Exhibit 10.33

LEASE

BETWEEN

POINT RICHMOND R&D ASSOCIATES II, LLC,

a California limited liability company (LANDLORD)

AND

TRANSCEPT PHARMACEUTICALS, INC.,

a Delaware corporation (TENANT)

POINT RICHMOND II

Point Richmond, California

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TABLE OF CONTENTS

 

          Page ARTICLE 1   

BASIC LEASE PROVISIONS

   1 1.1      BASIC LEASE PROVISIONS    1 1.2      ENUMERATION OF EXHIBITS,
RIDER AND ADDENDUM    3 1.3      DEFINITIONS    3 ARTICLE 2   

PREMISES, TERM, FAILURE TO GIVE POSSESSION, PARKING, EXTENSION OPTION,
ACCELERATION OPTION, AND AVAILABLE SPACE

   9 2.1      LEASE OF PREMISES    9 2.2      TERM    9 2.3      CONDITION OF
PREMISES    9 2.4      PARKING    10 2.5      EXTENSION OPTION    11 2.6     
ACCELERATION OPTION    13 2.7      AVAILABLE SPACE    14 2.8      EXPANSION   
14 ARTICLE 3   

RENT

   15 ARTICLE 4   

RENT ADJUSTMENTS AND PAYMENTS

   15 4.1      RENT ADJUSTMENTS    15 4.2      STATEMENT OF LANDLORD    15 4.3  
   BOOKS AND RECORDS    16 4.4      TENANT OR LEASE SPECIFIC TAXES    17 ARTICLE
5   

SECURITY DEPOSIT

   17 ARTICLE 6   

SERVICES

   18 6.1      LANDLORD’S GENERAL SERVICES    18 6.2      GAS AND ELECTRICAL
SERVICES    19 6.3      additional services    19 6.4      TELEPHONE SERVICES   
20 6.5      DELAYS IN FURNISHING SERVICES    20 6.6      CHOICE OF SERVICE
PROVIDER    21 6.7      SIGNAGE    22 ARTICLE 7   

POSSESSION, USE AND CONDITION OF PREMISES

   22 7.1      POSSESSION AND USE OF PREMISES    22 7.2      LANDLORD ACCESS TO
PREMISES; APPROVALS    24 7.3      QUIET ENJOYMENT    25

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TABLE OF CONTENTS

(continued)

 

          Page ARTICLE 8   

MAINTENANCE

   26 8.1      LANDLORD’S MAINTENANCE    26 8.2      TENANT’S MAINTENANCE    26
ARTICLE 9   

ALTERATIONS AND IMPROVEMENTS

   27 9.1      TENANT ALTERATIONS    27 9.2      LIENS    29 ARTICLE 10   

ASSIGNMENT AND SUBLETTING

   29 10.1      ASSIGNMENT AND SUBLETTING    29 10.2      RECAPTURE    31 10.3  
   EXCESS RENT    31 10.4      TENANT LIABILITY    31 10.5      ASSUMPTION AND
ATTORNMENT    32 10.6      PERMITTED TRANSFERS    32 ARTICLE 11   

DEFAULT AND REMEDIES

   32 11.1      EVENTS OF DEFAULT    32 11.2      LANDLORD’S REMEDIES    33
11.3      ATTORNEYS’ FEES    36 11.4      BANKRUPTCY    37 11.5      LANDLORD’S
DEFAULT    38 ARTICLE 12   

SURRENDER OF PREMISES

   38 12.1      IN GENERAL    38 12.2      LANDLORD’S RIGHTS    39 ARTICLE 13   

HOLDING OVER

   39 ARTICLE 14   

DAMAGE BY FIRE OR OTHER CASUALTY

   39 14.1      SUBSTANTIAL UNTENANTABILITY    39 14.2      INSUBSTANTIAL
UNTENANTABILITY    40 14.3      RENT ABATEMENT    41 14.4      WAIVER OF
STATUTORY REMEDIES    41 ARTICLE 15   

EMINENT DOMAIN

   41 15.1      TAKING OF WHOLE OR SUBSTANTIAL PART    41 15.2      TAKING OF
PART    41 15.3      COMPENSATION    42

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TABLE OF CONTENTS

(continued)

 

          Page ARTICLE 16   

INSURANCE

   42 16.1      TENANT’S INSURANCE    42 16.2      FORM OF POLICIES    43 16.3  
   LANDLORD’S INSURANCE    43 16.4      WAIVER OF SUBROGATION    43 16.5     
NOTICE OF CASUALTY    45 ARTICLE 17   

WAIVER OF CLAIMS AND INDEMNITY

   45 17.1      WAIVER OF CLAIMS    45 17.2      INDEMNITY BY TENANT    45
17.3      INDEMNITY BY LANDLORD    45 ARTICLE 18   

RULES AND REGULATIONS

   46 18.1      RULES    46 18.2      ENFORCEMENT    46 ARTICLE 19   

LANDLORD’S RESERVED RIGHTS

   46 ARTICLE 20   

ESTOPPEL CERTIFICATE

   47 20.1      IN GENERAL    47 20.2      ENFORCEMENT    47 ARTICLE 21   

LANDLORD’S FURNITURE

   48 ARTICLE 22   

REAL ESTATE BROKERS

   48 ARTICLE 23   

MORTGAGEE PROTECTION

   49 23.1      SUBORDINATION AND ATTORNMENT    49 23.2      MORTGAGEE
PROTECTION    49 ARTICLE 24   

NOTICES

   50 ARTICLE 25   

MISCELLANEOUS

   51 25.1      LATE CHARGES    51 25.2      NO JURY TRIAL; VENUE; JURISDICTION
   51 25.3      NO OPTION    52 25.4      AUTHORITY    52 25.5      ENTIRE
AGREEMENT    52 25.6      OFAC    52 25.7      EXCULPATION    53

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TABLE OF CONTENTS

(continued)

 

          Page 25.8        ACCORD AND SATISFACTION    53 25.9        LANDLORD’S
OBLIGATIONS ON SALE OF BUILDING    53 25.10      BINDING EFFECT    53 25.11     
CAPTIONS    54 25.12      TIME; APPLICABLE LAW; CONSTRUCTION    54 25.13     
ABANDONMENT    54 25.14      LANDLORD’S RIGHT TO PERFORM TENANT’S DUTIES    54
25.15      SECURITY    54 25.16      NO LIGHT, AIR OR VIEW EASEMENTS    55
25.17      RECORDATION    55 25.18      SURVIVAL    55 25.19      RIDERS    55
Exhibit A    Plan of Premises    Exhibit B    Workletter    Exhibit C    Rules
and Regulations    Exhibit D    Visitor Spaces    Exhibit E    Landlord’s
Furniture   

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LEASE

ARTICLE 1

BASIC LEASE PROVISIONS

1.1 BASIC LEASE PROVISIONS

In the event of any conflict between these Basic Lease Provisions and any other
Lease provision, such other Lease provision shall control.

 

  (1) BUILDING AND ADDRESS:

POINT RICHMOND R&D ASSOCIATES II, LLC

501 Canal Boulevard

Point Richmond, California

 

  (2) LANDLORD AND ADDRESS:

POINT RICHMOND R&D ASSOCIATES II, LLC

1120 Nye Street, Suite 400

San Rafael, California 94901

Notices to Landlord shall be addressed:

POINT RICHMOND R&D ASSOCIATES II, LLC

c/o Wareham Development Corporation

1120 Nye Street, Suite 400

San Rafael, California 94901

With a copy to:

Shartsis Friese LLP

One Maritime Plaza, 18th Floor

San Francisco, California 94111

Attention: David H. Kremer

 

  (3) TENANT AND CURRENT ADDRESS:

 

(a) Name:    Transcept Pharmaceuticals, Inc.    (b) State of incorporation:   
Delaware   

 

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Notices to Tenant shall be addressed:

Transcept Pharmaceuticals, Inc.

1003 West Cutting Boulevard

Richmond, California 94804

Attn: Glenn Oclassen, CEO

 

  (4) DATE OF LEASE: as of February 9, 2008

 

  (5) LEASE TERM: Approximately fifty-two (52) months, subject to the Extension
Option set forth in Section 2.5 and the Acceleration Option set forth in
Section 2.6

 

  (6) COMMENCEMENT DATE: The later of (i) February 15, 2009, and (ii) the date
by which all of the following have occurred: (a) the Landlord Work (defined in
the Workletter attached hereto as Exhibit B) is Substantially Complete in
accordance with this Lease and the Workletter; and (b) Landlord has delivered
possession of the Premises to Tenant.

 

  (7) EXPIRATION DATE: May 31, 2013

 

  (8) MONTHLY BASE RENT:

 

MONTHS OF TERM

   MONTHLY    MONTHLY RATE/SF OF
RENTABLE AREA  

Months 1*- 6

   $ 7,800    $ 1.30 **

Months 7 - 12

   $ 11,700    $ 1.30 ***

Months 13 - 24

   $ 16,412.12    $ 1.339  

Months 25 - 36

   $ 16,904.49    $ 1.379  

Months 37 - 48

   $ 17,411.62    $ 1.420  

Months 49 - Expiration Date

   $ 17,933.97    $ 1.463  

 

* “Month 1” will include any partial calendar month following the Commencement
Date if the Commencement Date is other than the first (1st) day of a calendar
month, and in the event Month 1 includes any partial calendar month, then on or
before the Commencement Date, Tenant shall pay the prorated amount of Monthly
Base Rent for such partial calendar month pursuant to Article 3 in addition to
the Monthly Base Rent for the first full calendar month of the Term.

** During Months 1 - 6, the Monthly Base Rent shall be determined by multiplying
the monthly rate per square foot of rentable area by 6,000, notwithstanding the
actual Rentable Area of the Premises.

*** During Months 7 - 12, the Monthly Base Rent shall be determined by
multiplying the monthly rate per square foot of rentable area by 9,000,
notwithstanding the actual Rentable Area of the Premises.

 

  (9) RENTABLE AREA OF THE PREMISES: 12,257 square feet

 

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  (10) SECURITY DEPOSIT: $17,934.00, subject to Article 5

 

  (11) PREMISES SUITE NUMBER: Suite E

 

  (12) TENANT’S USE OF PREMISES: General office

 

  (13) PARKING: Up to 37 unreserved parking spaces on surface lots, and five
(5) visitor parking spaces reserved exclusively for Tenant near the main
entrance to the Building as shown on Exhibit D

 

  (14) BROKERS:    Cushman & Wakefield

1111 Broadway, Suite 1600

Oakland, CA 94607

Cornish & Carey

5980 Horton Street, Suite 100

Emeryville, California 94608

1.2 ENUMERATION OF EXHIBITS, RIDER AND ADDENDUM

The Exhibits set forth below and attached to this Lease are incorporated in this
Lease by this reference:

 

EXHIBIT A    Plan of Premises    EXHIBIT B    Workletter    EXHIBIT C    Rules
and Regulations    EXHIBIT D    Visitor Spaces   

1.3 DEFINITIONS

For purposes hereof, the following terms shall have the following meanings:

AFFILIATE: Any corporation or other business entity that is owned or controlled
by, owns or controls, or is under common ownership or control with Tenant or
with Landlord.

BUILDING: The building located at the address specified in Section 1.1(1).

COMMENCEMENT DATE: The date specified in Section 1.1(6).

COMMON AREAS: All areas of the Project made available by Landlord from time to
time for the general common use or benefit of the tenants of the Building, and
their employees and invitees, or the public, as such areas currently exist and
as they may be changed from time to time.

DECORATION: Tenant Alterations which do not require a building permit and which
do not involve any of the structural elements of the Building, or any of the
Building’s systems, including its electrical, mechanical, plumbing, security,
heating, ventilating, air-conditioning, communication, and fire and life safety
systems.

 

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DEFAULT RATE: Two (2) percentage points above the rate then most recently
announced by Bank of America, N.A., at its San Francisco main office as its
corporate or commercial base lending reference rate, from time to time
announced, but in no event higher than the maximum rate permitted by Law.

ENVIRONMENTAL LAWS: All Laws governing the use, storage, disposal or generation
of any Hazardous Material, including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended, and
the Resource Conservation and Recovery Act of 1976, as amended.

EXPIRATION DATE: The date specified in Section 1.1(7).

FORCE MAJEURE: Any accident, casualty, act of God, war or civil commotion,
strike or labor troubles, or any cause whatsoever beyond the reasonable control
of Landlord or Tenant (excluding either such party’s financial inability),
including water shortages, energy shortages or governmental preemption in
connection with an act of God, a national emergency, or by reason of Law, or by
reason of the conditions of supply and demand which have been or are affected by
act of God, war or other emergency. Any prevention, delay, or stoppage due to
any Force Majeure event shall excuse the performance of the party affected for a
period of time equal to any such prevention, delay, or stoppage.

HAZARDOUS MATERIAL: Such substances, material and wastes which are or become
regulated under any Environmental Law; or which are classified as hazardous or
toxic under any Environmental Law; and explosives and firearms, radioactive
material, asbestos, polychlorinated biphenyls, and petroleum products.

INDEMNITEES: Collectively, Landlord, any Mortgagee or ground lessor of the
Property, the property manager and the leasing manager for the Property and
their respective partners, members, directors, officers, agents and employees.

LAND: The parcel(s) of real estate on which the Building and Project are
located.

LANDLORD WORK: The construction or installation of improvements to the Premises
and the Project to be furnished by Landlord, as specifically described in the
Workletter or exhibits attached hereto.

LAWS OR LAW: All laws, ordinances, rules, regulations, other requirements,
orders, rulings or decisions adopted or made by any governmental body, agency,
department or judicial authority having jurisdiction over the Property, the
Premises or Tenant’s activities at the Premises and any covenants, conditions or
restrictions of record which affect the Property.

LEASE: This instrument and all exhibits and riders attached hereto, as may be
amended from time to time.

MONTHLY BASE RENT: The monthly base rent specified in Section 1.1(8).

MORTGAGEE: Any holder of a mortgage, deed of trust or other security instrument
encumbering the Property.

 

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NATIONAL HOLIDAYS: New Year’s Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day and other holidays recognized by Landlord and
the janitorial and other unions servicing the Building in accordance with their
contracts.

OPERATING EXPENSES: All costs, expenses and disbursements of every kind and
nature, which Landlord shall pay in connection with the ownership, management,
operation, maintenance, replacement and repair of the Building and the Project
(including, without limitation, property management fees, costs and expenses,
and the amortized portion of any capital expenditure or improvement, together
with interest thereon, and the costs of changing utility service providers). In
no event shall the annual property management fees for the Building exceed an
amount equal to four and one-half percent (4.5%) of gross receipts. Operating
Expenses shall not include:

 

  (i) costs of alterations of the premises of tenants of the Project, except
where such costs are necessitated by the acts or omissions of Tenant or its
employees, servants, agents, contractors, customers, or invitees,

 

  (ii) costs of capital improvements to the Project (except for amortized
portion calculated on a straight-line basis calculated over the useful life of
the capital expenditure or improvement as reasonably determined by Landlord of
capital improvements installed for the purpose of reducing or controlling
Operating Expenses or complying with applicable Laws, but only to the extent
that the actual annual cost savings realized do not redound primarily to the
benefit of any particular Building tenant),

 

  (iii) depreciation charges or expenses reserves,

 

  (iv) interest and principal payments on loans (except for loans for capital
improvements which Landlord is allowed to include in Operating Expenses as
provided above),

 

  (v) ground rental payments,

 

  (vi) real estate brokerage and leasing commissions,

 

  (vii) advertising and marketing expenses,

 

  (viii) costs of Landlord reimbursed by insurance proceeds,

 

  (ix) expenses incurred in negotiating leases of tenants in the Project,
enforcing lease obligations of tenants in the Project, or providing additional
services to particular tenants in the Project,

 

  (x) Landlord’s general corporate overhead,

 

  (xi) costs occasioned by the wrongful act, wrongful omission or violation of
any Law by Landlord or its agents, employees or contractors,

 

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  (xii) costs to correct any construction defect in the Premises or the Building
or to comply with any Law applicable to the Premises or the Project as of the
Commencement Date,

 

  (xiii) costs relating to the presence of any Hazardous Material at or in the
Building or Project prior to the Commencement Date (except to the extent caused
by the release of the Hazardous Material by Tenant or Tenant’s agents,
employees, contractors or invitees), and provided that with respect to the
presence of any Hazardous Material at or in the Building or Project on or after
the Commencement Date, except to the extent caused by the release of the
Hazardous Material by Tenant or Tenant’s agents, employees, contractors or
invitees, Tenant’s Share of such costs shall not exceed $10,000 in any given
calendar year; and

 

  (xiv) compensation for any officer of Landlord or for any management employee
not stationed at the Project on a full-time basis or any compensation retained
by Landlord or its Affiliates for the management or administration of the
Project in excess of the property management fees applicable to the Project.

Notwithstanding anything contained herein to the contrary, in the event any
facilities, services, or utilities used in connection with the Building are
provided from another building in the Project or another building owned or
operated by Landlord or a Landlord Affiliate, or vice versa, the costs incurred
by Landlord in connection therewith shall be allocated to Operating Expenses by
Landlord on a reasonably equitable basis.

PREMISES: The space located in the Building at the Suite Number listed in
Section 1.1(11) and depicted on Exhibit A attached hereto.

PROJECT or PROPERTY: The Project consists of the Building, the building located
at 503 Canal Boulevard, associated surface parking as designated by Landlord
from time to time, landscaping and improvements, together with the Land, any
associated interests in real property, and the personal property, fixtures,
machinery, equipment, systems and apparatus owned by Landlord located in and
used in conjunction with any of the foregoing. The Project may also be referred
to as the Property.

REAL PROPERTY: The Property excluding any personal property.

RENT: Collectively, Monthly Base Rent, Rent Adjustments and Rent Adjustment
Deposits, and all other charges, payments, late fees or other amounts required
to be paid by Tenant to Landlord under this Lease.

RENT ADJUSTMENT: Any amounts owed by Tenant for payment of Operating Expenses or
Taxes. The Rent Adjustments shall be determined and paid as provided in Article
Four.

RENT ADJUSTMENT DEPOSIT: An amount equal to Landlord’s estimate of the Rent
Adjustment attributable to each month of the applicable calendar year (or
portion thereof). On or before the beginning of each calendar year during the
Term or with Landlord’s Statement

 

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(defined in Article Four), Landlord may estimate and notify Tenant in writing of
its estimate of the amount of Operating Expenses and Taxes payable by Tenant for
such year or applicable portion. Prior to the first determination by Landlord of
the amount of Operating Expenses and Taxes for the first calendar year of the
Term, Landlord may estimate such amounts in the foregoing calculation. The last
estimate by Landlord shall remain in effect as the applicable Rent Adjustment
Deposit unless and until Landlord notifies Tenant in writing of a change, which
notice may be given by Landlord from time to time during any calendar year of
the Term.

RENTABLE AREA OF THE PREMISES: The amount of square footage set forth in
Section 1.1(9).

RENTABLE AREA OF THE PROJECT: The amount of square footage which represents the
sum of the rentable area of all space intended for occupancy in the Project, as
determined by Landlord from time to time; and Landlord shall notify Tenant of
any adjustments in such rentable area and any corresponding change in Tenant’s
Share.

SECURITY DEPOSIT: The funds specified in Section 1.1(10), deposited by Tenant
with Landlord as security for Tenant’s performance of its obligations under this
Lease.

SUBSTANTIALLY COMPLETE or SUBSTANTIAL COMPLETION: The completion of the Landlord
Work or any work required under this Lease, as the case may be, in accordance
with applicable Laws and any plans and specifications for such work (i.e., the
Workletter) approved by the other party, except for minor insubstantial details
of construction, decoration or mechanical adjustments which remain to be done.

TAXES: All federal, state and local governmental taxes, assessments and charges
of every kind or nature, whether general, special, ordinary or extraordinary,
which Landlord shall pay or become obligated to pay because of or in connection
with the ownership, leasing, management, control or operation of the Property or
any of its components (including any personal property used in connection
therewith), which may also include any rental or similar taxes levied in lieu of
or in addition to general real and/or personal property taxes. For purposes
hereof, Taxes for any year shall be Taxes which are assessed for any period of
such year, whether or not such Taxes are billed and payable in a subsequent
calendar year. There shall be included in Taxes for any year the amount of all
fees, costs and expenses (including reasonable attorneys’ fees) paid by Landlord
during such year in seeking or obtaining any refund or reduction of Taxes. Taxes
for any year shall be reduced by the net amount of any tax refund received by
Landlord attributable to such year. If a special assessment payable in
installments is levied against any part of the Property, Taxes for any year
shall include only the installment of such assessment and any interest payable
during such year as if such assessment were payable over the longest possible
term. Taxes shall not include any franchise, capital stock, federal or state
inheritance, general or net income, or gift or estate taxes, except that if a
change occurs in the method of taxation resulting in whole or in part in the
substitution of any such taxes, or any other assessment, for any Taxes as above
defined, such substituted taxes or assessments shall be included in the Taxes.
Taxes shall also exclude any tax or assessment imposed on land or improvements
other than the Property.

TENANT ADDITIONS: Collectively, Landlord Work and Tenant Alterations.

 

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TENANT ALTERATIONS: Any alterations, improvements, additions, installations or
construction in or to the Premises or any Building systems serving the Premises
(excluding any Landlord Work); and any supplementary air-conditioning systems
installed by Landlord or by Tenant at Landlord’s request pursuant to
Section 6.1(b).

TENANT DELAY: Any event or occurrence that delays the completion of any
improvement work required hereunder (including the Landlord Work) which is
caused by the following, but only to the extent that Substantial Completion of
such work is actually delayed solely as a result thereof:

 

  (1) special work, changes, alterations or additions requested or made by
Tenant in the design or finish in any part of the Premises after Tenant’s
initial approval;

 

  (2) Tenant’s delay in submitting plans, supplying information, approving
plans, specifications or estimates, giving authorizations or otherwise beyond
the times provided in this Lease;

 

  (3) failure to pay the costs for any work as Landlord undertakes to complete,
to the extent Tenant is responsible for the costs of such work pursuant to this
Lease;

 

  (4) the performance or completion by Tenant or any person engaged by Tenant of
any work in or about the Premises; or

 

  (5) failure to perform or comply with any obligation or condition binding upon
Tenant pursuant to this Lease.

TENANT WORK: None.

TENANT’S SHARE: The percentage that represents the ratio of the Rentable Area of
the Premises to the Rentable Area of the Building/Project, as determined by
Landlord from time to time. Tenant’s Share of the Building as of the
Commencement Date is stipulated to be 15.01%. Tenant’s Share of the Project as
of the Commencement Date is stipulated to be 9.6%.

TERM: The term of this Lease commencing on the Commencement Date and expiring on
the Expiration Date.

TERMINATION DATE: The Expiration Date or such earlier date as this Lease
terminates or Tenant’s right to possession of the Premises terminates.

WORKLETTER: The Agreement describing the Landlord Work set forth on Exhibit B
attached hereto.

 

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ARTICLE 2

PREMISES, TERM, FAILURE TO GIVE POSSESSION, PARKING, EXTENSION OPTION,

ACCELERATION OPTION, AVAILABLE SPACE, AND EXPANSION

2.1 LEASE OF PREMISES

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the
Premises for the Term and upon the terms, covenants and conditions provided in
this Lease. In the event Landlord delivers possession of the Premises to Tenant
prior to the Commencement Date, Tenant shall be subject to all of the terms,
covenants and conditions of this Lease (except with respect to the payment of
Rent) as of the date of such possession.

2.2 TERM

 

  (a) The Commencement Date shall be the date specified in Section 1.1(6) of the
Basic Lease Provisions, and the Expiration Date shall be the date specified in
Section 1.1(7) of the Basic Lease Provisions.

 

  (b) Subject to the terms and conditions of this Lease including, without
limitation, Article 9, and provided Landlord has received the Security Deposit,
the first installment of Monthly Base Rent, and all evidence of insurance
reasonably required by Landlord, Tenant shall be allowed access into the
Premises from and after the full execution and delivery of this Lease, at
Tenant’s sole risk, solely for the purpose of (i) installing furniture,
equipment and telecommunications and data cabling in the Premises and
(ii) storing documents and equipment in the Premises. Landlord may withdraw such
permission to enter the Premises prior to the Commencement Date at any time that
Landlord reasonably determines that such entry by Tenant is causing a dangerous
situation for Landlord, Tenant or their respective contractors or employees.
Such early entry shall be subject to all the terms and provisions of this Lease,
except that Tenant shall have no obligation to pay Monthly Base Rent, Rent
Adjustments, Rent Adjustment Deposits or other charges during such early access
period unless Tenant commences business operations in the Premises during such
early access period.

2.3 CONDITION OF PREMISES

Tenant shall notify Landlord in writing within sixty (60) days after the
Substantial Completion of the Landlord Work of any defects in the Premises
claimed by Tenant or in the materials or workmanship furnished by Landlord in
completing the Landlord Work. Except for defects stated in such notice, Tenant
shall be conclusively deemed to have accepted the Premises “AS IS” in the
condition existing on the date Tenant first takes possession. Landlord shall
proceed diligently to correct the defects stated in such notice unless Landlord
disputes the existence of any such defects. In the event of any dispute as to
the existence of any such defects, the decision of Landlord’s architect shall be
final and binding on the parties. No agreement of Landlord to alter, remodel,
decorate, clean or improve the Premises or the Real Property and no
representation regarding the condition of the Premises or the Real Property has
been made by or

 

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on behalf of Landlord to Tenant, except as may be specifically stated in this
Lease or the Workletter. As of the Commencement Date, Landlord warrants and
represents that, to Landlord’s actual knowledge (i) the Premises, Building and
the Project will comply with all applicable Laws, (ii) the Premises will be in
good and clean operating condition and repair, (iii) the electrical, mechanical,
HVAC, plumbing, sewer, elevator and other systems serving the Premises and
Building will be in good operating condition and repair, and (iv) the roof of
the Building will be in good condition and water tight. Notwithstanding the
foregoing, Landlord, upon the receipt of evidence reasonably satisfactory to
Landlord, shall reimburse the costs and expenses (in an amount not to exceed
$15,000) (the “Cabling Allowance”) incurred by Tenant to connect Tenant’s
network serving the Premises with Tenant’s network serving the space that Tenant
leases from Landlord’s Affiliate, located at 1003 West Cutting Boulevard,
Richmond, California. Landlord hereby authorizes Tenant to perform all work
reasonably required by Tenant (including, without limitation, during the early
access period set forth in Section 2.2(b) above, subject to the terms and
conditions therein) to connect Tenant’s networks and grants Tenant reasonable
rights to access and use the existing conduit serving the Premises and the PRI
Premises (as hereinafter defined) for such purpose.

2.4 PARKING

During the Term, Tenant may use the number of spaces specified in
Section 1.1(13) for parking free of charge, without regard to parking rates
charged or discounts provided to any other occupants of the Building or Project.
The locations and type of parking shall be designated by Landlord or Landlord’s
parking operator from time to time. Tenant acknowledges and agrees that the
parking spaces serving the Project may include valet parking (at no additional
cost to Tenant) and a mixture of spaces for compact vehicles as well as
full-size passenger automobiles, and that Tenant shall not use parking spaces
for vehicles larger than the striped size of the parking spaces. As of the date
of this Lease, the parking spaces serving the Project do not include valet
parking. All vehicles utilizing Tenant’s parking privileges shall prominently
display identification stickers or other markers, and/or have passes or keycards
for ingress and egress, as may be required and provided by Landlord or its
parking operator from time to time. Tenant shall comply with any and all
reasonable parking rules and regulations from time to time established by
Landlord or Landlord’s parking operator, including a requirement that Tenant pay
to Landlord or Landlord’s parking operator a charge for loss and replacement of
passes, keycards, identification stickers or markers, and for any and all loss
or other damage caused by persons or vehicles related to use of Tenant’s parking
privileges. Tenant shall not allow any vehicles using Tenant’s parking
privileges to be parked, loaded or unloaded except in accordance with this
Section, including in the areas and in the manner designated by Landlord or its
parking operator for such activities. If any vehicle is using the parking or
loading areas contrary to any provision of this Section, Landlord or its parking
operator shall have the right, in addition to all other rights and remedies of
Landlord under this Lease, to remove or tow away the vehicle on not less than
forty-eight (48) hours’ after posting a notice on such vehicle, and the cost
thereof shall be paid to Landlord within ten (10) days after notice from
Landlord to Tenant. Notwithstanding the foregoing, Landlord agrees to stripe,
label and install pole signage for five (5) non-handicapped parking spaces near
the main Building lobby immediately outside the Building’s front door as spaces
shown on Exhibit D attached hereto (“Visitor Spaces”) exclusively for “Transcept
Visitors”. Landlord shall use reasonable efforts to enforce Tenant’s exclusive
use of the Visitor Spaces.

 

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2.5 EXTENSION OPTION

 

  (a) Landlord hereby grants Tenant an option to extend the Term (“Extension
Option”) for one (1) additional period of five (5) years (“Option Term”),
commencing immediately after the expiration of the Term. The Extension Option
shall be upon the terms and conditions contained in this Lease, except that the
initial Monthly Base Rent for the Premises during the Option Term shall be equal
to 95% of the “fair market rent” for the Premises as of the commencement of the
Option Term (i.e., the rate that a willing, comparable, new (i.e., non-renewal),
non-equity tenant would pay, and that a willing landlord of comparable office
space in Point Richmond, California would accept at arms’ length), determined in
the manner set forth in subparagraph 2.5(b) below. Notwithstanding anything to
the contrary contained herein, in no event shall the Monthly Base Rent payable
(on a per square foot basis) by Tenant during the Option Term be less than the
Monthly Base Rent payable (on a per square foot basis) by Tenant as of the last
month of the initial Term. The fair market rent shall not take into account any
Tenant Additions paid for by Tenant without reimbursement from Landlord.
Tenant’s election to exercise the Extension Option (“Tenant’s Extension Notice”)
must be given to Landlord in writing not less than nine (9) months prior to the
scheduled Expiration Date. Notwithstanding anything to the contrary contained
herein, the Extension Option exercised by Tenant shall, at Landlord’s option, be
null and void and of no further force or effect if Tenant is in Default under
this Lease as of the date of Tenant’s Extension Notice.

 

  (b) If Tenant properly exercises the Extension Option, the initial Monthly
Base Rent during the Option Term shall be determined in the following manner.
Landlord shall advise Tenant in writing of Landlord’s good faith, reasonable
determination of the fair market rent (based on the definition of fair market
rental set forth above) for the Premises as of the commencement of the Option
Term (“Landlord’s Fair Market Proposal”) no less than ninety (90) days prior to
the commencement of the Option Term, provided Landlord’s notification to Tenant
of Landlord’s Fair Market Proposal shall specifically state that Tenant shall
have fifteen (15) days after receipt of Landlord’s Fair Market Proposal within
which to approve or disapprove Landlord’s Fair Market Proposal. If Tenant does
not disapprove in writing Landlord’s Fair Market Proposal within fifteen
(15) days after receipt of Landlord’s Fair Market Proposal, Landlord’s Fair
Market Proposal shall be deemed disapproved. In the event Tenant disapproves in
writing (or is deemed to have disapproved) Landlord’s Fair Market Proposal,
Landlord and Tenant shall attempt in good faith to agree upon the fair market
rent within twenty (20) days of Tenant’s notice of or deemed disapproval. If
after such twenty (20) day period, Landlord and Tenant have not agreed in
writing as to the fair market rent, the parties shall determine the fair market
rent in accordance with the procedure set forth below.

 

  (i)

Within five (5) days after the expiration of such twenty (20) day period, Tenant
shall notify Landlord of the name and address of the broker appointed to
represent Tenant (“Tenant’s Broker”). Tenant’s Broker shall

 

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be licensed in the State of California, engaged in the brokerage business in the
San Francisco-East Bay commercial real estate market for at least the
immediately preceding five (5) years, and familiar with the office market in the
cities of Richmond, Berkeley and Emeryville, California. Within ten (10) days of
the appointment of Tenant’s Broker’s, Tenant shall advise Landlord in writing of
Tenant’s Broker’s good faith, reasonable determination of the fair market rent
for the Premises as of the commencement of the Option Term (“Tenant’s Broker’s
Fair Market Proposal”). Landlord shall have ten (10) days after receipt of
Tenant’s Broker’s Fair Market Proposal within which to approve or disapprove
Tenant’s Broker’s Fair Market Proposal. In the event Landlord disapproves in
writing Tenant’s Broker’s Fair Market Proposal, Landlord and Tenant shall
attempt in good faith to agree upon the fair market rent within ten (10) days of
Landlord’s notice of disapproval. If after such ten (10) day period, Landlord
and Tenant have not agreed in writing as to the fair market rent, the parties
shall determine the fair market rent in accordance with the procedure set forth
below.

 

  (ii) If Landlord and Tenant are unable to agree upon the fair market rent
within such ten (10) day period, Landlord and Tenant shall, within five (5) days
thereafter, appoint a second broker meeting the qualifications set forth above
with the added qualification that such second broker shall not have previously
acted for either Landlord or Tenant. Within five (5) days following the
appointment of the second broker, the second broker shall deliver his or her
written determination of the fair market rent to Landlord and Tenant. If the
second broker’s determination of fair market rent falls between Landlord’s Fair
Market Proposal and Tenant’s Broker’s Fair Market Proposal, the second broker’s
determination shall be deemed to be the fair market rent for purposes of
determining the initial Monthly Base Rent for the Premises for the Option Term.
If the second broker’s determination falls outside of Landlord’s Fair Market
Proposal and Tenant’s Broker’s Fair Market Proposal, whichever of Landlord’s
Fair Market Proposal and Tenant’s Broker’s Fair Market Proposal most closely
reflects the fair market rent as determined by the second broker shall be deemed
to be the fair market rent for purposes of determining the initial Monthly Base
Rent for the Premises for the Option Term, and such determination shall be
binding on both Landlord and Tenant. Tenant shall pay all costs, commissions and
fees of Tenant’s Broker in connection with such determination of the fair market
rent. The costs and fees of the second broker shall be paid one-half by Landlord
and one-half by Tenant.

 

  (c) If the amount of the fair market rent has not been determined in
accordance with this Section 2.5 as of the commencement of the Option Term, then
Tenant shall continue to pay the Monthly Base Rent in effect during the last
month of the initial Term, until the amount of the fair market rent is
determined. When such determination is made, Tenant shall pay any deficiency to
Landlord within twenty (20) days after such determination.

 

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  (d) The Monthly Base Rent payable hereunder during the Option Term shall be
increased by three percent (3%) on each anniversary of the commencement date of
the Option Term.

2.6 ACCELERATION OPTION

 

  (a) Tenant shall have the right, in Tenant’s sole discretion, to accelerate
the Termination Date (“Acceleration Option”) of the Lease, with respect to the
entire Premises only, to May 31, 2011 (the “Accelerated Termination Date”), if:

 

  (i) Tenant is not in Default under the Lease at the date Tenant provides
Landlord with an Acceleration Notice (defined below); and

 

  (ii) Landlord receives notice of acceleration (“Acceleration Notice”) by no
later than August 31, 2010.

 

  (b) If Tenant exercises its Acceleration Option, Tenant, within twenty
(20) days of the delivery of Landlord’s statement of the Acceleration Fee, shall
pay to Landlord an amount equal to the unamortized portion of any broker
commissions, incurred or provided by Landlord in connection with this Lease
(collectively, the “Acceleration Fee”). Within ninety (90) days of the
Commencement Date, and the commencement date for any additional space leased by
Tenant hereunder, as the case may be, Landlord shall provide Tenant with a
statement setting forth the amount and calculation of the Acceleration Fee
(including reasonable back up documentation). Tenant shall remain liable for all
Monthly Base Rent, additional Rent and other sums due under this Lease up to and
including the Accelerated Termination Date even though billings for such may
occur subsequent to the Accelerated Termination Date. The “unamortized portion”
of any broker commissions shall be determined on a straight-line basis over the
initial Term.

 

  (c) If Tenant defaults in the payment of the Acceleration Fee, Landlord, at
its option, may, by written notice to Tenant within fifteen (15) days after such
default, (1) declare Tenant’s exercise of the Acceleration Option in that
instance only to be null and void, and immediately so notify Tenant in writing,
or (2) continue to honor Tenant’s exercise of its Acceleration Option, in which
case, Tenant shall remain liable for the payment of the Acceleration Fee and all
Monthly Base Rent, additional Rent and other sums due under the Lease up to and
including the Accelerated Termination Date even though billings for such may
occur subsequent to the Accelerated Termination Date. If Landlord fails to
notify Tenant of such election within such fifteen (15)-day period, Landlord
shall be deemed to have elected clause (2) above.

 

  (d) As of the date Tenant provides Landlord with an Acceleration Notice that
is honored by Landlord, any unexercised rights or options of Tenant to extend
the Term or expand the Premises shall immediately be deemed terminated and of no
further force or effect.

 

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2.7 AVAILABLE SPACE

Prior to Landlord leasing space in the Project (“Available Space”) to a proposed
third party tenant during the Term, Landlord shall first notify Tenant in
writing of such Available Space and meet and confer with Tenant for not less
than fifteen (15) days to discuss any interest Tenant may have in leasing the
Available Space. Landlord shall have no obligation to (i) disclose to Tenant any
term in connection with the proposed lease of the Available Premises,
(ii) disclose to Tenant the proposed third party tenant, or (iii) lease the
Available Space to Tenant following any discussion with Tenant. After providing
notice to Tenant pursuant to this Section 2.7, Landlord may, in its sole and
absolute discretion, elect to lease the Available Space to the third party
tenant. Nothing in this Section 2.7 shall be deemed a right of first offer or a
right of first refusal.

2.8 EXPANSION

 

  (a) Point Richmond R&D Associates, a California limited partnership (“PRA I”),
as landlord, and Tenant, as tenant, are parties to that certain Lease dated as
of February 22, 2006 (as amended, the “PRI Lease”), pursuant to which Tenant
leases from PRA I, an affiliate of Landlord, the premises commonly known as
Suites 110 and 130 (the “PRI Premises”) on the ground floor of the building
located at 1003 West Cutting Boulevard, Richmond, California. Pursuant to the
PRI Lease, Tenant holds an option to expand (the “PRI Expansion Option”) into
space consisting of at least 5,000 rentable square feet of area more than the
aggregate of the Rentable Area of the Premises and the rentable area of the PRI
Premises (the “Aggregate Premises”).

 

  (b) If PRA I (or its Affiliate) and Tenant have not agreed upon suitable space
for Tenant (in Tenant’s sole opinion) within six (6) months following Tenant’s
exercise of the PRI Expansion Option, Tenant shall have the right to terminate
this Lease by providing Landlord one hundred eighty (180) days prior notice
specifying the unequivocal termination of this Lease, and provided further that
Tenant provide such termination notice within thirty (30) days of the expiration
of such six-month period.

 

  (c) If Tenant properly exercises its PRI Expansion Right, and PRA I (or its
Affiliate) and Tenant are able to agree on a space suitable for Tenant in
accordance with the PRI Lease (the “Expansion Space”), as evidenced by the
execution and delivery of the Expansion Amendment (as defined in the PRI Lease),
Tenant shall have the right to terminate this Lease as of the commencement date
of the term for the Expansion Space by delivering written notice to Landlord
within thirty (30) days following the date of the Expansion Amendment (as
defined in the PRI Lease). If Tenant fails to timely deliver such termination
notice, Tenant shall be deemed to have elected to continue this Lease, and this
Lease will remain in full force and effect.

 

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ARTICLE 3

RENT

Tenant agrees to pay to Landlord at the address specified in Section 1.1(2), or
to such other persons, or at such other places designated by Landlord, without
any prior demand therefor and without any deduction or offset whatsoever, Rent,
including Monthly Base Rent and Rent Adjustments in accordance with Article
Four, during the Term. Monthly Base Rent shall be paid monthly in advance on the
first day of each month of the Term, except that the installment of Monthly Base
Rent for the first full month of the Term shall be paid by Tenant to Landlord
concurrently with Tenant’s execution of this Lease. Monthly Base Rent shall be
prorated for partial months within the Term. Unpaid Rent shall bear interest at
the Default Rate from the date due until paid. Tenant’s covenant to pay Rent
shall be independent of every other covenant in this Lease.

ARTICLE 4

RENT ADJUSTMENTS AND PAYMENTS

4.1 RENT ADJUSTMENTS

Tenant shall pay to Landlord Rent Adjustments with respect to each calendar year
(or partial calendar year) as follows:

 

  (a) The Rent Adjustment Deposit representing Tenant’s Share of Operating
Expenses for the applicable calendar year (or partial calendar year), monthly
during the Term with the payment of Monthly Base Rent; and

 

  (b) The Rent Adjustment Deposit representing Tenant’s Share of Taxes for the
applicable calendar year (or partial calendar year), monthly during the Term
with the payment of Monthly Base Rent; and

 

  (c) Any Rent Adjustments due in excess of the Rent Adjustment Deposits in
accordance with Section 4.2. Rent Adjustments due from Tenant to Landlord for
any calendar year (or partial calendar year) shall be Tenant’s Share of
Operating Expenses for such year and Tenant’s Share of Taxes for such year.

 

  (d) Landlord shall reasonably allocate Operating Expenses and Taxes to the
Building or Project as reasonably appropriate and Tenant’s Share of Operating
Expenses and Taxes shall be applied with respect to the Building or Project, as
reasonably appropriate.

4.2 STATEMENT OF LANDLORD

As soon as practicable after the expiration of each calendar year, Landlord will
furnish to Tenant a statement (“Landlord’s Statement”) showing the following:

 

  (a) Actual Operating Expenses and Taxes for the calendar year;

 

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  (b) The amount of Rent Adjustments due Landlord for the last calendar year (or
partial calendar year), less other amounts paid, if any; and

 

  (c) Any change in the Rent Adjustment Deposit due monthly in the current
calendar year, including the amount or revised amount due for months preceding
any such change pursuant to Landlord’s Statement.

Tenant shall pay to Landlord within thirty (30) days after receipt of such
statement any amounts for Rent Adjustments then due in accordance with
Landlord’s Statement. Any amounts due from Landlord to Tenant pursuant to this
Section shall be credited to the Rent next coming due, or refunded to Tenant if
the Term has already expired provided Tenant is not in Default hereunder and no
further Rent is due. No interest or penalties shall accrue on any amounts that
Landlord is obligated to credit or refund to Tenant by reason of this
Section 4.2. Landlord’s failure to deliver Landlord’s Statement or to compute
the amount of the Rent Adjustments shall not constitute a waiver by Landlord of
its right to deliver such items nor constitute a waiver or release of Tenant’s
obligations to pay such amounts. The Rent Adjustment Deposit shall be credited
against Rent Adjustments due for the applicable calendar year. During the last
complete calendar year or during any partial calendar year in which the Lease
terminates, Landlord may include in the Rent Adjustment Deposit its reasonable
estimate of Rent Adjustments which may not be finally determined until after the
termination of this Lease. Tenant’s obligation to pay Rent Adjustments survives
the expiration or termination of the Lease.

4.3 BOOKS AND RECORDS

Landlord shall maintain books and records showing Operating Expenses and Taxes
in accordance with generally accepted accounting principles, consistently
applied. Tenant or its representative(s) (which representative(s) shall be
experienced in reviewing building operating expenses not be paid on a
contingency basis) shall have the right, for a period of ninety (90) days
following the date upon which Landlord’s Statement is delivered to Tenant, to
examine Landlord’s books and records with respect to the items in the foregoing
statement of Operating Expenses and Taxes during Landlord’s normal business
hours, upon written notice, delivered at least three (3) business days in
advance (a “Tenant Review”). If Tenant does not object in writing to Landlord’s
Statement within ninety (90) days of Tenant’s receipt thereof, specifying the
nature of the item in dispute and the reasons therefor, then Landlord’s
Statement shall be considered final and accepted by Tenant. If Tenant does
dispute any Landlord’s Statement (or supplemental Landlord’s Statement), Tenant
shall deliver a copy of any such audit to Landlord at the time of notification
of the dispute. If Tenant does not provide such notice of dispute and a copy of
such audit to Landlord within such ninety day (90) day period, it shall be
deemed to have waived such right to dispute Landlord’s Statement. Any amount due
to the Landlord as shown on Landlord’s Statement, whether or not disputed by
Tenant as provided herein shall be paid by Tenant when due as provided above,
without prejudice to any such written exception. In no event shall Tenant be
permitted to examine Landlord’s books and records or to dispute any statement of
Operating Expenses unless Tenant has paid and continues to pay all Rent when
due. Upon resolution of any dispute with respect to Operating Expenses and
Taxes, Tenant, at its election, shall either pay Landlord any shortfall or
Landlord shall credit Tenant with respect to any overages paid by Tenant. The
records obtained by Tenant shall be treated as confidential and neither Tenant
nor any of its representatives or agents shall disclose or discuss the
information

 

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set forth in the audit to or with any other person or entity, except in
connection with any dispute resolution or other legal proceeding and except such
disclosures as may be necessary to Tenant’s attorneys, accountants, and other
professional advisors, provided that the disclosing party ensures that such
attorneys, accountants and prospective advisors maintain the confidentiality of
such terms (“Confidentiality Requirement”).

4.4 TENANT OR LEASE SPECIFIC TAXES

In addition to Monthly Base Rent, Rent Adjustments, Rent Adjustment Deposits and
other charges to be paid by Tenant, Tenant shall pay to Landlord, upon demand,
any and all taxes payable by Landlord (other than federal or state inheritance,
general income, gift or estate taxes) whether or not now customary or within the
contemplation of the parties hereto: (a) upon, allocable to, or measured by the
Rent payable hereunder, including any gross receipts tax or excise tax levied by
any governmental or taxing body with respect to the receipt of such Rent; or
(b) upon or with respect to the possession, leasing, operation, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises or
any portion thereof; or (c) upon the measured value of Tenant’s personal
property located in the Premises or in any storeroom or any other place in the
Premises or the Property, or the areas used in connection with the operation of
the Property, it being the intention of Landlord and Tenant that, to the extent
possible, such personal property taxes shall be billed to and paid directly by
Tenant; or (d) resulting from Tenant Alterations to the Premises, whether title
thereto is in Landlord or Tenant; or (e) upon this transaction. Taxes paid by
Tenant pursuant to this Section 4.5 shall not be included in any computation of
Taxes payable pursuant to Sections 4.1 and 4.2.

ARTICLE 5

SECURITY DEPOSIT

Concurrently with the execution of this Lease, Tenant shall pay to Landlord the
Security Deposit. The Security Deposit may be applied by Landlord to cure, in
whole or part, any default of Tenant under this Lease (after applicable notice
and cure periods), and upon notice by Landlord of such application, Tenant shall
replenish the Security Deposit in full by paying to Landlord within ten
(10) days of demand the amount so applied. Landlord’s application of the
Security Deposit shall not constitute a waiver of Tenant’s default to the extent
that the Security Deposit does not fully compensate Landlord for all losses,
damages, costs and expenses incurred by Landlord in connection with such default
and shall not prejudice any other rights or remedies available to Landlord under
this Lease or by Law. Landlord shall not pay any interest on the Security
Deposit. Landlord shall not be required to keep the Security Deposit separate
from its general accounts. The Security Deposit shall not be deemed an advance
payment of Rent or a measure of damages for any default by Tenant under this
Lease, nor shall it be a bar or defense of any action that Landlord may at any
time commence against Tenant. In the absence of evidence satisfactory to
Landlord of an assignment of the right to receive the Security Deposit or the
remaining balance thereof, Landlord may return the Security Deposit to the
original Tenant, regardless of one or more assignments of this Lease. Upon the
transfer of Landlord’s interest under this Lease, Landlord’s obligation to
Tenant with respect to the Security Deposit shall terminate upon transfer to the
transferee of the Security Deposit, or any balance thereof. If Tenant shall
fully and faithfully comply with all the terms, provisions, covenants, and
conditions

 

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of this Lease, the Security Deposit, or any balance thereof, shall be returned
to Tenant within thirty (30) days after Landlord recovers possession of the
Premises. Tenant hereby waives any and all rights of Tenant under the provisions
of Section 1950.7 of the California Civil Code or other Law regarding security
deposits.

In lieu of the cash Security Deposit described above, Tenant shall have the
right to deliver the Security Deposit in the form an unconditional, irrevocable,
standby letter of credit (the “Letter of Credit”) in the amounts described
above, issued to Landlord, as beneficiary, by a bank reasonably approved by
Landlord, in which case the Letter of Credit shall serve as the Security Deposit
under this Lease. Tenant shall maintain the Letter of Credit for the entire
Term, provided that Tenant may at any time substitute a cash Security Deposit
for the Letter of Credit, and upon such substitution, Landlord shall return the
Letter of Credit to Tenant. The Letter of Credit shall provide that it will be
automatically renewed until sixty (60) days after the Expiration Date unless the
issuer provides Landlord with written notice of non-renewal at least sixty
(60) days prior to the expiration thereof. If, not later than thirty (30) days
prior to expiration of the Letter of Credit, Tenant fails to furnish Landlord
with a replacement Letter of Credit, Landlord shall have the right to draw the
full amount of the Letter of Credit, in which event Landlord shall hold the
proceeds of the Letter of Credit as a cash Security Deposit under this Lease.
Except as set forth in the preceding sentence, Landlord shall only draw upon the
Letter of Credit while a Default by Tenant exists and only to the extent
required to cure such Default. If Landlord draws upon the Letter of Credit
solely due to Tenant’s failure to renew the Letter of Credit at least thirty
(30) days before its expiration, then (i) such failure to renew shall not
constitute a default hereunder, and (ii) Tenant shall at any time thereafter be
entitled to provide Landlord with a replacement Letter of Credit that satisfies
the requirements of this paragraph, at which time Landlord shall return the cash
proceeds of the original Letter of Credit drawn by Landlord.

ARTICLE 6

SERVICES

6.1 LANDLORD’S GENERAL SERVICES

 

  (a) So long as the Lease is in full force and effect, Landlord shall furnish
the following, the cost of which shall be included in Operating Expenses or paid
directly by Tenant to the utility or service provider:

 

  (i) heat, ventilation and air-conditioning (“HVAC”) in the Premises and the
Common Areas;

 

  (ii) tempered and cold water for use in lavatories in common with other
tenants from the regular supply of the Building;

 

  (iii) customary utilities, landscaping and cleaning services in the Common
Areas; and

 

  (iv) washing of the outside windows in the Premises weather permitting at
intervals determined by Landlord.

 

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  (b) If Tenant uses heat generating machines or equipment in the Premises to an
extent which adversely affects the temperature otherwise maintained by the
air-cooling system or whenever the occupancy or electrical load adversely
affects the temperature otherwise maintained by the air-cooling system, Landlord
reserves the right to install or to require Tenant to install supplementary
air-conditioning units in the Premises. Tenant shall bear all costs and expenses
related to the installation, maintenance and operation of such units.
Notwithstanding the foregoing or anything to the contrary in this Lease,
Landlord acknowledges that Tenant may require additional HVAC for the server
room in the Premises. Landlord shall cooperate reasonably with Tenant to provide
such HVAC service with the existing facilities located at the Building.

 

  (c) Landlord shall provide HVAC as reasonably required for Tenant’s permitted
use for the comfortable occupancy and operation of the Premises during normal
business hours (i.e., 8:00 a.m. to 8:00 p.m. Monday through Friday). Landlord
shall also furnish such water for use in the employee break room at the
Premises. Landlord shall furnish trash pick-up and recycling services consistent
with general office use at the Premises. Landlord shall provide Tenant with
access to the Premises twenty-four hours per day, seven days per week.

6.2 GAS AND ELECTRICAL SERVICES

 

  (a) The Premises are separately metered for gas and electricity, and Tenant
shall contract directly with the utility company for the use of gas and
electricity at the Premises. Electricity used by Tenant in the Premises shall be
paid for by Tenant directly to the utility company. Gas used by Tenant in the
Premises shall be paid for by Tenant directly to the utility company.
Notwithstanding any provision of the Lease to the contrary, without, in each
instance, the prior written approval of Landlord, in Landlord’s reasonable
business judgment, Tenant shall not: (i) make any alterations or additions to
the utility equipment or systems; or (ii) install or use or permit the
installation or use of any computer or electronic data processing equipment in
the Premises other than personal computers, laptop computers and ancillary
equipment consistent with Tenant’s permitted use. Tenant’s use of electric
current shall at no time exceed the capacity of the wiring, feeders and risers
providing electric current to the Premises or the Building. The consent of
Landlord to the installation of electric equipment shall not relieve Tenant from
the obligation to limit usage of electricity to no more than such capacity.

6.3 ADDITIONAL SERVICES

At Tenant’s request, Landlord shall furnish additional quantities of any of the
services specified in Section 6.1, if Landlord can reasonably do so, on the
terms set forth herein. Landlord and Tenant acknowledge Tenant shall provide its
request for weekend HVAC service during normal business hours. Landlord shall
use reasonable efforts to accommodate any requests by Tenant outside of normal
business hours. For services requested by Tenant and furnished by Landlord,
Tenant shall pay to Landlord as a charge therefor Landlord’s prevailing rates
charged from time to time for such services and utilities. If Tenant shall fail
to make any

 

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such payment (beyond applicable notice and cure periods), Landlord may, upon
notice to Tenant and in addition to Landlord’s other remedies under this Lease,
discontinue any of such additional services for which Tenant has not paid.

6.4 TELEPHONE SERVICES

All telephone, and communication connections which Tenant may desire shall be
subject to Landlord’s prior written approval, in Landlord’s reasonable
discretion, and the location of all wires and the work in connection therewith
shall be performed by contractors approved by Landlord and shall be subject to
the direction of Landlord, except that such approval is not required as to
Tenant’s telephone equipment (including cabling) within the Premises and from
the Premises in a route designated by Landlord to any telephone cabinet or panel
provided (as existing or as installed as part of Landlord Work, if any) on
Tenant’s floor for Tenant’s connection to the telephone cable serving the
Building so long as Tenant’s equipment does not require connections different
than or additional to those to the telephone cabinet or panel provided. Except
to the extent of such cabling within the Premises or from the Premises to such
telephone cabinet or panel, Landlord reserves the right to designate and control
the entity or entities providing telephone or other communication cable
installation, removal, repair and maintenance in the Building and to restrict
and control access to telephone cabinets or panels. In the event Landlord
designates a particular vendor or vendors to provide such cable installation,
removal, repair and maintenance for the Building, Tenant agrees to abide by and
participate in such program. Tenant shall be responsible for and shall pay all
costs incurred in connection with the installation of telephone cables and
communication wiring in the Premises, including any hook-up, access and
maintenance fees related to the installation of such wires and cables in the
Premises and the commencement of service therein, and the maintenance thereafter
of such wire and cables; and there shall be included in Operating Expenses for
the Building all reasonable installation, removal, hook-up or maintenance costs
incurred by Landlord in connection with telephone cables and communication
wiring serving the Building which are not allocable to any individual users of
such service but are allocable to the Building generally. If Tenant fails to
maintain all telephone cables and communication wiring in the Premises and such
failure affects or interferes with the operation or maintenance of any other
telephone cables or communication wiring serving the Building, Landlord or any
vendor hired by Landlord may enter into and upon the Premises forthwith and
perform such repairs, restorations or alterations as Landlord deems necessary in
order to eliminate any such interference (and Landlord may recover from Tenant
all of Landlord’s costs in connection therewith). If required by Landlord, no
later than the Termination Date Tenant shall remove all telephone cables and
communication wiring installed by Tenant for and during Tenant’s occupancy.
Tenant agrees that neither Landlord nor any of its agents, or employees,
contractors, or invitees shall be liable to Tenant, or any of Tenant’s
employees, agents, customers or invitees or anyone claiming through, by or under
Tenant, for any damages, injuries, losses, expenses, claims or causes of action
because of any interruption, diminution, delay or discontinuance at any time for
any reason in the furnishing of any telephone or other communication service to
the Premises and the Building.

6.5 DELAYS IN FURNISHING SERVICES

Tenant agrees that Landlord shall not be in breach of this Lease nor be liable
to Tenant for damages or otherwise, for any failure to furnish, or a delay in
furnishing, or a change in the

 

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quantity or character of any service when such failure, delay or change is
occasioned, in whole or in part, by repairs, improvements or mechanical
breakdowns by the act or default of Tenant or other parties or by an event of
Force Majeure. No such failure, delay or change (“Service Failure”) shall be
deemed to be an eviction or disturbance of Tenant’s use and possession of the
Premises, or relieve Tenant from paying Rent or from performing any other
obligations of Tenant under this Lease, without any deduction or offset. Failure
to any extent to make available, or any slowdown, stoppage, or interruption of,
the specified utility services resulting from any cause, including changes in
service provider or Landlord’s compliance with any voluntary or similar
governmental or business guidelines now or hereafter published or any
requirements now or hereafter established by any governmental agency, board, or
bureau having jurisdiction over the operation of the Property shall not render
Landlord liable in any respect for damages to either persons, property, or
business, nor be construed as an eviction of Tenant or work an abatement of
Rent, nor relieve Tenant of Tenant’s obligations for fulfillment of any covenant
or agreement hereof. Should any equipment or machinery furnished by Landlord
break down or for any cause cease to function properly, Landlord shall use
reasonable diligence to repair same promptly, but Tenant shall have no claim for
abatement of Rent or damages on account of any interruption of service
occasioned thereby or resulting therefrom. Notwithstanding the foregoing, if the
Premises, or a material portion of the Premises, are made untenantable for a
period in excess of three (3) consecutive business days as a result of a Service
Failure that is reasonably within the control of Landlord to correct, then
Tenant, as its sole remedy, shall be entitled to receive an abatement of Rent
payable hereunder during the period beginning on the fourth (4th) consecutive
business day of the Service Failure and ending on the day the service has been
restored. If the entire Premises have not been rendered untenantable by the
Service Failure, the amount of abatement shall be equitably prorated.
Notwithstanding the foregoing, if a Service Failure is reasonably within the
control of Landlord and (a) continues for thirty (30) business days after the
Service Failure and (b) is not being diligently remedied by Landlord, then
Tenant, as its sole remedy, shall have the right to elect to terminate this
Lease within 10 days after the expiration of said thirty (30) business day
period without penalty, by delivering written notice to Landlord of its election
thereof; provided, however, if Landlord is diligently pursuing the repair or
restoration of the service, Tenant shall not be entitled to terminate the Lease
but rather Tenant’s sole remedy shall be to abate Rent as provided above. The
foregoing termination right shall not apply if the Service Failure is due to
fire or other casualty. Instead, in such an event, the terms and provisions of
Article Fourteen shall apply.

6.6 CHOICE OF SERVICE PROVIDER

Tenant acknowledges that Landlord may, at Landlord’s sole option, to the extent
permitted by applicable law, elect to change, from time to time, the company or
companies which provide services (including electrical service, gas service,
water, telephone and technical services) to the Building, the Premises and/or
its occupants. Notwithstanding anything to the contrary set forth in this Lease,
Tenant acknowledges that Landlord has not and does not make any representations
or warranties concerning the identity or identities of the company or companies
which provide services to the Building and the Premises or its occupants and
Tenant acknowledges that the choice of service providers and matters concerning
the engagement and termination thereof shall be solely that of Landlord. The
foregoing provision is not intended to modify, amend, change or otherwise
derogate any provision of this Lease concerning the nature or type of service to
be provided or any specific information concerning the amount thereof to be
provided. Tenant agrees to cooperate with Landlord and each of its service
providers in connection with any change in service or provider.

 

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6.7 SIGNAGE

Initial Building standard signage will be installed by Landlord at Tenant’s main
entry door to the Premises at Landlord’s sole cost and expense. Tenant’s signage
will also be installed by Landlord at the various monuments within the Project
at Landlord’s sole cost and expense. Tenant, at Tenant’s sole cost and expense,
may install signage on the exterior of the Building, subject to approval by
Landlord (not to be unreasonably withheld) and the City of Richmond, in which
case Tenant shall also be responsible for all costs to remove such exterior
signage and restore any damage caused by such exterior signage to the Building.
Any change in such signage shall be only with Landlord’s prior written consent,
shall conform to Building standard signage and shall be at Tenant’s sole cost
and expense. Tenant shall not place on the exterior of the Premises or the door,
window or roof, within any display window space or within five (5) feet behind
the entry to the Premises, or on the exterior of the Building, any sign,
decoration, lettering, advertising matter or descriptive material without all
applicable governmental approvals and Landlord’s prior written approval. Tenant
shall submit to Landlord reasonably detailed drawings of its proposed signs for
review and approval by Landlord prior to utilizing same. All signs, awnings,
canopies, decorations, lettering, advertising matter or other items used by
Tenant shall conform to the standards of design, motif, and decor, from time to
time, established by Landlord for the Building and shall be insured and
maintained at all times by Tenant in good condition, operating order and repair.
Flashing signs and credit card or other signs, advertisements and hand lettered
signs visible from outside the Building or the Common Areas are prohibited.
Landlord shall have the right, without notice to Tenant and without any
liability for damage to the Premises reasonably caused thereby, to remove any
items displayed or affixed in or to the Premises which Landlord determines to be
in violation of the provisions of this Section. If any damage is done to
Tenant’s signs, or any damage to the Building or Project results from the
installation, maintenance, or removal of Tenant’s signs, Tenant shall commence
to repair same within five (5) days after such damage occurs, and upon Tenant’s
failure to commence the repair work within said five (5) day period and to
diligently prosecute the same to completion, Landlord may, after notice to
Tenant, repair such damage and Tenant shall pay Landlord, upon demand,
Landlord’s costs and expenses in connection therewith.

ARTICLE 7

POSSESSION, USE AND CONDITION OF PREMISES

7.1 POSSESSION AND USE OF PREMISES

 

  (a)

Except as otherwise provided in Section 2.2(b), Tenant shall be entitled to
possession of the Premises on the Commencement Date. Tenant shall occupy and use
the Premises only for the uses specified in Section 1.1. Tenant shall not occupy
or use the Premises (or permit the use or occupancy of the Premises) for any
purpose or in any manner which: (1) is unlawful or in violation of any Law or
Environmental Law; (2) may be dangerous to persons or property or which may
increase the cost of, or invalidate, any policy of insurance carried on the
Building

 

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or covering its operations; (3) is contrary to or prohibited by the terms and
conditions of this Lease or the rules of the Building set forth in Article
Eighteen; or (4) would tend to create or continue a nuisance. Notwithstanding
the foregoing or anything in this Lease to the contrary, Tenant shall not be
required to comply with or cause the Premises to comply with any Laws unless
such compliance is necessitated solely due to Tenant’s particular use of the
Premises.

 

  (b)

Tenant shall comply with all Environmental Laws pertaining to Tenant’s occupancy
and use of the Premises and concerning the proper storage, handling and disposal
of any Hazardous Material introduced to the Premises, the Building or the
Property by Tenant or other occupants of the Premises, or their employees,
servants, agents, contractors, customers or invitees. Landlord shall comply with
all Environmental Laws applicable to the Property other than those to be
complied with by Tenant pursuant to the preceding sentence. Tenant shall not
generate, store, handle or dispose of any Hazardous Material in, on, or about
the Property without the prior written consent of Landlord, which may be
withheld in Landlord’s reasonable discretion, except that such consent shall not
be required to the extent of Hazardous Material packaged and contained in office
products for consumer use in general business offices in quantities for ordinary
day-to-day use provided such use does not give rise to, or pose a risk of,
exposure to or release of Hazardous Material. In the event that Tenant is
notified of any investigation or violation of any Environmental Law arising from
Tenant’s activities at the Premises, Tenant shall immediately deliver to
Landlord a copy of such notice. In such event or in the event Landlord
reasonably believes that a violation of Environmental Law exists, Landlord may
conduct such tests and studies relating to compliance by Tenant with
Environmental Laws or the alleged presence of Hazardous Materials upon the
Premises as Landlord deems desirable, all of which shall be completed at
Tenant’s expense if Landlord reasonably believes the violation of Environmental
Law was caused by Tenant or Tenant’s agents, contractors, invitees or employees.
Landlord’s inspection and testing rights are for Landlord’s own protection only,
and Landlord has not, and shall not be deemed to have assumed any responsibility
to Tenant or any other party for compliance with Environmental Laws, as a result
of the exercise, or non-exercise of such rights. Tenant hereby indemnifies, and
agrees to defend, protect and hold harmless, the Indemnitees from any and all
loss, claim, demand, action, expense, liability and cost (including reasonable
attorneys’ fees and expenses) arising out of or in any way related to the
presence of any Hazardous Material introduced to the Premises or the Project
during the Term by Tenant or Tenant’s employees, contractors, agents, or
invitees. In case of any action or proceeding brought against the Indemnitees by
reason of any such claim, upon notice from Landlord, Tenant covenants to defend
such action or proceeding by counsel chosen by Landlord, in Landlord’s
reasonable discretion. Landlord reserves the right to settle, compromise or
dispose of any and all actions, claims and demands related to the foregoing
indemnity. Unless caused by Tenant or Tenant’s agents or contractors, Landlord
hereby indemnifies, and agrees to defend, protect and hold harmless, Tenant from
any and all loss, claim, demand, action, expense, liability and cost (including
reasonable attorneys’ fees and expenses) arising out of or in

 

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any way related to the presence of any Hazardous Material existing at the
Property prior to the Commencement Date. To Landlord’s actual knowledge, (a) no
underground storage tanks are present on the Property, and (b) no action,
proceeding or claim is pending or threatened regarding the Building or the
Property concerning any Hazardous Material or pursuant to any Environmental Law.
Under no circumstance shall Tenant be liable for, and Landlord shall indemnify,
defend, protect and hold harmless Tenant, its agents, contractors, stockholders,
directors, successors, representatives, and assigns from and against, all
losses, costs, claims, liabilities and damages (including reasonable attorneys’
and consultants’ fees) of every type and nature, directly or indirectly arising
out of or in connection with any Hazardous Material released, discharged or
disposed of on or about the Property caused by Landlord or Landlord’s employees,
servants, agents or contractors.

 

  (c) Landlord and Tenant acknowledge that the Americans With Disabilities Act
of 1990 (42 U.S.C. §12101 et seq.) and regulations and guidelines promulgated
thereunder, as all of the same may be amended and supplemented from time to time
(collectively referred to herein as the “ADA”) establish requirements for
business operations, accessibility and barrier removal, and that such
requirements may or may not apply to the Premises, the Building and the Project
depending on, among other things: (1) whether Tenant’s business is deemed a
“public accommodation” or “commercial facility”, (2) whether such requirements
are “readily achievable”, and (3) whether a given alteration affects a “primary
function area” or triggers “path of travel” requirements. The parties hereby
agree that: (a) Landlord shall be responsible for ADA Title III compliance in
the Common Areas, except as provided below, (b) Tenant shall be responsible for
ADA Title III compliance in the Premises, including any leasehold improvements
or other work to be performed in the Premises under or in connection with this
Lease, and (c) Landlord may perform, or require that Tenant perform, and Tenant
shall be responsible for the cost of, ADA Title III “path of travel”
requirements triggered by Tenant Additions in the Premises. Tenant shall be
solely responsible for requirements under Title I of the ADA relating to
Tenant’s employees.

7.2 LANDLORD ACCESS TO PREMISES; APPROVALS

 

  (a) Tenant shall permit Landlord to erect, use and maintain pipes, ducts,
wiring and conduits in and through the Premises, so long as Tenant’s use, layout
or design of the Premises is not materially affected or altered. Landlord or
Landlord’s agents shall have the right to enter upon the Premises in the event
of an emergency, or to inspect the Premises, to perform office janitorial and
other customary services, to conduct safety and other testing in the Premises
and to make such repairs, alterations, improvements or additions to the Premises
or the Building or other parts of the Property as Landlord may deem necessary or
desirable (including all alterations, improvements and additions in connection
with a change in service provider or providers). Any entry or work by Landlord
may be during normal business hours and Landlord shall use reasonable efforts to
ensure that any entry or work does not materially interfere with Tenant’s
occupancy of the Premises. In exercising any rights under this Lease to enter
the Premises, Landlord shall also comply with Tenant’s reasonable security
measures and operating procedures.

 

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  (b) If Tenant shall not be present to permit an entry into the Premises when
for any reason an entry therein shall be necessary or permissible, Landlord (or
Landlord’s agents), after attempting to notify Tenant (unless Landlord believes
an emergency situation exists), may enter the Premises without rendering
Landlord or its agents liable therefor, and without relieving Tenant of any
obligations under this Lease.

 

  (c) Landlord may enter the Premises for the purpose of conducting such
inspections, tests and studies as Landlord may deem desirable or necessary to
confirm Tenant’s compliance with all Laws and Environmental Laws or for other
purposes necessary in Landlord’s reasonable judgment to ensure the sound
condition of the Property and the systems serving the Property, provided that
such inspections, tests, or studies shall not materially interfere with Tenant’s
occupancy of the Premises. Landlord’s rights under this Section 7.2(c) are for
Landlord’s own protection only, and Landlord has not, and shall not be deemed to
have assumed, any responsibility to Tenant or any other party as a result of the
exercise or non-exercise of such rights, for compliance with Laws or
Environmental Laws or for the accuracy or sufficiency of any item or the quality
or suitability of any item for its intended use.

 

  (d) Landlord may do any of the foregoing, or undertake any of the inspection
or work described in the preceding paragraphs without such action constituting
an actual or constructive eviction of Tenant, in whole or in part, or giving
rise to an abatement of Rent by reason of loss or interruption of business of
Tenant, or otherwise.

 

  (e) The review, approval or consent of Landlord with respect to any item
required or permitted under this Lease is for Landlord’s own protection only,
and Landlord has not, and shall not be deemed to have assumed, any
responsibility to Tenant or any other party, as a result of the exercise or
non-exercise of such rights, for compliance with Laws or Environmental Laws or
for the accuracy or sufficiency of any item or the quality or suitability of any
item for its intended use.

7.3 QUIET ENJOYMENT

Landlord covenants, in lieu of any implied covenant of quiet possession or quiet
enjoyment, that so long as Tenant is in compliance with the covenants and
conditions set forth in this Lease, Tenant shall have the right to quiet
enjoyment of the Premises without hindrance or interference from Landlord or
those claiming through Landlord, and subject to the covenants and conditions set
forth in the Lease. This covenant shall be binding on Landlord and its
successors only during its or their respective periods of ownership of the
Building.

 

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ARTICLE 8

MAINTENANCE

8.1 LANDLORD’S MAINTENANCE

Subject to the provisions of Articles Four and Fourteen, Landlord shall maintain
and make necessary repairs to the foundations, roofs, exterior walls, and the
structural elements of the Building, the electrical, plumbing, heating,
ventilating, air-conditioning, mechanical, communication, security and the fire
and life safety systems of the Building; and those corridors, washrooms and
lobbies which are Common Areas of the Building and all other Common Areas of the
Project, except that: (a) Landlord shall not be responsible for the maintenance
or repair of any floor or wall coverings in the Premises or any of such systems
which are located within the Premises and are supplemental or special to the
Building’s standard systems; and (b) the cost of performing any of said
maintenance or repairs to the Premises shall be paid directly by Tenant as
additional Rent and not included in Operating Expenses and (c) the cost of
performing any maintenance or repairs whether to the Premises or to the Building
caused by the negligence of Tenant, its employees, agents, servants, licensees,
subtenants, contractors or invitees, shall be paid directly by Tenant as
additional Rent and shall not be included in Operating Expenses, subject to the
waivers set forth in Section 16.4. Landlord shall not be liable to Tenant for
any expense, injury, loss or damage resulting from work done in or upon, or in
connection with the use of, any adjacent or nearby building, land, street or
alley. In performing all repair and maintenance, Landlord shall use its
reasonable efforts to minimize disruption to Tenant’s business.

8.2 TENANT’S MAINTENANCE

Subject to the provisions of Section 8.1 above and Article Fourteen, Landlord,
at Tenant’s expense, shall keep and maintain the Premises and all Tenant
Additions in good order, condition and repair and in accordance with all Laws
and Environmental Laws, subject to Section 7.1 above. Tenant shall provide
regular janitorial services to the Premises, at Tenant’s sole cost and expense.
Tenant shall not permit waste and shall bear the expense of the repair of all
damage to the Premises and the replacement and repair all damaged or broken
glass in the interior of the Premises, fixtures or appurtenances. Any repairs or
maintenance shall be completed by Landlord or Landlord’s contractors with
materials of similar quality to the original materials. Any such repairs or
maintenance shall be performed only by Landlord or contractors or mechanics
approved or designated by Landlord, which approval shall not be unreasonably
withheld, and whose work will not cause or threaten to cause disharmony or
interference with Landlord or other tenants in the Building and their respective
agents and contractors performing work in or about the Building. If Tenant fails
to perform any of its obligations set forth in this Section 8.2 (beyond
applicable notice and cure periods), Landlord may, in its sole discretion and
upon 24 hours prior notice to Tenant (except without notice in the case of
emergencies), perform the same, and Tenant shall pay to Landlord any costs or
expenses incurred by Landlord upon demand. Notwithstanding the foregoing or
anything in this Lease to the contrary, Tenant shall have no responsibility to
perform or construct, any repair, maintenance or improvements (i) necessitated
by the acts or omissions of Landlord, (ii) required as a consequence of any
violation of any Laws or construction defects in the Premises, the Building or
the Property existing as of the Commencement Date and (iii) for which Landlord
has a right of reimbursement from others.

 

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ARTICLE 9

ALTERATIONS AND IMPROVEMENTS

9.1 TENANT ALTERATIONS

 

  (a) The following provisions shall apply to the completion of any Tenant
Alterations:

 

  (i)

Tenant shall not, except as provided herein, without the prior written consent
of Landlord, which consent shall not be unreasonably withheld, make or cause to
be made any Tenant Alterations in or to the Premises or any Property systems
serving the Premises. Prior to making any Tenant Alterations, Tenant shall give
Landlord ten (10) days prior written notice (or such earlier notice as would be
necessary pursuant to applicable Law) to permit Landlord sufficient time to post
appropriate notices of non-responsibility. Subject to all other requirements of
this Article Nine, Tenant may undertake Decoration work without Landlord’s prior
written consent. Tenant shall furnish Landlord with the names and addresses of
all contractors and subcontractors and copies of all contracts. All Tenant
Alterations shall be completed at such time and in such manner as Landlord may
from time to time reasonably designate, and only by contractors or mechanics
approved by Landlord, which approval shall not be unreasonably withheld,
provided, however, that Landlord may, in its sole discretion, specify the
engineers and contractors to perform all work relating to the Building’s systems
(including the mechanical, heating, plumbing, security, ventilating,
air-conditioning, electrical, communication and the fire and life safety systems
in the Building). The contractors, mechanics and engineers who may be used are
further limited to those whose work will not cause or threaten to cause
disharmony or interference with Landlord or other tenants in the Building and
their respective agents and contractors performing work in or about the
Building. Landlord may further condition its consent upon Tenant furnishing to
Landlord and Landlord approving prior to the commencement of any work or
delivery of materials to the Premises related to the Tenant Alterations such of
the following as specified by Landlord: architectural plans and specifications,
opinions from Landlord’s engineers stating that the Tenant Alterations will not
in any way adversely affect the Building’s systems, necessary permits and
licenses, certificates of insurance, and such other documents in such form
reasonably requested by Landlord. Landlord may, in the exercise of reasonable
judgment, request that Tenant provide Landlord with appropriate evidence of
Tenant’s ability to complete and pay for the completion of the Tenant
Alterations such as a performance bond or letter of credit, but only if the
estimated cost of the Tenant Alterations exceeds

 

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$100,000. Upon completion of the Tenant Alterations, Tenant shall deliver to
Landlord an as-built mylar and digitized (if available) set of plans and
specifications for the Tenant Alterations.

 

  (ii) Tenant shall pay the cost of all Tenant Alterations and the cost of
decorating the Premises and any work to the Property occasioned thereby. Upon
completion of Tenant Alterations, Tenant shall furnish Landlord with
contractors’ affidavits and full and final waivers of lien and receipted bills
covering all labor and materials expended and used in connection therewith and
such other documentation reasonably requested by Landlord or Mortgagee.

 

  (iii) Tenant agrees to complete all Tenant Alterations (i) in accordance with
all Laws, Environmental Laws, all requirements of applicable insurance companies
and in accordance with Landlord’s standard construction rules and regulations,
and (ii) in a good and workmanlike manner with the use of good grades of
materials. Tenant shall notify Landlord immediately if Tenant receives any
notice of violation of any Law in connection with completion of any Tenant
Alterations and shall immediately take such steps as are necessary to remedy
such violation. In no event shall such supervision or right to supervise by
Landlord nor shall any approvals given by Landlord under this Lease constitute
any warranty by Landlord to Tenant of the adequacy of the design, workmanship or
quality of such work or materials for Tenant’s intended use or of compliance
with the requirements of this Section 9.1(a) or impose any liability upon
Landlord in connection with the performance of such work.

 

  (b) All Tenant Additions whether installed by Landlord or Tenant, shall
without compensation or credit to Tenant, become part of the Premises and the
property of Landlord at the time of their installation and shall remain in the
Premises, unless pursuant to Article Twelve, Tenant may remove them or is
required to remove them at Landlord’s request.

 

  (c) Notwithstanding the foregoing, all Tenant Alterations and Tenant’s trade
fixtures, furniture, equipment and other personal property installed in the
Premises (collectively, “Tenant’s Property”) shall at all times be and remain
Tenant’s property. Except for Tenant Alterations which cannot be removed without
structural injury to the Premises, at any time, Tenant may remove Tenant’s
Property from the Premises, provided that Tenant repairs all damage caused by
such removal. Landlord shall have no right to require Tenant to remove any
Tenant Alterations unless Landlord notifies Tenant at the time Landlord consents
to such Tenant Alterations that Landlord shall require such Tenant Alterations
to be removed. Under no circumstance shall Tenant be required to remove any of
the Landlord Work.

 

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9.2 LIENS

Tenant shall not permit any lien or claim for lien of any mechanic, laborer or
supplier or any other lien to be filed against the Building, the Land, the
Premises, or any other part of the Property arising out of work (excluding the
Landlord Work) performed, or alleged to have been performed by, or at the
direction of, or on behalf of Tenant. If any such lien or claim for lien is
filed, Tenant shall within ten (10) days of receiving notice of such lien or
claim (a) have such lien or claim for lien released of record or (b) deliver to
Landlord a bond in form, content, amount, and issued by surety, satisfactory to
Landlord, indemnifying, protecting, defending and holding harmless the
Indemnitees against all costs and liabilities resulting from such lien or claim
for lien and the foreclosure or attempted foreclosure thereof. If Tenant fails
to take any of the above actions, Landlord, in addition to its rights and
remedies under Article Eleven, without investigating the validity of such lien
or claim for lien, may pay or discharge the same and Tenant shall, as payment of
additional Rent hereunder, reimburse Landlord upon demand for the amount so paid
by Landlord, including Landlord’s expenses and reasonable attorneys’ fees.

ARTICLE 10

ASSIGNMENT AND SUBLETTING

10.1 ASSIGNMENT AND SUBLETTING

 

  (a)

Without the prior written consent of Landlord, which consent shall not be
unreasonably withheld, Tenant may not sublease, assign, mortgage, pledge,
hypothecate or otherwise transfer or permit the transfer of this Lease or the
encumbering of Tenant’s interest therein in whole or in part, by operation of
Law or otherwise or permit the use or occupancy of the Premises, or any part
thereof, by anyone other than Tenant, provided, however, if Landlord chooses not
to recapture the space proposed to be subleased or assigned as provided in
Section 10.2, Landlord shall not unreasonably withhold its consent to a
subletting or assignment under this Section 10.1. Tenant agrees that the
provisions governing sublease and assignment set forth in this Article Ten shall
be deemed to be reasonable. If Tenant desires to enter into any sublease of the
Premises or assignment of this Lease, Tenant shall deliver written notice
thereof to Landlord (“Tenant’s Notice”), together with the identity of the
proposed subtenant or assignee and the proposed principal terms thereof and
financial and other information sufficient for Landlord to make an informed
judgment with respect to such proposed subtenant or assignee at least twenty
(20) days prior to the commencement date of the term of the proposed sublease or
assignment. If Tenant proposes to sublease less than all of the Rentable Area of
the Premises, the space proposed to be sublet and the space retained by Tenant
must each be a marketable unit as reasonably determined by Landlord and
otherwise in compliance with all Laws. Landlord shall notify Tenant in writing
of its approval or disapproval of the proposed sublease or assignment or its
decision to exercise its rights under Section 10.2 within fifteen (15) days
after receipt of Tenant’s Notice (and all reasonably required information). In
no event may Tenant sublease any portion of the Premises or assign the Lease to
any other tenant of the

 

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Project without Landlord’s prior written consent, which consent shall not be
unreasonably withheld. Tenant shall submit for Landlord’s approval (which
approval shall not be unreasonably withheld) any advertising which Tenant or its
agents intend to use with respect to the space proposed to be sublet.

 

  (b) With respect to Landlord’s consent to an assignment or sublease, Landlord
may take into consideration any factors that Landlord may deem relevant, and the
reasons for which Landlord’s denial shall be deemed to be reasonable shall
include, without limitation, the following:

 

  (1) the business reputation or creditworthiness of any proposed subtenant or
assignee is not acceptable to Landlord; or

 

  (2) in Landlord’s reasonable judgment the proposed assignee or sublessee would
diminish the value or reputation of the Building or Landlord; or

 

  (3) any proposed assignee’s or sublessee’s use of the Premises would be
different from the Use of the Premises set forth in Section 1.1 or would violate
Section 7.1 of the Lease or would violate the provisions of any other leases of
tenants in the Project; or

 

  (4) the proposed sublessee or assignee is a bona fide prospective tenant of
Landlord in the Project as demonstrated by a written proposal dated within sixty
(60) days prior to the date of Tenant’s request; or

 

  (5) the proposed sublessee or assignee would materially and adversely increase
the estimated pedestrian and vehicular traffic to and from the Premises and the
Building.

 

  (c) Any sublease or assignment shall be expressly subject to the terms and
conditions of this Lease. Any subtenant or assignee shall execute such documents
as Landlord may reasonably require to evidence such subtenant or assignee’s
assumption of the obligations and liabilities of Tenant under this Lease. Tenant
shall deliver to Landlord a copy of all agreements executed by Tenant and the
proposed subtenant and assignee with respect to the Premises. Landlord’s
approval of a sublease, assignment, hypothecation, transfer or third party use
or occupancy shall not constitute a waiver of Tenant’s obligation to obtain
Landlord’s consent to further assignments or subleases, hypothecations,
transfers or third party use or occupancy.

 

  (d) For purposes of this Article Ten, an assignment shall be deemed to include
a change in the majority control of Tenant, resulting from any transfer, sale or
assignment of shares of stock of Tenant occurring by operation of Law or
otherwise if Tenant is a corporation whose shares of stock are not traded
publicly; provided however, the foregoing shall not apply to any private or
public offering of Tenant’s stock. If Tenant is a partnership, any change in the
partners of Tenant shall be deemed to be an assignment.

 

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10.2 RECAPTURE

Landlord shall have the option to exclude from the Premises covered by this
Lease (“recapture”) the space proposed to be sublet or subject to the
assignment, effective as of the proposed commencement date of such sublease or
assignment. If Landlord elects to recapture, Tenant shall surrender possession
of the space proposed to be subleased or subject to the assignment to Landlord
on the effective date of recapture of such space from the Premises, such date
being the Termination Date for such space. Effective as of the date of recapture
of any portion of the Premises pursuant to this section, the Monthly Base Rent,
Rentable Area of the Premises and Tenant’s Share shall be adjusted accordingly.

10.3 EXCESS RENT

Tenant shall pay Landlord on the first day of each month during the term of the
sublease or assignment, fifty percent (50%) of the amount by which the sum of
all rent and other consideration (direct or indirect) actually received by
Tenant from the subtenant or assignee for such month exceeds: (i) that portion
of the Monthly Base Rent and Rent Adjustments due under this Lease for said
month which is allocable to the space sublet or assigned; and (ii) the following
costs and expenses for the subletting or assignment of such space: (1) brokerage
commissions and attorneys’ fees and expenses, (2) the actual costs paid in
making any improvements or substitutions in the Premises required by any
sublease or assignment; (3) “free rent” periods, costs of any inducements or
concessions given to subtenant or assignee, moving costs, and other amounts in
respect of such subtenant’s or assignee’s other leases or occupancy
arrangements, and (4) the cost of Tenant Additions allocable to the space sublet
or assigned. All such costs and expenses shall be amortized over the term of the
sublease or assignment pursuant to sound accounting principles.

10.4 TENANT LIABILITY

In the event of any sublease or assignment, whether or not with Landlord’s
consent, Tenant shall not be released or discharged from any liability, whether
past, present or future, under this Lease, including any liability arising from
the exercise of any renewal or expansion option, to the extent such exercise is
expressly permitted by Landlord. Tenant’s liability shall remain primary, and in
the event of default by any subtenant, assignee or successor of Tenant in
performance or observance of any of the covenants or conditions of this Lease,
Landlord may proceed directly against Tenant without the necessity of exhausting
remedies against said subtenant, assignee or successor. After any assignment,
Landlord may consent to subsequent assignments or subletting of this Lease, or
amendments or modifications of this Lease with assignees of Tenant, without
notifying Tenant, or any successor of Tenant, and without obtaining its or their
consent thereto, and such action shall not relieve Tenant or any successor of
Tenant of liability under this Lease. If Landlord grants consent to such
sublease or assignment, Tenant shall pay all reasonable attorneys’ fees and
expenses incurred by Landlord with respect to such assignment or sublease. In
addition, if Tenant has any options to extend the Term or to add other space to
the Premises, such options shall not be available to any subtenant or assignee
(other than a subtenant or assignee pursuant to a Permitted Transfer), directly
or indirectly without Landlord’s express written consent, which may be withheld
in Landlord’s sole discretion.

 

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10.5 ASSUMPTION AND ATTORNMENT

If Tenant shall assign this Lease as permitted herein, the assignee shall
expressly assume all of the obligations of Tenant hereunder in a written
instrument satisfactory to Landlord and furnished to Landlord not later than
five (5) days after request by Landlord. If Tenant shall sublease the Premises
as permitted herein, Tenant shall, at Landlord’s option, within fifteen
(15) days following any request by Landlord, obtain and furnish to Landlord the
written agreement of such subtenant to the effect that the subtenant will attorn
to Landlord and will pay all subrent directly to Landlord.

10.6 PERMITTED TRANSFERS

So long as Tenant is not entering into the Permitted Transfer (defined below)
for the purpose of avoiding or otherwise circumventing the remaining terms of
this Article Ten, Tenant may assign its entire interest under this Lease,
without the consent of Landlord, to (i) an Affiliate of Tenant, or a
corporation, partnership or other legal entity wholly owned by Tenant
(collectively, an “Affiliated Party”), or (ii) an entity resulting from the
purchase, merger, consolidation or reorganization of, with or into Tenant,
provided that all of the following conditions are satisfied (each such transfer
a “Permitted Transfer”): (1) Tenant is not in Default under this Lease; (2) the
permitted use does not allow the Premises to be used for any use other than the
uses set forth in Section 1.1 above; (3) Tenant shall give Landlord written
notice within twenty (20) days after the effective date of the proposed
Permitted Transfer; (4) with respect to a proposed Permitted Transfer to an
Affiliated Party, Tenant continues to have a net worth immediately after the
Permitted Transfer equal to or greater than Tenant’s net worth as of the day
prior to the proposed Permitted Transfer; and (5) with respect to a purchase,
merger, consolidation or reorganization or any Permitted Transfer which results
in Tenant ceasing to exist as a separate legal entity, (a) Tenant’s successor
shall own all or substantially all of the assets of Tenant, and (b) Tenant’s
successor shall have a net worth immediately after the Permitted Transfer which
is at least equal to Tenant’s net worth as of the day prior to the proposed
purchase, merger, consolidation or reorganization. Tenant’s notice to Landlord
shall include information and documentation showing that each of the above
conditions has been satisfied. If requested by Landlord, Tenant’s successor
shall sign a commercially reasonable form of assumption agreement.

ARTICLE 11

DEFAULT AND REMEDIES

11.1 EVENTS OF DEFAULT

The occurrence and continuance of any one or more of the following shall
constitute a “Default” by Tenant under this Lease:

 

  (a)

Tenant fails to pay any installment or other payment of Rent including Rent
Adjustment Deposits or Rent Adjustments within five (5) days after written
notice

 

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that the Rent is past due, provided however, a “Default” shall be deemed to have
occurred hereunder without any obligation of Landlord to give any notice if
(i) Tenant fails to pay Rent within five (5) days after the date when due and
(ii) during the 12 month interval preceding such failure, Landlord has given
Tenant written notice of failure to timely pay Rent on two or more occasions;

 

  (b) Tenant fails to observe or perform any of the other covenants, conditions
or provisions of this Lease and fails to cure such default within thirty
(30) days after written notice thereof to Tenant. However, if Tenant’s failure
to comply cannot reasonably be cured within thirty (30) days, Tenant shall be
allowed additional time (not to exceed sixty (60) days) as is reasonably
necessary to cure the failure so long as: (1) Tenant commences to cure the
failure within twenty (20) days, and (2) Tenant diligently pursues a course of
action that can reasonably be expected to cure the failure and bring Tenant back
into compliance with the Lease, unless the default involves a hazardous
condition, which shall be cured forthwith or unless the failure to perform is a
Default for which this Lease specifies there is no cure or grace period;

 

  (c) the interest of Tenant in this Lease is levied upon under execution or
other legal process;

 

  (d) a petition is filed by or against Tenant to declare Tenant bankrupt or
seeking a plan of reorganization or arrangement under any Chapter of the
Bankruptcy Act, or any amendment, replacement or substitution therefor, or to
delay payment of, reduce or modify Tenant’s debts, which in the case of an
involuntary action is not discharged within sixty (60) days;

 

  (e) Tenant is declared insolvent by Law or any assignment of Tenant’s property
is made for the benefit of creditors;

 

  (f) a receiver is appointed for Tenant or Tenant’s property, which appointment
is not discharged within sixty (60) days;

 

  (g) any action taken by or against Tenant to reorganize or modify Tenant’s
capital structure in a materially adverse way which in the case of an
involuntary action is not discharged within sixty (60) days; or

 

  (h) upon the dissolution of Tenant.

11.2 LANDLORD’S REMEDIES

 

  (a) A Default shall constitute a breach of the Lease for which Landlord shall
have the rights and remedies set forth in this Section 11.2 and all other rights
and remedies set forth in this Lease or now or hereafter allowed by Law, whether
legal or equitable, and all rights and remedies of Landlord shall be cumulative
and none shall exclude any other right or remedy.

 

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  (b) With respect to a Default, at any time Landlord may terminate Tenant’s
right to possession by written notice to Tenant stating such election. Any
written notice required pursuant to Section 11.1 shall constitute notice of
unlawful detainer pursuant to California Code of Civil Procedure Section 1161
(provided that such notice is served upon Tenant in accordance with California
Code of Civil Procedure Section 1162) if, at Landlord’s sole discretion, it
states Landlord’s election that Tenant’s right to possession is terminated after
expiration of any period required by Law or any longer period required by
Section 11.1. Upon the expiration of the period stated in Landlord’s written
notice of termination (and unless such notice provides an option to cure within
such period and Tenant cures the Default within such period), Tenant’s right to
possession shall terminate and this Lease shall terminate, and Tenant shall
remain liable as hereinafter provided. Upon such termination in writing of
Tenant’s right to possession, Landlord shall have the right, subject to
applicable Law, to re-enter the Premises and dispossess Tenant and the legal
representatives of Tenant and all other occupants of the Premises by unlawful
detainer or other summary proceedings, or otherwise as permitted by Law, regain
possession of the Premises and remove their property (including their trade
fixtures, personal property and those Tenant Alterations which Tenant is
required or permitted to remove under Article Twelve), but Landlord shall not be
obligated to effect such removal, and such property may, at Landlord’s option,
be stored elsewhere, sold or otherwise dealt with as permitted by Law, at the
risk of, expense of and for the account of Tenant, and the proceeds of any sale
shall be applied pursuant to Law. Landlord shall in no event be responsible for
the value, preservation or safekeeping of any such property. Tenant hereby
waives all claims for damages that may be caused by Landlord’s removing or
storing Tenant’s personal property pursuant to this Section or Section 12.1, and
Tenant hereby indemnifies, and agrees to defend, protect and hold harmless, the
Indemnitees from any and all loss, claims, demands, actions, expenses, liability
and cost (including reasonable attorneys’ fees and expenses) arising out of or
in any way related to such removal or storage. Upon such written termination of
Tenant’s right to possession and this Lease, Landlord shall have the right to
recover damages for Tenant’s Default as provided herein or by Law, including the
following damages provided by California Civil Code Section 1951.2:

 

  (i) the worth at the time of award of the unpaid Rent which had been earned at
the time of termination;

 

  (ii) 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 Rent loss that Tenant proves could reasonably have been
avoided;

 

  (iii) the worth at the time of award of the amount by which the unpaid Rent
for the balance of the term of this Lease after the time of award exceeds the
amount of such Rent loss that Tenant proves could be reasonably avoided; and

 

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  (iv) 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, including, without limitation, Landlord’s unamortized costs of tenant
improvements, leasing commissions and legal fees incurred in connection with
entering into this Lease. The word “rent” as used in this Section 11.2 shall
have the same meaning as the defined term Rent in this Lease. The “worth at the
time of award” of the amount referred to in clauses (1) and (2) above is
computed by allowing interest at the Default Rate. The worth at the time of
award of the amount referred to in clause (3) above is 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%). For the purpose of determining unpaid
Rent under clause (3) above, the monthly Rent reserved in this Lease shall be
deemed to be the sum of the Monthly Base Rent, monthly storage space rent, if
any, and the amounts last payable by Tenant as Rent Adjustments for the calendar
year in which Landlord terminated this Lease as provided hereinabove.

 

  (c) Even if Tenant is in Default and/or has abandoned the Premises, this Lease
shall continue in effect for so long as Landlord does not terminate Tenant’s
right to possession by written notice as provided in Section 11.2(b) above, and
Landlord may enforce all its rights and remedies under this Lease, including the
right to recover Rent as it becomes due under this Lease. In such event,
Landlord shall have all of the rights and remedies of a landlord under
California Civil Code Section 1951.4 (Landlord may continue Lease in effect
after Tenant’s Default and abandonment and recover Rent as it becomes due, if
Tenant has the right to sublet or assign, subject only to reasonable
limitations), or any successor statute. During such time as Tenant is in
Default, if Landlord has not terminated this Lease by written notice and if
Tenant requests Landlord’s consent to an assignment of this Lease or a sublease
of the Premises, subject to Landlord’s option to recapture pursuant to
Section 10.2, Landlord shall not unreasonably withhold its consent to such
assignment or sublease. Tenant acknowledges and agrees that the provisions of
Article Ten shall be deemed to constitute reasonable limitations of Tenant’s
right to assign or sublet. Tenant acknowledges and agrees that in the absence of
written notice pursuant to Section 11.2(b) above terminating Tenant’s right to
possession, no other act of Landlord shall constitute a termination of Tenant’s
right to possession or an acceptance of Tenant’s surrender of the Premises,
including acts of maintenance or preservation or efforts to relet the Premises
or the appointment of a receiver upon initiative of Landlord to protect
Landlord’s interest under this Lease or the withholding of consent to a
subletting or assignment, or terminating a subletting or assignment, if in
accordance with other provisions of this Lease.

 

  (d) In the event that Landlord seeks an injunction with respect to a breach or
threatened breach by Tenant of any of the covenants, conditions or provisions of
this Lease, Tenant agrees to pay the premium for any bond required in connection
with such injunction.

 

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  (e) Tenant hereby waives any and all rights to relief from forfeiture,
redemption or reinstatement granted by Law (including California Civil Code of
Procedure Sections 1174 and 1179) in the event of Tenant being evicted or
dispossessed for any cause or in the event of Landlord obtaining possession of
the Premises by reason of Tenant’s Default or otherwise;

 

  (f) Notwithstanding any other provision of this Lease, a notice to Tenant
given under this Article and Article Twenty-four of this Lease or given pursuant
to California Code of Civil Procedure Section 1161, and any notice served by
mail shall be deemed served, and the requisite waiting period deemed to begin
under said Code of Civil Procedure Section upon mailing, without any additional
waiting requirement under Code of Civil Procedure Section 1011 et seq. or by
other Law. For purposes of Code of Civil Procedure Section 1162, Tenant’s “place
of residence”, “usual place of business”, “the property” and “the place where
the property is situated” shall mean and be the Premises, whether or not Tenant
has vacated same at the time of service.

 

  (g) The voluntary or other surrender or termination of this Lease, or a mutual
termination or cancellation thereof, shall not work a merger and shall terminate
all or any existing assignments, subleases, subtenancies or occupancies
permitted by Tenant, except if and as otherwise specified in writing by
Landlord.

 

  (h) No delay or omission in the exercise of any right or remedy of Landlord
upon any default by Tenant, and no exercise by Landlord of its rights pursuant
to Section 25.14 to perform any duty which Tenant fails timely to perform, shall
impair any right or remedy or be construed as a waiver. No provision of this
Lease shall be deemed waived by Landlord or Tenant unless such waiver is in
writing and signed by the party to be charged or as otherwise provided in this
Lease. The waiver by Landlord of any breach of any provision of this Lease shall
not be deemed a waiver of any subsequent breach of the same or any other
provision of this Lease.

11.3 ATTORNEYS’ FEES

In the event any party brings any suit or other proceeding with respect to the
subject matter or enforcement of this Lease, the prevailing party (as determined
by the court, agency or other authority before which such suit or proceeding is
commenced) shall, in addition to such other relief as may be awarded, be
entitled to recover attorneys’ fees, expenses and costs of investigation as
actually incurred, including court costs, expert witness fees, costs and
expenses of investigation, and all attorneys’ fees, costs and expenses in any
such suit or proceeding (including in any action or participation in or in
connection with any case or proceeding under the Bankruptcy Code, 11 United
States Code Sections 101 et seq., or any successor statutes, in establishing or
enforcing the right to indemnification, in appellate proceedings, or in
connection with the enforcement or collection of any judgment obtained in any
such suit or proceeding).

 

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11.4 BANKRUPTCY

The following provisions shall apply in the event of the bankruptcy or
insolvency of Tenant:

 

  (a) In connection with any proceeding under Chapter 7 of the Bankruptcy Code
where the trustee of Tenant elects to assume this Lease for the purposes of
assigning it, such election or assignment, may only be made upon compliance with
the provisions of (b) and (c) below, which conditions Landlord and Tenant
acknowledge to be commercially reasonable. In the event the trustee elects to
reject this Lease then Landlord shall immediately be entitled to possession of
the Premises without further obligation to Tenant or the trustee.

 

  (b) Any election to assume this Lease under Chapter 11 or 13 of the Bankruptcy
Code by Tenant as debtor-in-possession or by Tenant’s trustee (the “Electing
Party”) must provide for:

 

  (i) The Electing Party to cure or provide to Landlord adequate assurance that
it will cure all monetary defaults under this Lease within fifteen (15) days
from the date of assumption and it will cure all nonmonetary defaults under this
Lease within thirty (30) days from the date of assumption. Landlord and Tenant
acknowledge such condition to be commercially reasonable.

 

  (ii) If the Electing Party has assumed this Lease or elects to assign Tenant’s
interest under this Lease to any other person, such interest may be assigned
only if the intended assignee has provided adequate assurance of future
performance (as herein defined), of all of the obligations imposed on Tenant
under this Lease.

 

  (iii) For the purposes hereof, “adequate assurance of future performance”
means that Landlord has ascertained that each of the following conditions has
been satisfied:

 

  (1) The assignee has submitted a current financial statement, certified by its
chief financial officer, which shows a net worth and working capital in amounts
sufficient to assure the future performance by the assignee of Tenant’s
obligations under this Lease; and

 

  (2) Landlord has obtained consents or waivers from any third parties that may
be required under a lease, mortgage, financing arrangement, or other agreement
by which Landlord is bound, to enable Landlord to permit such assignment.

 

  (c) Landlord’s acceptance of rent or any other payment from any trustee,
receiver, assignee, person, or other entity will not be deemed to have waived,
or waive, the requirement of Landlord’s consent, Landlord’s right to terminate
this Lease for any transfer of Tenant’s interest under this Lease without such
consent, or Landlord’s claim for any amount of Rent due from Tenant.

 

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11.5 LANDLORD’S DEFAULT

Landlord shall be in default hereunder in the event Landlord has not begun and
pursued with reasonable diligence the cure of any failure of Landlord to meet
its obligations hereunder within thirty (30) days after the receipt by Landlord
of written notice from Tenant of the alleged failure to perform. Except as
expressly provided in this Lease, (a) in no event shall Tenant have the right to
terminate or rescind this Lease as a result of Landlord’s default as to any
covenant or agreement contained in this Lease, and (b) Tenant hereby waives such
remedies of termination and rescission and hereby agrees that Tenant’s remedies
for default hereunder and for breach of any promise or inducement shall be
limited to a suit for damages and/or injunction. In addition, Tenant hereby
covenants that, prior to the exercise of any such remedies, it will give the
Mortgagee notice and a reasonable time to cure any default by Landlord.

ARTICLE 12

SURRENDER OF PREMISES

12.1 IN GENERAL

Upon the Termination Date, Tenant shall surrender and vacate the Premises
immediately and deliver possession thereof to Landlord in a clean, good and
tenantable condition, ordinary wear and tear, damage caused by Landlord,
casualty damage and Tenant Alterations which Landlord states may be surrendered
at the termination of the Lease excepted, and Tenant shall deliver to Landlord
all keys to the Premises. Tenant shall remove from the Premises all movable
personal property of Tenant and Tenant’s trade fixtures, including, subject to
Section 6.4, cabling for any of the foregoing. Tenant shall be entitled to
remove such Tenant Additions, which at the time of their installation Landlord
and Tenant agreed may be removed by Tenant. Tenant shall also remove such other
Tenant Alterations as required by Landlord at the time Landlord consented to the
Tenant Alterations, including any Tenant Alterations containing Hazardous
Materials. Tenant immediately shall repair all damage resulting from removal of
any of Tenant’s property, furnishings or Tenant Alterations, shall close all
floor, ceiling and roof openings and shall restore the Premises to a tenantable
condition as reasonably determined by Landlord. If any of the Tenant Alterations
which were installed by Tenant involved the lowering of ceilings, raising of
floors or the installation of specialized wall or floor coverings or lights,
then Tenant shall also be obligated to return such surfaces to their condition
prior to the commencement of this Lease. In the event possession of the Premises
is not delivered to Landlord when required hereunder, or if Tenant shall fail to
remove those items described above, Landlord may (but shall not be obligated
to), at Tenant’s expense, remove any of such property and store, sell or
otherwise deal with such property as provided in Section 11.2(b), including the
waiver and indemnity obligations provided in that Section, and undertake, at
Tenant’s expense, such restoration work as Landlord deems necessary or
advisable.

 

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12.2 LANDLORD’S RIGHTS

All property which may be removed from the Premises by Landlord in accordance
with applicable law shall be conclusively presumed to have been abandoned by
Tenant and Landlord may deal with such property as provided in Section 11.2(b),
including the waiver and indemnity obligations provided in that Section. Tenant
shall also reimburse Landlord for all costs and expenses incurred by Landlord in
removing any of Tenant Alterations and in restoring the Premises to the
condition required by this Lease at the Termination Date.

ARTICLE 13

HOLDING OVER

In the event that Tenant holds over in possession of the Premises after the
Termination Date, Tenant shall pay Landlord one hundred fifty percent (150%) of
the monthly Rent payable for the month immediately preceding the holding over
(including increases for Rent Adjustments which Landlord may reasonably
estimate. Tenant shall also pay all damages sustained by Landlord by reason of
such retention of possession. The provisions of this Article shall not
constitute a waiver by Landlord of any re-entry rights of Landlord, and Tenant’s
continued occupancy of the Premises shall be as a tenancy in sufferance.

ARTICLE 14

DAMAGE BY FIRE OR OTHER CASUALTY

14.1 SUBSTANTIAL UNTENANTABILITY

 

  (a) If any fire or other casualty (whether insured or uninsured) renders all
or a substantial portion of the Premises or the Building untenantable, Landlord
shall, with reasonable promptness after the occurrence of such damage,
reasonably estimate the length of time that will be required to Substantially
Complete the repair and restoration and shall by notice advise Tenant of such
estimate (“Landlord’s Notice”). If Landlord estimates that the amount of time
required to substantially complete such repair and restoration will exceed one
hundred eighty (180) days from the date such damage occurred, then Landlord, or
Tenant if all or a substantial portion of the Premises is rendered untenantable,
shall have the right to terminate this Lease as of the date of such damage upon
giving written notice to the other at any time within twenty (20) days after
delivery of Landlord’s Notice, provided that if Landlord so chooses, Landlord’s
Notice may also constitute such notice of termination. Further, if Tenant is
permitted and does properly terminate the PRI Lease in accordance with Article
14 (Damage by Fire or Other Casualty) of the PRI Lease, Tenant shall also have
the right to terminate this Lease by giving Landlord written notice of such
termination concurrently with its notice to terminate the PRI Lease. Tenant’s
notice to terminate this Lease pursuant to the preceding sentence shall
designate a termination date for this Lease; provided, however, such date may
not be earlier than ninety (90) days following the date Tenant delivers its
termination notice for this Lease.

 

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  (b) Unless this Lease is terminated as provided in the preceding subparagraph,
Landlord shall proceed with reasonable promptness to repair and restore the
Premises to its condition as existed prior to such casualty, subject to
reasonable delays for insurance adjustments and Force Majeure delays, and also
subject to zoning Laws and building codes then in effect. Landlord shall have no
liability to Tenant, and Tenant shall not be entitled to terminate this Lease if
such repairs and restoration are not in fact completed within the time period
estimated by Landlord so long as Landlord shall proceed with reasonable
diligence to complete such repairs and restoration, unless such repairs and
restoration are not completed within ninety (90) days after the expiration of
such time period.

 

  (c) Tenant acknowledges that Landlord shall be entitled to the full proceeds
of any insurance coverage, whether carried by Landlord or Tenant, for damages to
the Premises, provided that Tenant shall be entitled to the full proceeds of
Tenant’s insurance (including endorsements, if any) of Tenant’s Property and its
own business losses and personal property, trade fixtures, Tenant Alterations
and equipment which would be removable by Tenant at the Termination Date. All
such Landlord insurance proceeds shall be payable to Landlord whether or not the
Premises are to be repaired and restored.

 

  (d) Notwithstanding anything to the contrary herein set forth: (i) Landlord
shall have no duty pursuant to this Section to repair or restore any portion of
any Tenant Alterations; and (ii) Tenant shall not have the right to terminate
this Lease pursuant to this Section if any damage or destruction was caused by
the act or neglect of Tenant, its agent or employees. Whether or not the Lease
is terminated pursuant to this Article Fourteen, in no event 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 for any inconvenience or annoyance
occasioned by any such damage, destruction, rebuilding or restoration of the
Premises or the Building or access thereto.

 

  (e) Any repair or restoration of the Premises performed by Tenant shall be in
accordance with the provisions of Article Nine hereof.

14.2 INSUBSTANTIAL UNTENANTABILITY

If the Premises or the Building is damaged by a casualty but neither is rendered
substantially untenantable and Landlord reasonably estimates that the time to
substantially complete the repair or restoration will not exceed one hundred
eighty (180) days from the date such damage occurred, then Landlord shall
proceed to repair and restore the Building and the Premises (excluding Tenant
Additions but including restoring the Landlord Work), with reasonable
promptness, unless such damage is to the Premises and occurs during the last six
(6) months of the Term, in which event either Tenant or Landlord shall have the
right to terminate this Lease as of the date of such casualty by giving written
notice thereof to the other within twenty (20) days after the date of such
casualty. Notwithstanding the aforesaid, (i) Landlord’s obligation to repair
shall be limited in accordance with the provisions of Section 14.1 above, and
(ii) Landlord shall not have the right to terminate this Lease due to any such
damage during the

 

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last six (6) months of the Term if Tenant has an option to extend the Term and
gives Landlord written notice of Tenant’s binding exercise of such option within
twenty (20) days after any such notice of termination by Landlord and Landlord
and Tenant enter into an amendment to this Lease extending the Term within
fifteen (15) days thereafter.

14.3 RENT ABATEMENT

Except for the negligence or willful act of Tenant or its agents, employees,
contractors or invitees, if all or any part of the Premises are rendered
untenantable by fire or other casualty and this Lease is not terminated, Monthly
Base Rent and Rent Adjustments shall abate for that part of the Premises which
is untenantable on a per diem basis from the date of the casualty until Landlord
has Substantially Completed the repair and restoration work in the Premises
which it is required to perform, provided, that as a result of such casualty,
Tenant does not occupy the portion of the Premises which is untenantable during
such period.

14.4 WAIVER OF STATUTORY REMEDIES

The provisions of this Lease, including this Article Fourteen, constitute an
express agreement between Landlord and Tenant with respect to any and all damage
to, or destruction of, the Premises or the Property or any part of either, and
any Law, including Sections 1932(2), 1933(4), 1941 and 1942 of the California
Civil Code, with respect to any rights or obligations concerning damage or
destruction shall have no application to this Lease or to any damage to or
destruction of all or any part of the Premises or the Property or any part of
either, and are hereby waived.

ARTICLE 15

EMINENT DOMAIN

15.1 TAKING OF WHOLE OR SUBSTANTIAL PART

In the event the whole or any substantial part of the Building or of the
Premises is taken or condemned by any competent authority for any public use or
purpose (including a deed given in lieu of condemnation) and is thereby rendered
untenantable, this Lease shall terminate as of the date title vests in such
authority, and Monthly Base Rent and Rent Adjustments shall be apportioned as of
the Termination Date. Notwithstanding anything to the contrary herein set forth,
in the event the taking is temporary (for less than the remaining Term of the
Lease), Landlord may elect either (i) to terminate this Lease or (ii) permit
Tenant to receive the entire award attributable to the Premises in which case
Tenant shall continue to pay Rent and this Lease shall not terminate.

15.2 TAKING OF PART

In the event a part of the Building or the Premises is taken or condemned by any
competent authority (or a deed is delivered in lieu of condemnation) and this
Lease is not terminated, the Lease shall be amended to reduce or increase, as
the case may be, the Monthly Base Rent and Tenant’s Share to reflect the
Rentable Area of the Premises, Building or Project, as the case may be,
remaining after any such taking or condemnation. Landlord, upon receipt

 

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and to the extent of the award in condemnation (or proceeds of sale) shall make
necessary repairs and restorations to the Premises (exclusive of Tenant
Alterations but inclusive of the Landlord Work) and to the Building to the
extent necessary to constitute the portion of the Building not so taken or
condemned as a complete architectural and economically efficient unit.
Notwithstanding the foregoing, if as a result of any taking, or a governmental
order that the grade of any street or alley adjacent to the Building is to be
changed and such taking or change of grade makes it necessary or desirable to
substantially remodel or restore the Building or prevents the economical
operation of the Building, Landlord shall have the right to terminate this Lease
upon ninety (90) days prior written notice to Tenant.

15.3 COMPENSATION

Landlord shall be entitled to receive the entire award (or sale proceeds) from
any such taking, condemnation or sale without any payment to Tenant, and Tenant
hereby assigns to Landlord Tenant’s interest, if any, in such award; provided,
however, Tenant shall have the right separately to pursue against the condemning
authority a separate award in respect of the loss, if any, to Tenant Additions
paid for by Tenant without any credit or allowance from Landlord, so long as
there is no diminution of Landlord’s award as a result.

ARTICLE 16

INSURANCE

16.1 TENANT’S INSURANCE

Tenant, at Tenant’s expense, agrees to maintain in force, with a company or
companies reasonably acceptable to Landlord, during the Term: (a) Commercial
General Liability Insurance on a primary basis and without any right of
contribution from any insurance carried by Landlord covering the Premises on an
occurrence basis against all claims for personal injury, bodily injury, death
and property damage, including contractual liability covering the
indemnification provisions in this Lease, and such insurance shall be for such
limits that are reasonably required by Landlord from time to time but not less
than a combined single limit of Three Million and No/100 Dollars
($3,000,000.00); (b) Workers’ Compensation and Employers’ Liability Insurance to
the extent required by and in accordance with the Laws of the State of
California; (c) “All Risks” property insurance in an amount adequate to cover
the full replacement cost of all Tenant Alterations, equipment, installations,
fixtures and contents of the Premises (except Landlord’s Furniture, as defined
in Article 21) in the event of loss; and (d) in the event a motor vehicle is to
be used by Tenant in connection with its business operation from the Premises,
Comprehensive Automobile Liability Insurance coverage with limits of not less
than One Million and No/100 Dollars ($1,000,000.00) combined single limit
coverage against bodily injury liability and property damage liability arising
out of the use by or on behalf of Tenant, its agents and employees in connection
with this Lease, of any owned, non-owned or hired motor vehicles.

 

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16.2 FORM OF POLICIES

Each policy referred to in Section 16.1 above shall satisfy the following
requirements. Each policy shall (i) name Landlord, Wareham Property Group and
the Indemnitees as additional insureds (except Workers’ Compensation and
Employers’ Liability Insurance), (ii) be issued by one or more responsible
insurance companies licensed to do business in the State of California
reasonably satisfactory to Landlord, (iii) where applicable, provide for
deductible amounts reasonably satisfactory to Landlord and not permit
co-insurance, (iv) shall provide that such insurance may not be canceled or
reduced without thirty (30) days’ prior written notice to the Landlord, and
(v) each policy of “All-Risks” property insurance shall provide that the policy
shall not be invalidated should the insured waive in writing prior to a loss,
any or all rights of recovery against any other party for losses covered by such
policies. Tenant shall deliver to Landlord, certificates of insurance and at
Landlord’s request, copies of all policies and renewals thereof to be maintained
by Tenant hereunder, not less than ten (10) days prior to the Commencement Date
and not less than ten (10) days prior to the expiration date of each policy.

16.3 LANDLORD’S INSURANCE

Landlord agrees to purchase and keep in full force and effect during the Term
hereof, including any extensions or renewals thereof, insurance under policies
issued by insurers of recognized responsibility, qualified to do business in the
State of California on the Project in amounts not less than the greater of one
hundred percent (100%) percent of the then full replacement cost (without
depreciation) of the Project (above foundations and including the Landlord Work
and Landlord’s Furniture, but excluding Tenant Alterations and Tenant’s
equipment, installations, fixtures and other contents of the Premises) or an
amount sufficient to prevent Landlord from becoming a co-insurer under the terms
of the applicable policies, against fire and such other risks as may be included
in standard forms of all risk coverage insurance reasonably available from time
to time, including, at Landlord’s option, earthquake insurance. Landlord agrees
to maintain in force during the Term, Commercial General Liability Insurance
covering the Project on an occurrence basis against all claims for personal
injury, bodily injury, death, and property damage. Such insurance shall be for a
combined single limit of not less than Three Million and No/100 Dollars
($3,000,000.00). Neither Landlord’s obligation to carry such insurance nor the
carrying of such insurance shall be deemed to be an indemnity by Landlord with
respect to any claim, liability, loss, cost or expense due, in whole or in part,
to Tenant’s negligent acts or omissions or willful misconduct. Without
obligation to do so, Landlord may, in its sole discretion from time to time,
carry insurance in amounts greater and/or for coverage additional to the
coverage and amounts set forth above.

16.4 WAIVER OF SUBROGATION

 

  (a) Landlord agrees that, so long as the same is permitted under the laws of
the State of California, it will include in its “All Risks” policies appropriate
clauses pursuant to which the insurance companies (i) waive all right of
subrogation against Tenant with respect to losses payable under such policies
and/or (ii) agree that such policies shall not be invalidated should the insured
waive in writing prior to a loss any or all right of recovery against any party
for losses covered by such policies.

 

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  (b) Tenant agrees to include, so long as the same is permitted under the laws
of the State of California, in its “All Risks” insurance policy or policies on
Tenant Alterations, whether or not removable, and on Tenant’s furniture,
furnishings, fixtures and other personal property removable by Tenant under the
provisions of this Lease appropriate clauses pursuant to which the insurance
company or companies (i) waive the right of subrogation against Landlord with
respect to losses payable under such policy or policies and/or (ii) agree that
such policy or policies shall not be invalidated should the insured waive in
writing prior to a loss any or all right of recovery against any party for
losses covered by such policy or policies. If Tenant is unable to obtain in such
policy or policies either of the clauses described in the preceding sentence,
Tenant shall, if legally possible and without necessitating a change in
insurance carriers, have Landlord named in such policy or policies as an
additional insured. If Landlord shall be named as an additional insured in
accordance with the foregoing, Landlord agrees to endorse promptly to the order
of Tenant, without recourse, any check, draft, or order for the payment of money
representing the proceeds of any such policy or representing any other payment
growing out of or connected with said policies, and Landlord does hereby
irrevocably waive any and all rights in and to such proceeds and payments.

 

  (c) Landlord hereby waives any and all right of recovery which it might
otherwise have against Tenant, its servants, agents and employees, for loss or
damage occurring to the Project and the fixtures, appurtenances and equipment
therein, to the extent the same is covered by Landlord’s insurance (or would
have been covered had Landlord maintained the insurance required to be
maintained by it under this Lease), notwithstanding that such loss or damage may
result from the negligence or fault of Tenant, its servants, agents or
employees. Tenant hereby waives any and all right of recovery which it might
otherwise have against Landlord, its servants, and employees for loss or damage
to Tenant Alterations, whether or not removable, and to Tenant’s furniture,
furnishings, fixtures and other property removable by Tenant under the
provisions hereof to the extent the same is covered by Tenant’s insurance
required (or would have been covered had Tenant maintained the insurance
required to be maintained by it under this Lease), notwithstanding that such
loss or damage may result from the negligence or fault of Landlord, its
servants, agents or employees.

 

  (d) Landlord and Tenant hereby agree to advise the other promptly if the
clauses to be included in their respective insurance policies pursuant to
subparagraphs (a) and (b) above cannot be obtained on the terms hereinbefore
provided and thereafter to furnish the other with a certificate of insurance or
copy of such policies showing the naming of the other as an additional insured,
as aforesaid. Landlord and Tenant hereby also agree to notify the other promptly
of any cancellation or change of the terms of any such policy that would affect
such clauses or naming. All such policies which name both Landlord and Tenant as
additional insureds shall, to the extent obtainable, contain agreements by the
insurers to the effect that no act or omission of any additional insured will
invalidate the policy as to the other additional insureds.

 

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16.5 NOTICE OF CASUALTY

Tenant shall give Landlord notice in case of a fire or accident in the Premises
promptly after Tenant is aware of such event.

ARTICLE 17

WAIVER OF CLAIMS AND INDEMNITY

17.1 WAIVER OF CLAIMS

To the extent permitted by Law, Tenant releases the Indemnitees from, and waives
all claims for, damage to person or property sustained by the Tenant or any
occupant of the Premises or the Property resulting directly or indirectly from
any existing or future condition, defect, matter or thing in and about the
Premises or the Property or any part of either or any equipment or appurtenance
therein, or resulting from any accident in or about the Premises or the
Property, or resulting directly or indirectly from any act or neglect of
Landlord, Landlord’s agents and servants, except to the extent caused by the
gross negligence or willful and wrongful act of any of the Indemnitees or by
Landlord’s breach of its obligations under this Lease. To the extent permitted
by Law, Tenant hereby waives any consequential damages and/or claims for loss of
business, rents, or profits as a result of such injury or damage, whether or not
caused by the gross negligence or willful and wrongful act of any of the
Indemnitees.

17.2 INDEMNITY BY TENANT

To the extent permitted by Law, Tenant hereby indemnifies, and agrees to
protect, defend and hold the Indemnitees harmless, against any and all actions,
claims, demands, liability, costs and expenses, including attorneys’ fees and
expenses for the defense thereof, arising from Tenant’s use of the Premises,
from the undertaking by Tenant of any Tenant Alterations or repairs to the
Premises, from the conduct of Tenant’s business on the Premises, or from any
breach or Default on the part of Tenant in the performance of any covenant or
agreement on the part of Tenant to be performed pursuant to the terms of this
Lease, or from any willful and wrongful act or negligence of Tenant, its agents,
contractors, servants, employees, customers or invitees, in or about the
Premises or the Property or any part of either. In case of any action or
proceeding brought against the Indemnitees by reason of any such claim, upon
notice from Landlord, Tenant covenants to defend such action or proceeding by
counsel chosen by Landlord in its reasonable discretion. Landlord reserves the
right to settle, compromise or dispose of any and all actions, claims and
demands related to the foregoing indemnity. The foregoing indemnity shall not
apply to or operate to relieve Indemnitees of liability to the extent such
liability is caused by the grossly negligent or willful and wrongful act of
Indemnitees. Further, the foregoing indemnity is subject to and shall not
diminish any waivers in effect in accordance with Section 16.4 by Landlord or
its insurers.

17.3 INDEMNITY BY LANDLORD

To the extent permitted by Law, Landlord hereby indemnifies, and agrees to
protect, defend and hold Tenant harmless, against any and all actions, claims,
demands, liability, costs and expenses, including attorneys’ fees and expenses
for the defense thereof, arising from any

 

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default on the part of Landlord in the performance of any covenant or agreement
on the part of Landlord to be performed pursuant to the terms of this Lease, or
from any willful and wrongful act or gross negligence of Landlord, its agents,
contractors, servants, employees, customers or invitees, in or about the
Premises or the Property or any part of either. In case of any action or
proceeding brought against Tenant by reason of any such claim, upon notice from
Tenant, Landlord covenants to defend such action or proceeding by counsel chosen
by Tenant in its reasonable discretion. Tenant reserves the right to settle,
compromise or dispose of any and all actions, claims and demands related to the
foregoing indemnity. The foregoing indemnity shall not apply to or operate to
relieve Tenant of liability to the extent such liability is caused by the
grossly negligent or willful and wrongful act of Tenant. Further, the foregoing
indemnity is subject to and shall not diminish any waivers in effect in
accordance with Section 16.4 by Tenant or its insurers.

ARTICLE 18

RULES AND REGULATIONS

18.1 RULES

Tenant agrees for itself and for its subtenants, employees, agents, and invitees
to comply with the rules and regulations listed on Exhibit C attached hereto and
with all reasonable modifications and additions thereto which Landlord may make
from time to time. If there is a conflict between this Lease and any rules and
regulations enacted after the date of this Lease, the terms of this Lease shall
control.

18.2 ENFORCEMENT

Nothing in this Lease shall be construed to impose upon the Landlord any duty or
obligation to enforce the rules and regulations as set forth on Exhibit C or as
hereafter adopted, or the terms, covenants or conditions of any other lease as
against any other tenant, and the Landlord shall not be liable to the Tenant for
violation of the same by any other tenant, its servants, employees, agents,
visitors or licensees. Landlord shall use reasonable efforts to enforce the
rules and regulations of the Project in a uniform and non-discriminatory manner.

ARTICLE 19

LANDLORD’S RESERVED RIGHTS

Landlord shall have the following rights exercisable without notice to Tenant
and without liability to Tenant for damage or injury to persons, property or
business and without being deemed an eviction or disturbance of Tenant’s use or
possession of the Premises or giving rise to any claim for offset or abatement
of Rent: (1) to change the Building’s name or street address upon thirty
(30) days’ prior written notice to Tenant; (2) to install, affix and maintain
all signs on the exterior and/or interior of the Building; (3) to designate
and/or approve prior to installation, all types of signs, window shades, blinds,
drapes, awnings or other similar items, and all internal lighting that may be
visible from the exterior of the Premises; (4) upon reasonable notice to Tenant,
to display the Premises to prospective purchasers and lenders at reasonable
hours at any

 

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time during the Term and to prospective tenants at reasonable hours during the
last twelve (12) months of the Term; (5) to grant to any party the exclusive
right to conduct any business or render any service in or to the Building,
provided such exclusive right shall not operate to prohibit Tenant from using
the Premises for the purpose permitted hereunder; (6) to change the arrangement
and/or location of entrances or passageways, doors and doorways, corridors,
elevators, stairs, washrooms or public portions of the Building, and to close
entrances, doors, corridors, elevators or other facilities, provided that such
action shall not materially and adversely interfere with Tenant’s access to the
Premises or the Building; (7) to have access for Landlord and other tenants of
the Building to any mail chutes and boxes located in or on the Premises as
required by any applicable rules of the United States Post Office; and (8) to
close the Building, except that Tenant and its employees and invitees shall be
entitled to admission at all times, under such regulations as Landlord
prescribes for security purposes. In exercising all such rights, Landlord shall
used reasonable efforts to minimize any disruption to Tenant and shall comply
with Tenant’s reasonable security measures and operating procedures.

ARTICLE 20

ESTOPPEL CERTIFICATE

20.1 IN GENERAL

Within ten (10) days after request therefor by Landlord, Mortgagee or any
prospective mortgagee or owner, Tenant agrees as directed in such request to
execute an Estoppel Certificate binding upon Tenant, certifying (i) that this
Lease is unmodified and in full force and effect (or if there have been
modifications, a description of such modifications and that this Lease as
modified is in full force and effect); (ii) the dates to which Rent has been
paid; (iii) that Tenant is in the possession of the Premises if that is the
case; (iv) that Landlord is not in default under this Lease, or, if Tenant
believes Landlord is in default, the nature thereof in reasonable detail;
(v) that Tenant has no offsets or defenses to the performance of its obligations
under this Lease (or if Tenant believes there are any offsets or defenses, a
reasonably detailed explanation thereof); (vi) that the Premises have been
completed in accordance with the terms and provisions hereof, that Tenant has
accepted the Premises and the condition thereof and of all improvements thereto
and has no claims against Landlord or any other party with respect thereto, or,
if Tenant believes that Tenant has any such claims against Landlord, the nature
thereof in reasonable detail; (vii) that if an assignment of rents or leases has
been served upon the Tenant by a Mortgagee, Tenant will acknowledge receipt
thereof and agree to be bound by the provisions thereof; (viii) that Tenant will
give to the Mortgagee copies of all notices required or permitted to be given by
Tenant to Landlord; and (ix) to any other information reasonably requested.

20.2 ENFORCEMENT

In the event that Tenant fails to deliver an Estoppel Certificate within ten
(10) additional days after notice that such Estoppel Certificate is past-due,
then such failure shall be a Default for which there shall be no further cure or
grace period.

 

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ARTICLE 21

LANDLORD’S FURNITURE

 

  (a) Landlord and Tenant hereby acknowledge that, as of the Date of Lease, the
Premises contains the furniture and furnishings owned by Landlord described on
Exhibit E hereto (“Landlord’s Furniture”). Throughout the Term of this Lease,
(i) Tenant shall have the exclusive use of the Landlord’s Furniture without
charge, (ii) Landlord shall maintain insurance covering Landlord’s Furniture
pursuant to Section 16.3, and (iii) Landlord shall promptly repair or replace
any Landlord’s Furniture damaged by casualty, if required pursuant to Article
14.

 

  (b) From time to time during the Term, Tenant may disassemble, remove, and
transfer any item(s) of Landlord’s Furniture to a warehouse owned or rented by
Landlord or its Affiliate, as designated by Landlord (“Landlord’s Warehouse”) by
delivering written notice to Landlord specifying the date of transfer and
item(s) of Landlord’s Furniture to be transferred; provided, however, the
location of any such Landlord’s Warehouse shall be in Berkeley, Richmond, or
Emeryville, California. Tenant’s notice to Landlord must be delivered to
Landlord not less than two (2) business days prior to the date of transfer.
Tenant shall repair or cause to be repaired any and all damage caused by the
disassembly, removal, or transfer of Landlord’s Furniture; however, Landlord
shall be responsible for the storage costs of such item(s). Tenant may not
request that any previously removed item of Landlord’s Furniture be reinstalled.
Tenant hereby acknowledges that Landlord may sell or use, in Landlord’s sole
discretion, any item(s) of Landlord’s Furniture removed from the Premises in
accordance with this Article 21.

ARTICLE 22

REAL ESTATE BROKERS

Tenant represents that, except for the broker(s) listed in Section 1.1(14),
Tenant has not dealt with any real estate broker, sales person, or finder in
connection with this Lease, and no such person initiated or participated in the
negotiation of this Lease, or showed the Premises to Tenant. Tenant hereby
agrees to indemnify, protect, defend and hold Landlord and the Indemnitees,
harmless from and against any and all liabilities and claims for commissions and
fees arising out of a breach of the foregoing representation. Landlord agrees to
pay any commission to which the brokers listed in Section 1.1 are entitled in
connection with this Lease pursuant to Landlord’s written agreement with such
broker.

 

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ARTICLE 23

MORTGAGEE PROTECTION

23.1 SUBORDINATION AND ATTORNMENT

This Lease is and shall be expressly subject and subordinate at all times to
(i) any ground or underlying lease of the Real Property, now or hereafter
existing, and all amendments, extensions, renewals and modifications to any such
lease, and (ii) the lien of any mortgage or trust deed now or hereafter
encumbering fee title to the Real Property and/or the leasehold estate under any
such lease, and all amendments, extensions, renewals, replacements and
modifications of such mortgage or trust deed and/or the obligation secured
thereby, unless such ground lease or ground lessor, or mortgage, trust deed or
Mortgagee, expressly provides or elects that the Lease shall be superior to such
lease or mortgage or trust deed. If any such mortgage or trust deed is
foreclosed (including any sale of the Real Property pursuant to a power of
sale), or if any such lease is terminated, upon request of the Mortgagee or
ground lessor, as the case may be, Tenant shall attorn to the purchaser at the
foreclosure sale or to the ground lessor under such lease, as the case may be,
provided, however, that such purchaser or ground lessor shall not be (i) bound
by any payment of Rent for more than one month in advance except payments in the
nature of security for the performance by Tenant of its obligations under this
Lease; (ii) subject to any offset, or damages arising out of a default of any
obligations of any preceding Landlord (except that such purchaser or ground
lessor shall be liable for continuing defaults, such as a continuing failure to
repair and maintain); or (iii) bound by any amendment or modification of this
Lease made without the written consent of the Mortgagee or ground lessor; or
(iv) liable for any security deposits not actually received in cash by such
purchaser or ground lessor. This subordination shall be self-operative and no
further certificate or instrument of subordination need be required by any such
Mortgagee or ground lessor. In confirmation of such subordination, however,
Tenant shall execute promptly any reasonable certificate or instrument that
Landlord, Mortgagee or ground lessor may request. Upon request by such successor
in interest, Tenant shall execute and deliver reasonable instruments confirming
the attornment provided for herein. Notwithstanding the foregoing, upon written
request by Tenant, Landlord will use reasonable efforts to obtain a
non-disturbance, subordination and attornment agreement from Landlord’s then
current Mortgagee on a commercially reasonable form of agreement. “Reasonable
efforts” of Landlord shall not require Landlord to incur any cost, expense or
liability to obtain such agreement, it being agreed that Tenant shall be
responsible for any fee or review costs charged by the Mortgagee. Upon request
of Landlord, Tenant will execute the Mortgagee’s commercially reasonable form of
non-disturbance, subordination and attornment agreement and return the same to
Landlord for execution by the Mortgagee. Landlord’s failure to obtain a
non-disturbance, subordination and attornment agreement for Tenant shall have no
effect on the rights, obligations and liabilities of Landlord and Tenant or be
considered to be a default by Landlord hereunder.

23.2 MORTGAGEE PROTECTION

Tenant agrees to give any Mortgagee or ground lessor, by registered or certified
mail or by overnight courier, a copy of any notice of default served upon
Landlord by Tenant, provided that prior to such notice Tenant has received
notice (by way of service on Tenant of a copy of an

 

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assignment of rents and leases, or otherwise) of the address of such Mortgagee
or ground lessor. Tenant further agrees that if Landlord shall have failed to
cure such default within the time provided for in this Lease, then the Mortgagee
or ground lessor shall have an additional thirty (30) days after receipt of
notice thereof within which to cure such default or if such default cannot be
cured within that time, then such additional notice time as may be necessary,
if, within such thirty (30) days, any Mortgagee or ground lessor has commenced
and is diligently pursuing the remedies necessary to cure such default
(including commencement of foreclosure proceedings or other proceedings to
acquire possession of the Real Property, if necessary to effect such cure). Such
period of time shall be extended by any period within which such Mortgagee or
ground lessor is prevented from commencing or pursuing such foreclosure
proceedings or other proceedings to acquire possession of the Real Property by
reason of Landlord’s bankruptcy. Until the time allowed as aforesaid for
Mortgagee or ground lessor to cure such defaults has expired without cure,
Tenant shall have no right to, and shall not, terminate this Lease on account of
default. No ground lessor or Mortgagee shall be bound by any agreement to modify
or amend this Lease so as to reduce the Rent or shorten the Term, or so as to
cancel or surrender this Lease, without the prior written consent, in each
instance, of the ground lessor or the Mortgagee.

ARTICLE 24

NOTICES

All notices, demands or requests provided for or permitted to be given pursuant
to this Lease must be in writing and shall be personally delivered, sent by
Federal Express or other reputable overnight courier service, or mailed by first
class, registered or certified United States mail, return receipt requested,
postage prepaid. All notices, demands or requests to be sent pursuant to this
Lease shall be deemed to have been properly given or served by delivering or
sending the same in accordance with this Section, addressed to the parties
hereto at their respective addresses listed in Sections 1.1. Notices, demands or
requests sent by mail or overnight courier service as described above shall be
effective upon deposit in the mail or with such courier service. However, the
time period in which a response to any such notice, demand or request must be
given shall commence to run from (i) in the case of delivery by mail, the date
of receipt on the return receipt of the notice, demand or request by the
addressee thereof, or (ii) in the case of delivery by Federal Express or other
overnight courier service, the date of acceptance of delivery by an employee,
officer, director or partner of Landlord or Tenant. Rejection or other refusal
to accept or the inability to deliver because of changed address of which no
notice was given, as indicated by advice from Federal Express or other overnight
courier service or by mail return receipt, shall be deemed to be receipt of
notice, demand or request sent. Notices may also be served by personal service
upon any officer, director or partner of Landlord or Tenant, and shall be
effective upon such service. By giving to the other party at least thirty
(30) days written notice thereof, either party shall have the right from time to
time during the term of this Lease to change their respective addresses for
notices, statements, demands and requests, provided such new address shall be
within the United States of America.

 

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ARTICLE 25

MISCELLANEOUS

25.1 LATE CHARGES

 

  (a) All payments required hereunder (other than the Monthly Base Rent, Rent
Adjustments, and Rent Adjustment Deposits, which shall be due as hereinbefore
provided) to Landlord shall be paid within thirty (30) days after Landlord’s
demand therefor. All such amounts (including Monthly Base Rent, Rent
Adjustments, and Rent Adjustment Deposits) not paid when due shall bear interest
from the date due until the date paid at the Default Rate in effect on the date
such payment was due.

 

  (b) In the event Tenant is more than five (5) days late in paying any
installment of Rent due under this Lease, Tenant shall pay Landlord a late
charge equal to five percent (5%) of the delinquent installment of Rent. The
parties agree that (i) such delinquency will cause Landlord to incur costs and
expenses not contemplated herein, the exact amount of which will be difficult to
calculate, including the cost and expense that will be incurred by Landlord in
processing each delinquent payment of rent by Tenant, (b) the amount of such
late charge represents a reasonable estimate of such costs and expenses and that
such late charge shall be paid to Landlord for each delinquent payment in
addition to all Rent otherwise due hereunder. The parties further agree that the
payment of late charges and the payment of interest provided for in subparagraph
(a) above are distinct and separate from one another in that the payment of
interest is to compensate Landlord for its inability to use the money improperly
withheld by Tenant, while the payment of late charges is to compensate Landlord
for its additional administrative expenses in handling and processing delinquent
payments.

 

  (c) Payment of interest at the Default Rate and/or of late charges shall not
excuse or cure any default by Tenant under this Lease, nor shall the foregoing
provisions of this Article or any such payments prevent Landlord from exercising
any right or remedy available to Landlord upon Tenant’s failure to pay Rent when
due, including the right to terminate this Lease.

25.2 NO JURY TRIAL; VENUE; JURISDICTION

Each party hereto (which includes any assignee, successor, heir or personal
representative of a party) shall not seek a jury trial, hereby waives trial by
jury, and hereby further waives any objection to venue in the County in which
the Project is located, and agrees and consents to personal jurisdiction of the
courts of the State of California, in any action or proceeding or counterclaim
brought by any party hereto against the other on any matter arising out of this
Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the
Premises, or the enforcement of any remedy under any statute, emergency or
otherwise, whether any of the foregoing is based on this Lease or on tort law.
No party will seek to consolidate any such action in which a jury has been
waived with any other action in which a jury trial cannot or has not been

 

51

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waived. It is the intention of the parties that these provisions shall be
subject to no exceptions. By execution of this Lease the parties agree that this
provision may be filed by any party hereto with the clerk or judge before whom
any action is instituted, which filing shall constitute the written consent to a
waiver of jury trial pursuant to and in accordance with Section 631 of the
California Code of Civil Procedure. No party has in any way agreed with or
represented to any other party that the provisions of this Section will not be
fully enforced in all instances. The provisions of this Section shall survive
the expiration or earlier termination of this Lease.

25.3 NO OPTION

This Lease shall not become effective as a lease or otherwise until executed and
delivered by both Landlord and Tenant. The submission of the Lease to Tenant
does not constitute a reservation of or option for the Premises.

25.4 AUTHORITY

Landlord and Tenant each represents and warrants to the other that it has full
authority and power to enter into and perform its obligations under this Lease,
that the person executing this Lease is fully empowered to do so, and that no
consent or authorization is necessary from any third party. Landlord or Tenant
may request that the other provide evidence of its authority.

25.5 ENTIRE AGREEMENT

This Lease, and the Exhibits attached hereto contain the entire agreement
between Landlord and Tenant concerning the Premises and there are no other
agreements, either oral or written, and no other representations or statements,
either oral or written, on which Tenant has relied. This Lease shall not be
modified except by a writing executed by Landlord and Tenant.

25.6 OFAC. Tenant hereby represents, certifies and warrants to Landlord as
follows: (i) Tenant is not named and is not acting, directly or indirectly, for
or on behalf of any person, group, entity or nation named by any Executive
Order, including without limitation Executive Order 13224, or the United States
Treasury Department as a terrorist, “Specially Designated National and Blocked
Person,” or other banned or blocked person, entity, nation or transaction
pursuant to any law, order, rule or regulation that is enacted, enforced or
administered by the Office of Foreign Assets Control (“OFAC”); (ii) Tenant is
not engaged in this transaction, directly or indirectly, for or on behalf of, or
instigating or facilitating this transaction, directly or indirectly on behalf
of, any such person, group, entity or nation; and (iii) none of the proceeds
used to pay rent have been or will be derived from a “specified unlawful
activity” as defined in, and Tenant is not otherwise in violation of, the Money
Laundering Control Act of 1986, as amended, or any other applicable laws
regarding money laundering activities. Furthermore, Tenant agrees to immediately
notify Landlord if Tenant was, is, or in the future becomes, a “senior foreign
political figure” or an immediate family member or close associate of a “senior
foreign political figure,” within the meaning of Section 312 of the USA PATRIOT
Act of 2001. Notwithstanding anything in this Lease to the contrary, Tenant
understands that this Lease is a continuing transaction and that the foregoing
representations, certifications and warranties are ongoing and shall be and
remain true and in force on the date hereof and throughout the Term of this
Lease and that any breach thereof shall be a Default under this Lease (not
subject to any

 

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notice or cure rights) giving rise to any and all Landlord remedies hereunder,
and Tenant hereby agrees to defend, indemnify and hold harmless Landlord from
and against any and all claims, damages, losses, risks, liabilities, fines,
penalties, forfeitures and expenses (including without limitation costs and
attorneys’ fees) arising from or related to any such Default.

25.7 EXCULPATION

Tenant agrees, on its behalf and on behalf of its successors and assigns, that
any liability or obligation under this Lease shall only be enforced against
Landlord’s equity interest in the Property (including, without limitation, any
rental insurance and condemnation proceeds thereof) and in no event against any
other assets of the Landlord, or Landlord’s officers or directors or partners,
and that any liability of Landlord with respect to this Lease shall be so
limited and Tenant shall not be entitled to any judgment in excess of such
amount.

25.8 ACCORD AND SATISFACTION

No payment by Tenant or receipt by Landlord of a lesser amount than any
installment or payment of Rent due shall be deemed to be other than on account
of the amount due, and no endorsement or statement on any check or any letter
accompanying any check or payment of Rent shall be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord’s right to recover the balance of such installment or payment of Rent
or pursue any other remedies available to Landlord. No receipt of money by
Landlord from Tenant after the termination of this Lease or Tenant’s right of
possession of the Premises shall reinstate, continue or extend the Term. Receipt
or acceptance of payment from anyone other than Tenant, including an assignee of
Tenant, is not a waiver of any breach of Article Ten, and Landlord may accept
such payment on account of the amount due without prejudice to Landlord’s right
to pursue any remedies available to Landlord.

25.9 LANDLORD’S OBLIGATIONS ON SALE OF BUILDING

In the event of any sale or other transfer of the Building, Landlord shall be
entirely freed and relieved of all agreements and obligations of Landlord
hereunder accruing or to be performed after the date of such sale or transfer,
provided that the transferee expressly assumes all liabilities and obligations
of the Landlord under this Lease. Landlord shall have the right to assign this
Lease to an entity comprised of the principals of Landlord or affiliates of such
entities. Upon such assignment and assumption of the obligations of Landlord by
Landlord’s successor hereunder, Landlord shall be entirely freed and relieved of
all obligations hereunder accruing after the date of such transfer.

25.10 BINDING EFFECT

Subject to the provisions of Article Ten, this Lease shall be binding upon and
inure to the benefit of Landlord and Tenant and their respective heirs, legal
representatives, successors and permitted assigns.

 

53

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25.11 CAPTIONS

The Article and Section captions in this Lease are inserted only as a matter of
convenience and in no way define, limit, construe, or describe the scope or
intent of such Articles and Sections.

25.12 TIME; APPLICABLE LAW; CONSTRUCTION

Time is of the essence of this Lease and each and all of its provisions. This
Lease shall be construed in accordance with the Laws of the State of California.
If more than one person signs this Lease as Tenant, the obligations hereunder
imposed shall be joint and several. If any term, covenant or condition of this
Lease or the application thereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term, covenant or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each item, covenant or condition of this Lease shall be
valid and be enforced to the fullest extent permitted by Law. Wherever the term
“including” or “includes” is used in this Lease, it shall have the same meaning
as if followed by the phrase “but not limited to”. The language in all parts of
this Lease shall be construed according to its normal and usual meaning and not
strictly for or against either Landlord or Tenant.

25.13 ABANDONMENT

In the event Tenant vacates or abandons the Premises, but is otherwise in
compliance with all the terms, covenants and conditions of this Lease, Landlord
shall (i) have the right to enter into the Premises in order to show the space
to prospective tenants, (ii) have the right to reduce the services provided to
Tenant pursuant to the terms of this Lease to such levels as Landlord reasonably
determines to be adequate services for an unoccupied premises and (iii) during
the last six (6) months of the Term, have the right to prepare the Premises for
occupancy by another tenant upon the end of the Term. Tenant expressly
acknowledges that in the absence of written notice pursuant to Section 11.2(b)
or pursuant to California Civil Code Section 1951.3 terminating Tenant’s right
to possession, none of the foregoing acts of Landlord or any other act of
Landlord shall constitute a termination of Tenant’s right to possession or an
acceptance of Tenant’s surrender of the Premises, and the Lease shall continue
in effect.

25.14 LANDLORD’S RIGHT TO PERFORM TENANT’S DUTIES

If a Default of Tenant exists due to Tenant’s failure to perform any of its
duties under this Lease, Landlord shall have the right (but not the obligation),
to perform such duty on behalf and at the expense of Tenant without further
notice to Tenant and all sums expended or expenses incurred by Landlord in
performing such duty shall be deemed to be additional Rent under this Lease and
shall be due and payable upon demand by Landlord.

25.15 SECURITY

Except as otherwise provided in this Section, Landlord shall not be obligated to
provide or maintain any security patrol or security system. Landlord and Tenant
acknowledge that as of the date of this Lease, the Premises are equipped with a
security system installed by a prior

 

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tenant of the Premises, but Landlord makes no representation or warranty of any
sort with respect to such security system. Landlord shall not be responsible for
the quality of any patrol or system which may be provided hereunder or for
damage or injury to Tenant, its employees, invitees or others due to the
failure, action or inaction of such patrol or system. Landlord and Tenant
acknowledge and agree that as of the date of this Lease, Landlord contracts with
a provider to patrol the exterior of the Building and/or Project only.
Notwithstanding the foregoing, Landlord shall, from time to time, have the right
to change providers for such security services.

25.16 NO LIGHT, AIR OR VIEW EASEMENTS

Any diminution or shutting off of light, air or view by any structure which may
be erected on lands of or adjacent to the Project shall in no way affect this
Lease or impose any liability on Landlord.

25.17 RECORDATION

Neither this Lease, nor any notice nor memorandum regarding the terms hereof,
shall be recorded by Tenant. Any such unauthorized recording shall be a Default
for which there shall be no cure or grace period.

25.18 SURVIVAL

The waivers of the right of jury trial, the other waivers of claims or rights,
the releases and the obligations of Landlord and Tenant under this Lease to
indemnify, protect, defend and hold harmless Tenant, Landlord and/or
Indemnitees, as applicable, shall survive the expiration or termination of this
Lease, and so shall all other obligations or agreements which by their terms
survive expiration or termination of the Lease.

25.19 RIDERS

All Riders attached hereto and executed both by Landlord and Tenant shall be
deemed to be a part hereof and hereby incorporated herein.

25.20 COUNTERPARTS; PDF.

This Lease may be executed in multiple counterparts each of which is deemed an
original but together constitute one and the same instrument. This Lease may be
executed in so-called “pdf” format and each party has the right to rely upon a
pdf counterpart of this Lease signed by the other party to the same extent as if
such party had received an original counterpart.

[SIGNATURES ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, this Lease has been executed as of the date set forth in
Section 1.1 hereof.

 

TENANT:     LANDLORD:

TRANSCEPT PHARMACEUTICALS, INC.,

a Delaware corporation

   

POINT RICHMOND R&D ASSOCIATES II, LLC,

a California limited liability company

By:  

/s/ Glenn Oclassen

    By:  

/s/ Richard K. Robbins

  Glenn Oclassen, CEO      

Richard K. Robbins

Manager

 

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EXHIBIT A

PLAN OF PREMISES

 

1

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LOGO [g70436exa_p58.jpg]

Exhibit A

POINT RICHMOND

TECH CENTER

SITE PLAN

SHOWING SUITES

501 AND 503

CANAL BOULEVARD

WEST CUTTING BOULEVARD

PREMISES

WINE STREET

EAST RICHMOND AVENUE

503 B

A

503 A

B

C

C-2

D

J

I

H

G

F

E

CANAL BOULEVARD

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EXHIBIT B

WORKLETTER

Landlord will perform, at its sole cost and expense the work described in this
Exhibit B (the “Landlord Work”), and shall deliver the Premises to Tenant with
the Landlord Work Substantially Complete. By its execution of the Lease, Tenant
has authorized Landlord to commence with construction of the Landlord Work. The
Landlord Work shall be as follows:

 

  1. Install eight (8) windows in the Premises, such windows to be as described
and of the dimensions and at the locations identified in Schedule 1 attached to
this Exhibit B;

 

  2. construct a paved stone and gravel walkway connecting the Building to the
parking lot serving the building located at 1003 West Cutting Boulevard,
Richmond, California;

 

  3. clean and patch the carpet within the Premises and install carpet in one
private office as noted on Schedule 1;

 

  4. remove decorative steel sculptures and lights behind the reception desk in
the Premises and patch and paint the wall as necessary as noted on Schedule 1;
and

 

  5. remove the high density file storage system in the Premises and patch
carpet as necessary due to such removal.

Landlord shall perform the Landlord Work using new materials of good quality, in
accordance with applicable Laws, and in a good and workmanlike manner reasonably
acceptable to Tenant. In the event of any Tenant Delay, Substantial Completion
of the Landlord Work shall be the date Landlord reasonably would have
Substantially Completed such Landlord Work but for the Tenant Delay.

 

1

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SCHEDULE 1 to Exhibit B

[ATTACHED]

 

2

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LOGO [g70436exa_p61.jpg]

Schedule 1 to

Exhibit B

page 1/2

Remove

tower, lights, patch & print.

2 windows

1 window

2 windows

2 windows

new carpet

Remove file system.

& patch carpet

Professionally clean carpets to remove stains.

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

LOGO [g70436exa_p62.jpg]

Schedule 1 to

Exhibit B

page 2/2

501 CANAL BOULEVARD SUITE E

NEW WINDOW INSTALLATION

±4”

60”

30”

48”

FLOOR

FRAMES TO BE ANODIZED ALUMINUM TO MATCH EXISTING IN THE SUITE

2/6/09

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

EXHIBIT C

RULES AND REGULATIONS

1. No sidewalks, entrance, passages, courts, elevators, vestibules, stairways,
corridors or halls shall be obstructed or encumbered by Tenant or used for any
purpose other than ingress and egress to and from the Premises and if the
Premises are situated on the ground floor of the Project, Tenant shall further,
at Tenant’s own expense, keep the sidewalks and curb directly in front of the
Premises clean and free from rubbish.

2. No awning or other projection shall be attached to the outside walls or
windows of the Project without the prior written consent of Landlord. No
curtains, blinds, shades, drapes or screens shall be attached to or hung in, or
used in connection with any window or door of the Premises, without the prior
written consent of Landlord. Such awnings, projections, curtains, blinds,
shades, drapes, screens and other fixtures must be of a quality, type, design,
color, material and general appearance approved by Landlord, and shall be
attached in the manner approved by Landlord. All lighting fixtures hung in
offices or spaces along the perimeter of the Premises must be of a quality,
type, design, bulb color, size and general appearance approved by Landlord.

3. No sign, advertisement, notice, lettering, decoration or other thing shall be
exhibited, inscribed, painted or affixed by Tenant on any part of the outside or
inside of the Premises or of the Project, without the prior written consent of
Landlord. In the event of the violation of the foregoing by Tenant, Landlord may
remove same without any liability, and may charge the expense incurred by such
removal to Tenant.

4. The sashes, sash doors, skylights, windows and doors that reflect or admit
light or air into the halls, passageways or other public places in the Project
shall not be covered or obstructed by Tenant, nor shall any bottles, parcels or
other articles be placed on the window sills or in the public portions of the
Project.

5. No showcases or other articles shall be put in front of or affixed to any
part of the exterior of the Project, nor placed in public portions thereof
without the prior written consent of Landlord.

6. The water and wash closets and other plumbing fixtures shall not be used for
any purposes other than those for which they were constructed, and no sweepings,
rubbish, rags or other substances shall be thrown therein. All damages resulting
from any misuse of the fixtures shall be borne by Tenant to the extent that
Tenant or Tenant’s agents, servants, employees, contractors, visitors or
licensees shall have caused the same.

7. Tenant shall not mark, paint, drill into or in any way deface any part of the
Premises or the Project. No boring, cutting or stringing of wires shall be
permitted, except with the prior written consent of Landlord, and as Landlord
may direct.

8. No animal or bird of any kind shall be brought into or kept in or about the
Premises or the Project, except seeing-eye dogs or other seeing-eye animals.

 

1

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9. Tenant shall not make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of the Project, or neighboring
buildings or premises, or those having business with them. Tenant shall not
throw anything out of the doors, windows or skylights or down the passageways.

10. Except as expressly permitted under the Lease, neither Tenant nor any of
Tenant’s agents, servants, employees, contractors, visitors or licensees shall
at any time bring or keep upon the Premises any flammable, combustible or
explosive fluid, chemical or substance.

11. No additional locks, bolts or mail slots of any kind shall be placed upon
any of the doors or windows by Tenant, nor shall any change be made in existing
locks or the mechanism thereof; provided, however, that subject to the
provisions of Article 9 of the Lease, Tenant shall have the right to install a
card-key or other security system at the Premises. Tenant must, upon the
termination of the tenancy, 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 any keys so furnished, Tenant shall pay to Landlord the
cost thereof.

12. All removals, or the carrying in or out of any safes, freight, furniture,
construction material, bulky matter or heavy equipment of any description must
take place during the hours which Landlord or its agent may determine from time
to time. Landlord reserves the right to prescribe the weight and position of all
safes, which must be placed upon two-inch thick plank strips to distribute the
weight. The moving of safes, freight, furniture, fixtures, bulky matter or heavy
equipment of any kind must be made upon previous notice to the Building Manager
and in a manner and at times prescribed by him, and the persons employed by
Tenant for such work are subject to Landlord’s prior approval. Landlord reserves
the right to inspect all safes, freight or other bulky articles to be brought
into the Project and to exclude from the Project all safes, freight or other
bulky articles which violate any of these Rules and Regulations or the Lease of
which these Rules and Regulations are a part.

13. Tenant shall not purchase spring water, janitorial or maintenance or other
like service 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 security and proper
operation of the Project.

14. Landlord shall have the right to prohibit any advertising or business
conducted by Tenant referring to the Project which, in Landlord’s opinion, tends
to impair the reputation of the Project or its desirability as a first class
building for offices and/or commercial services and upon notice from Landlord,
Tenant shall refrain from or discontinue such advertising.

15. Tenant’s contractors shall, while in the Premises or elsewhere in the
Project, be subject to the reasonable supervision of the Building Manager (but
not as agent or servant of said Building Manager or of Landlord).

16. 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 same 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.

 

2

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17. The requirements of Tenant will be attended to only upon application at the
office of the Project. Project personnel shall not perform any work or do
anything outside of their regular duties unless under special instructions from
the office of the Landlord.

18. Canvassing, soliciting and peddling in the Project are prohibited and Tenant
shall cooperate to prevent the same.

19. No air conditioning unit or system or similar apparatus shall be installed
or used by Tenant without the written consent of Landlord.

20. There shall not be used in any premises, or in the public halls, plaza
areas, lobbies, or elsewhere in the Project, either by Tenant or by Tenant’s
contractors or others, in the delivery or receipt of merchandise, any hand
trucks or dollies, except those equipped with rubber tires and sideguards.

21. Tenant, Tenant’s agents, servants, employees, contractors, licensees, or
visitors shall not park any vehicles in any driveways, service entrances, or
areas posted “No Parking” and shall comply with any other parking restrictions
imposed by Landlord from time to time.

22. Tenant shall install and maintain, at Tenant’s sole cost and expense, an
adequate visibly marked (at all times properly operational) fire extinguisher
next to any duplicating or photocopying machine or similar heat producing
equipment, which may or may not contain combustible material, in the Premises.

23. Tenant shall not use the name of the Project for any purpose other than as
the address of the business to be conducted by Tenant in the Premises, nor shall
Tenant use any picture of the Project in its advertising, stationery or in any
other manner without the prior written permission of Landlord. Landlord
expressly reserves the right at any time to change said name without in any
manner being liable to Tenant therefor.

24. Tenant shall not prepare any food nor do any cooking, operate or conduct any
restaurant, luncheonette or cafeteria for the sale or service of food or
beverages to its employees or to others, except that food and beverage
preparation by Tenant’s employees using microwave ovens or coffee makers shall
be permitted provided no odors of cooking or other processes emanate from the
Premises. Tenant shall not install or permit the installation or use of any
vending machine or permit the delivery of any food or beverage to the Premises
except by such persons and in such manner as are approved in advance in writing
by Landlord.

25. The Premises shall not be used as an employment agency, a public
stenographer or typist, a labor union office, a physician’s or dentist’s office,
a dance or music studio, a school, a beauty salon, or barber shop, the business
of photographic, multilith or multigraph reproductions or offset printing (not
precluding using any part of the Premises for photographic, multilith or
multigraph reproductions solely in connection with Tenant’s own business and/or
activities), a restaurant or bar, an establishment for the sale of
confectionery, soda, beverages, sandwiches, ice cream or baked goods, an
establishment for preparing, dispensing or

 

3

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consumption of food or beverages of any kind in any manner whatsoever, or news
or cigar stand, or a radio, television or recording studio, theatre or
exhibition hall or sale of merchandise, goods, services or property of any kind
at wholesale, retail or auction, or for lodging, sleeping or for any immoral
purposes.

26. Business machines and mechanical equipment shall be placed and maintained by
Tenant at Tenant’s expense in settings sufficient in Landlord’s judgment to
absorb and prevent vibration, noise and annoyance. Tenant shall not install any
machine or equipment which causes noise, heat, cold or vibration to be
transmitted to the structure of the building in which the Premises are located
without Landlord’s prior written consent, which consent may be conditioned on
such terms as Landlord may reasonably require. Tenant shall not place a load
upon any floor of the Premises exceeding the floor load per square foot that
such floor was designed to carry and which is allowed by Law.

27. Tenant shall not bring any Hazardous Materials onto the Premises except for
those that are in general commercial use and are incidental to Tenant’s business
operations and only in quantities suitable for prompt use and as otherwise
expressly permitted by the Lease.

28. Tenant shall not store any vehicle within the parking area. Tenant’s parking
rights are limited to the use of parking spaces for short-term parking, of up to
twenty-four (24) hours, of vehicles utilized in the normal and regular daily
travel to and from the Project. Tenants who wish to park a vehicle for longer
than a 24-hour period shall notify the Building Manager for the Project and
consent to such long-term parking may be granted for periods up to two
(2) weeks. Any motor vehicles parked without the prior written consent of the
Building Manager for the Project for longer than a 24-hour period and that have
not been moved within twenty-four (24) hours after the Building Manager shall
have given Tenant written notice thereof shall be deemed stored in violation of
this rule and regulation and shall be towed away and stored at the owner’s
expense or disposed of as provided by Law.

29. Smoking is prohibited in the Premises, the Building and all enclosed Common
Areas of the Project, including all lobbies, all hallways, all elevators and all
lavatories.

 

4

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EXHIBIT D

VISITOR SPACES

 

D-1

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

EXHIBIT E

LANDLORD’S FURNITURE

 

E-1

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LOGO [g70436exa_p69.jpg]

EXHIBIT E

501 CANAL BOULEVARD – SUITE E FURNITURE:

ENTRANCE:

Reception Area:

4 Office Chairs – gray

2 desk chairs – purple

One “T” shaped reception desk, wood

MAIN CONFERENCE ROOM:

1 Large Conference Table

1 Credenza (matching)

1 Telephone Table

9 Purple Conference Room Chairs

1 White Board

ENTER MAIN SUITE AREA – TURN RIGHT:

OFFICE 120 –

1 “L” Shaped Desk

1 matching bookcase – 2 shelves – wooden

1 Desk Chair – purple

1 Office Chair – gray

OFFICE 119 –

1 rectangular Shaped Desk – wooden

1 Credenza

1 Bookcase Cabinet (door) – 3 shelves – wooden

1 Desk Chair – gray

OFFICE 118 –

1 “U” Shaped Desk

1 Credenza

1 Bookcase Cabinet (door) – no shelves

1 Desk Chair – blue

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

LOGO [g70436exa_p70.jpg]

OFFICE 117 –

1 “L” Shaped Desk

1 Bookcase Cabinet (door) – 3 shelves

1 Credenza

1 Desk Chair – grey

2 Office Chairs – gray

OFFICE 116 – (No ‘nameplate”) –

1 “L” Shaped Desk

1 Bookcase Cabinet (door) – 3 shelves

1 Desk Chair – gray

WORK AREA (along right corridor) –

5 Filing Cabinets – lateral – 4 drawer, dark grey

1 Filing Cabinet – 3 drawer, black wheeled

OFFICE 115 –

1 “L” Shaped Desk

1 round table – wooden

1 Desk Chair – gray

2 Office Chairs – gray

1 Dry Erase board

OFFICE 114 –

1 “L” Shaped Desk

1 Credenza

1 Bookcase – 4 shelves (open)

1 Desk Chair – black

2 Office Chairs – gray

OFFICE 113 –

1 “L” Shaped Desk

1 Bookcase Cabinet (door) – 1 shelf

1 Desk Chair – gray

OFFICE 112 –

1 “L” Shaped Desk

1 Bookcase Cabinet (door) – 2 shelves

1 Bookcase – 2 shelves (open)

1 Desk Chair – gray

1 Office Chair - gray

BACK WALL – (along rear corridor) –

9 Filing Cabinets – lateral - 4 drawer, dark grey

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LOGO [g70436exa_p71.jpg]

ROOM 111 – Employee Break Room –

3 stools

3 Round Tables w/silver legs

24 Chairs (portable) – grey with silver legs

1 Refrigerator

1 Dishwasher

1 Microwave

ROOM 110 – Filing System Room –

2 Filing Cabinet – vertical - 4 drawer, beige

4 Filing Cabinets – vertical - 4 drawer – black

1 Filing Cabinet – vertical - 4 drawer – brown

3 Filing Cabinets –lateral - 4 drawer – beige

5 Filing Cabinets – lateral - 4 drawer – lighter beige

1 Filing Cabinet – lateral - 4 drawer – black

1 rectangular work table w/silver legs – wooden

1 cork bulletin board

1 stepping stool

1 phone

ROOM 109 – Copy Room –

5 Work Tables – Green Laminate tops/black metal legs

2 Filing Cabinets – lateral - 4 drawer, dark grey

SEMI-CUBICLE AREA – (near back door corridor)

2 Filing Cabinets – lateral – 4 drawer, dark grey

1 Filing Cabinet – 2 drawer, black wheeled

1 Filing Cabinet – 3 drawer, black wheeled

1 Desk Chair – purple

JANITOR’S CLOSET –

2 Rubbermaid Storage Cabinets

1 Metal Shelf Rack (6 shelves)

ROOM 107 – Telephone Room –

1 UPS – Symetra APC Power Array

ROOM 108 – SERVER ROOM

1 Server Cabinet – black

1 UPS – Symetra APC Power Array

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LOGO [g70436exa_p72.jpg]

ROOM 106 – Work Room –

3 Work Tables – Green Laminate tops/black metal legs

1 Metal Storage Cabinet – beige – 4 shelves

OFFICE 105 –

1 “L” Shaped Desk

1 White Board

1 Desk Chair – purple

1 Office Chair – gray

OFFICE 104 –

1 “L” Shaped Desk

1 Desk Chair – purple

OFFICE 103 –

1 “L” Shaped Desk

2 Filing Cabinets – 2 drawer, black wheeled

1 Desk Chair – purple

1 Dry Erase Board

OFFICE 102 –

1 “L” Shaped Desk

1 Filing Cabinet – 2 drawer, black wheeled

1 Area Rug – Checkered Pattern/Multi colored

1 Desk Chair – purple

1 Office Chair - gray

CUBICLES/WORKSTATIONS –

ROW ONE (Closest to Main Entry):

6 CUBICLES/WORKSTATIONS:

6 Desk Chairs – purple

8 Filing Cabinets – 2 drawer, black wheeled

4 Filing Cabinets – 3 drawer, black wheeled

ROW TWO:

12 CUBICLES/WORKSTATIONS:

12 Desk Chairs – purple

10 Filing Cabinets – 2 drawer, black wheeled

14 Filing Cabinets – 3 drawer, black wheeled

1 black desk lamp

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LOGO [g70436exa_p73.jpg]

ROW THREE:

12 CUBICLES/WORKSTATIONS:

12 Desk Chairs – purple

9 Filing Cabinets – 2 drawer, black wheeled

15 Filing Cabinets – 3 drawer, black wheeled

ROW FOUR:

12 CUBICLES/WORKSTATIONS:

12 Desk Chairs – purple

9 Filing Cabinets – 2 drawer, black wheeled

15 Filing Cabinets – 3 drawer, black wheeled

ROW FIVE:

12 CUBICLES/WORKSTATIONS:

12 Desk Chairs – purple

12 Filing Cabinets – 2 drawer, black wheeled

12 Filing Cabinets – 3 drawer, black wheeled