Exhibit 10.1

OFFICE LEASE

BY AND BETWEEN

DWF III GATEWAY, LLC,

A Delaware limited liability company,

As Landlord

And

PUMA BIOTECHNOLOGY, INC.,

A Delaware corporation,

as Tenant

For Leased Premises at Suite 275

701 Gateway Boulevard, South San Francisco, California

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TABLE OF CONTENTS

 

ARTICLE 1    SALIENT LEASE TERMS      1    ARTICLE 2    ADDITIONAL DEFINITIONS
     3    ARTICLE 3    PREMISES AND COMMON AREAS      10    ARTICLE 4    TERM
AND POSSESSION      14    ARTICLE 5    MINIMUM MONTHLY RENT      16    ARTICLE 6
   ADDITIONAL RENT      16    ARTICLE 7    ACCORD AND SATISFACTION      18   
ARTICLE 8    SECURITY DEPOSIT OR LETTER OF CREDIT      18    ARTICLE 9    USE   
  22    ARTICLE 10    COMPLIANCE WITH LAWS AND REGULATIONS      23    ARTICLE 12
   ALTERATIONS      28    ARTICLE 13    PROPERTY INSURANCE      29    ARTICLE 14
   INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION      30    ARTICLE 15   
LIABILITY INSURANCE      31    ARTICLE 16    INSURANCE POLICY REQUIREMENTS &
INSURANCE DEFAULTS      32    ARTICLE 17    FORFEITURE OF PROPERTY      33   
ARTICLE 18    MAINTENANCE AND REPAIRS      33    ARTICLE 19    DESTRUCTION     
33    ARTICLE 20    CONDEMNATION      35    ARTICLE 21    ASSIGNMENT AND
SUBLETTING      36    ARTICLE 22    ENTRY BY LESSOR      39    ARTICLE 23   
SIGNS      40    ARTICLE 24    DEFAULT      40    ARTICLE 25    REMEDIES UPON
DEFAULT      41    ARTICLE 26    BANKRUPTCY      42    ARTICLE 27    SURRENDER
OF LEASE      43    ARTICLE 28    LANDLORD’S EXCULPATION      44    ARTICLE 29
   ATTORNEYS’ FEES      44    ARTICLE 30    NOTICES      44    ARTICLE 31   
SUBORDINATION AND FINANCING PROVISIONS      44    ARTICLE 32    ESTOPPEL
CERTIFICATES      46    ARTICLE 33    MISCELLANEOUS PROVISIONS      46   

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OFFICE LEASE

THIS OFFICE LEASE (“Lease”) is entered and dated for reference purposes only as
May 16, 2012 (the “Lease Reference Date”), by and between “Landlord” and
“Tenant” (as such terms are defined below).

ARTICLE 1     SALIENT LEASE TERMS

In addition to the terms defined throughout this Lease, the following salient
terms shall have the following meanings when referred to in this Lease:

 

1.1    Rent Payment    DWF III Gateway, LLC    Address:    P.O. Box 7470      
San Francisco, CA 94120-7470 1.2    “Landlord”    DWF III Gateway, LLC,    and
   c/o Divco West Real Estate Services, Inc.    Notice   
575 Market Street, 35th floor    Address:    San Francisco, CA 94105      
Attn.: Asset Manager and Property Manager       With a copy to:           
Broadway Partners          100 California Street, Suite 610          San
Francisco, CA 94111          Attention: Asset Manager 1.3    “Tenant”    Puma
Biotechnology, Inc.    and          Notice          Address    10880 Wilshire
Blvd., Suite 1250       Los Angeles, CA 90024,       Attention: Charles Eyler
1.4    “Leased Premises:”    Approximately 9,560 square feet of Rentable Area
(hereinafter defined)       in Suite 275 of the Building. The foregoing Rentable
Area of the Leased       Premises shall be deemed the actual Rentable Area. 1.5
   “Building:”    That building located at 701 Gateway Boulevard, South San
Francisco, California, containing approximately 170,310 square feet of Rentable
Area, which shall be deemed the actual square footage of Rentable Area in the
Building. 1.6    Complex:    The Building, the Common Areas (hereinafter
defined), the parcel(s) of land containing the Building and Common Areas, as
such parcel of land is described in Exhibit A attached hereto (the “Land”). 1.7
   Commencement       Date:    The “Commencement Date” shall mean the earlier of
(a) seven (7) days after the date the “Tenant Improvements” to be constructed by
Landlord pursuant to Exhibit C have been “Substantially Completed,” subject to
“Tenant Delays” and “Force Majeure Delays” (as such terms are defined in Exhibit
C), or (b) the date Tenant takes possession of the Leased Premises other than
during the Early Access Period (as defined in Section 4.3). If there is any
delay in Substantially

 

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          Completing the Tenant Improvements due to any Tenant Delay, then such
delay shall thereupon
effect a postponement of the date by which Landlord is obligated to
Substantially Complete the
Tenant Improvements. In such event the date for commencement of the Reduced
Minimum Rent
Period (hereinafter defined), Rent and all additional rent shall be deemed the
date the Tenant
Improvements would have been Substantially Completed but for the Tenant Delays.
Thus, the date
for commencement of the Reduced Minimum Rent Period (hereinafter defined), Rent
and all
additional rent shall not be delayed by Tenant Delay.       The “Estimated
Commencement Date” is approximately one hundred (100) days after the date this
Lease has been fully executed by Tenant and Landlord, except with respect to the
Temporary Space (as defined in Section 3.5). The Estimated Commencement Date for
the Temporary Space shall be within two (2) business days after the date this
Lease has been fully executed by the parties, Tenant has paid the first month’s
advance rent due upon signing of this Lease and delivers to Landlord the Letter
of Credit (or cash for the amount of the Letter of Credit pending delivery of
the Letter of Credit) and evidence of insurance required of Tenant under this
Lease, as more specifically set forth in Section 3.5. 1.8    “Term:”   
Eighty-four (84) months following the Commencement Date for the Leased Premises,
plus any partial month for the month in which the Commencement Date occurs if
the Commencement Date occurs on other than the first day of a calendar month. If
the Commencement Date is other than the first day of a calendar month, the first
month shall include the remainder of the calendar month in which the
Commencement Date occurs plus the first full calendar month thereafter. Rent for
such partial month shall be prorated on a daily basis and a full month’s rent
also shall be paid for the first month of the Term. 1.9    “Minimum         
Monthly Rent:”    Months    Minimum Monthly Rent       1 – 12    $20,250.00   
   13 – 18    $20,857.50       19 – 24    $26,586.36       25 – 36    $27,383.95
      37 – 48    $28,205.47       49 – 60    $29,051.63       61 – 72   
$29,923.18       73 – 84    $30,820.88       The foregoing schedule starts as of
the Commencement Date of the Term of the Lease for the Leased Premises. The
Minimum Monthly Rent for the first eighteen (18) months of the initial Term may
be referred to as the “Reduced Minimum Rent Period” unless the Commencement Date
occurs other than on the first day of a calendar month. If the Commencement Date
is other than the first day of a calendar month, then the Reduced Minimum Rent
Period shall be 540 days from and including the Commencement Date and the
Minimum Monthly Rent for the month in which the Reduced Minimum Rent Period
expires shall be prorated on a daily basis. By way of example only, if the
Commencement date is June 10, 2012, the Reduced Minimum Rent Period shall be
June 10, 2012 to and including December 1, 2013 (i.e., 540 days) and

 

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          Minimum Monthly Rent for the month of December 2013 (i.e., the month
in which the Reduced
Minimum Rent Period expires) shall be $26,401.56 representing the sum of one day
proration of
Minimum Monthly Rent in the monthly amount of $20,857.50 for December 1, 2013,
and 30 days
of proration of Minimum Monthly Rent in the monthly amount of $26,586.36 for
December 2, 2013
through December 31, 2013. 1.10    Base Year for       Base Year Costs:”    For
Base Operating Costs: 2012 calendar year       For Base Taxes: real estate tax
fiscal year 7/1/2012 – 6/30/2013 1.11    “Security Deposit:”    $150,000.00,
subject to partial reduction as provided in Section 8.3. 1.12    “Permitted
Use:”    The Leased Premises shall be used solely for general office and
administrative purposes, but for no other use. 1.13    Proportionate         
Share:    Tenant’s initial Proportionate Share is 5.61% based on the ratio that
the Rentable Area of the Leased Premises (i.e., 9,560 square feet) bears to the
Rentable Area of the Building (i.e., 170,310 square feet). 1.14    “Broker(s):”
   Cassidy Turley representing Landlord and Cornish & Carey and LA Realty
Partners representing Tenant. 1.16    Guarantor    Not applicable.    and Notice
         Address:       1.17    Parking Allocation:    Thirty-one (31) parking
spaces. 1.18    Contents:    Included as part of this Lease are the following
Exhibits and addenda which are attached hereto and incorporated herein by this
reference:       Exhibits:    A – Legal Description for the Land          B –
Outline of the Leased Premises          B-1 – Outline of the Temporary Space   
      C – Work Letter for Construction Obligations (with Exhibit C-1 – Space
Plan attached)          D – Acknowledgment of Commencement Date          E –
Rules & Regulations          F – Option to Extend

ARTICLE 2     ADDITIONAL DEFINITIONS

The terms defined in this Article 2 shall, for all purposes of this Lease and
all agreements supplemental hereto, have the meanings herein specified, unless
expressly stated otherwise.

“Base Operating Costs” means the Operating Costs for the calendar year set forth
in Section 1.10 hereof as such Operating Costs shall be increased to be what the
Operating Costs would have been if the Building were ninety-five (95%) leased
and occupied during such calendar year as more specifically provided in
Section 6.2.

“Base Taxes” means the Taxes for the calendar year set forth in Section 1.10
hereof.

 

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“Common Areas” shall mean all areas and facilities outside the Leased Premises
within the exterior boundaries of the parcel of land containing the Building of
which the Leased Premises form a part, together with the parking and access
areas within the Complex, all as provided and designated by Landlord from time
to time for the general use and convenience of Tenant and of other tenants of
Landlord having the common use of such areas, and their respective authorized
representatives and invitees. As of the date of this Lease, Common Areas
include, without limitation, corridors, stairways, elevator shafts, janitor
rooms in the Building, the driveways, parking areas and landscaped areas in the
Complex.

“Insurance Costs” shall mean all premiums and costs and expenses for all
policies of insurance required to be maintained by Landlord under this Lease or
which are obtained by Landlord in its discretion for (a) the Leased Premises,
Building and the Common Areas of the Complex, or any blanket policies which
include the Building or Complex, covering damage thereto and loss of rents
caused by fire and other perils Landlord elects to cover, including, without
limitation, coverage for earthquakes and floods, (b) commercial general
liability insurance for the benefit of Landlord and its designees and (c) such
other coverage Landlord elects to obtain for the Leased Premises, Building or
Common Areas of the Complex, including, without limitation, coverage for
environmental liability and losses. Landlord shall allocate in a reasonable
manner the insurance premiums under any blanket policy that includes coverage
for the Complex and any other property. Notwithstanding anything to the
contrary, Landlord reserves the right to reduce the Insurance Costs if Insurance
costs for the Base Year Operating Costs include coverages for perils not
required or elected to be insured by Landlord in the future. If in years after
the Base Year for Operating Costs Landlord includes insurance coverages for
perils not included in the Insurance Costs for the Base Year Operating Costs,
Insurance Costs for the Base Year Operating Costs shall be increased as if such
Insurance Costs were so included.

“Lease Year” means any fiscal year (as determined by Landlord), or portion
thereof, following the commencement hereof, the whole or any part of which
period is included within the Term.

“Operating Costs” means the total amounts paid or payable, whether by Landlord
or others on behalf of Landlord, in connection with the ownership, maintenance,
repair, replacement and operations of the Building and the Common Areas of the
Complex in accordance with Landlord’s standard operating and accounting
procedures. Operating Costs shall include (except as otherwise expressly
provided in this Lease), but not be limited to, the aggregate of the amount paid
for:

(1) all fuel used in heating and air conditioning of the Building and Common
Areas of the Complex;

(2) the amount paid or payable for all electricity furnished by Landlord to the
Common Areas of the Complex (other than electricity furnished to and paid for by
other tenants by reason of their extraordinary consumption of electricity and
that furnished to the other building in the Complex for which the tenants of
such other building are responsible for such electrical costs);

(3) the cost of periodic relamping and reballasting of lighting fixtures;

(4) the amount paid or payable for all hot and cold water (other than that
chargeable to Tenants by reason of their extraordinary consumption of water and
that furnished to other buildings in the Complex for which the tenants of such
other building are responsible for such water costs) and sewer costs;

(5) the amount paid or payable for all labor and/or wages and other payments
including cost to Landlord of workers’ compensation and disability insurance,
payroll taxes, welfare and fringe benefits made to janitors, caretakers, and
other employees, contractors and subcontractors of Landlord (including wages of
the Building manager) involved in the management, operation, maintenance and
repair of the Complex;

 

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(6) painting for exterior walls of the Building and the Common Areas of the
Complex; managerial and administrative expenses; the total charges of any
independent contractors employed in the repair, care, operation, maintenance,
and cleaning of the Building and Common Areas of the Complex;

(7) the amount paid or payable for all supplies occasioned by everyday wear and
tear;

(8) the costs of climate control, window and exterior wall cleaning, telephone
and utility costs of the Building and Common Areas of the Complex;

(9) the cost of accounting services necessary to compute the rents and charges
payable by Tenants and keep the books of the Building and Common Areas of the
Complex;

(10) fees for management of the Complex equal to three percent (3%) of the gross
rental revenues from the Complex, plus reasonable charge for office rent,
supplies, equipment, salaries, wages, bonuses and other compensation (including
fringe benefits, vacation, holidays and other paid absence benefits) relating to
employees of Landlord or its agents engaged in the management, operation,
repair, or maintenance of the Building and/or Common Areas of the Complex;

(11) fees for legal, accounting (including, without limitation, any outside
audit as Landlord may elect in its sole and absolute discretion), inspection and
consulting services;

(12) the cost of operating, repairing and maintaining the Building elevators;

(13) the cost of porters, guards, alarm (including any central station signaling
systems) and other protection services;

(14) the cost of establishing and maintaining the Building’s directory board;

(15) payments for general maintenance and repairs to the plant and equipment
supplying climate control to the Building and Common Areas of the Complex;

(16) the cost of supplying all services pursuant to Article 11 hereof to the
extent such services are not paid by individual tenants;

(17) amortization of the costs, including repair and replacement, of all
maintenance and cleaning equipment and master utility meters and of the costs
incurred for repairing or replacing all other fixtures, equipment and facilities
serving or comprising the Building and Common Areas of the Complex (including
any equipment leasing costs associated therewith if applicable) which by their
nature require periodic or substantial repair or replacement, and which are not
charged fully in the year in which they are incurred, at rates on the various
items reasonably determined from time to time by Landlord in accordance with
sound accounting principles;

(18) community association dues, assessments and charges and property owners’
association dues, assessments and charges which may be imposed upon Landlord by
virtue of any recorded instrument affecting title to the Building, including
without limitation, any reciprocal easement agreement and covenants, conditions,
easements and restrictions of record, and the cost of any licenses, permits and
inspection fees;

(19) all costs to upgrade, improve or change the utility, efficiency or capacity
of any utility or telecommunication system serving the Building and the Common
Areas of the Complex;

(20) the repair and replacement, resurfacing and/or repaving of any paved areas,
curbs or gutters within the Building or Common Areas of the Complex, subject to
any repaving being treated as a Capital Cost as provided in paragraph
(22) below;

 

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(21) the repair and replacement of any equipment or facilities serving or
located within the Complex;

(22) the cost for any capital repairs, improvements and replacements made by the
Landlord to the Building or Common Areas of the Complex that are capital repairs
or capital improvements under generally accepted accounting principles (“Capital
Costs”) which are (a) required to be made in order to conform to changes
subsequent to the Commencement Date in any applicable laws, ordinances, rules,
regulations, or orders of any governmental authority having jurisdiction over
the Building or Common Areas (“laws”), or are first required to be made after
the Commencement Date under any existing laws (noncompliance with any laws in
effect as of the Commencement date of this Lease which is permitted under
applicable law because such improvements were in compliance with applicable laws
as of the date they were constructed shall be considered to be in compliance
with applicable law under this Paragraph), (b) incurred for the purpose of
reducing other operating expenses or utility costs, or (c) performed to replace
capital improvements or building service equipment when required because of
normal wear and tear. The Capital Costs shall be includable in Operating Costs
each year only to the extent of that fraction allocable to the year in question
calculated by amortizing such Capital Cost over the reasonably useful life of
the improvement resulting therefrom, as determined by Landlord in its good faith
discretion, with interest on the unamortized balance at the higher of (i) eight
percent (8%) per annum; and

(23) Insurance Costs.

Operating Costs shall not include the following:

(a) Interest, principal, points and fees on debts or amortization on any
mortgage or mortgages or any other debt instrument encumbering any portion of
the Complex;

(b) such of the Operating Costs as are recovered from condemnation awards or
proceeds, or insurance proceeds or which were required by the Lease to be
covered by insurance or which were paid for directly by Tenant or any third
party;

(c) Costs arising from Landlord’s charitable or political contributions;

(d) Brokers’ or other leasing commissions and costs incurred in connection with
entering into new leases or disputes under existing leases, including without
limitation tenant incentives, finders’ fees, attorneys’, accountants’ and other
consultants’ fees;

(e) costs associated with bad debt losses, rent losses, or reserves for bad debt
or rent losses;

(f) expenses for any item or service not provided, offered or available to
Tenant, but provided exclusively to certain other tenants in the Building;

(g) depreciation and amortization on any mortgage;

(h) any ground lease or underlying lease payments;

(i) marketing costs including leasing commissions, attorneys’ fees in connection
with the negotiation and preparation of letters, deal memos, letters of intent,
leases, subleases and/or assignments, space planning costs, and other costs and
expenses incurred in connection with lease, sublease and/or assignment
negotiations and transactions with present or prospective tenants or other
occupants of the Building;

(j) costs for acquisition of sculpture, paintings or other objects of art,
except to the extent to replace, when necessary, any sculpture, paintings or
other objects of art existing at the Complex as of the date of this Lease so
long as such item replaced is of like kind and quality;

 

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(k) any costs, fines or penalties incurred due to violations by Landlord of any
legal requirement which may have been in effect as of the Commencement Date of
this Lease;

(l) Costs incurred (A) to comply with applicable laws with respect to “Hazardous
Material” (as defined below) which was in existence in, on, under or about the
Building or the Complex prior to the Commencement Date, or (B) with respect to
Hazardous Material, which Hazardous Material is brought into, on, under or about
the Building or the Complex after the date hereof due to the acts or omissions
of Landlord or any other tenant of the Complex or by anyone other than Tenant;

(m) expenses for any item or service not provided, offered or available to
Tenant, but provided exclusively to certain other tenants in the Building;

(n) expenses for tenant improvement work for any tenant or “improvement
allowances or “tenant concessions” and other costs or expenses incurred in
completing, fixturing, furnishing, renovating or otherwise improving, decorating
or redecorating space for tenants or other occupants of the Complex, or vacant
lease space in the Complex (including but not limited to space planning fees,
architects, engineers’ and other consultants’ fees and costs, and related
permit, license and construction costs);

(o) the cost of any repairs, improvements, or replacements made to remedy any
structural defect in the original design or construction of the Building or
other buildings in the Complex.

(p) The wages and benefits of any employee who does not devote his or her
employed time to the Complex unless such wages and benefits are prorated to
reflect time spent on operating and managing the Complex vis-à-vis time spent on
matters unrelated to operating and managing the Complex;

(q) Landlord’s general corporate overhead and general and administrative
expenses;

(r) Any costs in connection with services of a type or quantity which are not
offered or available to Tenant, but which are provided to another tenant or
occupant of the Complex, whether or not such other tenant or occupant is
specifically charged therefore by Landlord;

(s) Any fee to or charge by Landlord and Landlord’s agents (or any person or
entity affiliated with Landlord or Landlord’s agents) for management or
supervision of the Complex in excess of the amounts provided in paragraph
(10) above;

(t) Costs associated with the operation of the business of the person or entity
which constitutes Landlord as the same are distinguished from the costs of
operation of the Complex, including entity accounting and legal matters, costs
of defending any lawsuits with any lender, costs of selling, syndicating,
financing, mortgaging or hypothecating any of Landlord’s interest in the
Complex, costs of any disputes between Landlord and its employees, disputes of
Landlord with Building management, or outside fees paid in connection with
disputes with other tenants;

(u) Reserves for future expenses except for actual expenses anticipated to be
incurred during the ensuing year and included in Landlord’s estimate of
Operating Expenses for such ensuring year;

(v) All interest, late charges, penalties and other amounts incurred as a result
of Landlord’s failure to pay bills as they become due, provided, Tenant pays all
Rent as and when due;

(w) rental payments incurred in leasing air conditioning systems, elevators or
other equipment ordinarily considered to be of a capital nature which if
purchased, rather than rented, would constitute a capital improvement and not
permitted to be a Capital Cost as provided in paragraph (22) above, except
rentals for items when needed in connection with normal repairs and maintenance;

 

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(x) Repairs or replacements for which Tenant is obligated to pay under this
Lease other that as part of Tenant’s share of Operating Costs or for which other
tenants are obligated to pay other than as part of such other tenants’ share of
Operating Costs;

(y) Any costs related to the Structural portion of the Building, including
without limitation any test, investigation and repairs or other remedial
measures, whether or not required pursuant to applicable laws enacted before or
after the Commencement Date.

(z) Costs arising from the gross negligence or willful misconduct of Landlord or
Landlord’s employees, contractors or agents;

(aa) Overhead and profit increment paid to Landlord or to subsidiaries or
affiliates of Landlord for goods and/or services in or to the Complex to the
extent the same exceeds the costs of such goods and/or services rendered by
unaffiliated third parties on a fair market basis;

(bb) legal, accounting or other professional expenses incurred expressly for
negotiating, preparing or enforcing a lease with a particular tenant, as a
result of a default of a specific tenant or in connection with a dispute with a
tenant or proposed or former tenant;

(cc) costs for utilities and services for which a tenant in the Building pays
directly to third party providers or are reimbursed to Landlord directly other
than as part of such tenant’s pro rata share of operating expenses;

(dd) Landlord’s in-house legal fees;

(ee) costs incurred with respect to the repair and maintenance of any portions
of the Complex, Building or Common Areas due to (1) violation by Landlord of the
terms and conditions of any provision of this Lease or any other lease in the
Building or any conditions, covenants, restrictions, easement agreements and
similar private contracts; or (2) violation by any other tenant in the Building
of the terms and conditions of any lease of space in the Building to the extent
that Landlord is entitled to recover such costs from such violating parties; or
(3) violation by Landlord of any governmental rule or authority;

(ff) legal fees and other costs incurred in connection with disputes with
tenants, other occupants, or prospective tenants or other occupants of the
Complex, including but not limited to all attorneys’ fees and costs of
settlement and judgments;

(gg) Costs incurred in connection with the removal or remediation of any
“Hazardous Materials” in the Building to cure a violation of any applicable
“Environmental Laws” (as such terms are defined in Section 10.3); and

(hh) Capital Costs not expressly included in Operating Expenses pursuant to
paragraph (22) above.

“Proportionate Share” or “Pro Rata Percent” shall be that fraction (converted to
a percentage) the numerator of which is the Rentable Area (hereinafter defined)
of the Leased Premises and the denominator of which is the Rentable Area of the
Building. Tenant’s Proportionate Share as of the commencement of the Term hereof
is specified in Section 1.13. Said Proportionate Share may be recalculated by
Landlord as may be required effective as at the commencement of any period to
which the calculation is applicable in this Lease. Notwithstanding the preceding
provisions of this Section, Tenant’s Proportionate Share as to certain expenses
may be calculated differently to yield a higher percentage share for Tenant as
to certain expenses in the event Landlord permits other tenants in the Building
to directly incur such expenses rather than have Landlord incur the expense in
common for the Building (such as, by way of illustration, wherein a tenant
performs its own janitorial services). In such case Tenant’s proportionate share
of the applicable expense shall be calculated as

 

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having as its denominator the Rentable Area of all floors rentable to tenants in
the Building less the Rentable Area of tenants who have incurred such expense
directly. In any case in which Tenant, with Landlord’s consent, incurs such
expenses directly, Tenant’s proportionate share will be calculated specially so
that expenses of the same character which are incurred by Landlord for the
benefit of other tenants in the Building shall not be prorated to Tenant.
Nothing herein shall imply that Landlord will permit Tenant or any other tenant
of the Building to incur any Operating Costs. Any such permission shall be in
the sole discretion of the Landlord, which Landlord may grant or withhold in its
arbitrary judgment.

“Real Estate Taxes” or “Taxes” mean all federal, state, county, or local
governmental or municipal taxes, fees, charges or other impositions of every
kind and nature, whether general, special, ordinary or extraordinary,
(including, without limitation, real estate taxes, general and special
assessments, transit taxes, leasehold taxes or taxes based upon the receipt of
rent, including gross receipts or sales taxes applicable to the receipt of rent,
unless required to be paid by Tenant, personal property taxes imposed upon the
fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances,
furniture and other personal property used in connection with the Complex, or
any portion thereof except for any personal property tax paid by Tenant for its
personal property), which shall be paid or accrued during any Lease Year
(without regard to any different fiscal year used by such governmental or
municipal authority) because of or in connection with the ownership, leasing and
operation of the Complex, or any portion thereof. Taxes shall include, without
limitation: (i) Any tax on the rent, right to rent or other income from the
Complex, or any portion thereof, or as against the business of leasing the
Complex, or any portion thereof; (ii) Any assessment, tax, fee, levy or charge
in addition to, or in substitution, partially or totally, of any assessment,
tax, fee, levy or charge previously included within the definition of real
property tax, it being acknowledged by Tenant and Landlord that Proposition 13
was adopted by the voters of the State of California in the June 1978 election
(“Proposition 13”) and that assessments, taxes, fees, levies and charges may be
imposed by governmental agencies for such services as fire protection, street,
sidewalk and road maintenance, refuse removal and for other governmental
services formerly provided without charge to property owners or occupants, and,
in further recognition of the decrease in the level and quality of governmental
services and amenities as a result of Proposition 13; and (iii) Any assessment,
tax, fee, levy, or charge allocable to or measured by the area of the leasable
premises or the rent payable hereunder, including, without limitation, any
business or gross income tax or excise tax with respect to the receipt of such
rent, or upon or with respect to the possession, leasing, operating, management,
maintenance, alteration, repair, use or occupancy by a tenant of leased
premises, or any portion thereof. Taxes shall also include any governmental or
private assessments or the Complex’s contribution towards a governmental or
private cost-sharing agreement for the purpose of augmenting or improving the
quality of services and amenities normally provided by governmental agencies.
Any reasonable costs and expenses (including, without limitation, reasonable
attorneys’ and consultants’ fees) incurred in attempting to protest, reduce or
minimize Taxes shall be included in Taxes in the Lease Year such expenses are
incurred. Notwithstanding anything to the contrary, there shall be excluded from
Taxes all excess profits taxes, franchise taxes, gift taxes, capital stock
taxes, inheritance and succession taxes, estate taxes, federal and state income
taxes, and other taxes to the extent applicable to Landlord’s general or net
income (as opposed to rents, receipts or income attributable to operations at
the Building); (ii) any Operating Costs, (iii) interest or penalties on Taxes
resulting from Landlord’s failure to pay Taxes when due, provided, Tenant makes
all payments of Rent when due, (iv) any taxes which Tenant pays directly to the
taxing authority, and (v) any items required to be paid by Tenant under
Section 6.1. With respect to any special assessments which may be levied as part
of the Taxes and which may be payable in installments over a period of time,
only the amount of the installments due each year shall be included in the Taxes
charged to Tenant, whether or not Landlord elects to pay in installments,
provided that Landlord has the option of paying said assessment in installments
over a period of time.

“Rent” “rent” or “rental” means Minimum Monthly Rent and all other sums required
to be paid by Tenant pursuant to the terms of this Lease.

“Rentable Area” as used in this Lease shall mean rentable areas measured in
accordance with the Standard Method for Measuring Floor Area in Office
Buildings, ANSI/BOMA Z65-1996 or ANSI/BOMA Z65.1-2010, as selected by Landlord,
except that the Rentable Area of the Leased Premises and Building set

 

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forth in Sections 1.4 and 1.5, respectively, are deemed to be the Rentable Area
of the Leased Premises and Building, which determinations shall be conclusive on
the parties and not subject to measurement.

“Structural” as herein used shall mean any portion of the Leased Premises,
Building or Common Areas of the Complex which provides bearing support to any
other integral member of the Leased Premises, Building or Common Areas of the
Complex such as, without limitation, the roof structure (trusses, joists,
beams), posts, load bearing walls, foundations, girders, floor joists, footings,
foundation, slabs and other load bearing members constructed by Landlord.

“Tenant Improvements” shall mean the Tenant Improvements, if any, as defined in
Exhibit C attached hereto to be constructed pursuant to Exhibit C attached
hereto.

ARTICLE 3     PREMISES AND COMMON AREAS

3.1 Demising Clause. Landlord hereby leases to Tenant, and Tenant hires from
Landlord the Leased Premises, consisting of the approximate square footage
listed in Section 1.4 of the Salient Lease Terms, which the parties agree shall
be deemed the actual square footage of Rentable Area.

3.2 Reservation. Landlord reserves the area beneath and above the Building as
well as the exterior thereof together with the right to install, maintain, use,
repair and replace pipes, ducts, conduits, wires, and structural elements
leading through the Leased Premises serving other parts of the Building and
Common Areas of the Complex, so long as such items are concealed by walls,
flooring or ceilings. Such reservation in no way affects the maintenance
obligations imposed herein. Landlord may change the shape, size, location,
number and extent of the improvements to any portion of the Building or Common
Areas of the Complex and/or the address or name of the Building without the
consent of Tenant, provided that such changes do not materially and unreasonably
impair the access to or permitted use of the Leased Premises or the parking
facilities.

3.3 Covenants, Conditions and Restrictions. The parties agree that this Lease is
subject to the effect of (a) any covenants, conditions, restrictions, easements,
mortgages or deeds of trust, ground leases, rights of way of record, and any
other matters or documents of record; (b) any zoning laws of the city, county
and state where the Complex is situated; and (c) general and special taxes not
delinquent. Landlord represents to its actual knowledge as of the date of this
Lease that any covenants, conditions, restrictions and easements of record and
encumbering the Complex as of the date of this Lease do not prohibit office use
of the Leased Premises. Tenant agrees that as to its leasehold estate, Tenant
and all persons in possession or holding under Tenant will conform to and will
not violate the terms of any covenants, conditions or restrictions of record
which may now or hereafter encumber the Building or the Complex (hereinafter the
“restrictions”). This Lease is subordinate to the restrictions and any
amendments or modifications thereto.

3.4 Common Areas. Landlord hereby grants to Tenant, for the benefit of Tenant
and its employees, suppliers, shippers, customers and invitees, during the term
of this Lease, the non-exclusive right to use, in common with others entitled to
such use, the Common Areas as they exist from time to time, subject to any
rights, powers, and privileges reserved by Landlord under the terms hereof or
under the terms of any rules and regulations or restrictions governing the use
of the Building or the Complex. Under no circumstances shall the right herein
granted to use the Common Areas be deemed to include the right to store any
property, temporarily or permanently, in the Common Areas. Any such storage
shall be permitted only by the prior written consent of Landlord or Landlord’s
designated agent, which consent may be revoked at any time. In the event that
any unauthorized storage shall occur then Landlord shall have the right, without
notice, in addition to such other rights and remedies that it may have, to
remove the property and charge the cost to Tenant, which cost shall be
immediately payable upon demand by Landlord.

(a) Common Areas Changes. Landlord shall have the right, in Landlord’s sole
discretion, from time to time to do the following, provided that such does not
materially and unreasonably impair access to or the permitted use of the Leased
Premises or the parking facilities:

 

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(1) To make changes and reductions to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas and walkways;

(2) To close temporarily any of the Common Areas for maintenance purposes so
long as reasonable access to the Leased Premises remains available;

(3) To designate other land outside the boundaries of the Building to be a part
of the Common Areas;

(4) To add additional improvements to the Common Areas;

(5) To use the Common Areas while engaged in making additional improvements,
repairs or alterations to the Building or Complex, or any portion thereof;

(6) To do and perform such other acts and make such other changes in, to or with
respect to the Common Areas, Building and Complex as Landlord may, in the
exercise of sound business judgment, deem to be appropriate.

(b) Common Area Maintenance. Landlord shall maintain the Common Areas (subject
to reimbursement pursuant to this Lease) in good condition comparable to that of
other similar class office buildings in the vicinity of the Building in South
San Francisco, California, establish and enforce reasonable rules and
regulations concerning such areas, close any of the Common Areas to whatever
extent required in the opinion of Landlord’s counsel to prevent a dedication of
any of the Common Areas or the accrual of any rights of any person or of the
public to the Common Areas, close temporarily any of the Common Areas for
maintenance purposes, and make changes to the Common Areas including, without
limitation, changes in the location of driveways, corridors, entrances, exits,
the designation of areas for the exclusive use of others, the direction of the
flow of traffic or construction of additional buildings thereupon. Landlord may
provide security for the Common Areas, but is not obligated to do so. Under no
circumstances shall Landlord be liable or responsible for any acts or omissions
of any party providing any services to the Common Areas, Building or other
improvements, including, without limitation, any security service,
notwithstanding anything to the contrary contained in this Lease.

(c) Parking. Tenant is allocated and shall have the non-exclusive and
non-preferential right on an unassigned and unreserved basis to use not more
than the number of parking spaces specified in Section 1.17 hereof (the “Parking
Spaces”) for use by Tenant and Tenant’s Parties (hereinafter defined), during
the Term of this Lease. The location of the Parking Spaces may be designated
from time to time by Landlord. At no time, may Tenant or any of Tenant’s Parties
use more than the number of Parking Spaces specified above.

(1) General Procedures. The Parking Spaces initially will not be separately
identified; however Landlord reserves the right in its sole and absolute
discretion to separately identify by signs or other markings the area where
Tenant’s Parking Spaces will be located. Landlord shall have no obligation to
monitor the use of the parking area, nor shall Landlord be responsible for any
loss or damage to any vehicle or other property or for any injury to any person
except to the extent caused or arising out of the gross negligence of Landlord.
Said Parking Spaces shall be used only for parking of automobiles no larger than
full size passenger automobiles, sport utility vehicles or small pick-up trucks.
Tenant shall comply with all rules and regulations which may be adopted by
Landlord from time to time and uniformly applied to all similarly situated
tenants to the extent Landlord has such right in its other leases with such
tenants. Tenant shall not at any time use more parking spaces than the number
allocated to Tenant or park vehicles or the vehicles of others in any portion of
the Complex designated by Landlord as exclusive parking area for others. Tenant
shall be responsible for and breach or violation by Tenant’s Parties of the
parking regulations and requirements in this Lease. Tenant shall not have the
exclusive right to use any specific parking space. If Landlord grants to any
other tenant the exclusive right to use any particular parking space(s), Tenant
shall not use such spaces. All

 

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trucks (other than pick-up trucks) and delivery vehicles shall be
(i) temporarily parked for loading and unloading in a location designated by
Landlord and otherwise in a manner which does not interfere with the businesses
of other occupants of the Complex, and (ii) permitted to remain on the Complex
only so long as is reasonably necessary to complete loading and unloading. In
the event Landlord elects in its sole and absolute discretion or is required by
any law to limit or control parking in the Complex, whether by validation of
parking tickets or any other method of assessment, Tenant agrees to participate
in such validation or assessment program under such reasonable rules and
regulations as are from time to time established by Landlord. Landlord may close
off or restrict access to the parking areas from time to time to facilitate
construction, alteration, or improvements, without incurring any liability to
Tenant and without any abatement of Rent under this Lease. Tenant shall use all
reasonable efforts to ensure that Tenant’s employees and visitors also comply
with such rules and regulations.

(2) Identification. Tenant shall furnish Landlord with a list of its employees’
vehicle license numbers within fifteen (15) days after taking possession of the
Leased Premises and thereafter shall notify Landlord of any changes within five
(5) days after request by Landlord. Landlord also reserves the right to
implement a system requiring that all employees of Tenant attach a parking
sticker or parking permit to their vehicles.

(3) Remedies. Tenant acknowledges and agrees that a breach of the parking
provisions by Tenant or any of Tenant’s Parties may seriously interfere with
Landlord’s operation of the Complex and with the rights or occupancy by other
tenants of the Complex. Accordingly, Landlord may suffer damages that are not
readily ascertainable. Therefore, if Tenant or any of Tenant’s Parties use more
than the number of allocated Parking Spaces, or park other than as designated by
Landlord for the Parking Spaces, or otherwise fail to comply with any of the
foregoing provisions, then Landlord, in addition to any other rights or remedies
available at law or in equity or under the Lease, may charge Tenant, as
liquidated damages, Twenty-Five Dollars ($25.00) per day for each violation
during a calendar year after Tenant has been previously notified on two or more
occasions during such calendar of a violation, or for each violation that is not
cured within one day’s notice of such violation, and Tenant shall pay such
charge within ten (10) days after request by Landlord. Each vehicle parked in
violation of the foregoing provisions shall be deemed a separate violation. In
addition, Landlord may immobilize and/or tow from the Complex any vehicle parked
in violation hereof, and/or attach violation stickers or notices to such
vehicle. The cost to remove any such vehicle shall be paid by Tenant within ten
(10) days after request by Landlord. Landlord reserves the right in its sole and
absolution discretion to have the parking areas operated by a third party and
Tenant shall comply with the rules and regulations of such parking operator.

3.5 Temporary Space. At the request of Tenant, the parties have agreed that
Tenant shall lease and occupy on a temporary basis approximately 2,256 square
feet of Rentable Area in Suite 370 of the Building (the “Temporary Space”), as
generally outlined in Exhibit B-1 attached hereto. Accordingly, Landlord leases
to Tenant and Tenant leases from Landlord the Temporary Space for a term
commencing on the date that Tenant takes possession of the Temporary Space (the
“Temporary Space Commencement Date”) and expiring on the Commencement Date (the
“Temporary Space Term”). The Temporary Space shall be available to Tenant within
two (2) business days after the date this Lease is fully executed and Tenant
delivers to Landlord the first month’s advance rent as required under
Section 5.2, the Letter of Credit (or cash Security Deposit pending delivery of
the Letter of Credit), certificates of insurance satisfactory to Landlord
evidencing the insurance required to be carried by Tenant under this Lease. The
lease of the Temporary Space shall be subject to all other terms and provisions
of this Lease, except as provided in this Section 3.5. During the Temporary
Space Term and as applicable to the lease of the Temporary Space, all references
in this Lease to the Leased Premises shall mean the Temporary Space. Prior to
occupying or using all or any portion of the Temporary Space, Tenant shall
deliver to Landlord the certificates of insurance required under this Lease.

(a) Rent and Utility Costs for Temporary Space. During the Temporary Space Term,
Tenant shall not be obligated to pay Minimum Monthly Rent or Operating Costs for
the Temporary Space.

 

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However, Tenant shall pay for costs for usage of the HVAC outside of the Climate
Control Hours (as defined in Section 11.1) for the Temporary Space. Tenant shall
make such payment to Landlord within fifteen (15) days after request by Landlord
each month. Tenant shall be responsible for arranging and paying for all of its
telephone and telecommunication services for the Temporary Space.

(b) Condition of Temporary Space. Tenant shall accept possession of the
Temporary Space in its current “AS IS” condition, without the construction or
installation by Landlord of any improvements, furnishings or equipment of any
kind, except that Landlord shall clean the carpets if the Temporary Space is in
Suite 370, without any allowances, credits or free rent and without any
representation or warranty, expressed or implied, by Landlord or any of its
agents concerning the condition or suitability of the Temporary Space. Any work
and allowance including, without limitation, Landlord’s Allowance, to be
performed or provided by Landlord in connection with the lease of the Leased
Premises will not be applicable for the lease of the Temporary Space. In
addition, Landlord shall relocate the existing furniture in Suite 275 at the
Building to the Temporary Space for Tenant’s use during the Temporary Space
Term. Tenant shall pay for the cost to relocate such furniture within ten
(10) days after request by Landlord. Landlord makes no representation or
warranty whatsoever with respect to the condition of such furniture or its
suitability for Tenant’s use, such use to be on an “as-is” basis. Tenant shall
be responsible for any damage to such personal property caused by Tenant or any
of its employees, agents or contractors. Such furniture shall remain the
property of Landlord.

(c) No Alterations. Tenant shall not construct any improvements or alterations
in the Temporary Space, except for the installation of telephone and electrical
lines and other minor work, all of which shall be subject to the prior written
consent of Landlord and otherwise in compliance with the requirements of this
Lease for the construction of alterations in the Leased Premises. The cost to
construct any improvements or alterations by Tenant in the Temporary Space shall
be paid by Tenant.

(d) Surrender of Temporary Space. Tenant shall vacate and surrender possession
of the Temporary Space by the end of the Temporary Space Term, with time being
of the essence, in broom clean condition, with all repairs and maintenance that
would be required for surrender of the Leased Premises completed and with all of
Tenant’s furniture, trade fixtures, equipment and other personal property
removed. Tenant acknowledges that Landlord is marketing the Temporary Space for
lease by others. In reliance upon Tenant’s agreement to vacate and surrender
possession of the Temporary Space on time, Landlord may enter into other
commitments affecting the Temporary Space and may incur significant expenses in
connection therewith, including, without limitation, brokerage commissions and
fees, legal or other professional fees, the costs of space planning and the
costs of construction of improvements. Tenant acknowledges that all of said
expenses, in addition to all other expenses incurred and actual and
consequential damages suffered by Landlord, shall be included in measuring
Landlord’s damages should Tenant fail to vacate and surrender possession on
time.

(e) Temporary Space Holdover. Notwithstanding the foregoing, if Tenant does not
vacate and surrender possession of the Temporary Space by the end of the
Temporary Space Term (as the same may be extended as provided above), Tenant
shall pay monthly base rent for the Temporary Space equal to at a monthly rate
of $6,091.20 ($2.70 per square foot of Rentable Area in the Temporary Space) for
the first thirty days and thereafter at the holdover rate of $9,136.80 per
month; provided nothing in this Lease shall be deemed to grant Tenant any right
to holder over in the Temporary Space beyond the end of the Temporary Space Term
or delay the Commencement Date or the date by which Tenant must commence paying
Rent for the Leased Premises.

3.6 Representations and Warranties Regarding Premises. Landlord hereby
represents and warrants to its actual knowledge as of the date of this Lease the
following to Tenant:

(a) Title; No Possessory Interests. Landlord owns fee simple title to the
Complex subject to all matters of record. There are no covenants, conditions,
easements or restrictions of record that prohibit office use of the Leased
Premises in the Building. The Leased Premises are vacant and are not subject to
any possessory right other than the rights granted to Tenant pursuant to this
Lease.

 

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(b) Water Tight. The Leased Premises (including without limitation the roof and
windows of the Leased Premises) do not contain any leaks.

(c) Systems. The existing Building’s base plumbing, fire sprinkler system,
lighting, electrical system, air conditioning, heating, serving the Leased
Premises, other than those constructed by Tenant, are in good condition and
repair as of the Effective Date or will be as of the Commencement Date.

(d) No Violations. As of the Effective Date, Landlord does not have notice of
any existing violations of any applicable laws regarding the existing condition
of the Building or Common Areas as of the date hereof, as such laws are applied
and interpreted by the applicable governmental authority as of the date of this
Lease.

ARTICLE 4     TERM AND POSSESSION

4.1 Commencement Date. The Term of this Lease shall commence on the Commencement
Date and shall be for the term specified in Section 1.8 hereof (which includes
as set forth in Section 1.8 any partial month at the commencement of the Term if
the Term commences other than on the first day of the calendar month).

4.2 Delivery of Leased Premises; Acknowledgment of Commencement.

(a) Delivery Conditions. Landlord shall satisfy each of the following conditions
(collectively, the “Delivery Conditions”):

(1) Landlord shall have delivered the Leased Premises to Tenant vacant and free
of any other possessory rights; and

(2) Landlord shall have substantially completed the Landlord’s Work (as defined
in Section 4.5 below) and the Tenant Improvements pursuant to the Exhibit C to
this Lease, unless Tenant accepts possession prior to the date of substantial
completion of such work; provided, however, if there is any delay in
substantially completing Landlord’s Work or the Tenant Improvements, then
Landlord’s Work and the Tenant Improvements shall be deemed the date such work
or improvements would have been substantially completed (or Substantially
Completed for the Tenant Improvements) but for any Tenant Delays (as defined in
Exhibit C).

(b) Within thirty (30) days after delivery of the Leased Premises to Tenant,
Tenant and Landlord shall execute a written acknowledgment of the date of
commencement in the form attached hereto as Exhibit D, and by this reference it
shall be incorporated herein. The failure or delay by Landlord to request such
acknowledgment or the failure or delay by Tenant in executing and delivery such
acknowledgement shall not delay or extend the Commencement Date.

(c) For purposes of determining the Commencement Date under Section 1.7 of this
Lease, the words “take possession” or “accept possession” of the Leased Premises
or words of similar import do not pertain to access during the Early Access
Period, and refer solely to the actual occupancy of some or all of the Leased
Premises by Tenant and the commencement of Tenant’s business activities from the
Leased Premises.

4.3 Landlord’s Work and Pre-Term Possession. Landlord will allow Tenant to have
access to the Leased Premises prior to the estimated date of completion of
Landlord’s Work. The period of time prior to the Commencement Date during which
Tenant may have early access and use of the Leased Premises under this
Section 4.3 shall be referred to herein as the “Early Access Period.” Tenant
agrees that it shall not in any way interfere with the progress of Landlord’s
Work or the Tenant Improvements by such access. Should such access prove an
impediment to the progress of Landlord’s Work or Tenant Improvements, in
Landlord’s judgment,

 

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Landlord may demand that Tenant forthwith vacate the Leased Premises until such
time as Landlord’s Work and Tenant Improvements are complete, and Tenant shall
immediately comply with this demand. During the Early Access Period, Tenant
shall comply with all terms and conditions of this Lease during the course of
any Early Access Period, except for the payment of Rent. As a condition to
entering the Leased Premises during the Early Occupancy Period, Tenant shall
provide Landlord with certificates of insurance that Tenant is required to
provide Landlord during the Term of this Lease.

4.4 Delay. If Landlord, for any reason whatsoever, cannot deliver possession of
the Leased Premises to Tenant by the Estimated Commencement Date, this Lease
shall not be void or voidable, nor shall Landlord be liable for any loss or
damage resulting therefrom, but in that event, there shall be no accrual of Rent
for the period between the Estimated Commencement Date and the Commencement
Date, except if the delay is due to a Tenant Delay.

4.5 Condition of the Space and Landlord’s Work. Tenant acknowledges it is
leasing the Leased Premises in its AS IS condition without the construction of
any improvements or the grant of any allowances other than the Tenant
Improvements in accordance with Exhibit C and Landlord’s Work described in
below. Landlord shall complete the following work in the Leased Premises
(collectively, “Landlord’s Work”):

(a) installation of a demising wall to separate the Leased Premises from the
adjacent space, which demising wall shall be sheet-rocked and taped, but not
painted on the side facing the Leased Premises;

(b) removal of the existing furniture, trade fixtures and equipment from the
Leased Premises, except for the furniture in the conference room and lateral
files in Suite 275, as soon as is commercially reasonable after the date this
Lease is fully executed by the parties; and

(c) to the extent any existing window coverings are worn or broken, Landlord
shall replace such worn or broken window coverings with new or like new
comparable window coverings existing in the Leased Premises; and

(d) installation of standard building signage and hardware for exit stairwells
and doors.

Landlord’s Work shall be completed at Landlord’s sole cost and expense. Landlord
shall complete Landlord’s Work as soon as is commercially reasonable after the
date this Lease is fully executed by the parties. Landlord shall also construct
the Tenant Improvements in accordance with Exhibit C to this Lease.

Within thirty (30) days following the later of the Commencement Date or the date
that Tenant takes possession of the Leased Premises, Tenant may provide Landlord
for its review and approval with a punch list which sets forth any corrective
work to be performed by Landlord with respect to Landlord’s Work and/or the
Tenant Improvements; provided, however, that Tenant’s obligation to pay Rent and
other sums under this Lease shall not be affected thereby. Landlord shall cause
the contractor to complete the punch list items within thirty (30) days after
Tenant’s and Landlord’s approval of the list of punch list items. If, however,
any punch list items cannot reasonably be completed within the thirty (30) day
period for any reason beyond Landlord’s reasonable control, Landlord shall
promptly commence the completion of such punch list items and shall thereafter
diligently prosecute the completion thereof. If Tenant fails to submit a punch
list to Landlord within such thirty (30) day period, Tenant agrees that by
taking possession of the Leased Premises it will conclusively be deemed to have
inspected the Leased Premises and found the Leased Premises in satisfactory
condition, with all work required of Landlord completed. Tenant acknowledges
that neither Landlord, nor any agent, employee or servant of Landlord, has made
any representation or warranty, expressed or implied, with respect to the Leased
Premises, Building or Common Areas of the Complex, or with respect to the
suitability of them to the conduct of Tenant’s business, nor has Landlord agreed
to undertake any modifications, alterations, or improvements of the Leased
Premises, Building or Common Areas of the Complex, except as specifically
provided in this Lease and the exhibits hereto.

 

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4.6 Failure to Take Possession. Tenant’s inability or failure to take possession
of the Leased Premises when delivery is tendered by Landlord shall not delay the
Commencement Date of the Lease or Tenant’s obligation to pay Rent.

ARTICLE 5     MINIMUM MONTHLY RENT

5.1 Payment. Tenant shall pay to Landlord at the address specified in
Section 1.1, or at such other place as Landlord may otherwise designate, as
“Minimum Monthly Rent” for the Leased Premises the amount specified in
Section 1.9 hereof, payable in advance on the first day of each month during the
Term of the Lease. If the Term commences on other than the first day of a
calendar month, the rent for the first partial month shall be prorated
accordingly. All payments of Minimum Monthly Rent (including sums defined as
rent in Section 2) shall be in lawful money of the United States, and payable,
except as otherwise expressly set forth in this Lease, without deduction,
offset, counterclaim, prior notice or demand.

5.2 Advance Rent. The first full month’s rent shall be paid by Tenant to
Landlord upon the execution of this Lease as advance rent, provided, however,
that such amount shall be held by Landlord as an additional “Security Deposit”
pursuant to this Lease until it is applied by Landlord to the first Minimum
Monthly Rent due hereunder.

ARTICLE 6     ADDITIONAL RENT

6.1 Personal Property, Gross Receipts, Leasing Taxes. This section is intended
to deal with impositions or taxes directly attributed to Tenant or this
transaction, as distinct from taxes attributable to the Building or Common Areas
of the Complex which are to be allocated among various tenants and others.
Tenant shall pay before delinquency any and all taxes, assessments, license fees
and public charges levied, assessed or imposed against Tenant or Tenant’s estate
in this Lease or the property of Tenant situated within the Leased Premises
which become due during the Term. On demand by Landlord, Tenant shall furnish
Landlord with reasonably satisfactory evidence of these payments. If such taxes
are included in the bill for the Real Estate Taxes for the Building or Complex,
then Tenant shall pay to Landlord as additional rent the amount of such taxes
within ten (10) days after demand from Landlord.

6.2 Operating Costs, Taxes and Insurance.

(a) Base Year Increases. If the Operating Costs or Taxes for any Lease Year,
calculated on the basis of the greater of (i) actual Operating Costs and Taxes;
or (ii) as if the Building were at least ninety-five (95%) leased and occupied
for the whole of such Lease Year, are more than the applicable Base Year Costs
for Base Operating Costs and Base Taxes as set forth in section 1.10 (which Base
Year Costs shall be calculated separately for each such category of Base Year
Costs), unless Landlord and Tenant have agreed in writing to include all Base
Year Costs without such separate allocation), Tenant shall pay to Landlord its
Proportionate Share of any such increase in Operating Costs and/or Taxes, as the
case may be, as additional Rent as hereinafter provided.

(b) Partial Year. If any Lease Year of less than twelve (12) months is included
within the Term, the amount payable by Tenant for such period shall be prorated
on a per diem basis (utilizing a thirty (30) day month, three hundred sixty
(360) day year).

6.3 Method of Payment. Any additional Rent payable by Tenant under Sections 6.1
and 6.2 hereof shall be paid as follows, unless otherwise provided:

(a) Estimated Monthly. Prior to the commencement of each calendar year, or as
soon thereafter as is commercially reasonable, Landlord shall deliver to Tenant
a statement showing Landlord’s reasonable estimate of the Operating Costs for
each calendar year, and Tenant’s Proportionate Share thereof. During the Term,
Tenant shall pay to Landlord monthly in advance with its payment of Minimum
Monthly Rent, one-

 

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twelfth (l/12th) of the amount of such additional Rent as is so estimated by
Landlord in advance, in good faith, to be due from Tenant. If at any time during
the course of the fiscal year, Landlord determines that Operating Costs and/or
Taxes are projected to vary from the then estimated costs for such items by more
than ten percent (10%), Landlord may, by written notice to Tenant, revise the
estimated Operating Costs and/or Taxes for the balance of such fiscal year, and
Tenant’s monthly installments for the remainder of such year shall be adjusted
so that by the end of such fiscal year Tenant will have paid to Landlord
Tenant’s Proportionate Share of the such revised expenses for such year.

(b) Annual Reconciliation. Annually, within one hundred fifty (150) days after
the expiration of each Lease Year, Landlord shall prepare in good faith and
deliver to Tenant a comparative statement (the “Annual Statement”), which
statement shall be conclusive between the parties hereto, setting forth (1) the
Operating Costs and Taxes for such Lease Year, and (2) the amount of additional
Rent as determined in accordance with the provisions of this Article 6.
Notwithstanding the immediately preceding sentence, Tenant shall not be
responsible for Tenant’s Proportionate Share of Operating Costs and Taxes
attributable to any Lease Year which are first billed to Tenant more than two
(2) calendar years after the expiration of the applicable Lease Year.

(c) Adjustment. If the aggregate amount of such estimated additional Rent
payments made by Tenant in any Lease Year should be less than the additional
Rent due for such year, then Tenant shall pay to Landlord as additional Rent
within thirty (30) days after written demand therefor the amount of such
deficiency. If the aggregate amount of such additional Rent payments made by
Tenant in any Lease Year of the Term should be greater than the additional Rent
due for such year, the amount of such excess will be applied by Landlord to the
next succeeding installments of Rent due hereunder; and if the Term has expired
and there is any such excess for the last year of the Term, the amount thereof
will be refunded by Landlord to Tenant within thirty (30) days of the last day
of the Term or earlier expiration or termination of this Lease, to the extent
not used to pay for any sum due from Tenant under this Lease.

6.4 Inspection. If Operating Costs and Taxes have increased in any Lease Year by
more than five percent (5%) of the applicable amounts in the prior year (the
“Increased Threshold”), then Tenant shall have the right as provided in this
Section and at its own expense to inspect and copy (at Tenant’s expense) the
books and records of Landlord pertaining to Operating Costs and Taxes once in
any calendar year by any employee of Tenant or by a certified public accountant
licensed in the State of California and mutually acceptable to Landlord and
Tenant (provided such certified public accountant charges for its service on an
hourly basis and not based on a percentage of any recovery or similar incentive
method). Tenant’s right to inspect such books and records is conditioned upon
Tenant first paying Landlord the full amount billed by Landlord. If the
Increased Threshold has been met, then Tenant shall have the right after notice
to Landlord within one hundred eighty (180) days after receipt of the Annual
Statement of Tenant’s desire to inspect the books and records of Landlord
pertaining to the year covered by such Annual Statement and the Base Year,
except that the records for the Base Year will only be available for the first
inspection undertaken by Tenant under this Section. Such inspection of records
shall be done at the offices of Landlord or its property manager, and Tenant
shall only have access to the books and records of Landlord pertaining solely to
the Operating Costs and Taxes for the calendar year covered in such Annual
Statement. All expenses of the inspection shall be borne by Tenant and must be
completed within fifteen (15) days after Landlord notifies Tenant that such
records are available for inspection. If Tenant’s inspection reveals a
discrepancy in the comparative Annual Statement, Tenant shall deliver a copy of
the inspection report and supporting calculations to Landlord within thirty
(30) days after completion of the inspection. If Tenant and Landlord are unable
to resolve the discrepancy within thirty (30) days after Landlord’s receipt of
the inspection report, either party may upon written notice to the other have
the matter decided by an inspection by an independent certified public
accounting firm approved by Tenant and Landlord (the “CPA Firm”), which approval
shall not be unreasonably withheld or delayed. If the inspection by the CPA Firm
shows that the actual amount of Operating Costs or Taxes payable by Tenant is
greater than the amount previously paid by Tenant for such accounting period,
Tenant shall pay Landlord the difference within thirty (30) days. If the
inspection by the CPA Firm shows that the actual applicable amount is less than
the amount paid by Tenant, then the difference shall be applied in payment of
the next estimated monthly

 

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installments of Operating Costs and/or Taxes owing by Tenant, or in the event
such accounting occurs following the expiration of the Term hereof, such
difference shall be refunded to Tenant. Tenant shall pay for the cost of the
inspection by the CPA Firm, unless such inspection shows that Landlord
overstated Operating Costs, Insurance Costs or Taxes by more than five percent
(5%), in which case Landlord shall pay for the cost of the inspection by the CPA
Firm.

Tenant acknowledges and agrees that any information revealed in the above
described inspection may contain proprietary and sensitive information and that
significant damage could result to Landlord if such information were disclosed
to any party other than Tenant’s employees or accountants. Tenant shall not in
any manner disclose, provide or make available any information revealed by the
inspection to any person or entity without Landlord’s prior written consent,
which consent may be withheld by Landlord in its sole and absolute discretion.

ARTICLE 7     ACCORD AND SATISFACTION

7.1 Acceptance of Payment. No payment by Tenant or receipt by Landlord of a
lesser amount of Minimum Monthly Rent or any other sum due hereunder, shall be
deemed to be other than on account of the earliest due rent or payment, nor
shall any endorsement or statement on any check or any letter accompanying any
such check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord’s right to recover
the balance of such rent or payment or pursue any other remedy available in this
Lease, at law or in equity. Landlord may accept any partial payment from Tenant
without invalidation of any contractual notice required to be given herein (to
the extent such contractual notice is required) and without invalidation of any
notice required to be given pursuant to California Code of Civil Procedure
Section 1161, et seq., or of any successor statute thereto.

ARTICLE 8     SECURITY DEPOSIT OR LETTER OF CREDIT

8.1 Security Deposit - Payment on Lease Execution. If Landlord elects in its
sole and absolute discretion to permit Tenant to deposit cash for a Security
Deposit in lieu of a Letter of Credit, then Tenant shall pay Landlord the cash
amount of the Security Deposit within ten (10) days after written notice from
Landlord that cash Security Deposit may be provided in lieu of the Letter of
Credit. This sum is designated as a Security Deposit and shall remain the sole
and separate property of Landlord until actually repaid to Tenant (or at
Landlord’s option the last assignee, if any, of Tenant’s interest hereunder),
said sum not being earned by Tenant until all conditions precedent for its
payment to Tenant have been fulfilled. As this sum both in equity and at law is
Landlord’s separate property, Landlord shall not be required to (1) keep said
deposit separate from his general accounts, or (2) pay interest, or other
increment for its use. If Tenant fails to pay rent or other charges when due
hereunder, or otherwise defaults with respect to any provision of this Lease,
including and not limited to Tenant’s obligation to restore or clean the Leased
Premises following vacation thereof, Tenant, at Landlord’s election, shall be
deemed not to have earned the right to repayment of the Security Deposit, or
those portions thereof used or applied by Landlord for the payment of any rent
or other charges in default, or for the payment of any other sum to which
Landlord may become obligated by reason of Tenant’s default, or to compensate
Landlord for any loss or damage which Landlord may suffer thereby. Landlord may
retain such portion of the Security Deposit as it reasonably deems necessary to
restore or clean the Leased Premises following vacation by Tenant. The Security
Deposit is not to be characterized as rent until and unless so applied in
respect of a default by Tenant. Tenant hereby waives the provisions of
Section 1950.7 of the California Civil Code, and all other provisions of law,
now or hereafter in force, which provide that Landlord may claim from a security
deposit only those sums reasonably necessary to remedy defaults in the payment
of rent, to repair damage caused by Tenant or to clean the Leased Premises, it
being agreed that Landlord may, in addition, claim those sums reasonably
necessary to compensate Landlord for any other loss or damage, foreseeable or
unforeseeable, caused by the act or omission of Tenant or any officer, employee,
agent or invitee of Tenant.

If Landlord elects to use or apply all or any portion of the Security Deposit as
provided in Section 8.1, Tenant shall within ten (10) days after written demand
therefor pay to Landlord in cash, an amount

 

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equal to that portion of the Security Deposit used or applied by Landlord, and
Tenant’s failure to so do shall be a material breach of this Lease. The ten
(10) day notice specified in the preceding sentence shall insofar as not
prohibited by law, constitute full satisfaction of notice of default provisions
required by law or ordinance.

If Tenant is unable to obtain the Letter of Credit at time of execution of this
Lease, Tenant shall pay to Landlord cash in the amount of the Security Deposit
pending delivery of the Letter of Credit. Landlord shall refund such cash
Security Deposit to Tenant within fifteen (15) days after receipt of the Letter
of Credit in the form and content required in Section 8.2 and all subsections
thereof.

8.2 Letter of Credit. Within twenty one (21) days after the date that this Lease
is fully executed, Tenant shall deliver to Landlord, as protection for the full
and faithful performance by Tenant of all of its obligations under this Lease
and for all losses and damages Landlord may suffer (or that Landlord reasonably
estimates it may suffer) as a result of any breach, default or failure to
perform by Tenant under this Lease, an irrevocable and unconditional negotiable
standby Letter of Credit (“Letter of Credit”), in the form as is acceptable to
Landlord, payable at an office in the San Francisco Bay Area, California,
running in favor of Landlord and issued by a solvent, nationally recognized bank
with a long term rating of BBB or higher, under the supervision of the
Superintendent of Banks of the State of California, or a national banking
association (an “Acceptable Issuing Bank”), in the amount of Security Deposit
(the “Letter of Credit Amount”). Tenant shall pay all expenses, points, or fees
incurred by Tenant in obtaining the Letter of Credit and any replacement Letter
of Credit. The bank issuing the Letter of Credit (the “Bank”) shall be subject
to Landlord’s prior written approval, which approval shall not be withheld by
Landlord if the proposed Bank is an Acceptable Issuing Bank. If an Acceptable
Issuing Bank is declared insolvent or taken over by the Federal Deposit
Insurance Corporation or any governmental agency for any reason or does not meet
the standards to be approved an Acceptable Issuing Bank, Tenant shall deliver a
replacement Letter of Credit from another Bank approved by Landlord that meets
the standards for an Acceptable Issuing Bank within the earlier of (i) thirty
(30) days after notice from Landlord that the Bank does not meet the standard
for an Acceptable Issuing Bank, or (ii) the date the Bank is declared insolvent
or taken over for any reason by the Federal Deposit Insurance Corporation or any
other governmental agency. In addition, the Letter of Credit shall expressly
provide for the following:

(1) shall be “callable” at sight, irrevocable, and unconditional;

(2) shall be maintained in effect, whether through renewal or extension, for the
period from the date of this Lease and continuing until the date (the “Letter of
Credit Expiration Date”) that is one hundred twenty (120) days after the
expiration of the Term (as the Term may be extended). The Letter of Credit may
be for one year period, provided the Letter of Credit is automatically extended
for not less than a one year period unless the issuing Bank provides written
notice to Landlord not less than sixty (60) days prior to the then expiration
date of the Letter of Credit that the issuing Bank will not renew or extend the
Letter of Credit, in which case Tenant shall deliver to Landlord a replacement
Letter of Credit not less than thirty (30) days prior to the scheduled
expiration date of the then existing Letter of Credit held by Landlord without
any action whatsoever on the part of Landlord;

(3) shall be fully assignable by Landlord, its successors, and assignees of its
interest in the Leased Premises;

(4) shall permit partial draws and multiple presentations and drawings; and

(5) shall be otherwise subject to the Uniform Customs and Practices for
Documentary Credits, International Chamber of Commerce Publication No. 600
(UCP600), or the International Standby Practices-ISP 98, International Chamber
of Commerce Publication No. 590 (1998).

(a) Transfers. The Letter of Credit shall also provide that Landlord, its
successors, and assigns, may, at any time and without notice to Tenant and
without first obtaining Tenant’s consent, transfer (one or more times) all or
any portion of its interest in and to the Letter of Credit to another party,
person, or

 

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entity, provided such transferee is the assignee of the Landlord’s rights and
interests in and to this Lease and expressly assumes the same and Landlord’s
obligations under the Lease, or to any lender providing financing to Landlord.
In the event of a transfer of Landlord’s interest in the Building, Landlord
shall transfer the Letter of Credit, in whole or in part, to the transferee and
Landlord shall then (provided such transferee assumes all of Landlord’s
obligations under this Lease), be released by Tenant from all liability
therefor, and it is agreed that the provisions of this Section shall apply to
every transfer or assignment of the whole or any portion of the Letter of Credit
to a new landlord. In connection with any such transfer of the Letter of Credit
by Landlord, Tenant shall execute and submit to the Bank such applications,
documents, and instruments as may be necessary to effectuate such transfer, and
Tenant shall be responsible for paying the Bank’s transfer and processing fees
in connection with any such transfer.

(b) Restoration. If, as a result of any drawing by Landlord on the Letter of
Credit, the amount of the Letter of Credit shall be less than the Letter of
Credit Amount, Tenant shall, within ten (10) business days after the drawdown by
Landlord and notice thereof to Tenant, take such actions as are required to
restore the Letter of Credit Amount, which may include providing a replacement
Letter of Credit for the full Letter of Credit Amount, provided such additional
Letter(s) of Credit or replacement Letter of Credit comply with the applicable
requirements of Section 8.2 and all subsections thereof of this Lease. If Tenant
fails to comply with this requirement, such failure shall be deemed a rent
default under Section 24.1(a) of this Lease, provided that if Landlord is
prevented from delivering a notice of default to Tenant or otherwise declaring a
default by Tenant for any reason, including, without limitation, because Tenant
has filed a voluntary petition, or an involuntary petition has been filed
against Tenant, under the Bankruptcy Code, then no such notice or declaration of
default and cure period shall be required for a rent default under
Section 24.1(a) of this Lease.

(c) Renewals. Tenant covenants and warrants that it will neither assign nor
encumber the Letter of Credit or any part of it and that neither Landlord nor
its successors or assigns will be bound by any such assignment, encumbrance,
attempted assignment, or attempted encumbrance. Without limiting the generality
of the foregoing, if the Letter of Credit expires earlier than the Letter of
Credit Expiration Date, Landlord will accept a renewal of the letter of credit
(such renewal letter of credit to be in effect and delivered to Landlord, as
applicable, not later than forty-five (45) days before the expiration of the
Letter of Credit), which shall be irrevocable and automatically renewable as
required in Section 8.2 above through the Letter of Credit Expiration Date on
the same terms as the expiring Letter of Credit or such other terms as may be
acceptable to Landlord in its sole discretion. However, if the Letter of Credit
is not timely renewed, or if Tenant fails to maintain the Letter of Credit in
the amount and in accordance with the terms set forth in Section 8.2 above,
Landlord shall have the right to present the Letter of Credit to the Bank to
draw on the Letter of Credit, and the proceeds of the Letter of Credit may be
applied by Landlord against any Rent payable by Tenant under this Lease that is
not paid when due and to pay for all losses and damages that Landlord has
suffered or that Landlord reasonably estimates that it will suffer as a result
of any breach or default by Tenant under this Lease. Any unused proceeds shall
be deemed held by Landlord as security in accordance with applicable laws, but
need not be segregated from Landlord’s other assets. Landlord agrees to pay to
Tenant within sixty (60) days after the expiration of the Term of this Lease the
amount of any proceeds of the Letter of Credit received by Landlord and not
applied against any Rent payable by Tenant under this Lease, or not used to pay
for any losses and damages suffered by Landlord (or reasonably estimated by
Landlord that it will suffer) as a result of any breach or default by Tenant
under this Lease; provided, however, that if before the Letter of Credit
Expiration Date a voluntary petition is filed by Tenant, or an involuntary
petition is filed against Tenant by any of Tenant’s creditors, under the
Bankruptcy Code, then Landlord shall not be obligated to make such payment in
the amount of the unused Letter of Credit proceeds until either all preference
issues relating to payments under this Lease have been resolved in such
bankruptcy or reorganization case or such bankruptcy or reorganization case has
been dismissed.

(d) Draws. Tenant acknowledges and agrees that Landlord is entering into this
Lease in material reliance on the ability of Landlord to draw on the Letter of
Credit on the occurrence of any breach, default or failure to perform on the
part of Tenant under this Lease. If Tenant shall breach or fail to perform any
provision of this Lease or otherwise be in default under this Lease, Landlord
may, but without obligation to do

 

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so, and without notice to Tenant, draw on the Letter of Credit, in part or in
whole, to cure any breach or default of Tenant and to compensate Landlord for
any and all damages of any kind or nature sustained or which Landlord reasonably
estimates that it will sustain resulting from Tenant’s breach or default and to
which Landlord is entitled under this Lease, including any damages that accrue
upon termination of the Lease under the Lease and/or Section 1951.2 of the
California Civil Code or any similar provision. The use, application, or
retention of any proceeds of the Letter of Credit, or any portion of it, by
Landlord shall not prevent Landlord from exercising any other right or remedy
provided by this Lease or by any applicable law, it being intended that Landlord
shall not first be required to proceed against the Letter of Credit, and shall
not operate as a limitation on any recovery to which Landlord may otherwise be
entitled. Tenant agrees not to interfere in any way with payment to Landlord of
the proceeds of the Letter of Credit, following a draw properly made by Landlord
of any portion of the Letter of Credit. No condition or term of this Lease shall
be deemed to render the Letter of Credit conditional to justify the issuer of
the Letter of Credit in failing to honor a drawing on such Letter of Credit in a
timely manner. Tenant agrees and acknowledges that (1) the Letter of Credit
constitutes a separate and independent contract between Landlord and the Bank;
(2) Tenant is not a third party beneficiary of such contract; (3) Tenant has no
property interest whatsoever in the Letter of Credit; and (4) if Tenant becomes
a debtor under any chapter of the Bankruptcy Code, neither Tenant, any trustee,
nor Tenant’s bankruptcy estate shall have any right to restrict or limit
Landlord’s claim or rights to the Letter of Credit by application of
Section 502(b)(6) of the U.S. Bankruptcy Code or otherwise.

In addition, Landlord, or its then managing agent, shall have the right to draw
down an amount up to the face amount of the Letter of Credit if any of the
following shall have occurred or be applicable:

(i) Landlord states that such amount is due to Landlord under the terms and
conditions of this Lease, provided that if Landlord is prevented from delivering
a notice of default to Tenant for any reason, including, without limitation,
because Tenant has filed a voluntary petition, or an involuntary petition has
been filed against Tenant, under the Bankruptcy Code (hereinafter defined), then
no such notice and cure period shall be required;

(ii) Tenant has filed a voluntary petition under any chapter of the U.S.
Bankruptcy Code or any similar state law (collectively, the “Bankruptcy Code”);

(iii) Tenant has assigned any or all of its assets to creditors in accordance
with any federal or state laws;

(iv) an involuntary petition has been filed against Tenant or any guarantor of
Tenant’s obligations under this Lease under any chapter of the Bankruptcy Code,
which petition is not dismissed within sixty (60) days after the date it is
filed; provided, however, that if Tenant is still operating its business in the
Leased Premises and this Lease has not been terminated, Landlord may draw upon
the Letter of Credit only to the extent such amount is due Landlord under the
terms of this Lease or the guaranty of this Lease; or

(v) the Bank has notified Landlord that the Letter of Credit will not be renewed
or extended through the Letter of Credit Expiration Date; or

(vi) the Bank does not meet the standard for an Acceptable Issuing Bank and
Tenant has not delivered a replacement Letter of Credit form an Acceptable
Issuing Bank within the earlier of (i) thirty (30) days after notice from
Landlord that the Bank does not meet the standard for an Acceptable Issuing
Bank, or (ii) the date the Bank is declared insolvent or taken over for any
reason by the Federal Deposit Insurance Corporation or any other governmental
agency.

(e) Replacement. Tenant may, from time to time, replace any existing Letter of
Credit with a new Letter of Credit if the new Letter of Credit:

 

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(1) Becomes effective at least 30 days before expiration of the Letter of Credit
that it replaces;

(2) Is in the applicable Letter of Credit Amount;

(3) Is issued by an Acceptable Issuing Bank or a Bank otherwise acceptable to
Landlord in its sole discretion; and

(r) Otherwise complies with the requirements of Section 8.2 and all subsections
thereof.

(f) Not a Security Deposit. Landlord and Tenant acknowledge and agree that in no
event or circumstance shall the Letter of Credit or any renewal of it or any
proceeds applied by Landlord as provided in this Lease be (1) deemed to be or
treated as a “security deposit” within the meaning of California Civil Code
Section 1950.7, (2) subject to the terms of Section 1950.7, or (3) intended to
serve as a “security deposit” within the meaning of Section 1950.7. Landlord and
Tenant (1) agree that Section 1950.7 and any and all other laws, rules, and
regulations applicable to security deposits in the commercial context (“Security
Deposit Laws”) shall have no applicability or relevancy to the Letter of Credit,
and (2) waive any and all rights, duties, and obligations either party may now
or in the future have relating to or arising from the Security Deposit Laws.

8.3 Reduction. The amount of the Security Deposit or Letter of Credit, as the
case may be, shall be reduced (i) by $50,000.00 after the end of the fourth
(4th) year following the Commencement Date leaving a remaining Security Deposit
or Letter of Credit of $100,000.00, and (ii) by $50,000.00 after the end of the
fifth (5th) year following the Commencement Date leaving a remaining Security
Deposit of $50,000.00; provided that in each case a default or breach by Tenant
of any provision of the Lease does not then exist at the time of such reduction.
If a default or breach does exist at the time of such reduction, then such
reduction shall occur when such default or breach is cured. If Tenant is
entitled to a reduction of the Security Deposit or Letter of Credit, Tenant
shall provide written notice of such request to Landlord and if Tenant has met
the requirements for a reduction, then Landlord will either refund the
applicable amount of the reduction to Tenant if Landlord is holding a cash
Security Deposit, or cooperate with Tenant, at Tenant’s expense, to either
exchange the Letter of Credit for a new Letter of Credit in the reduced amount
or accept an amendment to the Letter of Credit for the reduced amount. Tenant
shall pay all costs and fees to the issuing Bank to issue a new Letter of Credit
in the reduced amount or to amend the then existing Letter of Credit.

ARTICLE 9     USE

9.1 Permitted Use. The Leased Premises may be used and occupied only for the
purposes specified in Section 1.12 hereof, and for no other purpose or purposes.
Tenant shall promptly comply with all laws, ordinances, orders and regulations
affecting the Leased Premises, their cleanliness, safety, occupation and use.
Tenant shall not use, or permit to be used, the Leased Premises in any manner
that will unreasonably disturb any other tenant in the Building or Complex, or
unreasonably obstruct or interfere with the rights of other tenant or occupants
of the Building or Complex, or injure or annoy them or create any unreasonable
smells, noise or vibrations (taking into account the nature and tenant-mix of
the Building) or otherwise constitute a nuisance. Tenant shall not do, permit or
suffer in, on, or about the Leased Premises the sale of any alcoholic liquor
without the written consent of Landlord first obtained.

9.2 Safes, Heavy Equipment. Tenant shall not place a load upon any floor of the
Leased Premises which exceeds fifty (50) pounds per square foot live load.
Landlord reserves the right to prescribe the weight and position of all safes
and heavy installations which Tenant wishes to place in the Leased Premises so
as properly to distribute the weight thereof, or to require plans prepared by a
qualified structural engineer at Tenant’s sole cost and expense for such heavy
objects. Notwithstanding the foregoing, Landlord shall have no liability for any
damage caused by the installation of such heavy equipment or safes.

 

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9.3 Machinery. Business machines and mechanical equipment belonging to Tenant
other than ordinary and customary office equipment which cause noise and/or
vibration that may be transmitted to the structure of the Building or to any
other leased space to such a degree as to be objectionable to Landlord or to any
tenants in the Complex shall be placed and maintained by the party possessing
the machines or equipment, at such party’s expense, in settings of cork, rubber
or spring type noise and/or vibration eliminators, and Tenant shall take such
other measures as needed to eliminate vibration and/or noise. If the noise or
vibrations cannot be eliminated, Tenant must remove such equipment within ten
(10) days following written notice from Landlord.

9.4 Waste or Nuisance. Tenant shall not commit, or suffer to be committed, any
waste upon the Leased Premises, or any nuisance which could be reasonably
expected to disturb the quiet enjoyment of any other tenant or occupant of the
Complex in which the Leased Premises are located.

9.5 Access. Tenant shall have access every day to the Leased Premises
twenty-four hours a day, seven days a week, subject to any security requirements
and regulations that may be in effect at the time. Tenant acknowledges and
agrees that it shall use the card-key or other system currently in place for
entry into the Building and into the Leased Premises.

ARTICLE 10     COMPLIANCE WITH LAWS AND REGULATIONS

10.1 Compliance Obligations. Tenant shall, at its sole cost and expense, comply
with all of the requirements of all municipal, state and federal authorities now
in force, or which may hereafter be in force, pertaining to the interior and
interior of the entrance to the Leased Premises, and shall faithfully observe in
the use or occupancy of the Leased Premises all municipal ordinances and state
and federal statutes, laws and regulations now or hereafter in force, including,
without limitation, the “Environmental Laws” (as hereinafter defined), and the
Americans with Disabilities Act, 42 U.S.C. §§ 12101-12213 (and any rules,
regulations, restrictions, guidelines, requirements or publications promulgated
or published pursuant thereto), whether or not any of the foregoing were
foreseeable or unforeseeable at the time of the execution of this Lease.
Tenant’s obligation to comply with and observe such requirements, ordinances,
statutes and regulations shall apply regardless of whether such requirements,
ordinances, statutes and regulations regulate or relate to Tenant’s particular
use of the Leased Premises or regulate or relate to the use of premises in
general, and regardless of the cost thereof. The judgment of any court of
competent jurisdiction, or the admission of Tenant in any action or proceeding
against Tenant, whether Landlord be a party thereto or not, that any such
requirement, ordinance, statute or regulation pertaining to the Leased Premises
has been violated, shall be conclusive of that fact as between Landlord and
Tenant.

Notwithstanding the foregoing, Tenant shall not be required to make any capital
improvements to the Structural portions of the Building, or to any base building
HVAC, plumbing or electrical systems, or to any aspect of the Building or
Complex which it is Landlord’s obligation to maintain under this Lease, or to
comply with any such laws, except if such work is required due to Tenant’s
particular use or change in use, any non-standard office alterations made by
Tenant, or any non-standard office improvements included as part of the Tenant
Improvements (each a “Tenant Activity”).

Landlord shall comply with such laws as the same pertain to the Common Areas of
the Complex and the Building, other than the Leased Premises, except in respect
of those matters in the Leased Premises for which Landlord is responsible in
this Lease and those aspects of the Building or Complex which it is Landlord’s
obligation to maintain, repair and replace under this Lease, and the cost such
work shall be included in Operating Costs to the extent permitted under this
Lease; provided, however, that any such work within the Leased Premises shall be
done at Tenant’s sole cost and expense if such work is then required to be done
due to any Tenant Activity.

10.2 Condition of Leased Premises. Subject to the completion of Landlord’s Work,
the performance by Landlord of all of its obligations under this Lease and any
representations or warranties of Landlord expressly set forth in this Lease,
Tenant hereby accepts the Leased Premises in the condition existing as of the

 

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date of occupancy and without representation, warranty or covenant by Landlord,
express or implied, as to the condition, habitability or safety of the Leased
Premises, the suitability or fitness thereof for their intended purposes, or any
other matter.

10.3 Hazardous Materials.

(a) Hazardous Materials. As used herein, the term “Hazardous Materials” shall
mean any wastes, materials or substances (whether in the form of liquids, solids
or gases, and whether or not air-borne), which are or are deemed to be
(i) pollutants or contaminants, or which are or are deemed to be hazardous,
toxic, ignitable, reactive, corrosive, dangerous, harmful or injurious, or which
present a risk to public health or to the environment, or which are or may
become regulated by or under the authority of any applicable local, state or
federal laws, judgments, ordinances, orders, rules, regulations, codes or other
governmental restrictions, guidelines or requirements, any amendments or
successor(s) thereto, replacements thereof or publications promulgated pursuant
thereto, including, without limitation, any such items or substances which are
or may become regulated by any of the Environmental Laws (as hereinafter
defined); (ii) listed as a chemical known to the State of California to cause
cancer or reproductive toxicity pursuant to Section 25249.8 of the California
Health and Safety Code, Division 20, Chapter 6.6 (Safe Drinking Water and Toxic
Enforcement Act of 1986); or (iii) a pesticide, petroleum, including crude oil
or any fraction thereof, asbestos or an asbestos-containing material, a
polychlorinated biphenyl, radioactive material, or urea formaldehyde.

(b) Environmental Laws. In addition to the laws referred to in section 10.3(a)
above, the term “Environmental Laws” shall be deemed to include, without
limitation, 33 U.S.C. Section 1251 et seq., 42 U.S.C. Section 6901 et seq., 42
U.S.C. Section 7401 et seq., 42 U.S.C. Section 9601 et seq., and California
Health and Safety Code Section 25100 et seq., and 25300 et seq., California
Water Code, Section 13020 et seq., or any successor(s) thereto, all local, state
and federal laws, judgments, ordinances, orders, rules, regulations, codes and
other governmental restrictions, guidelines and requirements, any amendments and
successors thereto, replacements thereof and publications promulgated pursuant
thereto, which deal with or otherwise in any manner relate to, air or water
quality, air emissions, soil or ground conditions or other environmental matters
of any kind.

(c) Use of Hazardous Materials. Tenant agrees that during the Term of this
Lease, there shall be no use, presence, disposal, storage, generation, leakage,
treatment, manufacture, import, handling, processing, release, or threatened
release of Hazardous Materials on, from or under the Leased Premises
(individually and collectively, “Hazardous Use”) except to the extent that, and
in accordance with such conditions as, Landlord may have previously approved in
writing in its sole and absolute discretion. However, without the necessity of
obtaining such prior written consent, Tenant shall be entitled to use and store
only those Hazardous Materials which are (i) typically used in the ordinary
course of business in an office for use in the manner for which they were
designed and in such limited amounts as may be normal, customary and necessary
for Tenant’s business in the Leased Premises, and (ii) in full compliance with
Environmental Laws, and all judicial and administrative decisions pertaining
thereto. For the purposes of this Section 10.3(c), the term Hazardous Use shall
include Hazardous Use(s) on, from or under the Leased Premises by Tenant or any
of its directors, officers, employees, shareholders, partners, agents or
contractors (collectively, “Tenant’s Parties”), whether known or unknown to
Tenant, and whether occurring and/or existing during or prior to the
commencement of the Term of this Lease.

(d) Compliance. Tenant agrees that during the Term of this Lease Tenant shall
not be in violation of any federal, state or local law, ordinance or regulation
relating to industrial hygiene, soil, water, or environmental conditions on,
under or about the Leased Premises including, but not limited to, the
Environmental Laws.

(e) Inspection and Testing by Landlord. Landlord shall have the right at all
times during the term of this Lease to (i) inspect the Leased Premises and to
(ii) conduct tests and investigations to determine whether Tenant is in
compliance with the provisions of this Section. Except in case of emergency,
Landlord shall give reasonable notice to Tenant before conducting any
inspections, tests, or investigations. The cost of all

 

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such inspections, tests and investigations shall be borne by Tenant if Tenant is
in breach of Section 10.3 of this Lease. Neither any action nor inaction on the
part of Landlord pursuant to this Section 10.3(e) shall be deemed in any way to
release Tenant from, or in any way modify or alter, Tenant’s responsibilities,
obligations, and/or liabilities incurred pursuant to Section 10.3 hereof.

10.4 Tenant’s Indemnity. Tenant shall indemnify, hold harmless and defend
Landlord and Landlord’s officers, directors, shareholders, partners, members,
managers, employees, contractors, property managers, agents and mortgagees and
other lien holders, from and against any and all “Losses” (hereinafter defined)
arising from or related to: (a) any violation or alleged violation by Tenant or
any of Tenant’s Parties of any of the requirements, ordinances, statutes,
regulations or other laws referred to in this Article 10, including, without
limitation, the Environmental Laws; (b) any breach of the provisions of this
Article 10 by Tenant or any of Tenant’s Parties; or (c) any Hazardous Use on,
about or from the Leased Premises of any Hazardous Material approved by Landlord
under this Lease. The term “Losses” shall mean all claims, demands, expenses,
actions, judgments, damages (whether consequential, direct or indirect, known or
unknown, foreseen or unforeseen), penalties, fines, liabilities, losses of every
kind and nature (including, without limitation, property damage, diminution in
value of Landlord’s interest in the Leased Premises or the Complex, damages for
the loss or restriction on use of any space or amenity within the Building or
the Complex, damages arising from any adverse impact on marketing space in the
Complex, sums paid in settlement of claims and any costs and expenses associated
with injury, illness or death to or of any person), suits, administrative
proceedings, costs and fees, including, but not limited to, attorneys’ and
consultants’ fees and expenses, and the costs of cleanup, remediation, removal
and restoration, that are in any way related to any matter covered by the
foregoing indemnity. Tenant’s indemnity under this Section 10.4 will not be
applicable for any Losses due to (i) a release of any Hazardous Material by
Landlord or any of its employees, agents or contractors, or (ii) a release of
any Hazardous Material by any other party other than Tenant or any of Tenant’s
Parties.

ARTICLE 11     SERVICE AND EQUIPMENT

11.1 Climate Control. So long as Tenant is not in default under any of the
covenants of this Lease, Landlord shall provide heating, ventilation and air
conditioning (“HVAC”) to the Leased Premises from 8:00 a.m. to 6:00 p.m. (the
“Climate Control Hours”) on weekdays (Saturdays, Sundays and holidays excepted)
to maintain a temperature adequate for comfortable occupancy, provided that
Landlord shall have no responsibility or liability for failure to supply climate
control service when making repairs, alterations or improvements or when
prevented from so doing by strikes or any cause beyond Landlord’s reasonable
control. If Tenant desires HVAC service outside of the Climate Control Hours,
Tenant shall provide not less eight (8) hours prior notice (which must be given
during normal business hours Monday through Friday, holidays excluded) to
Landlord requesting such service. Any climate control furnished for periods not
within the Climate Control Hours pursuant to Tenant’s request shall be at
Tenant’s sole cost and expense in accordance with rate schedules promulgated by
Landlord from time to time, such rates to be consistent with those charged in
comparable office buildings in the South San Francisco Area. Upon request,
Landlord shall advise Tenant of the then current rate schedule. Tenant
acknowledges that Landlord has installed in the Building a system for the
purpose of climate control.

11.2 Elevator Service. Landlord shall provide elevator service twenty-four hours
a day, seven days a week.

11.3 Cleaning Public Areas. Landlord shall maintain and keep clean the street
level lobbies, sidewalks, truck dock, public corridors and other public portions
of the Building and Common Areas and maintain the same in good condition.

11.4 Refuse Disposal. Tenant shall pay Landlord, within ten (10) days of being
billed therefor, for the removal from the Leased Premises and the Building of
such refuse and rubbish of Tenant as shall exceed that ordinarily accumulated
daily in the routine of a reasonable office.

 

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11.5 Janitorial Service. Landlord shall provide cleaning and janitorial service
in and about the Complex and Leased Premises five days a week (which is
currently scheduled for Monday through Friday, holidays excepted, subject to
change by Landlord) in accordance with commercially reasonable standards in an
office building in the city in which the Building is located.

11.6 Special Cleaning Service. To the extent that Tenant shall require special
or more frequent cleaning and/or janitorial service (hereinafter referred to as
“Special Cleaning Service”) Landlord may, upon reasonable advance notice from
Tenant, elect to furnish such Special Cleaning Service and Tenant agrees to pay
Landlord, within ten (10) days of being billed therefor, Landlord’s charge for
providing such additional service. Special Cleaning Service shall include but
shall not be limited to the following to the extent such services are beyond
those typically provided pursuant to section 11.5 above:

(a) The cleaning and maintenance of Tenant eating facilities other than the
normal and ordinary cleaning and removal of garbage, which special cleaning
service shall include, without limitation, the removal of dishes, utensils and
excess garbage; it being acknowledged that normal and ordinary cleaning service
does not involve placing dishes, glasses and utensils in the dishwasher,
cleaning any coffee pot or other cooking mechanism or cleaning the refrigerator
or any appliances;

(b) The cleaning and maintenance of Tenant computer centers, including
peripheral areas other than the normal and ordinary cleaning and removal of
garbage if Tenant so desires;

(c) The cleaning and maintenance of special equipment areas, locker rooms, and
medical centers;

(d) The cleaning and maintenance in areas of special security; and

(e) The provision of consumable supplies for private toilet rooms.

11.7 Electrical. During the Term of this Lease, there shall be available to the
Leased Premises electrical facilities comparable to those supplied in other
comparable office buildings in the vicinity of the Building to provide
sufficient power for normal lighting and office use, including personal
computers, servers, wireless routers, copy machines and other standard and
customary office equipment; provided, however, that if the installation of such
electrical equipment requires additional air conditioning capacity above that
normally provided to tenants of the Building or above standard usage of existing
capacity as reasonably determined by Landlord, then the additional air
conditioning installation and/or operating costs attributable thereto shall be
paid by Tenant. Tenant agrees not to connect any apparatus or device to the
wires, conduits or pipes or other means by which such electricity is supplied,
for the purpose of using additional or unusual amounts of electricity, without
the prior written consent of Landlord. At all times, Tenant’s use of electric
current shall never exceed Tenant’s share of the capacity of the feeders to the
Building or the risers or wiring installation. Tenant shall not install or use
or permit the installation or use in the Leased Premises of any computer or
electronic data processing or ancillary equipment or any other electrical
apparatus designed to operate on electrical current in excess of 110 volts and 5
amps per machine, without the prior written consent of Landlord, which may be
exercised in Landlord’s reasonable discretion. Landlord shall notify Tenant if
Tenant is using electrical current or capacity in excess of that usually
furnished or supplied for general office use in the Lease Premises and Tenant
shall have a period of five (5) days after receipt of such notice to discontinue
such excess usage of electricity. If Tenant desires to have electrical current
in excess of that usually furnished or supplied for use of the Leased Premises
as general office space, Tenant shall first procure the written consent of
Landlord (which may be exercised in Landlord’s sole and absolute discretion) to
the use thereof and Landlord or Tenant may (i) cause a meter to be installed in
or for the Leased Premises, or (ii) if Tenant elects not to install said meter,
Landlord may reasonably estimate such excess electrical current. The cost of any
such meters (including, without limitation, the cost of any installation) or
surveys to estimate such excess electrical current shall be paid by Tenant.
Landlord’s approval of any space plan, floor plan, construction plans,
specifications, or other drawings or materials regarding the construction of the
Tenant Improvements or any alterations shall not be

 

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deemed or construed as consent by Landlord under this paragraph to Tenant’s use
of such excess electrical current as provided above. Tenant agrees to pay to
Landlord, promptly upon demand therefor, all costs of such excess electrical
current consumed as well as an additional use charge calculated by said meters
(at the rates charged for such services to the Building by the municipality or
the local public utility) or the amount specified in said estimate, as the case
may be, plus any additional expense incurred in keeping account of the
electrical current so consumed, which additional expense Landlord shall advise
Tenant within a reasonable time after request by Tenant.

11.8 Water. Water shall be made available to the Leased Premises for drinking,
lavatory and office kitchen purposes. If Tenant requires, uses or consumes water
for any purpose in addition to ordinary drinking, lavatory, and office kitchen
purposes, as applicable, Landlord may reasonably estimate such excess and Tenant
shall pay for same. At Tenant’s sole cost and expense, in such event Landlord
may also install a water meter and thereby measure Tenant’s water consumption
for all purposes, and Tenant shall keep said meter and installation equipment in
good working order and repair at Tenant’s own cost and expense. Tenant agrees to
pay for water consumed, as shown in said meter, as and when bill are rendered.

11.9 Lavatory. Lavatories shall be made available on the floor of the Building
where the Leased Premises is located for the use of Tenant Parties and Tenant’s
invitees, in a manner consistent with that of other similar office buildings in
South San Francisco.

11.10 Interruptions. It is understood that Landlord does not warrant that any of
the services referred to above or any other services which Landlord may supply
will be free from interruption. Tenant acknowledges that any one or more such
services may be suspended or reduced by reason of repairs, alterations or
improvements necessary to be made, by strikes or accidents, by any cause beyond
the reasonable control of Landlord, or by orders or regulations of any federal,
state, county or municipal authority. Any such interruption or suspension of
services shall not be deemed an eviction (constructive or otherwise) or
disturbance of Tenant’s use and possession of the Leased Premises or any part
thereof, nor render Landlord liable to Tenant for damages by abatement of Rent
or otherwise, nor relieve Tenant of performance of Tenant’s obligations under
this Lease. Notwithstanding the foregoing, if electrical service to the Leased
Premises is discontinued for three (3) consecutive business (3) days after
Landlord receipt of written notice of such interruption and such interruption is
caused solely by the negligence or willful misconduct of Landlord or any of its
agents, employees or contractors and not as a result of any act of omission of
Tenant or the utility company providing such service and as a result Tenant is
unable to use the Leased Premises or applicable portion thereof, then, Rent
shall abate for the period beginning on the day immediately following such
three (3) business-day period and ending on the day such interruption ends.

11.12 Conservation. Tenant agrees to comply with the conservation, use and
recycling policies and practices from time to time established by Landlord for
the use of utilities and services supplied by Landlord, and the utility charges
payable by Tenant hereunder may include such excess usage penalties or
surcharges as may from time to time be established by Landlord for the Building.
Landlord may reduce the utilities supplied to the Leased Premises and the Common
Areas as required or permitted by any mandatory or voluntary water, energy or
other conservation statute, regulation, order or allocation or other program.

11.11 Excess Usage. In addition to Tenant’s Proportionate Share of Operating
Costs, Tenant shall pay for (the “Excess Utility Costs”) (i) all utility costs
(including, without limitation, electricity, water and/or natural gas)
attributable to any HVAC or other cooling system located in the Leased Premises
or that provides service to Tenant’s server room, data center or other areas
with special equipment or for special use, and (ii) all utility costs consumed
at the Leased Premises in excess of normal office use (such as by way of example
only, extended hours of operation, heavier use of duplicating, computer,
telecommunications or other equipment in excess of the normal use for general
office uses, or a density of workers in excess of the normal density for general
office uses). Tenant shall pay for such Excess Utility Costs within thirty
(30) days after receipt of a billing from Landlord. Such billing shall be
determined in good faith by Landlord based on separate meters, submeters or
other measuring devices (such as an eamon demon device) to measure consumption
of such

 

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utilities at the Leased Premises or otherwise based on a commercially reasonable
allocation given Tenant’s use of the Leased Premises. The charge for such excess
use may include a reasonable charge for increased wear and tear on existing
equipment caused by Tenant’s excess consumption. Tenant shall pay, as additional
rent, for the Excess Utility Costs within thirty (30) days after receipt of a
billing from Landlord, and if requested by Landlord, Tenant shall pay for Excess
Utility Costs, as additional rent, on an estimated basis in advance on the first
day of each month, subject to an annual reconciliation of such Excess Utility
Costs.

ARTICLE 12     ALTERATIONS

12.1 Consent of Landlord; Ownership. Except to the extent included as part of
Landlord’s Work or the initial Tenant Improvements, Tenant shall not make, or
suffer to be made, any alterations, additions or improvements, including,
without limitation, any alterations, additions or improvements that result in
increased telecommunication demands or require the addition of new communication
or computer wires, cables and related devises or expand the number of telephone
or communication lines dedicated to the Leased Premises by the Building’s
telecommunication design (individually, an “alteration” and collectively,
“alterations”) to the Leased Premises, or any part thereof, without the written
consent of Landlord first had and obtained. Subject to Section 12.4 below, any
alterations, except trade fixtures, shall upon expiration or termination of this
Lease become a part of the realty and belong to Landlord. Notwithstanding the
foregoing Landlord’s consent shall not be required for an alteration to the
interior of the Leased Premises that complies with the following requirements:
(a) is cosmetic in nature such as painting, (b) does not affect the roof or any
area outside of the Leased Premises or require work inside the walls or above
the ceiling of the Leased Premises; (c) does not affect the structural parts of
the Building or electrical, plumbing, HVAC or mechanical systems in the Building
or servicing the Leased Premises, or the sprinkler or other life safety system;
and (d) costs less than $15,000.00 individually or in the aggregate for all of
such Alterations during a calendar year (herein referred to as “Minor
Alteration”). Tenant shall provide Landlord with prior written notice of any
Minor Alteration that requires a building permit. Tenant shall, at the
expiration or earlier termination of this Lease, remove its furniture, trade
fixtures fixtures and equipment and repair any damage to the Leased Premises
caused as result.

12.2 Requirements. Any alteration performed by Tenant shall be subject to strict
conformity with the following requirements:

(a) All alterations shall be at the sole cost and expense of Tenant;

(b) Prior to commencement of any work of alteration, Tenant shall submit
detailed plans and specifications, including working drawings (hereinafter
referred to as “Plans”), of the proposed alteration, which shall be subject to
the consent of Landlord in accordance with the terms of Section 12.1 above;

(c) Following approval of the Plans by Landlord, Tenant shall give Landlord at
least five (5) days’ prior written notice of any commencement of work in the
Leased Premises so that Landlord may post notices of non-responsibility in or
upon the Leased Premises as provided by law;

(d) No alteration shall be commenced without Tenant having previously obtained
all appropriate permits and approvals required by and of governmental agencies;

(e) All alterations shall be performed in a skillful and workmanlike manner,
consistent with the best practices and standards of the construction industry,
and pursued with diligence in accordance with said Plans previously approved by
Landlord and in full accord with all applicable laws and ordinances. All
material, equipment, and articles incorporated in the alterations are to be new
and of recent manufacture and of the most suitable grade for the purpose
intended;

(f) Tenant must obtain the prior written approval from Landlord for Tenant’s
contractors before the commencement of any work. Tenant’s contractor for any
work shall maintain all of the insurance

 

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reasonably required by Landlord, including, without limitation, commercial
general liability and workers’ compensation.

(g) As a condition of approval of an alteration the reasonably anticipated cost
of which is in excess of $25,000, Landlord may require performance and labor and
materialmen’s payment bonds issued by a surety approved by Landlord, in a sum
equal to the cost of the alterations guarantying the completion of the
alteration free and clear of all liens and other charges in accordance with the
Plans. Such bonds shall name Landlord as beneficiary;

(h) The alteration must be performed in a manner such that they will not
interfere with the quiet enjoyment of the other tenants in the Complex.

12.3 Liens. Tenant shall keep the Leased Premises and the Complex in which the
Leased Premises are situated free from any liens arising out of any work
performed, materials furnished or obligations incurred by Tenant. In the event a
mechanic’s or other lien is filed against the Leased Premises, Building or the
Complex as a result of a claim arising through Tenant and not removed within ten
10) days, Landlord may demand that Tenant furnish to Landlord a surety bond
satisfactory to Landlord in an amount equal to at least one hundred fifty
percent (150%) of the amount of the contested lien claim or demand, indemnifying
Landlord against liability for the same and holding the Leased Premises free
from the effect of such lien or claim. Such bond must be posted within ten
(10) days following notice from Landlord. In addition, Landlord may require
Tenant to pay Landlord’s reasonable attorneys’ fees and costs in participating
in any action to foreclose such lien if Landlord shall decide it is to its best
interest to do so. If Tenant fails to post such bond within said time period,
Landlord, after five (5) days prior written notice to Tenant, may pay the claim
prior to the enforcement thereof, in which event Tenant shall reimburse Landlord
in full, including attorneys’ fees, for any such expense, as additional rent,
with the next due rental.

12.4 Restoration. Tenant shall return the Leased Premises to Landlord at the
expiration or earlier termination of this Lease in good and sanitary order,
condition and repair, free of rubble and debris, broom clean, reasonable wear
and tear excepted. At the time Tenant requests Landlord’s consent to the
construction or installation of any alteration, Tenant may also request in
writing whether Landlord will require all or portions of such alteration to be
removed by Tenant at the expiration or earlier termination of this Lease and
Landlord shall advise Tenant at the time it provides its consent (if consent is
granted by Landlord) whether all or any part of such alteration must be removed.
If Tenant does not make such request at the time it seeks Landlord’s consent,
then Tenant shall ascertain from Landlord at least thirty (30) days prior to the
termination of this Lease, whether Landlord desires such alteration, or any part
thereof, removed and the affected portion of the Leased Premises restored to its
condition prior to the making of permitted alteration, and if Landlord shall so
desire, then Tenant shall forthwith restore said Leased Premises or the
designated portions thereof, as the case may be, to its original condition,
entirely at its own expense, excepting normal wear and tear. All damage to the
Leased Premises caused by the removal of any alteration or any of Tenant’s trade
fixtures and other personal property that Tenant is permitted to remove under
the terms of this Lease and/or such restoration shall be repaired by Tenant at
its sole cost and expense prior to termination. All damage to the Leased
Premises caused by the removal of such trade fixtures and other personal
property that Tenant is permitted to remove under the terms of this Lease and/or
such restoration shall be repaired by Tenant at its sole cost and expense prior
to termination.

ARTICLE 13     PROPERTY INSURANCE

13.1 Use of Leased Premises. No use shall be made or permitted to be made on the
Leased Premises, nor acts done, which will increase the existing rate of
insurance upon the building in which the Leased Premises are located or upon any
other Building in the Complex or cause the cancellation of any insurance policy
covering the Building, or any part thereof, nor shall Tenant sell, or permit to
be kept, used or sold, in or about the Leased Premises, any article which may be
prohibited by the standard form of “All Risk” fire insurance policies. Tenant
shall, at its sole cost and expense, comply with any and all requirements
pertaining to the Leased Premises, of any insurance organization or company,
necessary for the maintenance of reasonable

 

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property damage and commercial general liability insurance, covering the Leased
Premises, the Building, or the Complex.

13.2 Personal Property Insurance. Tenant shall maintain in full force and effect
on alterations, additions, improvements, carpeting, floor coverings, panelings,
decorations, fixtures, inventory and other business personal property situated
in or about the Leased Premises a policy or policies providing protection
against any peril included within the classification “All Risk” to the extent of
one hundred percent (100%) of their replacement cost, or that percentage of the
replacement cost required to negate the effect of a co-insurance provision,
whichever is greater. No such policy shall have a deductible in a greater amount
than FIVE THOUSAND DOLLARS ($5,000.00). Tenant shall also insure in the same
manner the physical value of all its leasehold improvements and alterations in
the Leased Premises. During the term of this Lease, the proceeds from any such
policy or policies of insurance shall be used for the repair or replacement of
the fixtures, equipment, and leasehold improvements so insured. Landlord shall
have no interest in said insurance (except as a loss payee with respect to any
alterations affixed to the Leased Premises or other leasehold improvements made
to the Leased Premises), and will sign all documents necessary or proper in
connection with the settlement of any claim or loss by Tenant. Tenant shall also
maintain business interruption insurance and insurance for all plate glass upon
the Leased Premises. All insurance specified in this Section 13.2 to be
maintained by Tenant shall be maintained by Tenant at its sole cost.

ARTICLE 14     INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION

14.1 Intent and Purpose. This Article 14 is written and agreed to in respect of
the intent of the parties to assign the risk of loss, whether resulting from
negligence of the parties or otherwise, to the party who is obligated hereunder
to cover the risk of such loss with insurance. Thus, the indemnity and waiver of
claims provisions of this Lease have as their object, so long as such object is
not in violation of public policy, the assignment of risk for a particular
casualty to the party carrying the insurance for such risk, without respect to
the causation thereof.

14.2 Waiver of Subrogation. Tenant and Landlord hereby mutually waive their
respective rights of recovery against each other for any loss covered by their
respective property insurance or property insurance required to be maintained
pursuant to this Lease. Each policy of property insurance which Tenant obtains
for the Leased Premises, and which Landlord obtains for the Complex, shall
include a clause or endorsement denying the insurer any right of subrogation
against the other party thereto to the extent that rights have been waived by
the insured party prior to the occurrence of injury or loss.

14.3 Form of Policy. Tenant’s policies of insurance required hereunder shall
(a) be provided at Tenant’s expense; (b) name the Landlord Entities as
additional insureds (General Liability) and loss payee (Property—Special Form);
(c) be issued by an insurance company with a minimum Best’s rating of “A:VII”
during the Term; and (d) provide that said insurance shall not be canceled
unless thirty (30) days prior written notice (ten days for non-payment of
premium) shall have been given to Landlord; a certificate of Liability insurance
on ACORD Form 25 and a certificate of Property insurance on ACORD Form 27 shall
be delivered to Landlord by Tenant upon the Commencement Date and at least
thirty (30) days prior to each renewal of said insurance.

14.4 Indemnity. Tenant shall protect, indemnify and hold Landlord, Landlord’s
investment manager, and the trustees, boards of directors, officers, general
partners, beneficiaries, stockholders, employees and agents of each of them (the
“Landlord Entities”) (except to the extent arising out of the gross negligence
or willful misconduct of any of the Landlord Entities) harmless from and against
any and all loss, claims, liability or costs (including court costs and
reasonable attorney’s fees) incurred by reason of (a) any damage to any property
(including but not limited to property of any Landlord Entity) or any injury
(including but not limited to death) to any person occurring in, on or about the
Leased Premises, Building and or Complex to the extent that such injury or
damage shall be caused by or arise from any actual or alleged act, neglect,
fault, or omission by or of Tenant or any of Tenant’s agents, contractors,
employees or licensees (collectively, the “Tenant Entities”) to

 

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meet any standards imposed by any duty with respect to the injury or damage;
(b) the conduct or management of any work or thing whatsoever done by the Tenant
in or about the Leased Premises or from transactions of the Tenant concerning
the Leased Premises; or (c) Tenant’s failure to comply with any and all
governmental laws, ordinances and regulations applicable to the condition or use
of the Leased Premises or its occupancy. Landlord shall protect, indemnify and
hold Tenant and the Tenant Entities harmless from and against any and all loss,
claims, liability or costs (including court costs and reasonable attorney’s
fees) arising from the gross negligence or willful misconduct of Landlord or any
of the Landlord Entities in, on or about the Complex, except to the extent
caused by the negligence or willful misconduct of the Tenant Entities. Further,
Tenant’s agreement to indemnify Landlord and Landlord’s agreement to indemnify
Tenant pursuant hereto are not intended to and shall not relieve any insurance
carrier of its obligations under policies required to be carried pursuant to the
provisions of this Lease or under any insurance required of Tenant under this
Lease where Landlord is named or required to be named as an additional insured,
to the extent such policies cover, or if carried, would have covered the
matters, subject to the parties’ respective indemnification obligations; nor
shall they supersede any inconsistent agreement of the parties set forth in any
other provision of this Lease. The provisions of this Article shall survive the
termination of this Lease with respect to any claims or liability accruing prior
to such termination.

14.5 Waiver of Claims. Tenant, as a material part of the consideration to be
rendered to Landlord, hereby waives all claims against Landlord for damages to
goods, wares, merchandise and loss of business in, upon or about the Leased
Premises and injury to Tenant, its agents, employees, invitees or third persons,
in, upon or about the Leased Premises, Building or Complex from any cause
arising at any time, including breach of the provisions of this Lease, the
failure to provide security or Landlord’s negligence in connection therewith, or
the negligence of the parties hereto, except to the extent such damages or
injury are caused by the gross negligence or willful actions of Landlord, its
agents, officers and employees.

14.6 References. Wherever in this Article the term Landlord or Tenant is used
and such party is to receive the benefit of a provision contained in this
Article, such term shall refer not only to that party but also to its
shareholders, officers, directors, employees, partners, members, managers,
mortgagees and agents.

ARTICLE 15     LIABILITY AND OTHER INSURANCE

15.1 Tenant’s Insurance. Tenant shall, at Tenant’s expense, obtain and keep in
force during the term of this Lease, a commercial general liability insurance
policy insuring Tenant and protecting Landlord and the Landlord Entities against
any liability to the public or to any invitee of Tenant or a Landlord Entity
against the risks of, bodily injury and property damage, personal injury,
contractual liability, completed operations, products liability, host liquor
liability, owned and non-owned automobile liability arising out of the
ownership, use, occupancy or maintenance of the Leased Premises and all areas
appurtenant thereto. Such insurance shall be a combined single limit policy in
an amount not less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence with
a TWO MILLION DOLLAR ($2,000,000.00) annual aggregate. Landlord, the Landlord
Entities and any lender and any other party in interest designated by Landlord
shall be named as additional insured(s). The policy shall contain cross
liability endorsements with coverage for Landlord for the negligence of Tenant
even though Landlord is named as an additional insured; shall insure performance
by Tenant of the indemnity provisions of this Lease; shall be primary, not
contributing with, and not in excess of coverage which Landlord may carry; shall
provide for severability of interest; shall provide that an act or omission of
one of the insured or additional insureds which would void or otherwise reduce
coverage shall not void or reduce coverages as to the other insured or
additional insureds; and shall afford coverage after the term of this Lease (by
separate policy or extension if necessary) for all claims based on acts,
omissions, injury or damage which occurred or arose (or the onset of which
occurred or arose) in whole or in part during the term of this Lease to the
extent insurable. The limits of said insurance shall not limit any liability of
Tenant hereunder. Not more frequently than every year, if, in the reasonable
opinion of Landlord, the amount of liability insurance required hereunder is not
adequate, Tenant shall promptly increase said insurance coverage as required by
Landlord.

 

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15.2 Workers’ Compensation Insurance. Tenant shall carry Workers’ Compensation
insurance as required by law, including an employers’ liability endorsement.

15.3 Other Insurance. Tenant shall keep in force throughout the Term:
(a) Business Auto Liability covering owned, non-owned and hired vehicles with a
limit of not less than $1,000,000 per accident; (b) Employers Liability with
limits of $1,000,000 each accident; (c) Business Interruption Insurance for 100%
of the six (6) months actual loss sustained, and (d) Excess Liability in the
amount of $5,000,000. In addition, whenever Tenant shall undertake any
alterations, additions or improvements in, to or about the Leased Premises
(“Work”) the aforesaid insurance protection must extend to and include injuries
to persons and damage to property arising in connection with such Work, without
limitation including liability under any applicable structural work act, and
such other insurance as Landlord shall require; and the certificates evidencing
such insurance must be delivered to Landlord prior to the commencement of any
such Work.

15.4 Landlord’s Insurance. In addition to any other insurance Landlord elects to
maintain, Landlord shall keep in full force and effect during the Lease Term,:
(i) “All Risk” or “Special Causes of Loss” property insurance for the full
replacement cost of the Building (excluding costs for footings and excavation
and costs for Tenant’s alterations, equipment, trade fixtures, inventory,
fixtures or personal property) and with such deductibles as are commercially
reasonable for comparable office buildings in the South San Francisco area owned
by other institutional owners of comparable property; and (ii) commercial
general liability insurance with a liability limit in such amount as Landlord
deems appropriate and with such deductibles as determined by Landlord in its
sole and absolute discretion. At Landlord’s option, such insurance may be
carried under any blanket or umbrella policies which Landlord has in force for
other properties. Such insurance shall be issued in the names of Landlord and
its lender (if required), as their interests appear, and shall be for the sole
benefit of such parties and under their sole control.

ARTICLE 16     INSURANCE POLICY REQUIREMENTS & INSURANCE DEFAULTS

16.1 General Requirements. All insurance policies required to be carried by
Tenant (except Tenant’s business personal property insurance) hereunder shall
conform to the following requirements:

(a) The insurer in each case shall carry a designation in “Best’s Insurance
Reports” as issued from time to time throughout the term as follows:
Policyholders’ rating of A-; financial rating of not less than VII;

(b) The insurer shall be qualified to do business in the state in which the
Leased Premises are located;

(c) The policy shall be in a form and include such endorsements as are
acceptable to Landlord;

(d) Certificates of insurance shall be delivered to Landlord at commencement of
the term and certificates of renewal at least fifteen (15) days prior to the
expiration of each policy;

(e) Each policy shall require that Landlord be notified in writing by the
insurer prior to any cancellation or expiration of such policy, or any reduction
in the amounts of insurance carried.

16.2 Tenant’s Insurance Defaults. If Tenant fails to obtain any insurance
required of it under the terms of this Lease, Landlord may, at its option, but
is not obligated to, obtain such insurance on behalf of Tenant and bill Tenant,
as additional rent, for the cost thereof. Payment shall be due within ten
(10) days of receipt of the billing therefor by Tenant.

 

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ARTICLE 17     FORFEITURE OF PROPERTY

17.1 Removal of Personal Property. Tenant agrees that as at the date of
termination of this Lease or repossession of the Leased Premises by Landlord, by
way of default or otherwise, it shall remove all of its personal property. Any
and all such property of Tenant not removed by such date shall, at the option of
Landlord, irrevocably become the sole property of Landlord. Tenant waives all
rights to notice and all common law and statutory claims and causes of action
which it may have against Landlord subsequent to such date as regards the
storage, destruction, damage, loss of use and ownership of the personal property
affected by the terms of this Article. Tenant acknowledges Landlord’s need to
relet the Leased Premises upon termination of this Lease or repossession of the
Leased Premises and understands that the forfeitures and waivers provided herein
are necessary to aid said reletting, and to prevent Landlord incurring a loss
for inability to deliver the Leased Premises to a prospective Tenant.

ARTICLE 18     MAINTENANCE AND REPAIRS

18.1 Landlord’s Obligations. Landlord shall repair, replace and maintain in good
operating order (i) the external and Structural parts of the Building, (ii) the
Common Areas of the Complex, and (iii) the roof and exterior walls and windows
of the Building, (iv) the Building’s curtain wall, exterior glass and mullions,
columns, beams, shafts (including elevator shafts),(v) exterior Complex signage
(but not tenant signage), (vi) stairwells, elevator cabs, and plazas, (vii) all
mechanical (including HVAC), electrical, plumbing and fire/life-safety systems
serving the Building in general, whether located inside or outside of the Leased
Premises, excluding any supplemental HVAC installed by or for Tenant and
Tenant’s trade fixtures and equipment, (viii) janitor and equipment closets and
shafts within the Leased Premises designated by Landlord for use by it in
connection with the operation and maintenance of the Complex. Landlord shall
perform such repairs, replacements and maintenance with reasonable dispatch, in
a good and workmanlike manner; but Landlord shall not be liable for any damages,
direct, indirect or consequential, or for damages for personal discomfort,
illness or inconvenience of Tenant by reason of failure of such equipment,
facilities or systems or reasonable delays in the performance of such repairs,
replacements and maintenance, unless caused by the gross negligence or
deliberate act or omission of Landlord. The cost for such certain of such
repairs, maintenance and replacement may be included in Operating Costs as to
the extent provided elsewhere in this Lease.

18.2 Tenant’s Obligations. To the extent not Landlord’s responsibility under
Section 18.1, Tenant shall repair the Leased Premises, including without
limiting the generality of the foregoing, all alterations made by Tenant in the
Leased Premises, fixtures and shelving, and special mechanical and electrical
equipment which equipment is not a normal part of the Leased Premises installed
by or for Tenant, reasonable wear and tear, damage with respect to which
Landlord has an obligation to repair as provided in Section 18.1 and Section 19
hereof only excepted. Landlord may enter and view the state of repair in
accordance with Section 22.1 and Tenant will repair in a good and workmanlike
manner according to notice in writing.

18.3 Waiver. Tenant waives all rights it may have under law to make repairs at
Landlord’s expense.

ARTICLE 19     DESTRUCTION

19.1 Rights of Termination. In the event the Building suffers (a) an “uninsured
property loss” (as hereinafter defined) or (b) a property loss which Landlord’s
contractor estimates cannot be repaired within one hundred eighty (180) days
from the date of destruction under the laws and regulations of state, federal,
county or municipal authorities, or other authorities with jurisdiction,
Landlord may terminate this Lease as of the date of the damage within twenty
(20) days of written notice from Landlord to Tenant that the damage from the
casualty was an uninsured property loss or that time to restore will exceed such
one hundred eighty (180) day period. In the event of a property loss to the
Leased Premises which cannot be repaired within one hundred eighty (180) days of
the occurrence thereof, Tenant shall also have the right to terminate the Lease
by written notice to Landlord within twenty (20) days following notice from
Landlord that the time for restoration will exceed such time period.
Notwithstanding anything to the contrary contained in this Lease, Tenant shall
not have the right to

 

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terminate this Lease if the casualty or other loss or damage was caused by the
gross negligence or intentional misconduct of Tenant or any Tenant Entity or a
party related to Tenant. For purposes of this Lease, the term “uninsured
property loss” shall mean any loss arising from a peril not covered by the
standard form of “All Risk” property insurance policy.

19.2 Repairs. In the event of a property loss which may be repaired within one
hundred eighty (180) days from the date of the damage, or, in the alternative,
in the event the parties do not elect to terminate this Lease under the terms of
Section 19.1 above, then this Lease shall continue in full force and effect and
Landlord shall forthwith undertake to make such repairs to reconstitute the
Building and the Leased Premises to as near the condition as existed prior to
the property loss as practicable; provided, however, that if the repairs and
restoration are not in fact substantially completed within such one hundred
eighty (180) day period, subject to delays caused by Tenant or its employees,
contractors or agents and delays beyond the reasonable control of Landlord (the
“Restoration Period”), then Tenant shall also have the right to terminate the
Lease by written notice to Landlord within twenty (20) days following the
earlier of (a) notice from Landlord that the repairs and restoration will take
longer than the Restoration Period, or (b) the expiration of the Restoration
Period if the repairs and restoration has not been substantially completed by
such expiration. Landlord shall not be required to repair or replace any damage
or loss by or from fire or other cause to any panelings, decorations,
partitions, additions, railings, ceilings, floor coverings, office fixtures or
any other property or improvements installed on the Leased Premises by, or
belonging to, Tenant. Such partial destruction shall in no way annul or void
this Lease except that Tenant shall be entitled to a proportionate reduction of
Rent following the property loss and until the time the Leased Premises are
restored and Tenant has had a reasonable period, not to exceed thirty (30) days,
to complete the installation of Tenant’s furniture, fixtures, and equipment and
any other work reasonably necessary to ready the Leased Premises for the
operation of Tenant’s business and to move into the Leased Premises. Such
reduction shall be based on the ratio that the square footage of the damaged
portion of the Leased Premises bears to the total square footage of the Leased
Premises. If the parties cannot agree within forty-five (45) days of the
property loss, the matter shall be submitted to arbitration under the rules of
the American Arbitration Association. Upon the resolution of the dispute, the
settlement shall be retroactive and Landlord shall within ten (10) days
thereafter refund to Tenant any sums due in respect of the reduced rental from
the date of the property loss. Landlord’s obligations to restore shall in no way
include any construction originally performed by Tenant or subsequently
undertaken by Tenant, but shall include solely that property constructed by
Landlord prior to commencement of the Term hereof. Notwithstanding anything to
the contrary contained in this Lease, in the event the holder of any
indebtedness secured by a mortgage or deed of trust covering the Leased
Premises, Building and/or Complex requires that any insurance proceeds be
applied to such indebtedness, then Landlord shall have the right to terminate
this Lease by delivering written notice of termination to Tenant within fifteen
(15) days after such requirement is made by any such holder, whereupon this
Lease shall end on the date of such damage as if the date of such damage were
the date originally fixed in this Lease for the expiration of the Term.

19.3 Repair Costs. The cost of any repairs to be made by Landlord, pursuant to
Section 19.2 of this Lease, shall be paid by Landlord utilizing available
insurance proceeds. Tenant shall reimburse Landlord upon completion of the
repairs for any deductible for which no insurance proceeds will be obtained
under Landlord’s insurance policy, not to exceed $10,000.00 in any instance, if
the damage was caused by Tenant or any of its employees, agents or contractors,
or if other premises are also repaired, a pro rata share based on total costs of
repair equitably apportioned to the Leased Premises.

19.4 Waiver. Tenant hereby waives all statutory or common law rights of
termination in respect to any partial destruction or property loss which
Landlord is obligated to repair or may elect to repair under the terms of this
Article.

19.5 Landlord’s Election. In the event that the Complex or Building is destroyed
to the extent of not less than fifty percent (50%) of the replacement cost
thereof, Landlord may elect to terminate this Lease, whether the Leased Premises
be injured or not, in the same manner as in Section 19.1 above. In all events, a
total destruction of the Complex or Building shall terminate this Lease.

 

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19.6 Damage Near End of Term. If at any time during the last twelve (12) months
of the term of this Lease there occurs a property loss to the Leased Premises
and, in Landlord’s reasonable judgment, repairs cannot reasonably be completed
within the period that is the lesser of (A) one hundred twenty (120) days after
the date of discovery of the damage, and (B) one-half of the then remaining
Term, Landlord and Tenant each shall have the independent right to terminate the
Lease by written notice delivered to Tenant within thirty (30) days after such
occurrence.

ARTICLE 20     CONDEMNATION

20.1 Definitions.

(a) “Condemnation” means (i) the exercise of any governmental power, whether by
legal proceedings or otherwise, by a condemnor and/or (ii) a voluntary sale or
transfer by Landlord to any condemnor, either under threat of condemnation or
while legal proceedings for condemnation are pending.

(b) “Date of taking” means the date the condemnor has the right to possession of
the property being condemned.

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

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

20.2 Total Taking. If the Leased Premises are totally taken by condemnation,
this Lease shall terminate on the date of taking.

20.3 Partial Taking; Common Areas.

(a) If any portion of the Leased Premises is taken by condemnation, this Lease
shall remain in effect, except that Tenant can elect to terminate this Lease if
20% or more of the total number of square feet in the Leased Premises is taken
or access to the Leased Premises is materially impaired.

(b) If any part of the Common Areas of the Complex is taken by condemnation,
this Lease shall remain in full force and effect so long as there is no material
interference with the access to the Leased Premises or parking, except that if
thirty percent (30%) or more of the Common Areas is taken by condemnation,
Landlord or Tenant shall have the election to terminate this Lease pursuant to
this Section.

(c) If fifty percent (50%) or more of the Building in which the Leased Premises
are located is taken, Landlord shall have the election to terminate this Lease
in the manner prescribed herein.

20.4 Termination or Abatement. If either party elects to terminate this Lease
under the provisions of Section 20.3 (such party is hereinafter referred to as
the “Terminating Party”), it must terminate by giving notice to the other party
(the “Nonterminating Party”) within thirty (30) days after the nature and extent
of the taking have been finally determined (the “Decision Period”). The
Terminating Party shall notify the Nonterminating Party of the date of
termination, which date shall not be earlier than one hundred twenty (120) days
after the Terminating Party has notified the Nonterminating Party of its
election to terminate nor later than the date of taking. If Notice of
Termination is not given within the Decision Period, the Lease shall continue in
full force and effect except that Minimum Monthly Rent shall be reduced by
subtracting therefrom an amount calculated by multiplying the Minimum Monthly
Rent in effect prior to the taking by a fraction the numerator of which is the
number of square feet taken from the Leased Premises and the denominator of
which is the number of square feet in the Leased Premises prior to the taking,
and Tenant’s Proportionate Share shall be reduced accordingly.

 

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20.5 Restoration. If there is a partial taking of the Leased Premises and this
Lease remains in full force and effect pursuant to this Article, Landlord, at
its cost, shall accomplish all necessary restoration so that the Leased Premises
is returned as near as practical to its condition immediately prior to the date
of the taking, but in no event shall Landlord be obligated to expend more for
such restoration than the extent of funds actually paid to Landlord by the
condemnor.

20.6 Award. Any award arising from the condemnation or the settlement thereof
shall belong to and be paid to Landlord except that Tenant shall receive from
the award compensation for the following if specified in the award by the
condemning authority: Tenant’s trade fixtures, tangible personal property,
goodwill, loss of business and relocation expenses. At all events, Landlord
shall be solely entitled to all awards in respect of the real property,
including the bonus value of the leasehold.

ARTICLE 21     ASSIGNMENT AND SUBLETTING

21.1 Intentionally Deleted.

21.2 “Transfer of the Leased Premises” Defined. Except for transfers described
in section 21.5 hereof, the terms “Transfer of the Leased Premises” or
“Transfer” as used herein shall include the following, whether voluntary or
involuntary and whether effected by death, operation of law or otherwise:

(a) An assignment of all or any part this Lease or subletting of all or any part
the Leased Premises or transfer of possession, or right of possession or
contingent right of possession of all or any portion of the Leased Premises
including, without limitation, concession, mortgage, deed of trust, devise,
hypothecation, agency, license, franchise or management agreement, or the
occupancy or use by any other person (the agents and servants of Tenant
excepted) of any portion of the Leased Premises.

(b) If Tenant is a partnership, limited liability company or other entity other
than (i) a corporation described in Section 21.1(c) below, or (ii) a publically
traded corporation:

(1) A change in ownership effected voluntarily, involuntarily, or by operation
of law of fifty percent (50%) or more of the partners or members or fifty
percent (50%) or more in the aggregate of the partnership or membership
interests, whether in a single transaction or series of transactions over a
period of time; or

(2) The sale, mortgage, hypothecation, pledge or other encumbrance at any time
of more than an aggregate of fifty percent (50%) in the aggregate of the value
of Tenant’s assets, whether in a single transaction or series of transactions
over a period of time; or

(3) The dissolution of the partnership or limited liability company without its
immediate reconstitution.

(c) If Tenant is a closely held corporation (i.e., one whose stock is not
publicly held and not traded through an exchange or over the counter):

(1) The sale or other transfer of more than an aggregate of fifty percent
(50%) of the voting shares of Tenant or more in the aggregate, whether in a
single transaction or series of transactions over a period of time;

(2) The sale, mortgage, hypothecation, pledge or other encumbrance at any time
of more than an aggregate of fifty percent (50%) in the aggregate of the value
of Tenant’s assets, whether in a single transaction or series of transactions
over a period of time; or

(3) The dissolution, merger, consolidation, or other reorganization of Tenant.

 

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21.3 No Transfer Without Consent. Except for a Transfer described in
Section 21.5 hereof, Tenant shall not suffer a Transfer of the Leased Premises
or any interest therein, or any part thereof, or any right or privilege
appurtenant thereto without the prior written consent of Landlord, and a consent
to one Transfer of the Leased Premises shall not be deemed to be a consent to
any subsequent Transfer of the Leased Premises. Any Transfer of the Leased
Premises without such consent shall be void, and shall, at the option of
Landlord, terminate this Lease. Any Transfer of the Leased Premises without such
consent shall (i) be voidable, and (ii) terminate this Lease, in either case, at
the option of Landlord. The consent by Landlord to any Transfer shall not
include consent to the assignment or transferring of any lease renewal option
rights or space option rights of the Leased Premises, special privileges or
extra services granted to Tenant by this Lease, or addendum or amendment thereto
or letter of agreement (and such options, rights, privileges or services shall
terminate upon such assignment), unless Landlord specifically grants in writing
such options, rights, privileges or services to such assignee or subtenant.

21.4 When Consent Granted. The consent of Landlord to a Transfer may not be
unreasonably withheld, provided that it is agreed to be reasonable for Landlord
to consider any of the following reasons, which list is not exclusive, in
electing to deny consent:

(a) The financial strength of the proposed transferee at the time of the
proposed Transfer is not reasonably sufficient to satisfy its obligations under
the Lease;

(b) A proposed transferee whose impact or affect on the common facilities or the
utility, efficiency or effectiveness of any utility or telecommunication system
serving the Building or the Complex or the other occupants of the Complex would
be adverse, disadvantageous or require improvements or changes in any utility or
telecommunication capacity currently serving the Building or the Complex;

(c) A proposed transferee whose occupancy will require a variation in the terms
of this Lease (including, without limitation, a variation in the use clause) or
which otherwise adversely affects any interest of Landlord;

(d) The existence of any default by Tenant under any provision of this Lease;

(e) A proposed transferee who is or is likely to be, or whose business is or is
likely to be, subject to compliance with additional laws or other governmental
requirements beyond those to which Tenant or Tenant’s business is subject and
would require additional work or improvements to the Complex;

(f) the proposed Transferee is a governmental agency or unit, a non-profit or
charitable entity or organization or an existing tenant in the Complex;

(g) Landlord otherwise determines that the proposed Transfer would have the
effect of increasing the expenses associated with operating, maintaining and
repairing the Building or the Complex;

(h) the Transfer occurs during the time period between the Commencement Date and
the date that at least ninety-five percent (95%) of the rentable square feet of
the Building is leased; or

(i) the portion of the Leased Premises to be sublet or assigned is irregular in
shape with inadequate means of ingress and egress.

21.5 Affiliated Transfer. Notwithstanding the foregoing, Landlord’s consent is
not required for any Transfer to an Affiliate, as defined below, as long as the
following conditions are met:

 

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(a) At least ten (10) business days before the Transfer, Landlord receives from
Tenant written notice of the Transfer (as well as any documents or information
reasonably requested by Landlord regarding the Transfer or Transferee);

(b) The Transfer is not a subterfuge by Tenant to avoid its obligations under
this Lease;

(c) If the Transfer is an assignment, Transferee assumes in writing all of
Tenant’s obligations under this Lease relating to the Leased Premises; and

(d) The Transferor and Transferee have a combined tangible net worth, as
evidenced by financial statements delivered to Landlord and certified by an
independent certified public accountant (“Net Worth”), at least equal to
Tenant’s Net Worth immediately before the Transfer.

For purposes hereof, the term “Affiliate” means any entity that controls, is
controlled by, or is under common control with Tenant. The term “control” means
the ability to direct, directly or indirectly, the management decisions and
policies of such person or entity.

21.6 Procedure for Obtaining Consent. In the event Tenant desires to sublet, or
permit such occupancy of, the Leased Premises, or any portion thereof, or assign
this Lease, and the proposed transaction requires Landlord’s consent hereunder,
Tenant shall give written notice thereof to Landlord at least thirty (30) days
but no more than one hundred twenty (120) days prior to the proposed
commencement date of such subletting or assignment, which notice shall set forth
the name of the proposed subtenant or assignee, the relevant terms of any
sublease or assignment and copies of financial reports and other relevant
financial information of the proposed subtenant or assignee. Landlord shall
notify Tenant, within twenty (20) days after Landlord receives from Tenant
request for consent to a transfer, together with the required documentation,
whether or not Landlord consents to such Transfer. If Landlord does not respond
within such twenty day period, Tenant may send a second written notice to
Landlord requesting such consent. to such transfer, and the failure of Landlord
to respond to such second written request within ten (10) days after receipt of
such second request shall be deemed an approval of such requested Transfer. With
respect to a Transfer requiring Landlord’s consent, Landlord need not commence
its review of any proposed Transfer, or respond to any request by Tenant with
respect to such, unless and until it has received from Tenant adequate
descriptive information concerning the business to be conducted by the proposed
transferee and the following additional information:

(a) The past two years’ Federal Income Tax returns of the proposed transferee
(or in the alternative the past two years’ audited annual Balance Sheets and
Profit and Loss statements or certified correct by a Certified Public
Accountant);

(b) Banking references of the proposed transferee;

(c) A resume of the business background and experience of the proposed
transferee; and

(d) such other information and such other information as may reasonably be
reasonably requested by Landlord.

21.7 Recapture. By written notice to Tenant (the “Termination Notice”) within
thirty (30) days following submission to Landlord by Tenant of the information
specified in section 21.6, Landlord may terminate this Lease in the event of an
assignment of this Lease or sublet of all or substantially all of the Leased
Premises. Landlord’s right to recapture under this Section 21.7 shall not be
applicable to any Transfer to an Affiliate under Section 21.5.

21.8 Reasonable Restriction. The restrictions on Transfer described in this
Lease are acknowledged by Tenant to be reasonable for all purposes, including,
without limitation, the provisions of California Civil Code (the “Code”)
Section 1951.4(b)(2). Tenant expressly waives any rights which it might
otherwise be

 

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deemed to possess pursuant to applicable law, including, without limitation,
Section 1997.040 of the Code, to limit any remedy of Landlord pursuant to
Section 1951.2 or 1951.4 of the Code by means of proof that enforcement of a
restriction on use of the Leased Premises would be unreasonable.

21.9 Effect of Transfer. If Landlord consents to a Transfer and does not elect
to recapture as provided in section 21.7, the following conditions shall apply:

(a) Each and every covenant, condition or obligation imposed upon Tenant by this
Lease and each and every right, remedy or benefit afforded Landlord by this
Lease shall not be impaired or diminished as a result of such Transfer.

(b) Tenant shall pay to Landlord on a monthly basis, fifty percent (50%) of all
rent, additional rent or other consideration payable by such transferee in
connection with the Transfer in excess of the Rent payable by Tenant under this
Lease during the term of the Transfer on a per rentable square foot basis if
less than all of the Leased Premises is transferred, after deducting all
reasonable expenses actually incurred by Tenant in connection therewith for
(i) any changes, alterations and improvements to the Leased Premises in
connection with the Transfer, (ii) any brokerage commissions in connection with
the Transfer, and (iii) any legal fees incurred in connection with the Transfer.
The amount so derived shall be paid with Tenant’s payment of Minimum Monthly
Rent.

(c) No Transfer, whether or not consent of Landlord is required hereunder, shall
relieve Tenant of its primary obligation to pay the rent and to perform all
other obligations to be performed by Tenant hereunder. The acceptance of rent by
Landlord from any person shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be consent to any Transfer of the Leased Premises.

(d) If Landlord consents to a sublease, such sublease shall not extend beyond
the expiration of the Term of this Lease.

(e) No Transfer shall be valid and no transferee shall take possession of the
Leased Premises or any part thereof unless, Tenant shall deliver to Landlord, at
least ten (10) days prior to the effective date of such Transfer, a duly
executed duplicate original of the Transfer instrument in form satisfactory to
Landlord which provides that (i) the transferee assumes Tenant’s obligations for
the payment of rent and for the full and faithful observance and performance of
the covenants, terms and conditions contained herein, (ii) such transferee will,
at Landlord’s election, attorn directly to Landlord in the event Tenant’s Lease
is terminated for any reason on the terms set forth in the instrument of
transfer and (iii) such instrument of transfer contains such other assurances as
Landlord reasonably deems necessary.

21.10 Costs. Tenant shall reimburse Landlord as additional rent for Landlord’s
reasonable costs and attorneys’ fees incurred in conjunction with the processing
and documentation of any proposed Transfer of the Leased Premises, whether or
not consent is granted, not to exceed $2,500.00.

ARTICLE 22     ENTRY BY LESSOR

22.1 Rights of Landlord. Tenant shall permit Landlord and Landlord’s agents and
any mortgagee under a mortgage or beneficiary under a deed of trust encumbering
the Building containing the Leased Premises and such party’s agents to enter the
Leased Premises at all reasonable times, provided that such occurs during
regular business hours (except for repairs and maintenance normally performed
outside of regular business hours such as janitorial service) and provided that
such are accompanied by a representative of Tenant, except for repairs and
maintenance normally performed outside of regular business hours such as
janitorial service, for the purpose (a) inspecting the same, (b) maintaining the
Building, (c) making repairs, replacements, alterations or additions to any
portion of the Building, including the erection and maintenance of such
scaffolding, canopies, fences and props as may be required, (d) posting notices
of non-responsibility for alterations, additions or repairs, and (e) placing
upon the Building and in any areas outside the Building any usual or ordinary
“for

 

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sale” or “for lease” signs and showing the space to prospective purchasers,
investors, lenders and during the last nine (9) months of the Term, tenants,
without any rebate of rent and without any liability to Tenant for any loss of
occupation or quiet enjoyment of the Leased Premises thereby occasioned. This
Section in no way affects the maintenance obligations of the parties hereto.
Landlord shall provide at least 24 hours prior notice of such entry, except that
no notice shall be required to perform normal and customary repairs and
maintenance. Such notice may be communicated verbally and no such notice shall
be required in an emergency; provided, however, that even in the event of an
emergency, Landlord shall use reasonable efforts to notify Tenant of the entry
as soon as is practicable.

ARTICLE 23     SIGNS

23.1 Approval, Installation and Maintenance. Tenant shall not place on the
Leased Premises or on the Building or Common Areas of the Complex, any exterior
signs or advertisements nor any interior signs or advertisements that are
visible from the exterior of the Leased Premises, without Landlord’s prior
written consent, which Landlord reserves the right to withhold for any aesthetic
or other reason in its sole and absolute discretion. The cost of installation
and regular maintenance of any such signs approved by Landlord shall be at the
sole expense of Tenant. At the termination of this Lease, or any extension
thereof, Tenant shall remove all its signs, and all damage caused by such
removal shall be repaired at Tenant’s expense.

23.2 Lobby and Suite Signage. Landlord will include Tenant’s name in the
directory of the lobby in the Building containing the Leased Premises, and
Landlord will pay for the initial cost to include Tenant’s name in such
directory to the extent a directory exists. Any changes to Tenant’s name or its
listing in such directory shall be at Tenant’s expense. At its expense, Landlord
will also install a sign identifying Tenant’s name next to the main entrance
door to the Lease Premises, which sign will be consistent with the Landlord’s
standard suite signage for such purposes. Any change to such sign shall be at
Tenant’s sole cost and expense.

ARTICLE 24     DEFAULT

24.1 Definition. The occurrence of any of the following shall constitute a
material default and breach of this Lease by Tenant:

(a) Payment. Any failure by Tenant to pay the rent or to make any other payment
required to be made by Tenant hereunder after five (5) days prior written notice
and opportunity to cure; provided, however, that such notice and cure period
shall be in lieu of and not in addition to any three day notice to pay or quit
under Section 1161, et. seq. of the California Code of Civil Procedure;

(b) Other Covenants. A failure by Tenant to observe and perform any other
provision of this Lease to be observed or performed by Tenant, where such
failure continues for thirty (30) days after written notice thereof by Landlord
to Tenant; provided, however, that if the nature of the default is such that the
same cannot reasonably be cured within the thirty (30) day period allowed,
Tenant shall not be deemed to be in default if Tenant shall, within such thirty
(30) day period, commence to cure and thereafter diligently prosecute the same
to completion. Notwithstanding the foregoing, any default by Tenant to comply
with the terms and conditions contained in Article 15 (Liability Insurance),
Article 16 (Insurance Policy Requirements and Insurance Defaults), Article 32
(Estoppel Certificates) and/or Section 33.25 (Financial Statements and Credit
Reports) within five (5) days after written notice thereof by Landlord to Tenant
after the expiration of any notice and cure period set forth therein shall be an
immediate default without benefit of notice or opportunity to cure; or

(c) Receivership. Either (1) the appointment of a receiver (except a receiver
appointed at the instance or request of Landlord) to take possession of all or
substantially all of the assets of Tenant, or (2) a general assignment by Tenant
for the benefit of creditors, or (3) any action taken or suffered by Tenant
under any insolvency or bankruptcy act shall constitute a breach of this Lease
by Tenant. In such event, Landlord may, at its option, declare this Lease
terminated and forfeited by Tenant, and Landlord shall be entitled to immediate

 

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possession of the Leased Premises. Upon such notice of termination, this Lease
shall terminate immediately and automatically by its own limitation.

ARTICLE 25     REMEDIES UPON DEFAULT

25.1 Termination and Damages. In the event of any default by Tenant, then in
addition to any other remedies available to Landlord herein or at law or in
equity, Landlord shall have the immediate option to terminate this Lease and all
rights of Tenant hereunder by giving written notice of such intention to
terminate. In the event that Landlord shall elect to so terminate this Lease,
then Landlord may recover from Tenant:

(a) The worth at the time of award of any unpaid rent which had been earned at
the time of such termination; plus

(b) The worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss Tenant proves could have been reasonably avoided;
plus

(c) The worth at the time of award of the amount by which the unpaid rent for
the balance of the term after the time of award exceeds the amount of such
rental loss that Tenant proves could be reasonably avoided; plus

(d) Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform its obligations under this
Lease or which in the ordinary course of events would be likely to result
therefrom; and

(e) At Landlord’s election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by the applicable law in the
state in which the Leased Premises are located.

25.2 Definition. As used in subsections 25.1(a) and (b) above, the “worth at the
time of award” is computed by allowing interest at the rate of ten percent
(10%) per annum. As used in subsection 25.1(c) above, the “worth at the time of
award” is computed by discounting such amount at the discount rate of the
Federal Reserve Bank for the region in which the Complex is located at the time
of award plus one percent (1%).

25.3 Intentionally Deleted.

25.4 Recovery of Rent; Reletting.

(a) If Landlord does not elect to terminate this Lease as provided in
Section 25.1 above, this Lease shall continue in effect for so long as Landlord
does not terminate Tenant’s right to possession, and Landlord may enforce all
its rights and remedies under this Lease, including, without limitation,
Landlord’s right from time to time, without terminating this Lease, to either
recover all rental as it becomes due or relet the Leased Premises or any part
thereof for such term or terms and at such rental or rentals and upon such other
terms and conditions as Landlord, in its sole discretion, may deem advisable
with the right to make alterations and repairs to the Leased Premises. Acts of
maintenance or preservation or efforts to relet the Leased Premises or the
appointment of a receiver upon initiation of Landlord or other legal proceeding
granting Landlord or its agent possession to protect Landlord’s interest under
this Lease shall not constitute a termination of Tenant’s right to possession.

(b) In the event that Landlord shall elect to so relet, then rentals received by
Landlord from such reletting shall be applied: first, to the payment of any
indebtedness other than rent due hereunder from Tenant to Landlord; second, to
the payment of any cost of such reletting; third, to the payment of the cost of
any alterations and repairs to the Leased Premises ; fourth, to the payment of
rent due and unpaid hereunder; and the residue, if any, shall be held by
Landlord and applied in payment of future rent as the same may become due and

 

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payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied by the payment of rent hereunder,
be less than the rent payable during that month by Tenant hereunder, then Tenant
shall pay such deficiency to Landlord immediately upon demand therefor by
Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall
also pay to Landlord, as soon as ascertained, any costs and expenses incurred by
Landlord in such reletting or in making such alterations and repairs not covered
by the rentals received from such reletting.

(c) No reentry or taking possession of the Leased Premises or any other action
under this Section shall be construed as an election to terminate this Lease
unless a written notice of such intention be given to Tenant or unless the
termination thereof be decreed by a court of competent jurisdiction.
Notwithstanding any reletting without termination by Landlord because of any
default by Tenant, Landlord may at any time after such reletting elect to
terminate this Lease for any such default.

(d) Landlord has the remedy described in California Civil Code Section 1951.4
(Landlord may continue Lease in effect after Tenant’s breach and abandonment and
recover rent as it becomes due, if Tenant has right to sublet or assign, subject
only to reasonable limitations).

25.5 No Waiver. Efforts by Landlord to mitigate the damages caused by Tenant’s
default in this Lease shall not constitute a waiver of Landlord’s right to
recover damages hereunder, nor shall Landlord have any obligation to mitigate
damages hereunder.

25.6 Curing Defaults. Should Tenant fail to repair, maintain, and/or service the
Leased Premises, or any part or contents thereof at any time or times, or
perform any other obligations imposed by this Lease or otherwise, then after
having given Tenant reasonable notice of the failure or failures and a
reasonable opportunity which in no case shall exceed thirty (30) days, to remedy
the failure, Landlord may perform or contract for the performance of the repair,
maintenance, or other Tenant obligation, and Tenant shall pay Landlord for all
direct and indirect costs incurred in connection therewith within ten (10) days
of receiving a bill therefor from Landlord.

25.7 Cumulative Remedies. The various rights, options, election powers, and
remedies of Landlord contained in this Article and elsewhere in this Lease shall
be construed as cumulative and no one of them exclusive of any others or of any
legal or equitable remedy which Landlord might otherwise have in the event of
breach or default, and the exercise of one right or remedy by Landlord shall not
in any way impair its right to any other right or remedy.

25.8 Default By Landlord. Landlord shall not be in default or breach in the
performance of any obligation required to be performed by Landlord under this
Lease unless Landlord has failed to perform such obligation within the shorter
of the time for Landlord’s performance as provided in this Lease, a reasonable
time for such performance and thirty (30) days after the receipt of written
notice thereof by or on behalf of Tenant; provided, however, that if the nature
of Landlord’s default (other than a monetary default) is such that more than
thirty (30) days (or shorter period as may be provided in this Lease) are
required for its cure, then it shall not be deemed to be a default or breach
under this Lease by Landlord if Landlord commences such cure within said thirty
(30) day period (or shorter period as may be provided in this Lease) and
thereafter diligently and continuously prosecutes such cure to completion.

ARTICLE 26     BANKRUPTCY

26.1 Bankruptcy Events. If at any time during the term of this Lease there shall
be filed by or against Tenant in any court pursuant to any statute either of the
United States or of any state a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of all or a
portion of Tenant’s property, or if a receiver or trustee takes possession of
any of the assets of Tenant, or if the leasehold interest herein passes to a
receiver, or if Tenant makes an assignment for the benefit of creditors or
petitions for or enters

 

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into an arrangement (any of which are referred to herein as “a bankruptcy
event”), then the following provisions shall apply:

(a) Assume or Reject. At all events any receiver or trustee in bankruptcy or
Tenant as debtor in possession (“debtor”) shall either expressly assume or
reject this Lease within the earlier of one hundred twenty (120) days following
the filing of a petition in bankruptcy or entry of an “Order for Relief” or such
earlier period of time provided by law.

(b) Cure. In the event of an assumption of the Lease by a debtor, receiver or
trustee, such debtor, receiver or trustee shall immediately after such
assumption (1) cure any default or provide adequate assurances that defaults
will be promptly cured; and (2) compensate Landlord for actual pecuniary loss or
provide adequate assurances that compensation will be made for actual pecuniary
loss; and (3) provide adequate assurance of future performance.

(c) Adequate Assurance. For the purposes of paragraph 26.1(b), adequate
assurance of future performance of all obligations under this Lease shall
include, but is not limited to:

(1) written assurance that rent and any other consideration due under the Lease
shall first be paid before any other of Tenant’s costs of operation of its
business in the Leased Premises is paid;

(2) written agreement that assumption of this Lease will not cause a breach of
any provision hereof including, but not limited to, any provision relating to
use or exclusivity in this or any other Lease, or agreement relating to the
Leased Premises, or if such a breach is caused, the debtor, receiver or trustee
will indemnify Landlord against such loss (including costs of suit and
attorneys’ fees), occasioned by such breach;

(d) Landlord’s Obligation. Where a default exists under the Lease, the party
assuming the Lease may not require Landlord to provide services or supplies
incidental to the Lease before its assumption by such trustee or debtor, unless
Landlord is compensated under the terms of the Lease for such services and
supplies provided before the assumption of such Lease.

(e) Assignment. The debtor, receiver, or trustee may assign this Lease only if
adequate assurance of future performance by the assignee is provided, whether or
not there has been a default under the Lease. Any consideration paid by any
assignee in excess of the rental reserved in the Lease shall be the sole
property of, and paid to, Landlord. Upon assignment by the debtor or trustee,
the obligations of the Lease shall be deemed to have been assumed, and the
assignee shall execute an assignment agreement on request of Landlord.

(f) Fair Value. Landlord shall be entitled to the fair market value for the
Leased Premises and the services provided by Landlord (but in no event less than
the rental reserved in the Lease) subsequent to the commencement of a bankruptcy
event.

(g) Reservation of Rights. Landlord specifically reserves any and all remedies
available to Landlord in Article 25 hereof or at law or in equity in respect of
a bankruptcy event by Tenant to the extent such remedies are permitted by law.

ARTICLE 27     SURRENDER OF LEASE

27.1 No Merger. The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, shall not work as a merger, and shall, at the
option of Landlord, terminate all or any existing subleases or subtenancies, or
may, at the option of Landlord, operate as an assignment to it of any or all
such subleases or subtenancies.

 

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ARTICLE 28     LANDLORD’S EXCULPATION

28.1 Limited Liability. Redress for any claim against Landlord under this Lease
shall be limited to and enforceable only against and to the extent of Landlord’s
interest in the Building and any insurance and condemnation proceed related
thereto. The obligations of Landlord shall not be personally binding on, nor
shall any resort be had to the private properties of, any of its or its
investment manager’s trustees, directors, officers, partners, beneficiaries,
members, stockholders, employees, or agents. Notwithstanding anything to the
contrary contained in this Lease, neither Tenant nor Landlord will be liable
for, and each hereby releases the other from all liability for, loss of, injury
to, or interference with, the other’s business, including, without limitation,
loss of profits and special and exemplary damages, however occurring, other than
those damages incurred by Landlord in connection with a holdover of the Leased
Premises by Tenant after the expiration or earlier termination of this Lease
which might sometimes be referred to as a business loss and other than
Landlord’s right to Rent as provided in Article 25.

ARTICLE 29     ATTORNEYS’ FEES

29.1 Attorneys’ Fees. In the event of any litigation or arbitration (if each
party in its sole and absolute discretion elects to use arbitration) proceeding
between the parties with respect to this Lease, then all costs and expenses,
including without limitation, all reasonable professional fees such as
appraisers’, accountants’ and attorneys’ fees, incurred by the prevailing party
therein shall be paid or reimbursed by the other party. The “prevailing party”
means the party determined by the court or arbitrator (if the parties elected to
use arbitration) to have most nearly prevailed, even if such party did not
prevail in all matters, not necessarily the one in whose favor a judgment is
rendered.

ARTICLE 30     NOTICES

30.1 Writing. All notices, demands and requests required or permitted to be
given or made under any provision of this Lease shall be in writing and shall be
given or made by personal service or by mailing same by registered or certified
mail, return receipt requested, postage prepaid, or overnight by Fed Ex or
reputable courier which provides written evidence of delivery or other means of
confirmation of delivery (such as computer confirmation by Fed Ex), or by
facsimile with facsimile confirmation that the notice was sent, addressed to the
respective party at the address set forth in Section 1.2 of this Lease or at
such other address as the party may from time to time designate, by a written
notice sent to the other in the manner aforesaid.

30.2 Effective Date. Any such notice, demand or request (“notice”) shall be
deemed given or made on the third day after the date so mailed. Notwithstanding
the foregoing, notice given by personal delivery or by fax to the party at its
address or fax number as aforesaid shall be deemed given on the day on which
delivery is made or the fax is sent, respectively. Notice given overnight by a
reputable courier service which provides written evidence of delivery shall be
deemed given on the business day immediately following deposit with the courier
service.

30.3 Authorization to Receive. Each person and/or entity whose signature is
affixed to this Lease as Tenant or as guarantor of Tenant’s obligations
(“obligor”) designates such other obligor its agent for the purpose of receiving
any notice pertaining to this Lease or service of process in the event of any
litigation or dispute arising from any obligation imposed by this Lease.

ARTICLE 31     SUBORDINATION AND FINANCING PROVISIONS

31.1 Priority of Encumbrances. This Lease is subordinate to any ground lease,
mortgage, deed of trust or any other hypothecation for security now or hereafter
placed upon the real property of which the Leased Premises are a part and to any
and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof. If any
mortgagee, trustee or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, and shall give written
notice

 

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thereof to Tenant, this Lease shall be deemed prior to such mortgage, deed of
trust or ground lease, whether this Lease is dated prior or subsequent to the
date of said mortgage, deed of trust or ground lease or the date of recording
thereof.

Landlord has informed Tenant that the Complex is encumbered by an existing deed
of trust (“Existing Deed of Trust”). At Tenant’s sole cost and expense, Landlord
shall request the beneficiary (or its servicer) of the Existing Deed of Trust
that encumbers the Complex as of the date hereof to issue such beneficiary’s
standard subordination, non-disturbance and attornment agreement (“SNDA”).
Landlord shall only make the request and follow the procedure required by the
beneficiary of the Existing Deed of Trust, but it shall not require Landlord to
incur any cost, expense or liability to obtain such SNDA, including the payment
of any administrative processing or legal fee that may be charged the such
beneficiary and the fee for such lender’s outside legal counsel to prepare such
document. Tenant shall be responsible for payment of any fees, costs and
charges, including fees for such lender’s legal counsel. Obtaining the SNDA is
not a condition precedent or subsequent to this Lease. The failure of such
beneficiary to issue its SNDA shall not be a breach or default by Landlord nor
relieve Tenant of any of its obligations under the Lease.

31.2 Execution of Documents. Tenant agrees to execute any documents required to
further effectuate such subordination or to make this Lease prior to the lien of
any mortgage, deed of trust or ground lease, as the case may be, if requested by
Landlord or any lender.

31.3 Attornment. If the holder of any ground lease, mortgage, deed of trust or
security described above (or its successor-in-interest), enforces its remedies
provided by law or under the pertinent mortgage, deed of trust or security
instrument and succeeds to Landlord’s interest in the Leased Premises, Tenant
shall, upon request of any person succeeding to the interest of such lender as
result of such enforcement, attorn to and recognize as its landlord and become
the Tenant of said successor-in-interest without change in the terms or other
provisions of this Lease or without the execution of any further instrument by
Tenant, provided, however, that said successor-in-interest shall not be
(i) bound by any payment of rent for more than thirty (30) days in advance,
except prepayment in the nature of security for the performance by Tenant of its
obligations under this Lease, (ii) liable for any act or omission of any
previous landlord (including Landlord), provided that as successor landlord it
shall be obligated to cure any continuing default of the prior landlord of which
it has received prior written notice and shall be liable for acts or omissions
accruing or arising after such successor’s succession to the position of
landlord and commencement of control and management of the Property,
(iii) subject to any offset, defense, recoupment or counterclaim that Tenant may
have given to any previous landlord (including Landlord), or (iv) liable for any
deposit that Tenant may have given to any previous landlord (including Landlord)
that has not, as such, been transferred to said successor-in-interest. Within
ten (10) days after receipt of request by said successor-in-interest, Tenant
shall execute and deliver an instrument or instruments confirming such
attornment, including a non-disturbance, attornment and subordination agreement
in a form required by any such successor-in-interest.

31.4 Notice and Right to Cure Default. Tenant agrees to give any mortgagee(s)
and/or trust deed holders, by registered mail, a copy of any notice of default
served upon Landlord, provided that prior to such notice Tenant has been
expressly notified, in writing, of the address of such mortgagees and/or trust
deed holders. Tenant further agrees that if Landlord shall have failed to cure
such default within the time provided for in this Lease or within a reasonable
period of time after Landlord’s receipt of such notice of such failure if no
specific period of time is provided in this Lease, then the mortgagees and/or
trust deed holders shall have an additional thirty (30) days within which to
cure such default or, if such default cannot be cured within that time, then
such additional time as may be necessary if, within such thirty (30) days, any
mortgagee and/or trust deed holder has commenced and is diligently pursuing the
remedies necessary to cure such default (including but not limited to
commencement of foreclosure proceedings, if necessary to effect such cure), in
which event this Lease shall not be terminated while such remedies are being so
diligently pursued.

 

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ARTICLE 32     ESTOPPEL CERTIFICATES

32.1 Execution by Tenant. Within ten (10) days after receipt of written request
by Landlord, Tenant shall execute and deliver to Landlord an estoppel
certificate acknowledging such facts regarding this Lease as Landlord may
reasonably require, including without limitation, that to the extent of Tenant’s
knowledge (i) this Lease is in full force and effect, binding and enforceable in
accordance with its terms and unmodified (or if modified, specifying the written
modification documents); (ii) no default exists on the part of Landlord or
Tenant under this Lease; (iii) there are no events which with the passage of
time, or the giving of notice, or both, would create a default under this Lease;
(iv) no rent in excess of one month’s rent has been paid in advance; (v) Tenant
has not received any written notice of any other sale, assignment, transfer,
mortgage or pledge of this Lease or the rent due hereunder; and (vi) Tenant has
no defense, setoff, recoupment or counterclaim against Landlord. Any such
estoppel certificate may be relied upon by Landlord, any lender and any
prospective purchaser of the Building or Complex or any interest therein.
Failure to comply with this Article shall be a material breach of this Lease by
Tenant giving Landlord all rights and remedies under this Lease.

32.2 Financial Statements and Credit Reports. At Landlord’s request and if
Tenant is not a publically traded corporation with financial statements readily
available to the public online, Tenant shall deliver to Landlord a copy,
certified by an officer of Tenant as being a true and correct copy, of Tenant’s
most recent audited financial statement, or, if unaudited, certified by Tenant’s
chief financial officer as being true, complete and correct in all material
respects. Tenant hereby authorizes Landlord to obtain one or more credit reports
on Tenant at any time, and shall execute such further authorizations as Landlord
may reasonably require in order to obtain a credit report.

ARTICLE 33     MISCELLANEOUS PROVISIONS

33.1 Effect of Waiver. The waiver by Landlord or Tenant of any breach of any
Lease provision by the other party shall not be deemed to be a waiver of such
Lease provision or any subsequent breach of the same or any other term, covenant
or condition therein contained. The subsequent acceptance of rent hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of
any provision of this Lease, other than the failure of Tenant to pay the
particular rental so accepted, regardless of Landlord’s knowledge of such
preceding breach at the time of acceptance of such rent. Any failure by Landlord
or Tenant to insist upon strict performance by the other of this Lease of any of
the terms and provisions of the Lease or any guaranty of this Lease shall not be
deemed to be a waiver of any of the terms or provisions of the Lease or such
guaranty, and Landlord or Tenant, as the case may be, shall have the right
thereafter to insist upon strict performance by the other of any and all of
them.

33.2 Holding Over. Tenant shall pay Landlord for each day Tenant retains
possession of the Leased Premises or part of them after termination of this
Lease by lapse of time or otherwise at the rate (“Holdover Rate”) which shall be
one Hundred fifty Percent (150%) of the Minimum Monthly Rent for the last period
prior to the date of such termination plus Tenant’s Proportionate Share of
Operating Costs, Real Estate Taxes and Insurance then required to be paid
hereunder, prorated on a daily basis, and also pay all damages sustained by
Landlord by reason of such retention. If Landlord gives notice to Tenant of
Landlord’s election to such effect, such holding over shall constitute renewal
of this Lease for a period from month to month the Holdover Rate, but if the
Landlord does not so elect, no such renewal shall result notwithstanding
acceptance by Landlord of any sums due hereunder after such termination; and
instead, a tenancy at sufferance at the Holdover Rate shall be deemed to have
been created. In any event, no provision of this Section 33.2 shall be deemed to
waive Landlord’s right of reentry or any other right under this Lease or at law.
Additionally, in the event that upon termination of the Lease, Tenant has not
fulfilled its obligation with respect to repairs and cleanup of the Leased
Premises or any other Tenant obligations as set forth in this Lease, then
Landlord shall have the right to perform any such obligations as it deems
necessary at Tenant’s sole cost and expense, and any time required by Landlord
to complete such obligations shall be considered a period of holding over and
the terms of this section shall apply.

 

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33.3 Binding Effect. The covenants and conditions herein contained shall,
subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of all of the parties hereto;
and all of the parties hereto shall be jointly and severally liable hereunder.

33.4 Time of the Essence. Time is of the essence of this Lease with respect to
each and every article, section and subsection hereof.

33.5 Release of Landlord. If, during the term of this Lease, Landlord shall sell
its interest in the Building or Complex of which the Leased Premises form a
part, or the Leased Premises, then in the event that the purchaser thereof
expressly assumes the same, Landlord shall be released and discharged from any
and all obligations and responsibilities under this Lease from and after the
effective date of the sale or conveyance, except those already accrued.

33.6 Rules and Regulations. Landlord or such other person(s) as Landlord may
appoint shall have the exclusive control and management of the Common Areas and
Building and shall have the right, from time to time, to establish, modify,
amend and enforce reasonable rules and regulations with respect thereto. Tenant
agrees to abide by and conform to all such rules and regulations to the extent
they are uniformly applied to similarly situated tenants of the Building, and to
cause its employees, suppliers, shippers, customers, and invitees to so abide
and conform. Landlord shall not be responsible to Tenant for the non-compliance
with said rules and regulations by other tenants of the Building or Complex;
provided, however, that Landlord shall use commercially reasonable efforts to
enforce the same against other similarly situated tenants to the extent Landlord
has such right under the applicable leases with such other tenants, but Landlord
shall not be required to terminate any lease or commence any litigation with any
other tenant in connection therewith.

33.7 Intentionally Deleted.

33.8 Late Charges. Tenant acknowledges that late payment by Tenant to Landlord
of rent or any other payment due hereunder will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of such costs being extremely
difficult and impractical to fix. Such costs include, without limitation,
processing and accounting charges, and late charges that may be imposed on
Landlord by the terms of any encumbrance and note secured by any encumbrance
covering the Leased Premises. Therefore, if any installment of rent, or any
other payment due hereunder from Tenant is not received by Landlord when due,
Tenant shall pay to Landlord an additional sum of five percent (5%) of such rent
or other charge as a late charge (provided, however, Landlord shall not charge
Tenant a late charge for the first (1st) late payment made during any
twelve (12) month period). The parties agree that this late charge represents a
fair and reasonable estimate of the cost that Landlord will incur by reason of
late payment by Tenant. Acceptance of any late charge shall not constitute a
waiver of Tenant default with respect to the overdue amount, or prevent Landlord
from exercising any other rights or remedies available to Landlord

33.9 Interest. Any amount owed by Tenant to Landlord which is not paid within
fifteen (15) days when due shall bear interest at the lesser of ten percent
(10%) per annum or the maximum rate of interest permitted to be contracted for
by law. However, interest shall not be payable on late charges to be paid by
Tenant under this Lease. The payment of interest on such amounts shall not
excuse or cure any default by Tenant under this Lease.

33.10 Authorization to Execute. If Tenant is a corporation, limited liability
company, partnership or other entity, each individual executing this Lease on
behalf of said organization represents and warrants that he is duly authorized
to execute and deliver this Lease on behalf of said organization in accordance
with a duly adopted resolution or other applicable authorization of said
organization, and that this Lease is binding upon said organization in
accordance with its terms. Further, if requested by Landlord, Tenant shall,
within thirty (30) days after such request, deliver to Landlord a certified copy
of a resolution or other applicable authorization of said organization
authorizing or ratifying the execution of this Lease.

 

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33.11 Captions. The captions of this Lease are for convenience only and are not
a part of this Lease and do not in any way limit or amplify the terms and
provisions of this Lease.

33.12 Number and Gender. Whenever the singular number is used in this Lease and
when required by the context, the same shall include the plural, the plural
shall include the singular, and the masculine gender shall include the feminine
and neuter genders, and the word “person” shall include corporation, firm or
association. If there be more than one Tenant, the obligations imposed under
this Lease upon Tenant shall be joint and several.

33.13 Modifications. This instrument contains all of the agreements, conditions
and representations made between the parties to this Lease and may not be
modified orally or in any other manner than by an agreement in writing signed by
all of the parties to this Lease.

33.14 Payments. Except as otherwise expressly stated, each payment required to
be made by Tenant shall be in addition to and not in substitution for other
payments to be made by Tenant.

33.15 Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.

33.16 No Offer. The preparation and submission of a draft of this Lease by
either party to the other shall not constitute an offer, nor shall either party
be bound to any terms of this Lease or the entirety of the Lease itself until
both parties have fully executed a final document and an original signature
document has been received by both parties. Until such time as described in the
previous sentence, either party is free to terminate negotiations with no
obligation to the other.

33.17 Light, Air and View. No diminution of light, air, or view by any structure
which may hereafter be erected (whether or not by Landlord) shall entitle Tenant
to any reduction of Rent, result in any liability of Landlord to Tenant, or in
any other way affect this Lease or Tenant’s obligations hereunder.

33.18 Intentionally Deleted.

33.19 Joint and Several Liability. Should Tenant consist of more than one person
or entity, they shall be jointly and severally liable on this Lease.

33.20 Survival of Obligations. All obligations of Tenant which may accrue or
arise during the term of this Lease or as a result of any act or omission of
Tenant during said term shall, to the extent they have not been fully performed,
satisfied or discharged, survive the expiration or termination of this Lease.

33.21 Real Estate Brokers. Landlord and Tenant each represents and warrants to
the other party that it has not authorized, retained or employed, or acted by
implication to authorize, retain or employ, any real estate broker or salesman
to act for it or on its behalf in connection with this Lease so as to cause the
other party to be responsible for the payment of a brokerage commission, except
for the Broker(s) identified in Article 1. Landlord shall pay any brokerage
commissions owing by Landlord to Tenant’s Broker in connection with the
transaction contemplated by this Lease pursuant to a separate written agreement
with Tenant’s Broker. Landlord and Tenant shall each indemnify, defend and hold
the other party harmless from and against any and all claims by any real estate
broker or salesman (other than the Brokers) whom the indemnifying party
authorized, retained or employed, or acted by implication to authorize, retain
or employ, to act for the indemnifying party in connection with this Lease.

33.22 Waiver of California Code Sections. In this Lease, numerous provisions
have been negotiated by the parties, some of which provisions are covered by
statute. Whenever a provision of this Lease and a provision of any statute or
other law cover the same matter, the provisions of this Lease shall control.
Therefore, Tenant waives (for itself and all persons claiming under Tenant) the
provisions of Civil Code Sections 1932(2)

 

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and 1933(4) with respect to the destruction of the Leased Premises; Civil Code
Sections 1941 and 1942 with respect to Landlord’s repair duties and Tenant’s
right to repair; Code of Civil Procedure Section 1265.130, allowing either party
to petition the Superior Court to terminate this Lease in the event of a partial
taking of the Leased Premises by condemnation as herein defined; and any right
of redemption or reinstatement of Tenant under any present or future case law or
statutory provision (including Code of Civil Procedure Sections 473 and 1179 and
Civil Code Section 3275) in the event Tenant is dispossessed from the Leased
Premises for any reason. This waiver applies to future statutes enacted in
addition to or in substitution for the statutes specified herein.

33.23 Quiet Enjoyment. So long as Tenant pays all of the Minimum Monthly Rent,
all additional rent and other sums and charges under the Lease and otherwise
performs all of its obligations in the Lease, Tenant shall have the right to
possession and quiet enjoyment of the Leased Premises free from any unreasonable
disturbance or interference, subject to the terms and provisions of the Lease.
Landlord represents and warrants that it has the full right and power to execute
and perform this Lease and to grant the estate demised herein.

33.24 Representation. Neither Tenant nor any of its constituent partners,
managers, members or shareholders, nor any beneficial owner of Tenant or of any
such partner, manager, member or shareholder (a) is listed on the Specially
Designated Nationals and Blocked Persons List maintained by the Office of
Foreign Asset Control, Department of the Treasury (“OFAC”) pursuant to the
Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) (“Order”); (b) is
listed on any other list of terrorists or terrorist organizations maintained
pursuant to the Order, the rules and regulations of OFAC or any other applicable
requirements contained in any enabling legislation or other Executive Orders in
respect of the Order (the Order and such other rules, regulations, legislation
or orders are collectively called the “Orders”); (c) is engaged in activities
prohibited in the Orders; or (d) has been convicted, pleaded nolo contendere,
indicted, arraigned or custodially detained on charges involving money
laundering or predicate crimes to money laundering.

33.25 Counterparts. This Lease may be executed in one or more counterparts,
including any facsimile or other electronic version of same, each of which shall
be deemed an original, but all of which when taken together shall constitute one
agreement. Any facsimile or other electronic signature shall constitute a valid
and binding method for executing this Lease. Executed counterparts of this Lease
exchanged by facsimile transmission or other electronic means shall be fully
enforceable.

[the balance of this page has been intentionally left blank; signature page
follows]

 

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day
and year first written above.

 

LANDLORD:     TENANT:

DWF III GATEWAY, LLC,

a Delaware limited liability company

   

PUMA BIOTECHNOLOGY, INC.,

a Delaware corporation

By:   Divco West Real Estate Services, Inc.,     By:  

/s/ Charles R. Eyler

  A Delaware corporation     Name:   Charles R. Eyler   Its Agent     Its:  
Senior Vice President, Finance   By:   /s/ James Teng         Name:   James Teng
        Its:   Managing Director      

 

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EXHIBIT A – LEGAL DESCRIPTION OF THE LAND

The land referred to herein is situated in the State of California, County of
San Mateo, City of South San Francisco, and described as follows:

PARCEL ONE:

Being a portion of Parcel 4 as said Parcel is shown on Parcel Map 98-082 filed
for Record on June 9, 1999 in Book 71 of Parcel Maps at pages 55 through 57, San
Mateo County Records, more particularly described as follows:

Beginning at the Northeasterly corner of said Parcel 4, said corner being a
point on the Westerly right of way line of Broadway Boulevard, 94 feet in width,
as said Boulevard is shown on said map; Thence leaving said Westerly right of
way line, along the general Northerly line of said Parcel 4, the following four
courses:

1) Westerly along the arc of a 682.00 foot radius curve to the left, the center
of which curve bears South 4° 15’ 39” East, through a central angle of 27° 44’
47” , an arc distance of 330.27 feet to a point of compound curvature;

2) Southwesterly along the arc of a 270.00 foot radius, tangent curve to the
left, through a central angle of 27° 18’ 10” , an arc distance of 128.66 feet to
a point of compound curvature;

3) Southerly along the arc of a 130.00 foot radius tangent curve to the left,
through a central Angle of 51° 02’ 48” , an arc distance of 115.82 feet; and

4) South 88° 16’ 54” West, 121.98 feet;

Thence leaving said general Northerly line, South 38° 42’ 41” West, 223.44 feet
to the general Southwesterly line of said Parcel 4; Thence along said general
Southwesterly line, the following three courses:

1) South 51° 17’ 19” East, 317.15 feet;

2) South 38° 42’ 41” West, 262.50 feet; and

3) South 51° 17’ 19” East, 145.00 feet to the Southerly corner of said Parcel 4,
said corner being a point on the aforementioned westerly right of way line of
Broadway Boulevard; Thence along said Westerly right of way line of Broadway
Boulevard, the following seven courses:

1) North 38° 42’ 41” East, 72.64 feet;

2) North 13° 42’ 41” East, 5.92 feet;

3) North 38° 41’ 41” East, 100.00 feet;

4) North 63° 42’ 41” East, 5.92 feet;

5) North 38° 42’ 41” East, 337.77 feet;

6) Northeasterly and Northerly along the arc of a 703.00 foot radius tangent
curve to the left, through a central angle of 41° 18’ 40” , an arc distance of
506.87 feet; and

7) North 2° 35’ 59” West, 98.30 feet to the point of beginning. Being known as
New Parcel A on Lot Line Adjustment No. 18, recorded March 3, 2000, Document
No. 2000-025801.

PARCEL TWO:

Easements, over, across and upon all of that certain real property pursuant to
the Declaration of Reciprocal Easements dated as of April 22, 1999 and recorded
June 10, 1999, as Instrument No. 99101219 and described as follows:

Parcels 1, 2 and 3, as designated on the Map entitled, “ PARCEL MAP 98-082 OF
THE LANDS OF HMS BROADWAY OFFICE, L.P.” , which map was filed in the office of
the Recorder of the County of San Mateo, State of California on June 9, 1999 in
Book 71 of Parcel Maps, at pages 55 through 57.

 

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PARCEL THREE:

Easements, over, across and upon all of that certain real property pursuant to
the Declaration of Reciprocal Easements dated as of April 22, 1999 and recorded
June 10, 1999, as Instrument No. 99101219 and described as follows:

Parcels A, B, and C as shown on the map of Parcel Map 99-095 filed June 26,
2000, Book 72 of Parcel Maps, pages 90 and 91, San Mateo County Records.

PARCEL FOUR:

Easements, over, across and upon all of that certain real property pursuant to
the Declaration of Reciprocal Easements dated June 1, 2000, as Instrument
No. 2000-077496 and described as follows:

Parcels A, B and C as shown on the map of Parcel Map 99-095 filed June 26, 2000,
Book 72 of Parcel Maps, pages 90 and 91, San Mateo County Records.

APN’ s: 015-024-290

015-024-360

JPN’ s: 107 027 000 22 thru 23 T 015-024-3 10

 

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EXHIBIT B – OUTLINE OF THE LEASED PREMISES

Exhibit B is intended only to show the general layout of the Leased Premises as
of the beginning of the Term of this Lease. The depiction of interior windows,
cubicles, modules, furniture and equipment in this Exhibit is for illustrative
purposes only, but does not mean that such items exist. Landlord is not required
to provide, install or construct any such items. It does not in any way
supersede any of Landlord’s rights set forth in the Lease with respect to
arrangements and/or locations of public parts of the Building. It is not to be
scaled; any measurements or distances shown should be taken as approximate. The
inclusion of elevators, stairways electrical and mechanical closets, and other
similar facilities for the benefit of occupants of the Building does not mean
such items are part of the Leased Premises.

 

LOGO [g3648891.jpg]

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EXHIBIT B-1 – OUTLINE OF THE TEMPORARY SPACE

Exhibit B is intended only to show the general layout of the Temporary Space.
The depiction of interior windows, cubicles, modules, furniture and equipment in
this Exhibit is for illustrative purposes only, but does not mean that such
items exist. Landlord is not required to provide, install or construct any such
items. It does not in any way supersede any of Landlord’s rights set forth in
the Lease with respect to arrangements and/or locations of public parts of the
Building. It is not to be scaled; any measurements or distances shown should be
taken as approximate. The inclusion of elevators, stairways electrical and
mechanical closets, and other similar facilities for the benefit of occupants of
the Building does not mean such items are part of the Temporary Space.

 

LOGO [g3648892.jpg]

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EXHIBIT C – WORK LETTER FOR TENANT IMPROVEMENTS

This Exhibit C forms a part of that certain Office Lease (the “Lease”) by and
between DWF III Gateway, LLC, a Delaware limited liability company, as Landlord,
and Puma Biotechnology, Inc., a Delaware corporation, as Tenant, to which this
Exhibit is attached. If there is any conflict between this Exhibit and the Lease
regarding the construction of the Tenant Improvements (hereinafter defined),
this Exhibit shall govern.

1. Defined Terms. All defined terms referred to in this Exhibit shall have the
same meaning as defined in the certain Lease, except where expressly defined to
the contrary.

2. Construction of the Tenant Improvements. Landlord shall construct the Tenant
Improvements in accordance with this exhibit and the construction contract to be
executed by Landlord and its contractor(s). The construction contract for
constructing the Tenant Improvements and the contractor(s) to perform the work
shall be approved and/or selected, as the case may be, by Landlord at its sole
and absolute discretion without the consent of Tenant.

3. Additional Definitions. Each of the following terms shall have the following
meaning:

“Construction Budget”- A estimate of the Construction Costs for the Tenant
Improvements prepared by Landlord after or in connection with the preparation of
the Construction Plans.

“Construction Costs”- All costs and expenses approved by Landlord to construct
the Tenant Improvements, including all fees and expenses for:

(1) architects, engineers and consultants in the preparation of the Preliminary
Plans and the Final Plans, including mechanical, electrical, plumbing and
structural drawings and of all other aspects of such plans for the Tenant
Improvements, and for processing governmental applications and applications for
payment, observing construction of the work;

(2) surveys, reports, environmental and other tests and investigations of the
site and any improvements thereon;

(3) labor, materials, equipment and fixtures supplied by the Contractor, its
subcontractors and/or materialmen, including, without limitation, charges for a
job superintendent and project representative;

(4) the furnishing and installation of all heating, ventilation and air
conditioning duct work, terminal boxes, distributing defusers and accessories
required for completing the heating, ventilation and air-conditioning system in
the Leased Premises, including costs of meter and key control for after-hour
usage, if required by Landlord;

(5) all electrical circuits, wiring, lighting fixtures, and tube outlets
furnished and installed throughout the Leased Premises, including costs of
meter;

(6) all window and floor coverings in the Leased Premises, including, without
limitation, all treatment and preparatory work required for the installation of
floor coverings over the concrete or other structural floor;

(7) all fire and life safety control systems , such as fire walls, wiring and
accessories installed within the Building;

 

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(8) all plumbing, fixtures, pipes and accessories installed within the Building;

(9) fees charged by the city and/or county where the Building is located
(including, without limitation, fees for building permits and approvals and plan
checks) required for the work in the Building;

(10) supervision and administration expense, including the Construction
Management Fee (hereinafter defined) payable to Landlord’s agent and property
manager and/or representative;

(11) all taxes, fees, charges and levies by governmental and quasi-governmental
agencies for authorization, approvals, licenses and permits; and all sales, use
and excise taxes for the materials supplied and services rendered in connection
with the installation and construction of the Tenant Improvements; and

(12) all costs and expenses incurred to comply with all Applicable Laws of any
governmental authority for any work at the Project in order to construct the
Tenant Improvements.

The term Construction Costs under this Exhibit shall not include (i) any fees,
costs, expenses, compensation or other consideration payable to Tenant, or any
of its officers, directors, employees or affiliates, or (ii) the cost any of
Tenant’s furniture, artifacts, trade fixtures, telephone and computer systems
and related facilities, or equipment. Any fees or costs referred to in clauses
(i) or (ii) above shall be paid by Tenant without resort to Landlord’s
Allowance.

“Construction Plans” - The complete plans and specifications for the
construction of the Tenant Improvements consisting of all architectural,
engineering, mechanical and electrical drawings and specifications which are
required to obtain all building permits, licenses and certificates from the
applicable governmental authority(ies) for the construction of the Tenant
Improvements. The Construction Plans shall be prepared by duly licensed and/or
registered architectural and/or engineering professionals selected by Landlord
in its sole and absolute discretion, and in all respects shall be in substantial
compliance with all applicable laws, rules, regulations, building codes for the
city and county where the Building is located.

“Force Majeure Delays” - Any delay, other than a Tenant Delay, by Landlord in
completing the Tenant Improvements by the Estimated Commencement Date set forth
in the Lease by reason of (i) any strike, lockout or other labor trouble or
industrial disturbance (whether or not on the part of the employees of either
party hereto), (ii) governmental preemption of priorities or other controls in
connection with a national or other public emergency, civil disturbance, riot,
war, sabotage, blockade, embargo, inability to secure customary materials,
supplies or labor through ordinary sources by reason of regulation or order of
any government or regulatory body, or (iii) shortages of fuel, materials,
supplies or labor, (iv) lightning, earthquake, fire, storm, tornado, flood,
washout explosion, inclement weather or any other similar industry-wide or
Building-wide cause beyond the reasonable control of Landlord, or (v) any other
cause, whether similar or dissimilar to the above, beyond Landlord’s reasonable
control. The time for performance of any obligation of Landlord to construct
Landlord’s Work under this Work Letter or the Lease shall be extended at
Landlord’s election by the period of any delay caused by any of the foregoing
events. Landlord shall notify Tenant of any Force Majeure Delay within five
(5) days after Landlord’s receipt of notice from Landlord’s contractor of the
Force Majeure Delay or when Landlord otherwise has received actual knowledge of
the Force Majeure Delay; provided, however, that if Landlord does not notify
Tenant of the Force Majeure Delay within such five (5) day period, then the
Force Majeure Delay shall not be deemed to have commenced until Landlord
notifies Tenant of the Force Majeure Delay.

 

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Landlord’s Allowance: A total amount equal to $191,200.00 to be paid by Landlord
for the Construction Costs for the Tenant Improvements as provided in this
Exhibit, except that Tenant may use up to $5,000.00 of Landlord’s Allowance, if
available after payment of all Construction Costs, to pay for Moving Costs. Any
unused portion of Landlord’s Allowance shall remain the property of Landlord,
and Tenant shall have no interest in said funds.

Moving Costs: The actual costs and expenses incurred by Tenant for third party
vendors to move Tenant and its business operations to the Leased Premises.

“Substantial Completion,” “Substantially Complete,” “Substantially Completed” -
The terms Substantial Completion, Substantially Completed and Substantially
Complete shall mean when the Landlord’s Work (as defined in the Lease) and the
Tenant Improvements have been Substantially Completed in accordance with the
Construction Plans except “punch list” items which may be completed without
materially impairing Tenant’s use of substantially all the Leased Premises and
Tenant has been tendered continuous and uninterrupted access to the Premises.

“Space Plan” - That certain Space Plan prepared by Huntsman Architectural Group,
number 12023.00 SK-2, a copy of which is attached hereto as Exhibit C-1.
Landlord shall be entitled to rely upon all plans, drawings and information
supplied by or for Tenant. Tenant hereby approves of the Space Plan. The
depiction of cubicles, modules, furniture and equipment in the Space Plan is for
illustrative purposes only, but does not mean that such items exist and Landlord
is not required to provide, install or construct any such items.

“Tenant Delay” - Any delay incurred by Landlord in the completion of the Tenant
Improvements due to (i) a delay by Tenant, or by any person employed or engaged
by Tenant, in approving or delivering to Landlord any plans, schedules or
information, including, without limitation, the Construction Plans beyond the
applicable time period set forth in this Exhibit, if any; (ii) a delay in the
performance of work in the Leased Premises by Tenant or any person employed by
Tenant; (iii) any changes requested by Tenant in or to previously approved work
or in the Construction Plans; (iv) requests for materials and finishes which are
not readily available (provided that Tenant is notified of the same at or
immediately after the time of such request), and/or delays in delivery of any
materials specified by Tenant through change orders; (v) the failure of Tenant
to pay as and when due under this Exhibit all Construction Costs and other costs
and expenses to construct the Tenant Improvements in excess of Landlord’s
Allowance; or (vi) interference by Tenant or any of Tenant’s Parties with the
construction of the Tenant Improvements. Landlord shall notify Tenant of any
Tenant Delay within five (5) business days after Landlord’s receipt of notice
from Landlord’s contractor of the Tenant Delay or when Landlord otherwise has
received actual knowledge of the Tenant Delay; provided, however, that if
Landlord does not notify Tenant of the Tenant Delay within such five
(5) business day period, then the Tenant Delay shall not be deemed to have
commenced until Landlord notifies Tenant of the Tenant Delay.

“Tenant Improvements” - The improvements to be installed by Landlord in the
Leased Premises substantially in accordance with the Construction Plans.

“Test Fit Allowance” Landlord shall provide Tenant with an allowance of
$1,434.00 for payment of actually third party architect costs incurred and paid
by Tenant for Tenant’s initial test fit planning in the Leased Premises. Any
unused portion of the of the Test Fit Allowance shall remain the property of
Landlord, and Tenant shall have no interest in said funds.

4. Preparation of Construction Plans. Landlord shall cause to be prepared
Construction Plans for the construction of the Tenant Improvements and deliver
the same to Tenant as soon as reasonably possible. Within five (5) days after
receipt of the Construction Plans, Tenant shall notify Landlord in writing

 

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that (i) Tenant approved the Construction Plans, which approval shall not be
unreasonably withheld, conditioned or delayed; or (ii) Tenant disapproves the
Construction Plans because they vary from the Space Plan, which disapproval
notice shall specify the same (including, without limitation, the specific
changes requested by Tenant). The failure of Tenant to provide such written
notice within said five (5) day period shall be deemed as approval by Tenant of
such plans.

5. Approval of the Construction Budget. After approval of the Construction Plans
by Landlord and Tenant as provided above, Landlord shall prepare the
Construction Budget for the Construction Costs and shall deliver a copy of such
Construction Budget to Tenant. The Construction Budget shall not be subject to
the prior written approval of Tenant, unless the estimated Construction Costs
exceed the amount of Landlord’s Allowance. If the Construction Budget reflects
Construction Costs in excess of Landlord’s Allowance, it shall be subject to
Tenant’s review and approval, which shall not be unreasonably withheld,
conditioned or delayed. Tenant shall notify Landlord in writing within five
(5) days after receipt of the Construction Budget that (a) Tenant approves the
Construction Budget, or (b) that Tenant disapproves of the Construction Budget
because it varies from the Construction Plans or contains details or items not
specifically addressed in the Construction Plans. The failure of Tenant to
provide such written notice within said five (5) day period shall be deemed an
approval by Tenant.

6. Building Permits. After approval by Landlord and Tenant of the Construction
Plans and Construction Budget as provided above, Landlord or its contractor
shall submit the Construction Plans to the appropriate governmental body for
plan checking and a building permit to the extent Landlord determines a permit
is necessary or desirable. Landlord, with Tenant’s cooperation, shall cause to
be made any change in the Construction Plans necessary to obtain the building
permit and to the extent the aggregate amount of the Construction Costs exceeds
the amount of Landlord’s Allowance, Tenant shall be responsible for such
additional costs, notwithstanding the amount previously specified in the
Construction Budget approved by Landlord and Tenant.

7. Changes. Any changes in the Construction Plans or Construction Budget,
including, without limitation, any changes required by any applicable law, rule,
regulation or ordinance, shall require the prior written consent of Landlord in
its reasonable discretion. Any changes requested by Tenant and approved by
Landlord shall be prepared by Landlord’s architect, engineer or contractor. The
cost of such changes, including the cost to revise the Construction Plans,
obtain any additional permits and construct any additional improvements required
as a result thereof, and the cost for materials and labor, and all other
additional costs incurred by Landlord from resulting delays in completing the
Tenant Improvements, shall be paid out of Landlord’s Allowance (only to the
extent funds are available and not committed for payment of other Construction
Costs). If such costs for changes exceed the Landlord’s Allowance, such excess
costs shall be paid by Tenant, at its sole cost and expense, to Landlord within
ten (10) days after Tenant’s receipt of notice from Landlord, together with
reasonable supporting documents reflecting such increased costs. If Landlord
does not receive such payment within said ten (10) day period, Landlord shall
have the right, in addition to any other rights or remedies available under the
Lease, at law or in equity, to (i) discontinue all or any portion of the work
until it receives said payment; (ii) proceed with the other work not affected by
such change until such payment is received; (iii) proceed with the work
contemplated with such change; or (iv) proceed with the work without making such
change; in which case the commencement or completion of such work shall not be
deemed a waiver of Tenant’s obligation to pay for same or any additional costs
or expenses incurred as a result thereof. The cost of a change order incurred as
a result thereof shall be determined by Landlord’s architect, which
determination shall be binding upon the parties.

8. Payment. Landlord shall pay for the Construction Costs for the Tenant
Improvements, not to exceed the amount of Landlord’s Allowance. Tenant
acknowledges and agrees that it shall be responsible for payment of all
Construction Costs in excess of Landlord’s Allowance and shall pay to Landlord
within thirty (30) days after request from Landlord the amount of such excess
Construction Costs. Tenant may use up to

 

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$5,000.00 out of Landlord’s Allowance for payment of the Moving Costs to the
extent such funds are available after Landlord has paid for all Construction
Costs.

8.1 Moving Costs. If Tenant has elected to use up to $5,000.00 of Landlord’s
Allowance for Moving Costs and such funds are available out of Landlord’s
Allowance, then the payment of such portion of Landlord’s Allowance for the
Moving Costs shall be made by Landlord within thirty (30) days after Landlord’s
receipt of written request from Tenant, together with reasonable supporting
documentation of such Moving Costs; provided that such funds have not already
been advanced or allocated as part of the Landlord’s Allowance for the Tenant
Improvements.

8.2 Test Fit Allowance. Landlord shall pay the Test Fit Allowance to Tenant
within thirty (30) days after receipt by Landlord from Tenant of the actual
third party architect’s costs incurred and paid by Tenant for Tenant’s initial
test fit planning in the Leased Premises. Landlord shall only be required to pay
up to the Test-Fit Allowance for such space planning by Tenant. Tenant shall be
responsible for payment of all fees and charges in excess of the Test Fit
Allowance for such initial test fit planning.

8.3 Construction Management Fee. Landlord, or an agent of Landlord, shall
provide project management services in connection with the construction of the
Tenant Improvements. Such project management services shall be performed, at
Tenant’s cost, for a fee (the “Construction Management Fee”) equal to four
percent (4%) of the amount of the Construction Costs for the Tenant
Improvements. Landlord shall be entitled to use the Landlord’s Allowance for
payment of such Construction Management Fee on a monthly basis. If there are
insufficient funds available in Landlord’s Allowance to pay for the Construction
Management Fee, Tenant shall pay for the fee within ten (10) days after request
by Landlord.

9. Tenant’s Representative. Tenant hereby authorizes Charles Eyler located at
Puma Biotechnology, Inc., 10880 Wilshire Blvd., Suite 1250, Los Angeles, CA
90024, as Tenant’s representative to act on its behalf and represents its
interests with respect to the construction of Tenant Improvements, and to make
decisions binding upon Tenant with respect to such matters.

 

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EXHIBIT C-1 – SPACE PLAN

 

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EXHIBIT D – ACKNOWLEDGEMENT OF COMMENCEMENT DATE

This Acknowledgement of Commencement Date is dated as of                     ,
between DWF III Gateway LLC, a Delaware limited liability company (“Landlord”),
and Puma Biotechnology, Inc., a Delaware corporation (“Tenant”), who entered
into a lease dated for reference purposes as of             , 2012, covering
certain premises located in Suite             of the building at 701 Gateway
Boulevard, South San Francisco, California. All capitalized terms, if not
defined herein, shall be defined as they are defined in the Lease.

1. The parties to this document hereby agree that the date of
                    , is the “Commencement Date” of the Term and that the
initial Term expires             .

2. Tenant hereby confirms the following:

(a) That it has accepted possession of Leased Premises pursuant to the terms of
the Lease; and

(b) That the Tenant Improvements and Landlord’s Work required to be furnished
according to the Lease by Landlord in the Leased Premises have been
Substantially Completed.

3. This agreement, each and all of the provisions hereof, shall inure to the
benefit, or bind, as the case may require, the parties hereto, and their
respective heirs, successors, and assigns subject to the restrictions upon
assignment and subletting contained in the Lease.

4. Each party represents and warrants to the other that it is duly authorized to
enter into this Amendment and perform its obligations without the consent or
approval of any other party and that the person signing on its behalf is duly
authorized to sign on behalf of such party.

5. This document may be executed in one or more counterparts, including any
facsimile or other electronic version of same, each of which shall be deemed an
original, but all of which when taken together shall constitute one agreement.
Any facsimile or other electronic signature shall constitute a valid and binding
method for executing this document. Executed counterparts of this document
exchanged by facsimile transmission or other electronic means shall be fully
enforceable.

 

LANDLORD:

 

DWF III GATEWAY, LLC,

a Delaware limited liability company

   

TENANT:

 

PUMA BIOTECHNOLOGY, INC.,

a Delaware corporation

By:   Divco West Real Estate Services, Inc.,     By:  

 

  A Delaware corporation     Name:  

 

  Its Agent     Its:  

 

  By:  

 

        Name:  

 

        Its:  

 

     

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EXHIBIT E – RULES AND REGULATIONS

All capitalized terms referred to in this Exhibit shall have the same meaning
provided in the Office Lease to which this Exhibit is attached, except where
expressly provided to the contrary in this Exhibit E.

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 Leased Premises.

2. No awning or other projection shall be attached to the outside walls or
windows of the Building or Complex without the prior written consent of Landlord
in its sole and absolute discretion. 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 Leased Premises, without the prior written consent of Landlord in
its sole and absolute discretion. Such awnings, 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 in its sole and absolute discretion. All
lighting fixtures hung in offices or spaces along the perimeter of the Leased
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 Leased Premises or of the Building, without the prior written
consent of Landlord in its sole and absolute discretion. 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 Building
or Complex 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 Building or Complex.

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

6. The restrooms, toilets, wash bowls, and other apparatus shall not be used for
any purpose other than that for which they were constructed, and no sweepings,
rubbish, rags or other foreign substance of any kind shall be thrown into them.

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

8. No animal or bird or bicycle or vehicle of any kind shall be brought into or
kept in or about the Leased Premises, Building or Complex, except seeing-eye
dogs or other seeing-eye animals or other animals or equipment required by any
disabled employee or invitee of Tenant.

9. Prior to leaving the Leased Premises for the day, Tenant shall extinguish all
lights. Tenant shall assume all responsibility, including keeping doors locked
and other means of entry to the Leased Premises closed, for protecting the
Leased Premises from theft, robbery, and pilferage.

10. Tenant shall not make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with any occupant of the Building or Complex, or
neighboring buildings or premises, or those having business with them. Tenant
shall not harass or annoy any occupant of the Building or Complex, including,

 

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without limitation, any act or conduct that may violate, breach or infringe upon
any federal, state or local laws or civil rights, including those pertaining to
the protection of the civil rights of any person based on sex, race, religion,
sexual preference, age or other consideration. Tenant shall not throw anything
out of the doors, windows or skylights or down the passageways.

11. Neither Tenant nor any of Tenant’s agents, servants, employees, contractors,
visitors or licensees shall at any time bring or keep upon the Leased Premises,
Building or Complex any flammable, combustible or explosive fluid, chemical or
substance.

12. 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. 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.

Two keys will be furnished by Landlord for the Leased Premises, and any
additional keys required by Tenant must be obtained from Landlord at a
reasonable cost to be established by Landlord.

If there is a card key or other form of keyless entry to the Building, Landlord
shall provide Tenant as of the commencement of the Term of its lease with one
keyless fobs for each 250 square feet of rentable space in such Tenant’s Leased
Premises for access to the Building and elevator. All additional keyless cards
or fobs requested by Tenant and any replacement for any lost or damaged keyless
cards or fobs will be provided by Landlord at a cost established by Landlord
from time to time for each additional or replaced keyless fob, as cost may be
increased by Landlord from time to time.

13. No furniture, freight, or equipment of any kind may be brought into or out
of the Building without prior notice to Landlord. All moving activity into or
out of the Building must be scheduled with Landlord and done only at the time
and in the manner designated by Landlord. No service deliveries (other than
messenger services) shall be allowed between the hours of 7:00 a.m. and 9:00
a.m., 12:00 p.m. and 1:00 p.m., and 4:00 p.m. and 6:00 p.m., Monday through
Friday. Landlord may at any time restrict the elevators and areas of the
Building into which messengers may enter and may require that deliveries be left
at the lobby security desk for pickup by Tenant. Landlord may prescribe the
weight, size, and position of all safes and other heavy property brought into
the Building and the times and manner of moving those items within and out of
the Building. Tenant shall not overload the floor of the Leased Premises. If
considered necessary by Landlord, safes and other heavy objects must stand on
supports that are adequate to distribute the weight properly. Landlord shall not
be responsible for loss of or damage to any safe or property. Any damage to any
part of the Building or to its contents, occupants, or visitors caused by moving
or maintaining any safe or other property referred to in this clause shall be
the sole responsibility and expense of Tenant. Landlord reserves the right to
inspect all safes, freight or other bulky articles to be brought into the
Building and to exclude from the Building 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. No packages, supplies, equipment, or
merchandise may be received in the Building or carried up or down in the
elevators, except between those hours and in that specific elevator that
Landlord shall designate.

14. Landlord shall have the right to prohibit any advertising or business
conducted by Tenant referring to the Building which, in Landlord’s good faith
opinion, tends to impair the reputation of the Building 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. Landlord reserves the right to exclude from the Building between the hours
of 6:00 p.m. and 8:00 a.m. Monday through Friday, after 1:00 p.m. on Saturdays
and at all hours Sundays and legal holidays, all persons who do not present a
pass to the Building issued by Landlord. Such hours are subject to change in

 

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Landlord’s sole and absolute discretion upon written from Landlord. Landlord may
furnish passes to Tenant so that Tenant may validate and issue same. Tenant
shall safeguard said passes and shall be responsible for all acts of persons in
or about the Building who possess a pass issued to Tenant. Landlord reserves the
right to exclude or expel from the Building and Complex any person who, in
Landlord’s judgment, is under the influence of alcohol or drugs or commits any
act in violation of any of these Rules and Regulations.

16. When departing after the Building’s normal business hours, Tenant and
Tenant’s employees and agents must be sure that the doors to the Building are
securely closed and locked. Any person, including Tenant and Tenant’s employees
and agents, who enters or leaves the Building at any time when it is locked or
at any time considered to be after the Building’s normal business hours, may be
required to sign the Building register. Access to the Building may be refused
unless the person seeking access has proper identification or has previously
arranged a pass for access to the Building. Landlord and its agents shall not be
liable for damages for any error concerning the admission to, or exclusion from,
the Building of any person. Landlord reserves the right, in the event of
invasion, mob, riot, public excitement, or other commotion, to prevent access to
the Building or Complex during the continuance of that event by any means it
considers appropriate for the safety and protection of life and property.

17. Tenant’s contractors shall, while in the Leased Premises, Building or
elsewhere in the Complex, be subject to and under the control and direction of
the Building Manager (but not as agent or servant of said Building Manager or of
Landlord).

18. If the Leased Premises is or becomes infested with vermin as a result of the
use or any misuse or neglect of the Leased 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.

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

20. Tenant and Tenant’s employees, agents, contractors and invitees shall not
loiter in or on the entrances, corridors, sidewalks, lobbies, halls, stairways,
elevators, or common areas for the purpose of smoking tobacco products or for
any other purpose. Tenant and Tenant’s employees and agents shall not obstruct
those areas but use them only as a means of ingress to and egress from the
Leased Premises, Building or Complex. Canvassing, soliciting and peddling in the
Building or Common Areas of the Complex are prohibited and Tenant shall
cooperate to prevent the same.

21. No air conditioning unit or system or other apparatus shall be installed or
used by Tenant without the written consent of Landlord in its sole and absolute
discretion. Tenant shall not waste electricity, water, or air-conditioning and
shall cooperate with Landlord to ensure the most effective operation of the
Building’s heating and air-conditioning system.

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

23. 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.

 

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24. 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 Leased
Premises, Building or Complex.

25. Tenant shall not use the name of the Building for any purpose other than as
the address of the business to be conducted by Tenant in the Leased Premises,
nor shall Tenant use any picture of the Building 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.

26. 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. 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 Leased
Premises except by such persons and in such manner as are approved in advance in
writing by Landlord.

27. Smoking is prohibited in the Building, including, without limitation, the
main lobby, all hallways, all elevators, all elevator lobbies and all restrooms.

28. Tenant shall store all trash and garbage within the interior of the Leased
Premises. Tenant shall not place or have placed in the trash boxes or
receptacles any material that may not or cannot be disposed of in the ordinary
and customary manner of removing and disposing of trash in the vicinity of the
Building. In disposing of trash and garbage, Tenant shall comply fully with any
law or ordinance governing that disposal. All trash, garbage, and refuse
disposal shall be made only through entry-ways and elevators provided for that
purpose and shall be made only at times designated by Landlord.

29. Tenant shall comply with requests by Landlord that Tenant inform Tenant’s
employees of items of importance to Landlord.

30. Tenant may not introduce telephone, cable or other communication or
telecommunication wires or other wires into the Leased Premises without first
obtaining Landlord’s approval of the method and location of such introduction.
No boring or cutting for telephone wires or other wires shall be allowed without
Landlord’s consent. The location of telephones, call boxes, and other office
equipment affixed to the Leased Premises shall be subject to Landlord’s prior
approval

31. Landlord reserves the right at any time to change or rescind any one or more
of these Rules and Regulations or to make any additional reasonable Rules and
Regulations that, in Landlord’s sole and absolute discretion, may be necessary
for:

(a) The management, safety, care, and cleanliness of the Leased Premises,
Building or Complex;

(b) The preservation of good order; or

(c) The convenience of other occupants and tenants in the Building or Complex.

Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular tenants. No waiver by Landlord shall be construed as a
waiver of those Rules and Regulations in favor of any other tenant, and no
waiver shall prevent Landlord from enforcing those Rules or Regulations against
any other tenant of the Building or Complex.

 

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EXHIBIT F – OPTION TO EXTEND

This Exhibit F (this “Exhibit”) is made in connection with and is a part of that
certain Office Lease, dated as of May 16, 2012, by and between DWF III Gateway,
LLC, a Delaware limited liability company, as Landlord, and Puma Biotechnology,
Inc., a Delaware corporation, as Tenant, (the “Lease”).

1. Definitions and Conflict. All capitalized terms referred to in this Exhibit
shall have the same meaning as provided in the Lease, except as expressly
provided to the contrary in this Exhibit. In case of any conflict between any
term or provision of the Lease and any exhibits attached thereto and this
Exhibit, this Exhibit shall control.

2. Option to Extend and Rent During the Extended Period: Tenant shall have one
option to extend the Term of the Lease for a period of five (5) years (the
period shall be referred to as the “Extension Period”) by giving written notice
of exercise of such option (“Extension Option Notice”) at least two hundred
seventy (270) days, but not more than three hundred sixty-five (365) days, prior
to the expiration of the Term. The Extension Period shall commence, if at all,
immediately following the expiration of the initial Term of the Lease. If Tenant
is in default under any term or provision of the Lease on the date of giving an
Extension Option Notice, or if Tenant is in default under any term or provision
of the Lease on the date of the applicable Extension Period is to commence, the
Extension Period at the option of Landlord shall not commence and the Lease
shall expire at the end of initial Term. The Extension Period shall be upon all
of the terms and provisions of the Lease, except that (i) the Minimum Monthly
Rent during such Extension Period shall be one hundred percent (100%) of then
Fair Market Rent, but not less than the Minimum Monthly Rent payable during the
last month prior to the commencement of the Extension Period, (ii) any work,
allowance, free rent, or concession provided by Landlord in connection with the
commencement of the initial Term shall not apply; and (iii) Tenant shall not
have any additional option to extend.

2.1 Fair Market Rent. The term “Fair Market Rent” for purposes of determining
Minimum Monthly Rent during the Extension Period shall mean the greater of
(i) the Minimum Monthly Rent payable during the last month prior to the
commencement of the Extension Period, or (ii) the minimum monthly rent generally
applicable to full service leases at first class office buildings of comparable
size, age, quality of the Leased Premises in the Gateway Business Park area of
South San Francisco, California area projected as of the first day of the
Extension Period by giving due consideration for the quality of the Building and
improvements therein (including the quality of the then existing improvements in
the Leased Premises as if they had been newly constructed and paid for by
Landlord on the first day of the Extension Period specifically for the Extension
Period), the quality for credit tenants, for a term comparable to the Extension
Period at the time the commencement of the Extension Period is scheduled to
commence, without any deduction for amortization or cost of tenant improvements,
allowances, capital improvements or commissions whether or not incurred by
Landlord, and otherwise subject to the terms and conditions of this Lease that
will be applicable during the Extension Period.

2.2 Procedure to Determine Fair Market Rent. Landlord shall notify Tenant in
writing of Landlord’s determination of the Fair Market Rent (“Landlord’s FMR”)
within thirty (30) days after receipt of the Extension Option Notice. Within
thirty (30) days after receipt of such written notice of Landlord’s FMR, Tenant
shall have the right either to: (i) accept Landlord’s FMR, or (ii) elect to have
the Fair Market Rent determined in accordance with the appraisal procedure set
forth below. The failure of Tenant to provide written notice of its election
under the preceding sentence shall be deemed an acceptance of Landlord’s FMR.
The election (or deemed election ) by Tenant under this section shall be
non-revocable and binding on the parties.

2.3 Appraisers. If Tenant has elected to have the Fair Market Rent determined by
an appraisal, then within ten (10) days after receipt of Tenant’s written notice
of such an election, each party, by giving written notice to the other party,
shall appoint a broker to render a written opinion of the Fair Market Rent for
the Extension Period. Each broker must be a real estate broker licensed in the
State where the Building is located for at least five years and with at least
five years experience in the appraisal of rental rates of leases or

 

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in the leasing of space in office buildings in the area in which the Building is
located and otherwise unaffiliated with either Landlord or Tenant. The two
brokers shall render their written opinion of the Fair Market Rent for the
Extension Period to Landlord and Tenant within thirty (30) days after the
appointment of the second broker. If the Fair Market Rent of each broker is
within three percent (3%) of each other, then the average of the two appraisals
of Fair Market Rent shall be the Fair Market Rent for the Extension Period. If
one party does not appoint its broker as provided above, then the one appointed
shall determine the Fair Market Rent. The Fair Market Rent so determined under
this section shall be binding on Landlord and Tenant.

2.4 Third Appraiser. If the Fair Market Rent determined by the brokers is more
than three percent (3%) apart, then the two brokers shall pick a third broker
within ten (10) days after the two brokers have rendered their opinions of Fair
Market Rent as provided above. If the two brokers are unable to agree on the
third broker within said ten (10) day period, Landlord and Tenant shall mutually
agree on the third broker within ten (10) days thereafter. If the parties do not
agree on a third qualified broker within ten (10) days, then at the request of
either Landlord or Tenant, such third broker shall be promptly appointed by the
then Presiding Judge of the Superior Court of the State of California for the
County where the Building is located. The third broker shall be a person who has
not previously acted in such capacity for either party and must meet the
qualifications stated above.

2.5 Impartial Appraisal. Within thirty (30) days after its appointment, the
third broker (the “Third Party”), shall render its written opinion by selecting
the Fair Market Rent made Landlord’s or Tenant’s broker to be the Fair Market
Rent for the Extension Period. The Third Party may not offer any different
opinion or recommendation of Fair Market Rent. The Fair Market Rent determined
in accordance with the foregoing procedure shall be binding on the parties.

2.6 Appraisal Costs. Each party shall bear the cost of its own appraiser and
one-half (1/2) the cost of the third appraiser.

2.7 Acknowledgment of Rent. After the Fair Market Rent for the Extension Period
has been established in accordance with the foregoing procedure, Landlord and
Tenant shall promptly execute an amendment to the Lease to reflect the minimum
monthly rent for the Extension Period.

2.8 Personal Option. The foregoing option to extend is personal to the original
Tenant signing the Lease (and its affiliates), but may not be assigned or
transferred to or exercised by any other assignee, sublessee or transferee under
a Transfer unless such constituted and Affiliate Transfer within the meaning of
Section 21.5 of the Lease or Landlord’s consent was not required in connection
therewith pursuant to Article 21 of the Lease or Landlord consented to such
Transfer.

 

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