 the exterior Building
signage of other tenants of the Building. 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 Law and to any covenants, conditions and
restrictions affecting the Project. Landlord shall use commercially reasonable
efforts to assist Tenant in obtaining all necessary governmental 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. Moreover, with respect to the existing street
monument serving the Building, Landlord shall have the right (i) to design and
organize Tenant's monument signage (and the materials, design, script size, type
face, colors and all other characteristics thereon) in such manner as it shall
determine in its sole discretion, (ii) place such other names, business names,
trade names or affiliate names representing such other tenants on such existing
street monument as it shall determine in its sole discretion, (iii) make such
modifications to such existing street monument as it shall desire from time to
time, and (iv) place on such existing street monument the name of (and/or other
identifying information for) the Building and/or Project as Landlord shall
determine in its sole discretion.
23.5.2    Objectionable Name or Logo. In no event shall Tenant's Signage
include, identify or otherwise refer to a name and/or logo 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 a Comparable Building
(an "Objectionable Name or Logo"). The parties hereby agree that the name
"Retrophin, Inc." or any reasonable derivation thereof, shall not be deemed an
Objectionable Name or Logo.
23.5.3    Termination of Right to Tenant's Signage. The rights contained in this
Section 23.5 may only be exercised by Original Tenant or its Permitted
Transferee Assignee (and not any other assignee or any sublessee or other
transferee of the Original Tenant's interest in this Lease) if the Original
Tenant and/or its Permitted Transferee Assignee is in occupancy of the entire
Premises. In no event shall Tenant have any right to Tenant's Signage upon the
occurrence of a default by Tenant under this Lease beyond any applicable notice
and cure period set forth in this Lease.
23.5.4    Cost and Maintenance of Tenant's Signage. The costs of the actual sign
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, at Tenant's sole cost and
expense. Should Tenant's Signage require repairs and/or maintenance, as
determined in Landlord's reasonable judgment, Landlord shall cause such repairs
and/or maintenance to be performed, and Tenant shall pay Landlord upon demand
the cost of the same as Additional Rent. Upon the expiration or earlier
termination of this Lease (or within five (5) business days following Tenant's
receipt of written notice from Landlord that Tenant's rights to such Tenant's
Signage have terminated as a result of a Tenant default under this Lease or
Tenant's failure to satisfy the occupancy requirement, as set forth in Section
23.5.3 above), Tenant shall, at Tenant's sole cost and expense, cause Tenant's
Signage to be removed and shall cause the area in which such Tenant's Signage
was located to be restored to the condition existing immediately prior to the
installation of such Tenant's Signage. 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 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 23.5.4 shall survive the
expiration or earlier termination of this Lease.
ARTICLE 24

COMPLIANCE WITH LAW
Landlord shall comply with all Applicable Laws relating to the Base Building,
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 prohibit Tenant from obtaining or maintaining a certificate of
occupancy for the Premises, or would unreasonably and materially affect the
safety of Tenant's employees or create a significant health hazard for Tenant's
employees. Landlord shall be permitted to include in Operating Expenses any
costs or expenses incurred by Landlord under this Article 24 to the extent not
prohibited by the terms of Section 4.2.4 above. For purposes of Section 1938 of
the California Civil Code, Landlord hereby discloses to Tenant, and Tenant
hereby acknowledges, that the Premises have not undergone inspection by a
Certified Access Specialist (CASp). 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, including, without limitation, any such governmental regulations
related to disabled access (collectively, "Applicable Laws"). At its sole cost
and expense, Tenant shall promptly comply with all Applicable Laws (including
the making of any alterations to the Premises required by Applicable Laws) which
relate to (i) Tenant's use of the Premises, (ii) the Alterations or the
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.
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 five (5) business
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 four (4) percentage points, and (ii) the highest rate permitted
by applicable law.
ARTICLE 26

LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
26.1    Landlord'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.
26.2    Tenant'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 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 made
and obligations 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 twelve (12) 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 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. Tenant hereby waives any claims for damages or
for any injuries or inconvenience to or interference with Tenant's business,
lost profits, any loss of occupancy or quiet enjoyment of the Premises, and any
other loss occasioned thereby. 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 Landlord herein.
ARTICLE 28

TENANT PARKING
Tenant shall be entitled to use commencing on the Lease Commencement Date,
(i) the amount of unreserved parking passes set forth in Section 9 of the
Summary, and (ii) up tothe amount of reserved parking passes set forth in
Section 9 of the Summary (which reserved parking passes shall be deducted from
the otherwise available unreserved parking passes in item (i) hereinabove),
which parking passes shall pertain to the Project parking facilities, of which
Tenant shall be entitled to Tenant's pro rata share of parking in the surface
area and in the covered parking structure. Tenant, from time to time during the
Lease Term, and upon not less than thirty (30) days' prior notice to Landlord,
shall have the right to increase or decrease the number of reserved parking
passes Tenant rents on a monthly basis from Landlord, provided that Tenant may
in no event rent more than the maximum amount of reserved parking passes set
forth in Section 9 of the Summary. Tenant shall pay to Landlord (or its
designee) for the reserved and unreserved parking passes on a monthly basis at
the prevailing rate charged from time to time at the location of such parking
passes; provided, however, (a) the monthly rate for Tenant's reserved parking
passes shall be One Hundred Fifty and 00/100 Dollars ($150.00) per reserved
parking pass throughout the initial Lease Term only, and (b) Tenant's unreserved
parking passes shall be without charge for the initial Lease Term only
(excepting only any parking taxes or other charges imposed by governmental
authorities in connection with the use of such parking as more particularly
contemplated below). In addition to any fees that may be charged to Tenant in
connection with its parking of automobiles in the Project parking facilities,
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 reasonable
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 cooperation in seeing that Tenant's employees and visitors also comply
with such rules and regulations and Tenant not being in default under this
Lease. 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, for any interruption in
use of Tenant’s parking spaces reasonably expected to exceed fifteen (15)
business days, Landlord shall use commercially reasonable efforts to provide
reasonable replacement parking. Landlord may, at any time, institute valet
assisted parking, tandem parking stalls, "stack" parking, or other parking
program within the Project parking facility, the cost of which shall be included
in Operating Expenses. 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 and such passes may not be transferred, assigned,
subleased or otherwise alienated by Tenant without Landlord's prior approval.
Tenant may validate visitor parking by such method or methods as the Landlord
may establish, at the validation rate from time to time generally applicable to
visitor parking.
ARTICLE 29

MISCELLANEOUS PROVISIONS
29.1    Terms; 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.
29.2    Binding 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.

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

29.3    No 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 is 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.
29.4    Modification 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) 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) days following the request therefor.
29.5    Transfer 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 accruing from and after the date of such 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.
29.6    Prohibition Against Recording or Publication. Neither this Lease, nor
any memorandum, affidavit or other writing with respect thereto, shall be
recorded or otherwise published by Tenant or by anyone acting through, under or
on behalf of Tenant.
29.7    Landlord'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.
29.8    Relationship 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.
29.9    Application of Payments. Landlord shall have the right to apply payments
received from Tenant pursuant to this Lease, regardless of Tenant's designation
of such payments, to satisfy any obligations of Tenant hereunder, in such order
and amounts as Landlord, in its sole discretion, may elect.
29.10    Time 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.
29.11    Partial 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.
29.12    No 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. Tenant agrees that neither Landlord
nor any agent of Landlord has made any representation or warranty with respect
to the physical condition of the Building, the Project, the land upon which the
Building or the Project are located, or the Premises, or the expenses of
operation of the Premises, the Building or the Project, or any other matter or
thing affecting or related to the Premises, except as herein expressly set forth
in the provisions of this Lease.
29.13    Landlord 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 net the interest
of Landlord in the Building (following payment of any outstanding liens and/or
mortgages, whether attributable to sales or insurance proceeds or otherwise).
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 injury or damage to, or interference with, Tenant's business,
including but not limited to, loss of profits, loss of rents or other revenues,
loss of business opportunity, loss of goodwill or loss of use, in each case,
however occurring.

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

29.14    Entire 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 (including, without limitation, any confidentiality agreement,
letter of intent, request for proposal, or similar agreement previously entered
into between Landlord and Tenant in anticipation of this Lease) 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.
29.15    Right 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.
29.16    Force 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 and except as to Tenant's obligations under
Articles 5 and 24 of 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.
29.17    Waiver 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.
29.18    Notices. All notices, demands, statements or communications
(collectively, "Notices") given or required to be given by either party to the
other hereunder shall be in writing, shall be (A) delivered by a nationally
recognized overnight courier, or (B) delivered personally. Any such Notice shall
be delivered (i) 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 (ii) to Landlord at the addresses set forth in
Section 11 of the Summary, or to such other firm or to such other place as
Landlord may from time to time designate in a Notice to Tenant. Any Notice will
be deemed given on the date of receipted delivery, of refusal to accept
delivery, or when delivery is first attempted but cannot be made due to a change
of address for which no Notice was given. 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. The party delivering Notice shall use commercially
reasonable efforts to provide a courtesy copy of each such Notice to the
receiving party via electronic mail.
29.19    Joint and Several. If there is more than one Tenant, the obligations
imposed upon Tenant under this Lease shall be joint and several.
29.20    Authority. If Tenant is a corporation, trust or partnership, each
individual executing this Lease 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 Lease and that each person signing on behalf of Tenant is
authorized to do so.
29.21    Attorneys' 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.
29.22    Governing 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. IN THE EVENT LANDLORD COMMENCES ANY SUMMARY
PROCEEDINGS OR ACTION FOR NONPAYMENT OF BASE RENT OR ADDITIONAL RENT, TENANT
SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY NATURE OR DESCRIPTION (UNLESS SUCH
COUNTERCLAIM SHALL BE MANDATORY) IN ANY SUCH PROCEEDING OR ACTION, BUT SHALL BE
RELEGATED TO AN INDEPENDENT ACTION AT LAW.
29.23    Submission 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.

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

29.24    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 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.
29.25    Independent 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,
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.
29.26    Project 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. 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.
29.27    Counterparts. 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.
29.28    Confidentiality. Tenant acknowledges that the content of this Lease and
any related documents are confidential information. Except as otherwise required
by law, Tenant shall keep such confidential information strictly confidential
and shall not disclose such confidential information to any person or entity
other than Tenant's financial, legal, and space planning consultants,
prospective purchasers, prospective lenders, investors, or any independent
auditors, third parties designated to review Direct Expenses, its directors,
officers, employees, attorneys, or proposed Transferees.  Landlord acknowledges
that the content of this Lease and any related documents (including financial
statements provided by Tenant pursuant to Article 17 above) are confidential
information.  Landlord shall keep such confidential information strictly
confidential and shall not disclose such confidential information to any person
or entity other than Landlord's financial, legal and space planning consultants,
or its directors, officers, employees, attorneys, accountants, prospective
lenders, prospective purchasers, and current and potential partners.  Moreover,
Landlord has advised Tenant that Landlord is obligated by law to regularly
provide financial information concerning the Landlord and/or its affiliates
(including Kilroy Realty Corporation, a public company whose shares of stock are
listed on the New York Stock Exchange) to the shareholders of its affiliates, to
the Federal Securities and Exchange Commission and other regulatory agencies,
and to auditors and underwriters, which information may include the fact that
Tenant is a tenant at the Project and summaries of financial information
concerning leases, rents, costs and results of operations of its real estate
business, including any rents or results of operations affected by this Lease. 
To the extent Tenant is a publicly traded corporation or as otherwise required
by law, Tenant may be obligated to regularly provide financial information
concerning Tenant and/or its affiliates to the shareholders of its affiliates,
to the Federal Securities and Exchange Commission and other regulatory agencies,
and to auditors and underwriters, which information may include summaries of
financial information concerning leases, rents, costs, and results of operations
of its business, including any financial obligations set forth in this Lease and
copies of material contracts, such as this Lease.  This provision shall survive
the expiration or earlier termination of this Lease for one (1) year.
29.29    Transportation Management. Tenant shall fully comply with all present
or future programs intended to manage parking, transportation or traffic in and
around the Building, 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.
29.30    Building 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. 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, which Renovations may
include, without limitation, (i) installing sprinklers in the Building common
areas and tenant spaces, (ii) modifying the common areas and tenant spaces to
comply with applicable laws and regulations, including regulations relating to
the physically disabled, seismic conditions, and building safety and security,
and (iii) installing new floor covering, lighting, and wall coverings in the
Building common areas, 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 use commercially reasonable
efforts to minimize interference with Tenant's use of, and access to, the
Premises in connection with any Renovations undertaken by Landlord.
29.31    No 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 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.
29.32    Communications 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, use Landlord's
designated contractor for provision of cabling and riser management services
(or, if Landlord does not have a designated contractor, then an experienced and
qualified contractor reasonably approved in writing by Landlord), and comply
with all of the other provisions of Articles 7 and 8 of this Lease, (ii) an
acceptable number of spare Lines and space for additional Lines shall be
maintained for existing and future occupants of the Project, as determined in
Landlord's reasonable opinion, (iii) the Lines therefor (including riser cables)
shall be (x) appropriately insulated to prevent excessive electromagnetic fields
or radiation, (y) surrounded by a protective conduit reasonably acceptable to
Landlord, and (z) 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"). Upon the expiration of the Lease Term, or
immediately following any earlier termination of this Lease, Tenant shall, at
Tenant's sole cost and expense, remove all Lines installed by Tenant, and repair
any damage caused by such removal. In the event that Tenant fails to complete
such removal and/or fails to repair any damage caused by the removal of any
Lines, Landlord may do so and may charge the cost thereof to Tenant. 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.
29.33    Hazardous Substances.
29.33.1    Definitions. 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.
29.33.2    Compliance 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. Landlord
represents and warrants that, to its actual knowledge, it has not received any
notice of violation of Environmental Laws from the applicable governmental
authority regarding any use, storage, treatment or transportation of Hazardous
Materials in, on or about the Project, Building or Premises prior to the date of
this Lease. Tenant represents and warrants that, except as herein set forth, it
will not use, store or dispose of any Hazardous Materials in or on the Premises.
However, notwithstanding the preceding sentence, 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) (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.
29.33.3    Tenant 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,

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

as well as at any other time following Tenant's receipt of a reasonable request
from Landlord, 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. At any time following Tenant's receipt of a request from Landlord,
Tenant shall promptly complete an "environmental questionnaire" using the form
then-provided by Landlord. 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.
29.33.4    Landlord'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
in violation of Environmental Laws, or provides recommendations or suggestions
to prohibit the release, discharge, escape or emission of any Hazardous
Materials 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. 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.
29.33.5    Indemnifications. 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 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.
29.34    Development of the Project.
29.34.1    Subdivision. Landlord reserves the right to further subdivide all or
a portion of the Project. Tenant agrees to execute and deliver, upon demand by
Landlord and in the form requested by Landlord, any additional documents needed
to conform this Lease to the circumstances resulting from such subdivision.
29.34.2    The Other Improvements. If portions of the Project or property
adjacent to the Project (collectively, the "Other Improvements") are owned by an
entity other than Landlord, Landlord, at its option, may enter into an agreement
with the owner or owners of any or all of the Other Improvements to provide
(i) for reciprocal rights of access and/or use of the Project and the Other
Improvements, (ii) for the common management, operation, maintenance,
improvement and/or repair of all or any portion of the Project and the Other
Improvements, (iii) for the allocation of a portion of the Direct Expenses to
the Other Improvements and the operating expenses and taxes for the Other
Improvements to the Project, and (iv) for the use or improvement of the Other
Improvements and/or the Project in connection with the improvement,
construction, and/or excavation of the Other Improvements and/or the Project.
Nothing contained herein shall be deemed or construed to limit or otherwise
affect Landlord's right to convey all or any portion of the Project or any other
of Landlord's rights described in this Lease.
29.34.3    Construction of Project and Other Improvements. Tenant acknowledges
that portions of the Project and/or the Other Improvements may be under
construction following Tenant's occupancy of the Premises, and that such
construction may result in levels of noise, dust, obstruction of access, etc.
which are in excess of that present in a fully constructed project. Tenant
hereby waives any and all rent offsets or claims of constructive eviction which
may arise in connection with such construction.
29.35    Water Sensors. Tenant shall, at Tenant's sole cost and expense (subject
to application of the Improvement Allowance pursuant to Section 2.4 of the Work
Letter), be responsible for promptly installing web-enabled wireless water leak
sensor devices designed to alert the Tenant on a twenty-four (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
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 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. Notwithstanding the foregoing, Tenant shall not be
responsible for the cost of installing Water Sensors in connection with the
installation of plumbing fixtures not installed by or at the request of Tenant,
in any Common Area, in any existing restroom or which existed prior to Tenant
taking occupancy of the Premises. 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
third-party). 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 cost thereof to Tenant.
29.36    LEED Certification. Landlord may, in Landlord's sole and absolute
discretion, elect to apply to obtain or maintain a LEED certification for the
Project (or portion thereof), or other applicable certification in connection
with Landlord's sustainability practices for the Project (as such sustainability
practices are to be determined by Landlord, in its sole and absolute discretion,
from time to time). In the event that Landlord elects to pursue such an
aforementioned certification, Tenant shall (to the extent it is at no more than
a de minimis cost or expense to Tenant), promptly cooperate with the Landlord's
efforts in connection therewith and provide Landlord with any documentation it
may need in order to obtain or maintain the aforementioned certification (which
cooperation may include, but shall not be limited to, Tenant complying with
certain standards pertaining to the purchase of materials used in connection
with any Alterations or improvements undertaken by the Tenant in the Project,
the sharing of documentation pertaining to any Alterations or improvements
undertaken by Tenant in the Project with Landlord, and the sharing of Tenant's
billing information pertaining to trash removal and recycling related to
Tenant's operations in the Project).
29.37    Utility Billing Information. In the event that the Tenant is permitted
to contract directly for the provision of electricity, gas and/or water services
to the Premises with the third-party provider thereof (all in Landlord's sole
and absolute discretion), Tenant shall promptly, but in no event more than five
(5) business days following its receipt of each and every invoice for such items
from the applicable provider, provide Landlord with a copy of each such invoice.
Tenant acknowledges that pursuant to California Public Resources Code Section
25402.10 and the regulations adopted pursuant thereto (collectively the "Energy
Disclosure Requirements"), Landlord may be required to disclose information
concerning Tenant’s energy usage at the Building to certain third parties,
including, without limitation, prospective purchasers, lenders and tenants of
the Building (the "Tenant Energy Use Disclosure"). Tenant hereby (A) consents to
all such Tenant Energy Use Disclosures, and (B) acknowledges that Landlord shall
not be required to notify Tenant of any Tenant Energy Use Disclosure. Further,
Tenant hereby releases Landlord from any and all losses, costs, damages,
expenses and liabilities relating to, arising out of and/or resulting from any
Tenant Energy Use Disclosure. The terms of this Section 29.37 shall survive the
expiration or earlier termination of this Lease.
29.38    Green Cleaning/Recycling. To the extent a "green cleaning program"
and/or a recycling program is implemented by Landlord in the Building and/or
Project (each in Landlord's sole and absolute discretion), Tenant shall, at
Tenant's sole cost and expense, comply with the provisions of each of the
foregoing programs (e.g., Tenant shall separate waste appropriately so that it
can be efficiently processed by Landlord's particular recycling contractors). To
the extent Tenant fails to comply with any of Landlord's recycling programs
contemplated by the foregoing, Tenant shall be required to pay any contamination
charges related to such non-compliance.
29.39    Open-Ceiling Plan. In the event that the Premises has an "open ceiling
plan", then Landlord and third parties leasing or otherwise using/managing or
servicing space on the floor immediately above the Premises shall have the right
to install, maintain, repair and replace mechanical, electrical and plumbing
fixtures, devices, piping, ductwork and all other improvements through the floor
above the Premises (which may penetrate through the ceiling of the Premises and
be visible within the Premises during the course of construction and upon
completion thereof) (as applicable, the "Penetrating Work"), as Landlord may
determine in Landlord's sole and absolute discretion and with no approval rights
being afforded to Tenant with respect thereto. Moreover, there shall be no
obligation by Landlord or any such third party to enclose or otherwise screen
any of such Penetrating Work from view within the Premises, whether during the
course of construction or upon completion thereof. Since Tenant is anticipated
to be occupying the Premises at the time the Penetrating Work is being
performed, Landlord agrees that it shall (and shall cause third parties to) use
commercially reasonable efforts to perform the Penetrating Work in a manner so
as to attempt to minimize interference with Tenant's use of the Premises;
provided, however, such Penetrating Work may be performed during normal business
hours, without any obligation to pay overtime or other premiums. Tenant hereby
acknowledges that, notwithstanding Tenant’s occupancy of the Premises during the
performance of any such Penetrating Work, Tenant hereby agrees that the
performance of such Penetrating Work shall in no way constitute a constructive
eviction of Tenant nor entitle Tenant to any abatement of rent.  Neither
Landlord nor any of the Landlord Parties or any third parties performing the
Penetrating Work shall be responsible for any direct or indirect injury to or
interference with Tenant’s business arising from the performance of such
Penetrating Work, nor shall Tenant be entitled to any compensation or damages
from Landlord or any of the Landlord Parties or any third parties performing the
Penetrating Work 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 performance of
the Penetrating Work, or for any inconvenience or annoyance occasioned by the
Penetrating Work. In addition, Tenant hereby agrees to promptly and diligently
cooperate with Landlord and any of the third parties performing the Penetrating
Work in order to facilitate the applicable party's performance of the particular
Penetrating Work in an efficient and timely manner.
29.40    Prohibited Persons; Foreign Corrupt Practices Act and Anti-Money
Laundering. Neither Tenant nor any of its affiliates, nor any of their
respective members, partners or, to Tenant’s knowledge, other equity holders,
and none of their respective officers, directors or managers is, nor prior to or
during the Lease Term, will they become a person or entity with whom U.S.
persons or entities are restricted from doing business under (a) the Patriot Act
(as defined below), (b) any other requirements contained in the rules and
regulations of the Office of Foreign Assets Control,

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

Department of the Treasury ("OFAC") (including any "blocked" person or entity
listed in the Annex to Executive Order Nos. 12947, 13099 and 13224 and any
modifications thereto or thereof or any other person or entity named on OFAC's
Specially Designated Blocked Persons List) or (c) any other U.S. statute,
Executive Order (including the September 24, 2001, Executive Order Blocking
Property and Prohibiting Transactions with Persons Who Commit, Threaten to
Commit or Support Terrorism) or other governmental action (collectively,
"Prohibited Persons"). Prior to and during the Lease Term, Tenant, and to
Tenant's knowledge, its employees and any person acting on its behalf have at
all times fully complied with, and are currently in full compliance with, the
Foreign Corrupt Practices Act of 1977 and any other applicable anti-bribery or
anti-corruption laws. Tenant is not entering into this Lease, directly or
indirectly, in violation of any laws relating to drug trafficking, money
laundering or predicate crimes to money laundering. As used herein, "Patriot
Act" shall mean the USA Patriot Act of 2001, 107 Public Law 56 (October 26,
2001) and all other statutes, orders, rules and regulations of the U.S.
government and its various executive departments, agencies and offices
interpreting and implementing the Patriot Act.
[Signatures follow on next page]
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
Its: General Partner
By:/s/ TRACY MURPHY              
Name:Tracy Murphy                           
Its: Executive Vice President, Life Science
By:/s/ NELSON ACKERTY
Name:Nelson Ackerty                        
Its:Senior Vice President, San Diego
"TENANT":
RETROPHIN, INC.,
a Delaware corporation
By:/s/ LAURA CLAGUE
Name:Laura Clague
Its:Chief Financial Officer

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

EXHIBIT A
KILROY CENTRE DEL MAR

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

leasefootprinta03.jpg [leasefootprinta03.jpg]

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

EXHIBIT B
KILROY CENTRE DEL MAR
WORK LETTER
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 of which this Work
Letter forms a part, and all references in this Work Letter to Sections of "this
Work Letter" shall mean the relevant portion of Sections 1 through 5 of this
Work Letter. Tenant acknowledges that Schedule 1 attached to this Work Letter
sets forth a list of required "Tenant Deliverables," as that term is defined in
Section 2.2.2 below, which Tenant is responsible to deliver on a timely basis to
Landlord in accordance with the terms of this Work Letter.
SECTION 1
DELIVERY OF THE PREMISES
Tenant acknowledges that Tenant has thoroughly examined the Premises. Upon the
full execution and delivery of this Lease by Landlord and Tenant, Landlord shall
deliver the Premises and Tenant shall accept the Premises from Landlord in their
presently existing, "as-is" condition as of the date of this Lease. Landlord
agrees to deliver possession of the Premises to Tenant promptly following the
full execution and delivery of this Lease by Landlord and Tenant.
SECTION 2
IMPROVEMENTS
2.1    Improvement Allowance. Tenant shall be entitled to a one-time improvement
allowance (the "Improvement Allowance") in the amount of $5,793,150.00 (i.e.,
$75.00 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
defined in Section 4.2.1, as and when required by such 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. Subject to the "Construction Risk Alternatives," as that term is
defined in Section 4.2.1 below, any unused portion of the Improvement Allowance
remaining as of the date which is six (6) months following the Lease
Commencement Date (subject to day-for-day extension to the extent of Landlord
Delay, the "Allowance Deadline"), shall remain with Landlord and Tenant shall
have no further right thereto. In addition to (and not as part of) the
Improvement Allowance, Landlord shall pay directly to Hollander Design Group a
space planning allowance for Tenant's preparation of an initial space plan for
the Improvements in an amount not to exceed $11,586.30 (i.e., $0.15 per rentable
square foot of the Premises).
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 Five and 00/100 Dollars ($5.00) per rentable
square foot of the Premises, and payment of the fees incurred by, and the cost
of documents and materials supplied by, Landlord and Landlord's consultants 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, freight elevator usage, hoisting and
trash removal costs, and contractors' fees and general conditions;
2.2.1.4      The cost of any changes in the Base Building (as contrasted with
the Improvements) 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, together with any third-party costs
reasonably incurred by Landlord to obtain Tenant Deliverables to the extent
Tenant fails to timely satisfy its obligations related thereto in accordance
with the terms of this Work Letter;
2.2.1.7      Sales and use taxes;
2.2.1.8    The costs incurred for reasonable moving expenses, the installation
of exterior and interior signage in accordance with the Lease, the installation
of Lines in the Premises, and other "soft costs" reasonably approved by
Landlord, provided that the costs of the foregoing items in this Section 2.2.5
shall not exceed an aggregate of $386,210.00 (i.e., $5.00 per rentable square
foot of the Premises);
2.2.1.9    The costs incurred by Tenant (but in no event for an amount in excess
of One Hundred Seventy-Three Thousand Seven Hundred Ninety-Four and 50/100
Dollars ($173,794.50) (i.e., $2.25 per rentable square foot of the Premises))
for Tenant’s retention of “Serbia Consulting Group” as Tenant’s project
management consultant; and
2.2.1.10      All other costs to be expended by Landlord in connection with the
construction of the Improvements.
2.2.2    Disbursement of Improvement Allowance. Tenant acknowledges that
Landlord is a publicly traded real estate investment trust (“REIT”), and due to
such REIT status Landlord is required to satisfy certain tax and accounting
requirements and related obligations in connection with the leases at the
Building. In order to satisfy such requirements and obligations in connection
with this Lease, Landlord requires various construction-related deliverables to
be timely submitted by Tenant to Landlord (“Tenant Deliverables”) at designated
times prior to, during and immediately following the construction of the
Improvements by Tenant, and Tenant hereby agrees to timely comply with all such
Tenant Deliverable obligations. The Tenant Deliverables and related delivery
deadlines are set forth in this Work Letter and in Schedule 1 attached to this
Work Letter and incorporated herein by this reference. Notwithstanding any
contrary provision of this Work Letter or Schedule 1 attached to this Work
Letter, a complete set of all Tenant Deliverables shall be delivered to Landlord
no later than forty-five (45) days following the Occupancy Outside Date.
Prior to the commencement of construction of the Improvements, Tenant shall
deliver all of the Tenant Deliverables set forth in Section 1 of Schedule 1
attached to this Work Letter (i.e., the “Prior to Start of Construction”
category of Tenant Deliverables) to Landlord. Certain of the Tenant Deliverables
set forth in Section 1 of Schedule 1 attached to this Work Letter are further
addressed with more specific provisions in this Work Letter.
Prior to and 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 twenty-fifth (25th) 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 conditional mechanic's lien releases as to
amounts subject to such draw, and unconditional mechanic’s lien releases with
respect to amounts previous paid no less than sixty (60) days prior to the date
of such release, 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; (iv) all of the Tenant
Deliverables set forth in Sections 2 and 3 of Schedule 1 attached to this Work
Letter, (i.e., the “Ongoing During Construction” and “Prior to Release of Any
Funds” categories of Tenant Deliverables, respectively); (v) invoices for softs
costs constituting Improvement Allowance Items, and (vi) all other information
reasonably requested by Landlord. Tenant's request for payment shall be deemed
Tenant's acceptance and approval of the work furnished and/or the materials
supplied as set forth in Tenant's payment request. Thereafter, (i) with respect
to payments due and owing to the Contractor, Landlord shall deliver a check to
Tenant in payment of the lesser of: (A) 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 from the Contract amount 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 material
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
reason, and (ii) with respect to payments due and owing on account of all
Improvement Allowance Items other than payments to the Contractor, Landlord
shall deliver a check to Tenant in payment of the lesser of: (A) the amounts so
requested by Tenant, as set forth in this Section 2.2.2.1, above, and (B) the
balance of any remaining available portion of the Improvement Allowance.
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,
with respect to payments due and owing to the Contractor, a check for the Final
Retention payable to Tenant shall be delivered by Landlord to Tenant within
thirty (30) days following the completion of construction of the Improvements,
provided that (i) Tenant delivers to Landlord (a) paid invoices for all
Improvements and related costs for which the Improvement Allowance is to be
disbursed, (b) signed permits for all Improvements completed within the
Premises, (c) properly executed unconditional

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

mechanics lien releases in compliance with both California Civil Code Section
8134 and either Section 8136 or Section 8138 from Tenant's contractor,
subcontractors and material suppliers and any other party which has lien rights
in connection with the construction of the Improvements, and (d) all of the
Tenant Deliverables set forth in Section 4 of Schedule 1 attached to this Work
Letter (i.e., the “Prior to Release of Final Payment” category of Tenant
Deliverables), and (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, or any other tenant's use of such other tenant's leased premises in
the Building, (iii) Architect delivers to Landlord a "Certificate of Substantial
Completion", in a form reasonably acceptable to Landlord, certifying that the
construction of the Improvements in the Premises has been substantially
completed, (iv) Tenant delivers to Landlord a "close-out package" in both paper
and electronic forms (including, as-built drawings, and final record CADD files
for the associated plans, warranties and guarantees from all contractors,
subcontractors and material suppliers, and an independent air balance report);
and (v) a certificate of occupancy, a temporary certificate of occupancy or its
equivalent is issued to Tenant for the Premises.
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, provided that Landlord may, at Landlord's option, require the
Improvements to comply with certain Building standards. Landlord may make
reasonable changes to said specifications for Building standards from time to
time. Removal requirements regarding the Improvements are addressed in Article 8
of this Lease.
2.4    Water Sensors. In connection with the construction of the Improvements
pursuant to the terms of this Work Letter, Tenant shall, at Tenant's sole cost
and expense (which may be deducted from the Improvement Allowance in accordance
with the provisions of Section 2.2 of this Work Letter), install Water Sensors
(as more particularly contemplated by the terms of Section 29.35 of this Lease).
The Water Sensors so installed by Tenant shall be subject to the terms and
conditions set forth in Section 29.35 of this Lease.
SECTION 3
CONSTRUCTION DRAWINGS
3.1    Selection of Architect/Construction Drawings. Tenant shall retain an
architect/space planner reasonably approved by Landlord (the "Architect") to
prepare the "Construction Drawings," as that term is defined in this Section
3.1. Notwithstanding the foregoing, Hollander Design Group is deemed an approved
Architect. 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, which work is not part of the Base Building.
Notwithstanding the foregoing, Michael Wall Engineering and McParlane are deemed
approved Engineers. 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 commercially reasonable drawing
format and specifications determined by Landlord and provided to Architect, and
shall be subject to Landlord's approval. 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.
3.2    Final Space Plan. On or before the date set forth in Schedule 2 attached
to this Work Letter, 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. If Tenant is so advised, Tenant shall cause the Final
Space Plan to be revised to correct any deficiencies or other matters Landlord
may reasonably require within five (5) business days of Tenant’s receipt of
Landlord’s notice thereof. The foregoing process shall be continued until the
Final Space Plan has been approved by Landlord and Tenant. Within fifteen (15)
business days follows the parties’ approval of the Final Space Plan, Tenant
shall provide Landlord with a preliminary breakdown, by trade, of the
anticipated 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," as that term is defined in Section 4.1
below (the "Preliminary Budget").

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

3.3    Final Working Drawings. Promptly after the Final Space Plan has been
approved by Landlord and Tenant, 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 (i) promptly cause the
Architect and the Engineers to complete the architectural and engineering
drawings for the Premises, (ii) promptly cause the Architect to 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 (iii) on or before the date set forth in Schedule 2
attached to this Work Letter, 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 ten (10) business days after Landlord's receipt of the Final Working
Drawings for the Premises if the same are unsatisfactory or incomplete in any
respect. If Tenant is so advised, Tenant shall, within seven (7) business days
of Tenant’s receipt of Landlord’s notice thereof, revise the Final Working
Drawings in accordance with such review and any disapproval of Landlord in
connection therewith. The foregoing process shall be continued until the Final
Working Drawings have been approved by Landlord, provided that Tenant shall
resubmit revised Final Working Drawings to Landlord within five (5) business
days following receipt of Landlord’s notice of deficiencies or other
shortcomings, and Landlord shall advise Tenant within five (5) business days
after Landlord’s receipt of the revised Final Working Drawings from Tenant if
the same are unsatisfactory or incomplete in any additional respect. In
addition, if the Final Working Drawings or any amendment thereof or supplement
thereto shall require Base Building Work, and if Landlord in its sole and
exclusive discretion agrees to any such alterations of the Base Building, and
notifies Tenant of the need and cost for such Base Building Work, then Tenant
shall pay the cost of such required Base Building Work in advance upon receipt
of notice thereof. The cost for the Base Building Work shall include, without
limitation, all direct architectural and/or engineering fees in connection
therewith, plus ten percent (10%) of such direct costs for Landlord's servicing
and overhead.
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 shall submit the same to the appropriate municipal
authorities for all applicable building permits (the "Permits"). Tenant shall
use commercially reasonable efforts to deliver the Permits to Landlord on or
before the date set forth in Schedule 2 attached to this Work Letter. 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 material
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.
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.
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 supplied by Landlord, and
Tenant shall deliver to Landlord notice of its selection of the Contractor upon
such selection. Notwithstanding the foregoing, each of (a) Turner Construction
Company, (b) BYCOR General Contractors, (c) Burger Construction, (d) DCT, (e)
Johnson & Jennings, and (f) Pacific Building Group are deemed approved general
contractors.
4.1.2    Tenant's Agents. All subcontractors, laborers, materialmen, and
suppliers directly employed by Tenant, specifically including MEP subcontractors
(whether or not directly employed 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. 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. 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.
4.2    Construction of Improvements by Tenant's Agents.
4.2.1    Construction Contract; Cost Budget. Tenant shall engage the Contractor
under Landlord's form of Stipulated Sum Agreement or Guaranteed Maximum Price
Contract, accompanied by Landlord's standard General Conditions, with such
modifications by Tenant and/or Contractor as may be reasonably approved by
Landlord (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 (i) a copy of the Contract,
(ii) Tenant’s proposed construction schedule for the construction and completion
of the Improvements (the "Construction Schedule"), and (iii) 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"). Notwithstanding the foregoing,
Tenant, upon Landlord’s reasonable approval, may phase certain aspects of the
construction of the Improvements prior to the foregoing (e.g. demolition) if
Tenant obtains a permit for such portion of the Improvements (to the extent
required by Applicable Laws), a Contract has been executed for such portion of
the Improvements and the Final Costs for such portion of the Improvements has
been determined. If Landlord reasonably determines that a "Construction
Triggering Event" (as that term is defined hereinbelow) has occurred, then
notwithstanding any contrary provision of this Work Letter, Landlord may elect
by written notice to Tenant any of the Construction Risk Alternatives set forth
below in order that Landlord may satisfy its REIT related obligations with
respect to timely recognizing revenue from this Lease (as determined by Landlord
in its sole discretion), and in such case the provisions of the applicable
Construction Risk Alternative(s) shall automatically apply and be binding upon
Tenant. The term "Construction Triggering Event" shall mean that at least one of
the following circumstances applies: (A) the Improvements lend themselves to
construction in separate phases, or (B) the aggregate Over-Allowance Amount
exceeds (or is reasonably anticipated by Landlord to exceed) $500,000.00 for
post-first generation premises in an existing Building, or (C) the Construction
Schedule will result in the substantial completion of the Improvements and the
issuance of a certificate of occupancy (permanent or temporary) by the Lease
Commencement Date, or (D) the "90% Threshold," as that term is defined in
Section 4.2.1(a) below, will not be satisfied by the Lease Commencement Date.
The term "Construction Risk Alternatives" means that Landlord may elect, in
Landlord’s sole discretion, any one or more of the following alternatives:
(a)    that Tenant shall bifurcate the Contract into two separate Contracts,
with one Contract (the "90% Contract") covering a sufficient portion of the work
to construct the Improvements in order that at least ninety percent (90%) of the
initial Improvement Allowance (the "90% Threshold") shall be expended by the
Lease Commencement Date, and with the other Contract (the "Remaining Work
Contract") covering the remaining work to construct the Improvements (the
"Bifurcated Contract Alternative"). In the event that Landlord elects the
Bifurcated Contract Alternative, then notwithstanding any contrary provision of
this Work Letter, at least ninety percent (90%) of the Improvement Allowance
shall be used for the costs to design and construct the Improvements to be
constructed pursuant to the 90% Contract (the "90% Contract Improvements"), and
the lesser of (i) the remaining balance of the Improvement Allowance following
substantial completion of the 90% Contract Improvements, and (ii) ten percent
(10%) of the initial Improvement Allowance, shall be used for the Improvements
to be constructed pursuant to the Remaining Work Contract (the "Remaining Work
Contract Improvements") and any remaining work relating to the 90% Contract
Improvements following the substantial completion of such 90% Contract
Improvements. In no event shall Landlord be obligated to make disbursements from
the Improvement Allowance for Remaining Work Contract Improvements until
disbursements have been made from the Improvement Allowance for all of the work
to design and substantially complete the 90% Contract Improvements.
Notwithstanding any contrary provision of this Work Letter, any unused portion
of the 90% Threshold remaining as of the Lease Commencement Date, shall remain
with Landlord and Tenant shall have no further right thereto, and the Allowance
Deadline set forth in Section 2.1 of this Work Letter shall only be applicable
to the Remaining Work Contract Improvements; and/or
(b)    that the Improvement Allowance (subject only to the Final Retention)
shall be disbursed for the costs relating to the design and construction of any
portion of the Improvements, as Landlord may elect in its sole discretion, prior
to Landlord’s disbursement of any Over-Allowance Amount (the "Improvement
Allowance Disbursement Alternative").
Subject to Section 4.2.5 below, Landlord shall notify Tenant of its election
("Landlord’s Construction Risk Notice") of any Construction Risk Alternatives no
later than ten (10) business days following Landlord’s receipt of the Contract
and the Construction Schedule. If Landlord elects the Allowance Deadline
Alternative, then Landlord’s Construction Risk Notice shall include the new
Allowance Deadline.
The difference between the amount of the Final Costs and the amount of the
Improvement Allowance (less any portion thereof already disbursed by Landlord,
or in the process of being disbursed by Landlord, on or before the commencement
of construction of the Improvements) is referred to herein as the
"Over-Allowance Amount". In the event that an Over-Allowance Amount exists in
connection with any particular construction project involving the construction
of the Improvements, then Tenant shall pay a percentage of each amount requested
by Contractor or otherwise disbursed under this Work Letter, which percentage
shall be equal to the Over-Allowance Amount divided by the amount of the Final
Costs (after deducting from the Final Costs any amounts expended in connection
with the preparation of the Construction Drawings, and the cost of other
Improvement Allowance Items incurred prior to the commencement of construction
of the Improvements) and such payments by Tenant (the “Over-Allowance Payments”)
shall be a condition to Landlord’s obligation to pay any amounts from the Tenant
Improvement Allowance. 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 in
accordance with the terms of the immediately preceding sentence and the amounts
to be disbursed by Landlord pursuant to the terms of this Work Letter thereafter
shall be accordingly adjusted so that Landlord’s disbursements in the aggregate
pursuant to the terms of this Work Letter and Tenant’s Over-Allowance Payments
are each proportionate to the adjusted Final Costs. In connection with any
Over-Allowance Payment made by Tenant pursuant to this Section 4.2.1, Tenant
shall 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
substantial 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, coordination of work with the
contractors of other tenants, 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 the product of (i) two percent (2%), and (ii) the
sum of the Improvement Allowance, the Over-Allowance Amount, as such amount may
be increased hereunder, and any other amounts expended by Tenant in connection
with the design and construction of the Improvements, 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 act or omission 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. Such indemnity by Tenant, 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 Landlord's performance of any ministerial acts
reasonably necessary (i) to permit Tenant to complete the Improvements, and (ii)
to enable Tenant to obtain any building permit or certificate of occupancy for
the Premises.
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 later to occur of (i) completion of the work performed by such
contractor or subcontractors and (ii)  the Lease Commencement Date. 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 required to be carried by Tenant as
set forth in this Lease.
4.2.2.4.2  Special Coverages. Tenant shall carry "Builder's All Risk" insurance
in an amount reasonably approved by Landlord based on the cost of construction,
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 the Contractor 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
all other Tenant's Agents shall carry excess liability insurance in an amount
reasonably approved by Landlord, all 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 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
immediately repair the same at Tenant's sole cost and expense. 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 insure Landlord and Tenant, 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. Landlord may, in its discretion, but only in the event (i) the
Over-Allowance Amount exceeds $500,000.00, and (ii) Tenant cannot reasonably
identify specifically earmarked, immediately available funds necessary to pay
such Over-Allowance Amount, 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 the Improvements and naming
Landlord as a co-obligee.
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 material deviations in,
and/or disapproval by Landlord of, the Improvements shall be rectified by Tenant
at no expense to Landlord, provided however, that in the event Landlord
determines that a defect or material deviation exists or disapproves of any
matter in connection with any portion of the Improvements and such defect,
deviation or matter might adversely affect the mechanical, electrical, plumbing,
heating, ventilating and air conditioning or life-safety systems of the
Building, the structure or exterior appearance of the Building or any other
tenant's use of such other tenant's leased premises, Landlord may, take such
action as Landlord deems necessary, at Tenant's expense and without incurring
any liability on Landlord's part, to correct any such defect, deviation and/or
matter, including, without limitation, causing the cessation of performance of
the construction of the Improvements until such time as the defect, deviation
and/or matter is corrected to Landlord's satisfaction.
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 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 fifteen (15)
days after final completion of construction of the Improvements (including
completion of all punchlist items and final payment to all of Tenant's Agents),
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 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 ninety (90) 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 Traci Benson as its sole
representative with respect to the matters set forth in this Work Letter (whose
e-mail address for the purposes of this Work Letter is
traci.benson@retrophin.com), 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 Robert Chambers as its
sole representative with respect to the matters set forth in this Work Letter
(whose e-mail address for the purposes of this Work Letter is
rchambers@kilroyrealty.com), 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. Unless otherwise indicated, wherever
Landlord’s approval is required (a) such approval shall not be unreasonably
withheld, conditioned or delayed, and (b) if Landlord does not respond within
the number of days indicated (or if no such timeframe is indicated, within five
(5) business days), Tenant may send a second written notice to Landlord
requesting such approval and, if Landlord does not respond within five (5)
business days of its receipt of such second request, Landlord shall be deemed to
have approved the request.
5.4    Tenant's Lease Default. Notwithstanding any provision to the contrary
contained in the Lease or this Work Letter, if any default by Tenant under the
Lease (beyond the applicable notice and cure periods) 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/or Landlord may, without any liability whatsoever, cause the cessation of
construction of the Improvements (in which case, Tenant shall be responsible for
any delay in the substantial completion of the Improvements and any costs
occasioned thereby), 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 Delay. As used herein, "Landlord Delay" shall mean an actual
delay in the substantial completion of the Improvements resulting from (i)
failure of Landlord to timely approve or disapprove any items requiring
Landlord's approval in this Work Letter; (ii) interference by Landlord, its
agents or contractors with the completion of the Improvements and which
objectively preclude or delay the construction of Improvements

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

in the Building; (iii) delays due to the acts or failures to act of Landlord,
its agents or contractors with respect to payment of the Improvement Allowance;
and (iv) the failure of any item in the Base Building portions of the Premises
to comply with Code. If Tenant contends that a Landlord Delay has occurred,
Tenant shall notify Landlord in writing (the “Delay Notice”) of the event which
constitutes such Landlord Delay. If the actions or inactions or circumstances
described in the Delay Notice qualify as a Landlord Delay, and are not cured by
Landlord within one (1) business day after Landlord's receipt of the Delay
Notice, the Lease Commencement Date and Occupancy Outside Date shall each be
delayed for the period by which substantial completion of the Improvements is
actually delayed as a result of such Landlord Delay.

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

SCHEDULE 1 TO EXHIBIT B
LIST OF TENANT DELIVERABLES
1.    Prior to Start of Construction
1.1.    Approved and permitted Construction Drawings (except to the extent not
necessary for phasing of construction as approved by Landlord pursuant to
Section 4.2.1).
1.2.    Approved subcontractors list.
1.3.    Copies of all executed Contracts with Contractor.
1.4.    Construction Schedule.
1.5.    Copies of Permits for Improvements.
1.6.
Preliminary Budget and the budget with Final Costs, including a schedule of
values for all hard construction costs.

2.    Ongoing During Construction
2.1.    Budget and Construction Schedule revisions as they occur.
2.2.    Change orders as they occur.
2.3.    Construction Drawings revisions as they occur.
2.4.    Monthly applications of payment with reciprocal releases when received.
2.5.    Monthly Architect's field report or equivalent.
2.6.    Monthly 4-week look ahead schedule.
2.7.    Weekly meeting minutes.
2.8.    Permit sign off card when received.
2.9.    Temporary certificate of occupancy/certificate of occupancy when
received.
3.    Prior to Release of Any Funds Related to Hard Costs
3.1.    Final Space Plans approved by both parties.
3.2.    Construction Drawings approved by both parties.
3.3.    Project budget
3.4.    Project schedule.
3.5.    Pay applications as above.
4.    Prior to Release of Final Payment
4.1.    Signed off inspection card or equivalent temporary certificate of
occupancy.
4.2.    Architect's Certificate of Substantial Completion.
4.3.
Final Contractor pay application indicating 100% complete, 90% previously paid.

4.4.    Physical inspection of the Premises by Landlord inspection team.
4.5.    Unconditional mechanic's lien releases.
4.6.    Final as-builts.
4.7.    Final subcontractors list.
4.8.    Warranties and guarantees.
4.9.    CAD files.
4.10.    Temporary certificate of occupancy/certificate of occupancy.

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

SCHEDULE 2 TO EXHIBIT B
TIME DEADLINES

 
Dates
Actions to be Performed
A.
September 1, 2019
Final Space Plan to be completed by Tenant and delivered to Landlord.
B.
Six (6) weeks following the parties’ approval of the Final Space Plan.
Tenant to deliver Final Working Drawings to Landlord.
C.
April 1, 2020
Tenant to deliver a copy of the Permits to Landlord.
D.
Lease Commencement Date
Tenant to deliver the certificate of occupancy, temporary certificate of
occupancy, or permit card signed by the City of San Diego for the Premises, as
applicable, and the Architect’s Certificate of Substantial Completion of the
Improvements, to Landlord.

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

EXHIBIT C
KILROY CENTRE DEL MAR
NOTICE OF LEASE TERM DATES

To:    _______________________
_______________________
_______________________
_______________________
Re:
Office Lease dated ____________, 20__ (the "Lease"), by and between
____________________, a _____________________ ("Landlord"), and
_______________________, a _______________________ ("Tenant"), for _____________
rentable square feet of space commonly known as Suite ______ (the "Premises"),
located on the ______ (___) floor of that certain office building located at
____________________________, _______________, _________________ (the
"Building").

Dear ________________:
Notwithstanding any provision to the contrary contained in the Lease, this
letter is to confirm and agree upon the following:
1.
Tenant has accepted the above-referenced Premises as being delivered in
accordance with the Lease, and there is no deficiency in construction.

2.
The Lease Term shall commence on or has commenced on ______________ for a term
of __________________ ending on __________________.

3.
Rent commenced to accrue on __________________, in the amount of
________________.

4.
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 shall
be for the full amount of the monthly installment as provided for in the Lease.

5.
Your rent checks should be made payable to __________________ at
___________________.

6.
The rentable square feet of the Premises is ________________.

7.
Tenant's Share of Direct Expenses with respect to the Premises is ________% of
the Project.

8.
Capitalized terms used herein that are defined in the Lease shall have the same
meaning when used herein. Tenant confirms that the Lease has not been modified
or altered except as set forth herein, and the Lease is in full force and
effect. Landlord and Tenant acknowledge and agree that to each party's actual
knowledge, neither party is in default or violation of any covenant, provision,
obligation, agreement or condition in the Lease.

If the provisions of this letter correctly set forth our understanding, please
so acknowledge by signing at the place provided below on the enclosed copy of
this letter and returning the same to Landlord.

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

 
"Landlord":
_________________________________,
a________________________________

By:______________________________
Name:___________________
Its:______________________
By:______________________________
Name:___________________
Its:______________________
Agreed to and Accepted
as of _____________, 20__.
"Tenant":
_________________________________,
a________________________________

By:______________________________
Name:___________________
Its:______________________
By:______________________________
Name:___________________
Its:______________________

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

EXHIBIT D
KILROY CENTRE DEL MAR
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.    Tenant shall not alter any lock or install any new or additional locks or
bolts on any doors or windows of the Premises without obtaining Landlord's prior
written consent. Tenant shall bear the cost of any lock changes or repairs
required by Tenant. Two keys will be furnished by Landlord for the Premises, and
any additional keys required by Tenant must be obtained from Landlord at a
reasonable cost to be established by Landlord. Upon the termination of this
Lease, Tenant shall restore to Landlord all keys of stores, offices, and toilet
rooms, either furnished to, or otherwise procured by, Tenant and in the event of
the loss of keys so furnished, Tenant shall pay to Landlord the cost of
replacing same or of changing the lock or locks opened by such lost key if
Landlord shall deem it necessary to make such changes.
2.    All doors opening to public corridors shall be kept closed at all times
except for normal ingress and egress to the Premises.
3.    Landlord reserves the right to close and keep locked all entrance and exit
doors of the Building during such hours as are customary for comparable
buildings in the San Diego, California area. Tenant, its employees and agents
must be sure that the doors to the Building are securely closed and locked when
leaving the Premises if it is after the normal hours of business for the
Building. Any tenant, its employees, agents or any other persons entering or
leaving the Building at any time when it is so locked, or any time when it is
considered to be after normal business hours for the Building, may be required
to sign the Building register. Access to the Building may be refused unless the
person seeking access has proper identification or has a previously arranged
pass for access to the Building. Landlord will furnish passes to persons for
whom Tenant requests same in writing. Tenant shall be responsible for all
persons for whom Tenant requests passes and shall be liable to Landlord for all
acts of such persons. The Landlord and his agents shall in no case be liable for
damages for any error with regard to the admission to or exclusion from the
Building of any person. In case of invasion, mob, riot, public excitement, or
other commotion, Landlord reserves the right to prevent access to the Building
or the Project during the continuance thereof by any means it deems appropriate
for the safety and protection of life and property.
4.    No furniture, freight or equipment of any kind shall be brought into the
Building without prior notice to Landlord. All moving activity into or out of
the Building shall be scheduled with Landlord and done only at such time and in
such manner as Landlord designates. Landlord shall have the right to prescribe
the weight, size and position of all safes and other heavy property brought into
the Building and also the times and manner of moving the same in and out of the
Building. 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.
5.    No furniture, packages, supplies, equipment or merchandise will be
received in the Building or carried up or down in the elevators, except between
such hours, in such specific elevator and by such personnel as shall be
designated by Landlord.
6.    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.
7.    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.
8.    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.
9.    Tenant shall not overload the floor of the Premises, nor mark, drive nails
or screws, or drill into the partitions, woodwork or drywall or in any way
deface the Premises or any part thereof without Landlord's prior written
consent. Tenant shall not purchase spring water, ice, towel, linen, maintenance
or other like services from any person or persons not approved by Landlord.
10.    Except for vending machines intended for the sole use of Tenant's
employees and invitees, no vending machine or machines other than fractional
horsepower office machines shall be installed, maintained or operated upon the
Premises without the written consent of Landlord.

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

11.    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 or substance used or kept on the Premises.
12.    Tenant shall not without the prior written consent of Landlord use any
method of heating or air conditioning other than that supplied by Landlord.
13.    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.
14.    Tenant shall not bring into or keep within the Project, the Building or
the Premises any firearms, animals, birds, aquariums, or, except in areas
designated by Landlord, bicycles or other vehicles.
15.    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.
16.    The Premises shall not be used for manufacturing or for the storage of
merchandise except as such 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. Tenant shall not engage or pay any employees on the
Premises except those actually working for such tenant on the Premises nor
advertise for laborers giving an address at the Premises.
17.    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.
18.    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 or for any other
purpose, nor in any way obstruct such areas, and shall use them only as a means
of ingress and egress for the Premises.
19.    Tenant shall not waste electricity, water or air conditioning and agrees
to cooperate fully with Landlord to ensure the most effective operation of the
Building's heating and air conditioning system, and shall refrain from
attempting to adjust any controls. Tenant shall participate in recycling
programs undertaken by Landlord.
20.    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.
21.    Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
22.    Any persons employed by Tenant to do janitorial work shall be subject to
the prior written approval of Landlord, and while in the Building and outside of
the Premises, shall be subject to and under the control and direction of the
Building manager (but not as an agent or servant of such manager or of
Landlord), and Tenant shall be responsible for all acts of such persons.
23.    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 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.
24.    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.
25.    Tenant must comply with requests by the Landlord concerning the informing
of their employees of items of importance to the Landlord.
26.    Tenant must comply with applicable "NO-SMOKING" ordinances and all
related, similar or successor ordinances, rules, regulations or codes. 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. In addition, no
smoking of any substance shall be permitted within the Project except in
specifically designated outdoor areas. Within such designated outdoor areas, all
remnants of consumed cigarettes and related paraphernalia shall be deposited in
ash trays and/or waste receptacles. No cigarettes shall be extinguished and/or
left on the ground or any other surface of the Project. Cigarettes shall be
extinguished only in ashtrays. Furthermore, in no event shall Tenant, its
employees or agents smoke tobacco products or other substances (x) within any
interior areas of the Project, or (y) within two hundred feet (200') of the main
entrance of the Building or the main entrance of any of the adjacent buildings,
or (z) within seventy-five feet (75') of any other entryways into the Building.
27.    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.
28.    All office equipment of any electrical or mechanical nature shall be
placed by Tenant in the Premises in settings approved by Landlord, to absorb or
prevent any vibration, noise and annoyance.
29.    Tenant shall not use in any space or in the public halls of the Building,
any hand trucks except those equipped with rubber tires and rubber side guards.
30.    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.
31.    No tenant shall use or permit the use of any portion of the Premises for
living quarters, sleeping apartments or lodging rooms.
32.    Tenant shall not purchase spring water, towels, janitorial or maintenance
or other similar services from any company or persons not approved by Landlord.
Landlord shall approve a sufficient number of sources of such services to
provide Tenant with a reasonable selection, but only in such instances and to
such extent as Landlord in its judgment shall consider consistent with the
security and proper operation of the Building.
33.    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.

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

EXHIBIT E
KILROY CENTRE DEL MAR
FORM OF TENANT'S ESTOPPEL CERTIFICATE
The undersigned as Tenant under that certain Office Lease (the "Lease") made and
entered into as of ___________, 20__ 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 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.    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.    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 materials or substances in the Premises.
14.    To the undersigned's knowledge, all 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 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 is 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 ___________, 20_ .
 
"Tenant":
_________________________________,
a________________________________

By:______________________________
Name:___________________
Its:______________________
By:______________________________
Name:___________________
Its:______________________

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

EXHIBIT F
KILROY CENTRE DEL MAR
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
ALLEN MATKINS LECK GAMBLE
MALLORY & NATSIS 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 ________, 20___, by and between
__________________ ("Landlord"), and ________________ ("Tenant"), with reference
to the following facts:
A.    Landlord and Tenant entered into that certain Office Lease dated _____,
20__ (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 is 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 ________________, 20___,
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.
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 from 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.
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.
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:_______________________________

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

EXHIBIT G
KILROY CENTRE DEL MAR
INTENTIONALLY OMITTED

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

EXHIBIT H
KILROY CENTRE DEL MAR
MARKET RENT DETERMINATION FACTORS
When determining Market Rent, the following rules and instructions shall be
followed.
1.    RELEVANT FACTORS. The "Market Rent," as used in this Lease, shall be
derived from an analysis (as such derivation and analysis are set forth in this
Exhibit H) of the "Net Equivalent Lease Rates," of the "Comparable Transactions"
(as that term is defined below). The Market Rent, as used in this Lease, shall
be equal to the annual rent per rentable square foot, at which tenants, are,
pursuant to transactions consummated within twelve (12) months prior to the
commencement of the Option Term, provided that timing adjustments shall be made
to reflect any changes in the Market Rent following the date of any particular
Comparable Transaction up to the date of the commencement of the applicable
Option Term, leasing non-sublease, non-encumbered space comparable in location
and quality to the Premises containing a square footage comparable to that of
the Premises for a term of five (5) years, in an arm's-length transaction, which
comparable space is located in "Comparable Buildings" (transactions satisfying
the foregoing criteria shall be known as the "Comparable Transactions"). 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 "Renewal
Allowance," as defined herein below, to be provided by Landlord in connection
with the Option Term 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 (A) any period
of rental abatement, if any, granted to tenants in Comparable Transactions in
connection with the design, permitting and construction of improvements, or
(B) any commission paid or not paid in connection with such Comparable
Transaction. The Market Rent shall include adjustment of the stated size of the
Premises based upon the standards of measurement utilized in the Comparable
Transactions; provided, however, the size of the Premises shall, notwithstanding
the foregoing, be at least equal to the greater of: (i) the square footages set
forth in this Lease, and (ii) the square footage of the Premises determined
pursuant to the standards of space measurement used 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
Landlord with financial security, such as an enhanced security deposit, a 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.    RENEWAL IMPROVEMENT ALLOWANCE. Notwithstanding anything to the contrary
set forth in this Exhibit H, once the Market Rent for the Option Term is
determined as a Net Equivalent Lease Rate, if, in connection with such
determination, it is deemed that Tenant is entitled to an improvement or
comparable allowance for the improvement of the Premises, (the total dollar
value of such allowance shall be referred to herein as the "Renewal Allowance"),
Landlord shall pay the Renewal Allowance to Tenant pursuant to a commercially
reasonable disbursement procedure determined by Landlord 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 Renewal 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 multi-tenant occupancy office buildings which
are comparable to the Building in terms of age (based upon the date of
completion of construction or major renovation), quality of construction, level
of services and amenities (including, but not limited to, the type (e.g.,
surface, covered, subterranean) and amount of parking), size and appearance, and
are located in the "Comparable Area," which is the which is the "Del Mar Heights
Area." The "Del Mar Heights Area" shall be the area containing Comparable
Buildings which have reasonably comparable freeway access to the Project and
which are within an area bounded by Highway 56 on the South side, Del Mar
Heights Road on the North side, Carmel Valley Road on the East side, and I-5 on
the West side, but shall exclude the buildings located at 12860 and 12830 El
Camino Real, San Diego, California.

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

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 then be 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 be 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).
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 "NNN" lease rate
applicable to each year of the Option Term.

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

EXHIBIT I-1
ALTERNATIVE BASE RENT SCHEDULE

In the event Tenant timely elects to continue to lease a portion of the Existing
Premises under the Existing Lease, the following Base Rent schedule shall apply:
Period During
Lease Term
Annual
Base Rent*
Monthly
Installment
of Base Rent*
Monthly
Rental Rate
per Rentable
Square Foot**
Lease Commencement Date through Lease Month 12
$4,310,103.60◊
$359,175.30◊
$4.65
Lease Month 13 through Lease Month 24
$4,439,406.72
$369,950.56
$4.79
Lease Month 25 through Lease Month 36
$4,572,588.96
$381,049.08
$4.93
Lease Month 37 through Lease Month 48
$4,709,766.6
$392,480.55
$5.08
Lease Month 49 through Lease Month 60
$4,851,059.64
$404,254.97
$5.23
Lease Month 61 through Lease Month 72
$4,996,591.44
$416,382.62
$5.39
Lease Month 73 through Lease Month 84
$5,146,489.2
$428,874.10
$5.55
Lease Month 85 through Lease Expiration Date
$5,300,883.84
$441,740.32
$5.72

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

EXHIBIT I-2
ALTERNATIVE BASE RENT SCHEDULE
In the event Tenant timely elects to continue to lease the entirety of the
Existing Premises under the Existing Lease, the following Base Rent schedule
shall apply:
Period During Lease Term
Annual
Base Rent*
Monthly
Installment
of Base Rent*
Monthly
Rental Rate
per Rentable
Square Foot**
Lease Commencement Date through Lease Month 12
$4,263,758.40◊
$355,313.20◊
$4.60
Lease Month 13 through Lease Month 24
$4,391,671.20
$365,972.60
$4.74
Lease Month 25 through Lease Month 36
$4,523,421.36
$376,951.78
$4.88
Lease Month 37 through Lease Month 48
$4,659,123.96
$388,260.33
$5.03
Lease Month 49 through Lease Month 60
$4,798,897.68
$399,908.14
$5.18
Lease Month 61 through Lease Month 72
$4,942,864.56
$411,905.38
$5.34
Lease Month 73 through Lease Month 84
$5,091,150.48
$424,262.54
$5.49
Lease Month 85 through Lease Expiration Date
$5,243,885.04
$436,990.42
$5.66

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

EXHIBIT J
SUPERIOR RIGHTS HOLDERS
(i.e., tenants with existing expansion rights)

Building Number
Expansion Space
Tenant Name
Type of Expansion Right
3721
Second (2nd) floor
Volcano
Right of first refusal
3579
Entire building
Foley
Right of first refusal
3611
First (1st) floor
Lindsay Poe and David Van Vuren
Right of first refusal
3611, 3661 and 3721
Entire buildings
FICO
Right of first refusal

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

OFFICE LEASE
KILROY REALTY
KILROY CENTRE DEL MAR

KILROY REALTY, L.P.,
a Delaware limited partnership,
as Landlord,
and
RETROPHIN, INC.,
a Delaware corporation,
as Tenant.

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

TABLE OF CONTENTS

 
 
Page
ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
5
ARTICLE 2
LEASE TERM; OPTION TERM
8
ARTICLE 3
BASE RENT
10
ARTICLE 4
ADDITIONAL RENT
11
ARTICLE 5
USE OF PREMISES
19
ARTICLE 6
SERVICES AND UTILITIES
19
ARTICLE 7
REPAIRS
21
ARTICLE 8
ADDITIONS AND ALTERATIONS
22
ARTICLE 9
COVENANT AGAINST LIENS
24
ARTICLE 10
INDEMNIFICATION AND INSURANCE
25
ARTICLE 11
DAMAGE AND DESTRUCTION
28
ARTICLE 12
NONWAIVER
30
ARTICLE 13
CONDEMNATION
30
ARTICLE 14
ASSIGNMENT AND SUBLETTING
31
ARTICLE 15
SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES
35
ARTICLE 16
HOLDING OVER
35
ARTICLE 17
ESTOPPEL CERTIFICATES
36
ARTICLE 18
SUBORDINATION
36
ARTICLE 19
DEFAULTS; REMEDIES
37
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
39
ARTICLE 21
SECURITY DEPOSIT
39
ARTICLE 22
SUBSTITUTION OF OTHER PREMISES
40
ARTICLE 23
SIGNS
40
ARTICLE 24
COMPLIANCE WITH LAW
41
ARTICLE 25
LATE CHARGES
42
ARTICLE 26
LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
42
ARTICLE 27
ENTRY BY LANDLORD
43
ARTICLE 28
TENANT PARKING
43

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

INDEX

 
Page (s)
Abatement Event
21
Accountant
18
Additional Notice
21
Additional Rent
11
Advocate Arbitrators
9
Alterations
22
Applicable Laws
42
Audit Period
18
Award
10
Bank Prime Loan
42
Base Building
23
Base Rent
10
Base Rent Abatement
11
Base Rent Abatement Period
11
Base Year
11
Brokers
47
BS/BS Exception
22
Building
5
Building Common Areas,
5
Building Hours
20
Building Structure
21
Building Systems
21
Casualty
28
CC&Rs
19
Common Areas
5
Comparable Area,
2
Comparable Buildings
2
Comparable Transactions
1
Control,
34
Cosmetic Alterations
23
Cost Pools
16
Damage Termination Date
29
Damage Termination Notice
29
Direct Expenses
11
Energy Disclosure Requirements
52
Environmental Laws
49
Environmental Permits
50
Estimate
17
Estimate Statement
17
Estimated Excess
17
Excess
16
Exercise Notice
9
Expense Year
12

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

Fifth Floor First Offer Space
7
First Offer Meeting
7
First Offer Rent
7
First Offer Rent Outside Agreement Date
7
Force Majeure
46
Hazardous Material(s)
49
Holidays
20
HVAC
19
Identification Requirements
49
Initial Notice
21
Intention to Transfer Notice
33
Interest Rate
42
Landlord
1
Landlord Parties
25
Landlord Repair Notice
28
Landlord Response Notice
9
Landlord's Option Rent Calculation
9
Landlord's Repair Estimate Notice
29
Lease
1
Lease Commencement Date
8
Lease Expiration Date
8
Lease Month
8
Lease Term
8
Lease Year
8
LEED
12
Lines
49
Market Rate Schedule
8
Market Rent,
1
Net Worth
34
Neutral Arbitrator
10
Notices
46
Objectionable Name or Logo
41
OFAC
53
Operating Expenses
12
Option Rent
8
Option Term
8
Original Improvements
26
Other Improvements
51
Outside Agreement Date
9
Patriot Act
53
Penetrating Work
52
Permitted Chemicals
50
Permitted Transferee
34
Permitted Transferee Assignee.
34
Permitted Use
3
Premises
5

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

Prohibited Persons
53
Project
5
Project Common Areas,
5
Proposition 13
15
Renewal Allowance
1
Renovations
48
Rent.
11
Rules and Regulations
19
Security Deposit
39
Sensor Areas
51
Sign Specifications
40
Statement
17
Subject Space
31
Summary
1
Tax Expenses
15
TCCs
5
Tenant
1
Tenant Energy Use Disclosure
52
Tenant Parties
25
Tenant's Option Rent Calculation
9
Tenant's Share
16
Third Party Contractor
28
Transfer
33
Transfer Notice
31
Transfer Premium
32
Transferee
31
Transfers
31
Water Sensors
51
Work Letter
5