Exhibit 10.1

 

Execution

 

LEASE AGREEMENT

 

BY AND BETWEEN

 

1400 16TH STREET LLC,

 

a Delaware limited liability company

 

AND

 

INVITAE CORPORATION,

 

a Delaware corporation

 

1400 16th Street
San Francisco, California 94103

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

ARTICLE I

SPECIAL DEFINITIONS

 

1

ARTICLE II

PREMISES

 

4

ARTICLE III

LEASE TERM AND RENEWAL OPTION

 

5

ARTICLE IV

BASE RENT

 

8

ARTICLE V

OPERATING CHARGES AND REAL ESTATE TAXES

 

9

ARTICLE VI

USE OF PREMISES

 

13

ARTICLE VII

ASSIGNMENT AND SUBLETTING

 

18

ARTICLE VIII

MAINTENANCE AND REPAIRS

 

24

ARTICLE IX

BASE BUILDING WORK, TENANT IMPROVEMENTS AND ALTERATIONS

 

25

ARTICLE X

SIGNS

 

31

ARTICLE XI

SECURITY DEPOSIT

 

32

ARTICLE XII

INSPECTION

 

35

ARTICLE XIII

INSURANCE

 

36

ARTICLE XIV

SERVICES AND UTILITIES

 

39

ARTICLE XV

LIABILITY OF LANDLORD

 

41

ARTICLE XVI

RULES AND REGULATIONS

 

43

ARTICLE XVII

DAMAGE OR DESTRUCTION

 

43

ARTICLE XVIII

CONDEMNATION

 

46

ARTICLE XIX

DEFAULT

 

47

ARTICLE XX

BANKRUPTCY

 

50

ARTICLE XXI

SUBORDINATION

 

51

ARTICLE XXII

HOLDING OVER

 

52

ARTICLE XXIII

COVENANTS OF LANDLORD

 

53

ARTICLE XXIV

GENERAL PROVISIONS

 

54

ARTICLE XXV

BACKUP GENERATOR

 

58

ARTICLE XXVI

MEASUREMENT STANDARD

 

60

ARTICLE XXVII

ROOF DECK

 

61

 

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RIDER 1

General Definitions

EXHIBIT 1.7

Base Building Exhibit

EXHIBIT 5.5-1

LEED Green Cleaning Policy

EXHIBIT 5.5-2

Solid Waste Management Policy

EXHIBIT A

Plan Showing Premises

EXHIBIT B

Work Agreement

EXHIBIT C

Building Rules and Regulations

EXHIBIT D

Certificate Affirming Lease Dates

EXHIBIT E

Legal Description

EXHIBIT F

Permitted Hazardous Substances

 

ii

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LEASE AGREEMENT

 

THIS LEASE AGREEMENT (this “Lease”) is dated as of the 2nd day of September,
2015, by and between 1400 16TH STREET LLC, a Delaware limited liability company
(“Landlord”), and INVITAE CORPORATION, a Delaware corporation (“Tenant”).

 

ARTICLE I

 

SPECIAL DEFINITIONS

 

Section 1.1.           Anticipated Delivery Date:  September 30, 2015.

 

Section 1.2.           Base Rent:  the annual amount payable as set forth in the
following table:

 

Lease Year

 

Monthly Installment*

 

Annual Installment*

 

Per Sq. Ft.

 

1

 

$

366,065

 

$

4,392,780

 

$

60.00

 

2

 

$

531,546.92

 

$

6,378,563

 

$

61.80

 

3

 

$

547,493.33

 

$

6,569,920

 

$

63.65

 

4

 

$

563,918.17

 

$

6,767,018

 

$

65.56

 

5

 

$

580,835.67

 

$

6,970,028

 

$

67.53

 

6

 

$

598,260.75

 

$

7,179,129

 

$

69.56

 

7

 

$

616,208.58

 

$

7,394,503

 

$

71.64

 

8

 

$

634,694.83

 

$

7,616,338

 

$

73.79

 

9

 

$

653,735.67

 

$

7,844,828

 

$

76.01

 

10

 

$

673,347.75

 

$

8,080,173

 

$

78.29

 

11**

 

$

693,548.18

 

$

2,774,193

 

$

80.63

 

 

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*Based on twelve (12) full calendar months, except year 11 which is based on
four (4) calendar months.

 

**Note: The 11th Lease Year shall consist of only four (4) months.

 

Notwithstanding anything to the contrary contained in this Lease, Tenant shall
pay Base Rent during the twelve (12) month period commencing on the Rent
Commencement Date with respect to 73,213 rentable square feet of the Premises. 
Tenant shall pay Base Rent with respect to the entire Premises (103,213 rentable
square feet) commencing on the date which is twelve (12) months following the
Rent Commencement Date.

 

Section 1.3.           Base Rent Annual Escalation Percentage:  three percent
(3.0%).  Base Rent shall increase by 3% per year on each anniversary of the Rent
Commencement Date.

 

Section 1.4.           Brokers:  Colliers International for Landlord and Newmark
Cornish & Carey for Tenant.

 

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Section 1.5.           Building:  The building commonly known as 1400 16th
Street, located in San Francisco, California and containing approximately
103,213 square feet of total rentable area (“Total Area”), which includes the
entirety of the interior space of the Building.

 

Section 1.6.           Base Building Work.  The work to be performed by Landlord
prior to delivery of the Premises to Tenant, as described in the 100%
Construction Drawings dated April 8. 2015 not including the alternate, as
amended through RFIs and Addenda, to be updated with As-Built drawings upon
Substantial Completion of the Base Building Work, and including, without
limitation, the costs to achieve and to obtain initial LEED Certification for
the Building.

 

Section 1.7.           Delivery Date:  the date the Premises are delivered to
Tenant by Landlord with the Base Building Work as shown on Exhibit 1.7 attached
hereto Substantially Complete (currently estimated to be the Anticipated
Delivery Date).

 

Section 1.8.           Guarantor(s):  None.

 

Section 1.9.           Holidays:  New Year’s Day, President’s Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day (and the day after Thanksgiving)
and Christmas Day and any additional holidays commonly recognized by the U.S.
Federal Government.

 

Section 1.10.         Improvements Allowance:  the product of Fifty Dollars
($50.00) multiplied by the rentable area of the Premises for a total of Five
Million One Hundred Sixty Thousand Six Hundred Fifty and No/100 Dollars
($5,160,650.00).

 

Section 1.11.         Landlord Notice Address:

 

1400 16th Street LLC

601 California Street, Suite 1310

San Francisco, CA 94108

Attn: Pamela R. Izzo

 

With a copy to:

 

1400 16th Street LLC

c/o ASB Capital Management LLC

540 Cowper Street, Suite 100

Palo Alto, CA 94301

Attn:  David T. Quigley

 

and an additional copy to:

 

1400 16th Street LLC

c/o ASB Capital Management LLC

7501 Wisconsin Avenue, Suite 1300W

Bethesda, MD 20814

Attn: Taryn Fielder, Esq.

 

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and an additional copy to:

 

DLA Piper LLP (US)

33 Arch Street, 26th Floor

Boston, MA 02494

Attention:  Barbara Trachtenberg, Esq.

 

Section 1.12.         Landlord Payment Address:

 

Via Mail or Overnight Delivery
1400 16th Street LLC

c/o CBRE

101 California Street, 22nd Floor

San Francisco, CA 94111

Attn:  Asset Services — Accounting Department

 

Via Wire
Bank Name —First Republic Bank

Bank Address — 111 Pine Street, San Francisco, CA 94111

ABA # - 321081669

Account Name — 1600 14th Street LLC

Account #- 80001843383

REF:  To be provided by Tenant

 

At Landlord’s option upon at least thirty (30) days’ written notice, Tenant
shall make all payments by means of electronic transfer of funds or in such
other manner as Landlord may from time to time specify in writing.

 

Section 1.13.         Lease Commencement Date:  the date of full execution and
unconditional delivery of this Lease.

 

Section 1.14.         Lease Expiration Date:  11:59 p.m. (local time at the
Building) on the last day of the fourth (4th) month of the eleventh (11th) Lease
Year (i.e., the last day of the one hundred twenty-fourth (124th) full calendar
month following the Rent Commencement Date), unless extended or earlier
terminated pursuant to this Lease.

 

Section 1.15.         Outside Delivery Date:  March 31, 2016.

 

Section 1.16.         Premises:  the interior of the Building, deemed to contain
one hundred three thousand, two hundred thirteen (103,213) square feet of
rentable area, being the entire rentable area of the interior of the Building,
as more particularly designated on Exhibit A.

 

Section 1.17.         Rent Commencement Date:  the date that is the earlier of
(a) six (6) months following the Delivery Date, as the same may be extended
pursuant to the provisions of

 

3

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the Work Letter due to a Force Majeure Delay or any Landlord Delay, or (b) the
date Tenant occupies any portion of the Premises for the conduct of its business
operations.

 

Section 1.18.         Security Deposit Amount:  Four Million, Six Hundred
Forty-four, Five Hundred Eighty-five dollars ($4,644,585.00), subject to
reduction pursuant to Section 11.2.

 

Section 1.19.         Tenant Notice Address:

 

Invitae Corporation

458 Brannan Street

San Francisco, CA 94107

Attn: Paul Intrieri

 

With a copy to:

 

Coblentz Patch Duffy & Bass LLP

One Ferry Building, Suite 200

San Francisco, CA 94111-4213

Attn: Misti M. Schmidt, Esq.

 

And a copy to:

 

The Premises (after Tenant has commenced beneficial use of the Premises)

Attn: Paul Intrieri

 

Section 1.20.         Tenant’s Proportionate Share:  100%.

 

Section 1.21.         Base Year:  Calendar year 2016, with respect to each of
Operating Charges and Real Estate Taxes.

 

ARTICLE II

 

PREMISES

 

Section 2.1.           Tenant leases the Premises from Landlord for the Lease
Term and upon the conditions and covenants set forth in this Lease.  Except as
may otherwise be expressly provided in this Lease, the lease of the Premises
does not include the right to use the roof, mechanical rooms, or electrical
closets at the Building, access to and use of which (other than as specifically
set forth in this Lease) shall be subject to reasonable approval by and
coordination with Landlord.  However, Tenant shall have the non-exclusive right
to use:  (1) the plenums, risers, electrical closets, telephone rooms, ducts or
pipes serving the Premises, strictly in accordance with (a) plans and
specifications to be approved by Landlord in its sole discretion, and (b)
Landlord’s rules, regulations and requirements in connection therewith; (2) any
mechanical rooms, electrical closets and telephone rooms located within the
Premises, for the purpose for which they were intended, but only with Landlord’s
prior written consent, which

 

4

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shall not be unreasonably withheld (except to the extent that such rooms and
closets contain no system, wiring or other item related to either the Building
Structure and Systems, in which case no such prior consent of Landlord shall be
required for use by Tenant’s on-site, properly licensed and trained technicians)
and strictly in accordance with Landlord’s rules, regulations and requirements
in connection therewith.

 

Section 2.2.           The Premises are located in the Building described in
Article I, which is located on certain real property (the “Property”) owned by
Landlord.  The term “Property,” as used in this Lease, shall mean (a) the
Building and the Common Areas, (b) the land (which is improved with landscaping
and other improvements) upon which the Building and the Common Areas are
located, and (c) at Landlord’s discretion, any additional real property, areas,
land, buildings or other improvements added thereto subsequent to the date
hereof.

 

ARTICLE III

 

LEASE TERM AND RENEWAL OPTION

 

Section 3.1.           All of the provisions of this Lease shall be in full
force and effect from and after the date first written above.  The “Lease Term”
shall commence on the Rent Commencement Date and expire at 11:59 P.M. on the
Lease Expiration Date.  The Lease Term shall also include any properly exercised
renewal or extension of the term of this Lease.

 

Section 3.2.           Promptly following the Delivery Date, the Tenant shall
cause the Tenant Improvements to be constructed in accordance with the Work
Agreement attached hereto as Exhibit B.  Promptly after the Delivery Date has
occurred, Landlord and Tenant shall execute the certificate attached to this
Lease as Exhibit D.  Failure to execute said certificate shall not affect the
occurrence of the Delivery Date or the commencement or expiration of the Lease
Term.

 

Section 3.3.           Landlord shall use commercially reasonable efforts to
deliver the Premises to Tenant in good, vacant, broom clean condition, in
compliance with all Laws and with the Base Building Work Substantially Complete
on or about the Anticipated Delivery Date; provided, however, that if Landlord
does not deliver possession of the Premises by such date, Landlord shall not
have any liability whatsoever, and this Lease shall not be rendered void or
voidable, as a result thereof.

 

Section 3.4.           Notwithstanding the provisions of Section 3.3 above, if
the Delivery Date shall not have occurred on or before the Outside Delivery
Date, then, provided no Event of Default exists under this Lease and except as
otherwise provided below, Tenant shall have the right, as its sole and exclusive
remedy, to terminate this Lease by delivering written notice of the exercise of
such right to Landlord. Such right of termination may be exercised by Tenant
only during the period commencing on the Outside Delivery Date and continuing
through the fifteenth (15th) business day thereafter, and if such right is not
exercised by Tenant by said fifteenth (15th) business day, such right shall
thereafter lapse and be of no further force or effect.  If this Lease is
terminated pursuant to this Section 3.4, then neither party shall have any
further obligations or liability hereunder to the other party; provided,
however, that Landlord shall promptly refund any and all security deposits or
advance rent previously deposited by Tenant with Landlord in accordance with the
provisions of this Lease.  Notwithstanding the foregoing,

 

5

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the Outside Delivery Date shall be extended on a day-for-day basis for each day
the Delivery Date is delayed as a result of any of the factors or causes
described in Section 24.20 (but the extension(s) as a result of the factors or
causes described in Section 24.20 shall not exceed one hundred twenty (120)
days).

 

Section 3.5.           Notwithstanding any provision in this Lease, Tenant shall
have the right to terminate this Lease if Tenant shall not have received the
Letter of Determination issued by the City and County of San Francisco Planning
Departments Zoning Administrator permitting Tenant’s intended laboratory use of
the ground floor of the Premises (the “New Letter of Determination”) on or
before December 1, 2015.  Such right of termination may be exercised by Tenant
only during the period commencing on December 2, 2015, and continuing through
the fifteenth (15th) day thereafter, and if such right is not exercised by
Tenant by said fifteenth (15th) day, such right shall thereafter lapse and be of
no further force or effect.  If this Lease is terminated pursuant to this
Section 3.5, then neither party shall have any further obligations or liability
hereunder to the other party; provided, however, that Landlord shall promptly
refund any and all security deposits or advance rent previously deposited by
Tenant with Landlord in accordance with the provisions of this Lease, and Tenant
shall reimburse Landlord for any portion of the Improvements Allowance paid by
Landlord pursuant to the Work Agreement, and to the extent Tenant has commenced
any work under the Work Agreement, Tenant shall complete such work as is
necessary to leave the Premises in a good and safe condition at its sole cost
and expense. Landlord and Tenant each agree to reasonably cooperate to obtain
the New Letter of Determination as soon as reasonably practicable following the
Lease Commencement Date.

 

Section 3.6.           Subject to the provisions hereinafter set forth, Landlord
hereby grants to Tenant one (1) option to extend the Lease Term, for a period of
ten (10) years (the “Renewal Period”) after the expiration of the initial Lease
Term.  The Renewal Period, if any, shall commence on the day after the scheduled
Lease Expiration Date initially specified herein and end on the tenth (10th)
anniversary of such initial Lease Expiration Date.  The option shall be
exercisable by written notice (the “Renewal Notice”) from Tenant to Landlord
given not earlier than fifteen (15) months nor later than twelve (12) months
prior to the end of the Lease Term as then in effect.  If the option is not so
exercised, said option shall thereupon expire.  Tenant may only exercise the
option, and an exercise thereof shall only be effective, if (i) at the time of
Tenant’s exercise of said option and, at Landlord’s option, at the commencement
of the Renewal Period, this Lease is in full force and effect and there is no
Event of Default by Tenant under this Lease, and (ii) inasmuch as said option is
intended only for the benefit of the original Tenant named in this Lease and its
Permitted Transferees, at least sixty percent (60%) of the Premises are occupied
by the original Tenant or its Permitted Transferees herein and said Tenant has
not assigned this Lease and is not then subletting more than sixty percent (60%)
of the Premises other than to its Permitted Transferees at the time of Tenant’s
exercise of such option and, at Landlord’s option, at the commencement of the
Renewal Period.  Without limitation of the foregoing, no sublessee or assignee
shall be entitled to exercise said option and, at the option of Landlord, no
exercise of said option by the original Tenant named herein shall be effective,
in the event said Tenant assigns this Lease or subleases more than sixty percent
(60%) of the Premises at the time of the delivery of the Renewal Notice or the
commencement of the Renewal Period, other than to a Permitted Transferee.

 

6

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Such extension shall be upon all of the same terms, covenants, and conditions
contained in this Lease, except that (i) Tenant shall have no further right to
extend the Lease Term beyond the Renewal Period, (ii) Landlord shall have no
obligation to make or pay for any improvements to the Premises or to pay any
allowances or inducements of any kind, and (iii) the Base Rent payable during
the Renewal Period shall be equal to the greater of (x) the Market Rent (as
hereinafter defined) as of the commencement of the Renewal Period; and (y) the
Base Rent in effect prior to commencement of the Renewal Period.  “Market Rent”
shall mean the base rent at which tenants are leasing comparable space in San
Francisco, California, for a comparable lease term and otherwise upon the terms
applicable to the lease of the Premises under this Lease in an arm’s length
transaction involving buildings which are comparable to the Building in terms of
quality, age, and existing build-out, with tenants which are comparable to
Tenant in terms of size, credit quality and stature and considering all relevant
factors.

 

Landlord and Tenant agree that they shall negotiate in good faith to determine
the Market Rent.  If Landlord and Tenant are unable to agree on the amount of
such Market Rent by the date that is the later of thirty (30) days after the
date of delivery of the Renewal Notice or nine (9) months before the expiration
of the Lease Term, then the Market Rent shall be established by appraisal in the
following manner.  Within ten (10) days after the later of the two dates
described in the preceding sentence, Landlord and Tenant shall each appoint one
(1) “broker appraiser” (as hereinafter defined) and, within thirty (30) days,
the two (2) appraisers so appointed shall independently determine the Market
Rent and exchange such determinations with a copy provided to each of Landlord
and Tenant.  As used herein, the term “broker appraiser” shall mean any
independent unaffiliated broker (a) who is employed by a real estate brokerage
firm of recognized competence in the San Francisco, California area and (b) who
has not less than seven (7) years’ experience in commercial real estate of the
general location, type and character as the Premises.  If either Landlord or
Tenant fails to appoint a broker appraiser within such ten (10) day period, then
the other party shall have the power to appoint the broker appraiser for the
defaulting party.  If the determination of the Market Rent by each broker
appraiser is within ten percent (10%) of the determination of the other
appraiser, then the Market Rent shall be deemed to be the average of the two
determinations.  If the two broker appraisers are unable to determine the Market
Rent within such ten percent (10%) margin during such thirty (30) day period,
then within ten (10) days of the expiration of such thirty (30) day period, they
jointly shall appoint a third broker appraiser and within thirty (30) days after
selection of such third broker appraiser, all three appraisers shall meet and
determine the Market Rent, at which time the third broker appraiser shall
deliver its determination of Market Rent.  If all three appraisers are unable
unanimously to agree upon the Market Rent, then the Market Rent shall be deemed
to be the average of the two closest determinations made and simultaneously
issued by the three appraisers.  Any Market Rent figure determined under the
provisions of this paragraph shall be conclusive and binding upon the Landlord
and Tenant.  Each party shall bear the cost of its broker appraiser, and the
cost of the third broker appraiser shall be borne equally between the parties. 
Until such time as the Market Rent is so determined, from and after the
commencement date of the Renewal Period, Tenant shall pay Base Rent at
Landlord’s appraiser’s initial designation of Market Rent, with an appropriate
adjustment once the Market Rent has been determined.

 

Such extension shall be upon all of the same terms, covenants, and conditions
contained in this Lease, except that (a) Tenant shall have no further right to
extend the Lease Term beyond

 

7

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the Renewal Period, (b) the Base Rent for the Renewal Period shall initially be
at a rate equal to the Market Rent for the Leased Premises as of the
commencement date of the Renewal Period, (c) the Base Rent shall increase by
three percent (3%) each Lease Year of the Renewal Period, and (d) Landlord shall
have no obligation to make or pay for any improvements to the Leased Premises or
to pay any allowances or inducements of any kind.

 

If Tenant has validly exercised the option to extend the Lease Term, within
thirty (30) days after the Market Rent is determined, Landlord and Tenant shall
enter into a written amendment to this Lease confirming the terms, conditions
and provisions applicable to the Renewal Period, as determined in accordance
herewith.  Tenant’s failure to timely execute such amendment shall not negate
the irrevocable nature of Tenant’s exercise of its option.

 

ARTICLE IV

 

BASE RENT

 

Section 4.1.                                 From and after the Rent
Commencement Date, Tenant shall pay the Base Rent in equal monthly installments
in advance on the first day of each month during a Lease Year.

 

Section 4.2.                                 Concurrently with Tenant’s
execution of this Lease, Tenant shall pay an amount equal to one (1) monthly
installment of the Base Rent payable during the first Lease Year, which amount
shall be credited toward the monthly installment of Base Rent payable for the
first full calendar month of the Lease Term following the Rent Commencement
Date.  If the Rent Commencement Date is not the first day of a month, then the
Base Rent from the Rent Commencement Date until the first day of the following
month shall be prorated on a per diem basis at the rate of one thirtieth
(1/30th) of the monthly installment of the Base Rent payable during the first
Lease Year, and Tenant shall pay such prorated installment of the Base Rent on
the Rent Commencement Date.

 

Section 4.3.                                 All sums payable by Tenant under
this Lease shall be paid to Landlord in legal tender of the United States,
without setoff, deduction or demand, except as expressly provided in this
Lease.  Payments shall be paid to Landlord at the Landlord Payment Address, or
to such other party or such other address as Landlord may designate in writing. 
Landlord’s acceptance of rent after it shall have become due and payable shall
not excuse a delay upon any subsequent occasion or constitute a waiver of any of
Landlord’s rights hereunder.  If any sum payable by Tenant under this Lease is
paid by check which is returned due to insufficient funds, stop payment order,
or otherwise, then:  (a) such event shall be treated as a failure to pay such
sum when due; and (b) in addition to all other rights and remedies of Landlord
hereunder, Landlord shall be entitled (i) to impose a returned check charge of
Fifty Dollars ($50.00) to cover Landlord’s administrative expenses and overhead
for processing, and (ii) to require that all future payments be remitted by wire
transfer, money order, or cashier’s or certified check.

 

Section 4.4.                                 Landlord and Tenant agree that no
rental or other payment for the use or occupancy of the Premises is or shall be
based in whole or in part on the net income or profits derived by any person or
entity from the Building or the Premises.  Tenant will not enter into any
sublease, license, concession or other agreement for any use or occupancy of the
Premises which

 

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provides for a rental or other payment for such use or occupancy based in whole
or in part on the net income or profits derived by any person or entity from the
Premises so leased, used or occupied.  Nothing in the foregoing sentence,
however, shall be construed as permitting or constituting Landlord’s approval of
any sublease, license, concession, or other use or occupancy agreement not
otherwise approved by Landlord in accordance with the provisions of Article VII.

 

ARTICLE V

 

OPERATING CHARGES AND REAL ESTATE TAXES

 

Section 5.1.                                 For purposes of this Article V, the
term “Building” shall be deemed to include the Land, the roof of the Building
and any physical extensions therefrom, any driveways, sidewalks, landscaping and
alleys on the Land, and all other areas, facilities, improvements and
appurtenances relating to any of the foregoing.

 

Section 5.2.                                 (a)                                
Commencing on the later of the Rent Commencement Date or January 1, 2017, Tenant
shall pay as additional rent Tenant’s Proportionate Share of Operating Charges
for each calendar year falling entirely or partly within the Lease Term which
are in excess of the amount of Operating Charges applicable to the Base Year. 
Such additional rent, together with any and all other amounts payable by Tenant
to Landlord, as additional rent or otherwise, pursuant to the terms of this
Lease, shall be hereinafter collectively referred to as the “Additional Rent”. 
The Base Rent and Additional Rent are herein collectively referred to from time
to time as the “Rent.”

 

Section 5.3.                                 (a)                                
Commencing on the later of the Rent Commencement Date or January 1, 2017, Tenant
shall make estimated monthly payments to Landlord on account of Tenant’s
Proportionate Share of Operating Charges in excess of the Operating Charges for
the Base Year.  At the beginning of each calendar year following the Base Year,
Landlord shall submit a reasonably detailed written statement setting forth
Landlord’s reasonable estimate of Tenant’s Proportionate Share thereof.  Tenant
shall pay to Landlord on the first day of each month following receipt of such
statement, until Tenant’s receipt of the succeeding annual statement, an amount
equal to one twelfth (1/12) of each such share (estimated on an annual basis
without proration pursuant to Section 5.5).  Not more than twice during any
calendar year, Landlord may revise Landlord’s estimate and adjust Tenant’s
monthly payments to reflect Landlord’s revised estimate, and any such revision
shall set forth on a reasonably specific basis any particular expense increase. 
Within one hundred twenty (120) days after the end of each calendar year, or as
soon thereafter as is feasible, Landlord shall submit a Reconciliation Statement
for Operating Charges.  If such Reconciliation Statement indicates that the
aggregate amount of such estimated payments exceeds Tenant’s actual liability,
then Landlord shall credit the net overpayment toward Tenant’s next
installment(s) of Base Rent due under this Lease, or, if the Lease Term has
expired or will expire before such credit can be fully applied, or if Tenant is
not otherwise liable to Landlord for further payment, Landlord shall reimburse
Tenant for the amount of such overpayment within thirty (30) days.  If such
Reconciliation Statement indicates that Tenant’s actual liability exceeds the
aggregate amount of such estimated payments, then Tenant shall pay the amount of
such excess as Additional Rent within thirty (30) days of Tenant’s receipt of
such Reconciliation Statement.

 

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Section 5.4.                                 (a)                                
Commencing on the later of the Rent Commencement Date or January 1, 2017, Tenant
shall pay as Additional Rent Tenant’s Proportionate Share of Real Estate Taxes
which are in excess of the amount of Real Estate Taxes applicable to the Base
Year.  Tenant shall not initiate or participate in any contest of Real Estate
Taxes without Landlord’s prior written consent.

 

(a)                                 Commencing on the later of the Rent
Commencement Date or January 1, 2017, Tenant shall make estimated monthly
payments to Landlord on account of Tenant’s Proportionate Share of Real Estate
Taxes in excess of the Real Estate Taxes for the Base Year, which Base Year
shall include the assessed value of the hard costs of the portion of the Tenant
Improvements that have been funded with the Improvements Allowance (the
“Included TI Costs”).  Until the Real Estate Taxes with respect to the Base Year
have been reassessed to include the Included TI Costs, Tenant’s Proportionate
Share of Real Estate Taxes after the Base Year shall be calculated using the
amount of Real Estate Taxes actually paid by Landlord during calendar year 2016
and the parties shall true-up such payments upon issuance of the Real Estate
Taxes for the Base Year that includes the Included TI Costs.  At the beginning
of each calendar year following the Base Year, Landlord shall submit a
reasonably detailed written statement setting forth Landlord’s reasonable
estimate of Tenant’s Proportionate Share thereof.  Tenant shall pay to Landlord
on the first day of each month following receipt of such statement, until
Tenant’s receipt of the succeeding annual statement, an amount equal to one
twelfth (1/12) of such share (estimated on an annual basis without proration
pursuant to Section 5.5).  Not more than twice during any calendar year,
Landlord may revise Landlord’s estimate and adjust Tenant’s monthly payments to
reflect Landlord’s revised estimate, and any such revision shall set forth on a
reasonably specific basis any particular expense increase.  Within one hundred
twenty (120) days after the end of each calendar year, or as soon thereafter as
is feasible, Landlord shall submit a Reconciliation Statement for Real Estate
Taxes showing (1) Tenant’s Proportionate Share of the Real Estate Taxes incurred
during the preceding calendar year, and (2) the aggregate amount of Tenant’s
estimated payments made during such year.  If such Reconciliation Statement
indicates that the aggregate amount of such estimated payments exceeds Tenant’s
actual liability, then Landlord shall credit the net overpayment toward Tenant’s
next installment(s) of Base Rent due under this Lease, or, if the Lease Term
hereof has expired or will expire before such credit can be fully applied, or if
Tenant is not otherwise liable for further payment, Landlord shall reimburse
Tenant for the amount of such overpayment within thirty (30) days.  If such
statement indicates that Tenant’s actual liability exceeds the aggregate amount
of such estimated payments, then Tenant shall pay the amount of such excess as
Additional Rent within thirty (30) days of Tenant’s receipt of such
Reconciliation Statement.

 

(b)                                 Upon good faith request by Tenant, Landlord
shall contest Real Estate Taxes, provided that Tenant shall reimburse Landlord
for actual out-of-pocket costs paid or incurred by Landlord in connection with
any such contest following the completion of any such contest.

 

Section 5.5.                                 (a)                                
Commencing on the Delivery Date, Tenant shall pay all expenses, charges and fees
incurred by or on behalf of Landlord or Tenant in connection with all

 

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electricity, gas, water, HVAC (including chilled condenser water), sewer and
other utility and service costs, charges and fees (including any tap fees and
connection and switching fees except for connection fees for the existing water
and sewer connection and connection fees for the existing 1600 amp service from
PG&E, which will be paid by Landlord if required) of every type and nature
serving the Premises or the Building Structure and Systems (the “Utilities
Services”) and (b) commencing on a date determined by Tenant, but not later than
the Rent Commencement Date, janitorial and cleaning services and supplies (the
“Janitorial Services”), which Utilities Services and Janitorial Services shall
be contracted by Tenant in Tenant’s own name and not in the name of the
Landlord; provided, however, in the event that any third party is providing the
Janitorial Services contemplated hereunder, Tenant shall not engage such third
party without Landlord’s prior written consent, not to be unreasonably withheld,
conditioned or delayed.  Whether provided by Tenant’s employees or any third
parties, Tenant shall ensure that the Premises and the Common Areas are cleaned
with a frequency, and in a manner, and subject to standards of, comparable
buildings and in accordance with the Rules and Regulations.  Tenant shall, in
conjunction with the Janitorial Services, implement the LEED Green Cleaning
Policy attached hereto as Exhibit 5.5-1 and the Solid Waste Management Policy
attached hereto as Exhibit 5.5-2.  To the extent that the Janitorial Services
being provided by or through Tenant do not comply with the provisions of this
Section 5.5, at Landlord’s election, the Janitorial Services shall be provided
by contractors engaged by Landlord and Tenant shall be responsible for the
actual cost thereof.  Prior to commencement of the Janitorial Services, Tenant
shall require Tenant’s Agents to remove trash from the Premises on a regular
basis.

 

(a)                                 If Landlord is providing the Janitorial
Services, Tenant shall make estimated monthly payments to Landlord on account of
Tenant’s Proportionate Share of the expenses, fees and charges of the Janitorial
Services (the “Janitorial Expenses”).  At the beginning of each calendar year
(and at Landlord’s election, following the Delivery Date with respect to periods
prior to the Rent Commencement Date), Landlord shall submit a reasonably
detailed written statement setting forth Landlord’s reasonable estimate of
Tenant’s Proportionate Share thereof.  Tenant shall pay to Landlord on the first
day of each month following receipt of such statement, until Tenant’s receipt of
the succeeding annual statement, an amount equal to one twelfth (1/12) of each
such share (estimated on an annual basis without proration pursuant to Section
5.5).  Not more than twice during any calendar year, Landlord may revise
Landlord’s estimate and adjust Tenant’s monthly payments to reflect Landlord’s
revised estimate, and any such revision shall set forth on a reasonably specific
basis any particular expense increase.  Within one hundred twenty (120) days
after the end of each calendar year, or as soon thereafter as is feasible,
Landlord shall submit a Reconciliation Statement for Janitorial Expenses.  If
such Reconciliation Statement indicates that the aggregate amount of such
estimated payments exceeds Tenant’s actual liability, then Landlord shall credit
the net overpayment toward Tenant’s next installment(s) of Base Rent due under
this Lease, or, if the Lease Term has expired or will expire before such credit
can be fully applied, or if Tenant is not otherwise liable to Landlord for
further payment, Landlord shall reimburse Tenant for the amount of such
overpayment within thirty (30) days.  If such Reconciliation Statement indicates
that Tenant’s actual liability exceeds the aggregate amount of such estimated
payments, then Tenant shall pay the amount of such excess as Additional Rent
within thirty (30) days of Tenant’s receipt of such Reconciliation Statement.

 

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Section 5.6.                                 If Tenant’s obligations to pay
Additional Rent under this Article commence or expire on a day other than the
first day or the last day of a calendar year, respectively, then Tenant’s
liabilities pursuant to this Article for such calendar year shall be apportioned
by multiplying the respective amount of Tenant’s Proportionate Share thereof for
the full calendar year by a fraction, the numerator of which is the number of
days during such calendar year when such amounts are payable hereunder, and the
denominator of which is three hundred sixty five (365).  If the Base Year
Operating Charges or Real Estate Taxes are not based on a fully occupied
Building for the entire Base Year, then such amounts shall be increased to
reflect a fully occupied Building for the entire Base Year.  If the Landlord
does not carry earthquake or terrorism insurance during the Base Year and
Landlord later elects to carry earthquake or terrorism insurance, the increase
in Operating Charges for such new insurance coverages shall be included only to
the extent of the increase in cost over the projected costs that would have been
included in Operating Charges for the Base Year if the earthquake or terrorism
insurance, as applicable, had been in effect during the entire Base Year.

 

Section 5.7.                                 Throughout the Lease Term, Landlord
shall maintain books and records with respect to Operating Charges, Real Estate
Taxes, and Janitorial Expenses in accordance with the income tax, accrual basis
of accounting, consistently applied. Within one hundred (100) days after receipt
of a Reconciliation Statement by Tenant, if Tenant disputes the amount of
Additional Rent set forth in the Reconciliation Statement, Tenant or its
authorized representative, which shall be an employee of Tenant or otherwise an
accountant not being compensated on a contingency basis, at Tenant’s cost, may,
after reasonable notice to Landlord and at reasonable times, inspect Landlord’s
records at Landlord’s offices in San Francisco, provided that there is no Event
of Default under this Lease.  In connection with such inspection, Tenant and
Tenant’s agents must agree in advance to abide by Landlord’s reasonable rules
and procedures regarding inspections of Landlord’s records, and shall execute a
commercially reasonable confidentiality agreement regarding such inspection.
Tenant’s failure to dispute the amount of Additional Rent set forth in any
Reconciliation Statement within one hundred (100) days of Tenant’s receipt of
such Reconciliation Statement shall be deemed to be Tenant’s approval of such
Reconciliation Statement and Tenant thereafter waives the right or ability to
dispute the amounts set forth in such Reconciliation Statement.  If after such
inspection, Tenant still disputes such Additional Rent, a certification as to
the proper amount shall be made, at Tenant’s expense, by an independent
certified public accountant (the “Accountant”) selected by Landlord and subject
to Tenant’s reasonable approval; provided that if such certification by the
Accountant determines that the Additional Rent in question was overstated by
more than five percent (5%), then the cost of the Accountant and the cost of
such certification shall be paid for by Landlord and Landlord shall credit
against the Base Rent next due from Tenant the amount of the overpayment made by
Tenant or, if such determination is made after the end of the Term, such
overpayment shall be paid to Tenant within thirty (30) days of the parties’
receipt of such certification.  In no event shall this Section 5.6 be deemed to
allow any review of any Landlord’s records by any subtenant of Tenant.  Tenant
agrees that this Section 5.6 shall be the sole method to be used by Tenant to
dispute the amount of any Additional Rent payable or not payable by Tenant
pursuant to the terms of this Lease, and Tenant hereby waives any other rights
at law or in equity relating thereto.

 

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ARTICLE VI

 

USE OF PREMISES

 

Section 6.1.                                 Tenant shall use and occupy the
Premises for office use and analytical laboratory and production use as
permitted by the Letters of Determination issued by the City and County of San
Francisco Planning Departments Zoning Administrator (the “Letters of
Determination”) regarding the permitted use of the ground and second floors of
the Premises (the “Permitted Use”), and for no other use or purpose.  Tenant
shall not use or occupy the Premises for any unlawful purpose, or in any manner
that will violate the certificate of occupancy for the Premises or the Letters
of Determination, or that will constitute waste, nuisance or unreasonable
annoyance to Landlord or any tenants or users of neighboring buildings. 
Landlord at its expense (subject to reimbursement pursuant to Article V, if and
to the extent permitted thereby and except as set forth in the next sentence)
shall comply with all Laws to the extent the same apply directly to the Building
Structure and Systems and Common Areas.  Except for Landlord’s obligations under
the preceding sentence, Tenant shall comply with all Laws concerning the use,
occupancy and condition of the Premises and all machinery, equipment,
furnishings, fixtures and improvements therein. Tenant shall be responsible for
the cost of compliance with Laws to the extent the same apply directly to the
Building Structure and Systems and Common Areas to the extent such compliance is
required by Tenant’s specific use of the Premises, all in a timely manner at
Tenant’s sole expense.  If any Law requires an occupancy or use permit or
license for the Premises or the operation of the business conducted therein,
then Tenant shall obtain and keep current such permit or license at Tenant’s
expense and shall promptly deliver a copy thereof to Landlord.  Without limiting
the generality of any of the foregoing:  Tenant, at its expense, shall install
and maintain fire extinguishers and other fire protection devices as may be
required with respect to Tenant’s use of the Premises from time to time by any
agency having jurisdiction thereof and/or the underwriters insuring the
Building.  Use of the Premises is subject to all covenants, conditions and
restrictions of record; provided, however, any such instrument shall not (and
could not by its terms) materially adversely affect Tenant’s use or occupancy of
the Premises or materially increase any obligations or decrease any rights of
Tenant hereunder.  Tenant shall not use any space in the Building or the Land
for the sale of goods to the public at large or for the sale at auction of goods
or property of any kind.  Tenant shall not conduct any operations, sales,
promotions, advertising or special events outside the Premises.

 

Section 6.2.                                 Tenant shall reasonably cooperate
with Landlord in any programs in which Landlord may elect to participate
relating to the Building’s (i) energy efficiency, management, and conservation;
(ii) water conservation and management; (iii) environmental standards and
efficiency; (iv) recycling and reduction programs; and/or (v) safety, which
participation may include, without limitation, the Leadership in Energy and
Environmental Design (LEED) program and related Green Building Rating System
promoted by the U.S. Green Building Council.  Tenant shall not waste
electricity, water or air conditioning and agrees to reasonably cooperate with
Landlord to ensure the most effective operation of the Building’s heating and
air conditioning system, including, without limitation, the use of window blinds
to block solar heat load.  To the extent required under the foregoing programs
or otherwise required under applicable Laws, Tenant shall comply with
requirements regarding metering or otherwise measuring the use of utilities and
services, including, without limitation, programs requiring the

 

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disclosure or reporting of the use of any utilities or services.  Tenant shall
also reasonably cooperate and comply with any conservation, sustainability,
recycling, energy efficiency, waste reduction or other programs reasonably
implemented from time to time at the Building, including, without limitation, in
connection with any LEED rating or compliance system, including those currently
coordinated through the U.S. Green Building Council.  Where possible, Tenant
shall use LED, compact fluorescent lighting or similar bulbs for lighting in the
Premises when replacing bulbs in the wall or ceiling fixtures or any portable
indirect lighting.  Tenant shall not do anything or suffer anything to be done
in or about the Premises which will in any way conflict with any law, statute,
ordinance or other governmental rule, regulation or requirement now in force or
which may hereafter be enacted or promulgated and any renewable energy and other
“green” requirements, any LEED or other building rating system level of
certification designated for the Building by Landlord, or as otherwise mandated
under applicable Laws with respect to renewable energy or energy efficiency.
Without limiting the generality of the foregoing, in order to increase energy
performance to reduce on-going utility costs, thus contributing to reduced
environmental impacts due to energy consumption, the Landlord has designed the
Base Building to (a) meet the 0.86W/sq. ft. lighting power density code
requirement (the “Lighting Efficiency Requirement”) and (b) provide base
building HVAC systems with a minimum efficiency rating of 15.2 SEER and 80% AFUE
with economizers (the “HVAC Efficiency Requirement”).  Tenant hereby agrees that
its use of the Premises will at all times meet or exceed the Lighting Efficiency
Requirement and any other lighting power density requirement of the CEC Title
24-2013 Code and any new HVAC systems installed by or on behalf of Tenant will
at all times meet the HVAC Efficiency Requirement.  Notwithstanding anything to
the contrary set forth above in this Section 6.2, except to the extent mandated
by applicable Laws or the Building’s LEED Certification, in no event shall
Tenant be required to comply with any measures that would materially and
adversely affect the conduct of Tenant’s business at the Premises or materially
increase Tenant’s occupancy costs (whether directly or by an increase in
Operating Charges after the Base Year) at the Premises in excess of those
required by applicable Laws and the Building’s LEED Certification.

 

Section 6.3.                                 Tenant hereby acknowledges that
neither the Building nor the Premises has undergone inspection by a Certified
Access Specialist (“CASp”).  Tenant shall not engage any CASp to inspect the
Premises without Landlord’s prior written consent.  Landlord may require that
Tenant select a CASp approved by Landlord for any inspection of the Premises. 
Tenant hereby waives any and all rights it otherwise might now or hereafter have
under Section 1938 of the California Civil Code and Chapter 38 of the San
Francisco Administrative Code.

 

Section 6.4.                                 Tenant shall pay before delinquency
any business, rent or other taxes or fees that are now or hereafter levied,
assessed or imposed upon Tenant’s use or occupancy of the Premises, the conduct
of Tenant’s business at the Premises, or Tenant’s equipment, fixtures,
furnishings, inventory or personal property.  If any such tax or fee is enacted
or altered so that such tax or fee is levied against Landlord or so that
Landlord is responsible for collection or payment thereof, then Tenant shall pay
as Additional Rent the amount of such tax or fee.

 

Section 6.5.                                 (a)                                
Tenant, and each of Tenant’s Agents must strictly comply with Environmental
Laws, as defined below, in connection with any use or storage of Hazardous
Materials on the Premises.  Neither Tenant nor any subtenant of the Premises or
Tenant’s Agents may, without Landlord’s prior written consent, generate, bring
onto, use or store any particular

 

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Hazardous Material on the Premises in excess of amounts reasonably required for
the conduct of Tenant’s (or such subtenant’s) business in the Premises
consistent with the Permitted Use as and when reasonably required.  Landlord
hereby approves the use and storage of the Hazardous Materials described on
Exhibit F in accordance with applicable Environmental Laws.  Tenant hereby
agrees to notify Landlord of any material increases to the amounts set forth on
Exhibit F with respect to any Hazardous Materials.  During the Lease Term,
Tenant shall provide a copy of Tenant’s most recent filing of the business plan
required pursuant to California Health and Safety code, Division 20, Chapter
6.95 with respect to Tenant’s generation, storage or use of any Hazardous
Materials in or on the Premises. Without diminishing Tenant’s obligation to
obtain Landlord’s consent to Tenant’s use of Hazardous Materials on the Premises
where this Lease requires such consent, Tenant represents and warrants that it
shall comply with all Laws applicable to Tenant’s use of Hazardous Materials in,
on or about the Premises, including doing the following:  (i) adhere to all
applicable inventory, emergency planning, reporting and inspection requirements
imposed by Federal, State, County or Municipal Laws, including without
limitation the Emergency Planning and Community Right-to-Know Act, and provide
Landlord a copy of any such inventories, emergency plans, reports, or agency
inspections on an annual basis or as reasonably requested more frequently; (ii)
adhere to all applicable hazardous chemical inventory and emergency planning
laws, (iii) obtain and provide Landlord copies of all necessary permits and
management plans required for the use, storage and handling of Hazardous
Materials by Tenant or Tenant’s Agents on the Premises; (iv) enforce Hazardous
Materials handling and disposal practices consistent with Environmental Laws;
(v) surrender the Premises free from any and all Hazardous Materials generated,
brought, used, stored, created, released (defined below), or disposed of by
Tenant or Tenant’s Agents (other than Landlord or Landlord’s Agents) during the
Lease Term; and (vi) properly close the facility with regard to Hazardous
Materials including the removal or decontamination of any process piping,
mechanical ducting, storage tanks, containers, and trenches that have come into
contact with Hazardous Materials as a result of Tenant’s or Tenant’s Agents’
actions or operations within the Premises to the extent required by
Environmental Laws, and removal or remediation of soil, ground or surface water,
which have come into contact with Hazardous Materials as a result of Tenant’s or
Tenant’s Agents’ actions or operations within the Premises to the extent
required by Environmental Laws.  For purposes of this Section, “release” shall
mean (y) releases in violation of Environmental Laws or (z) other releases to
soil or water.

 

(a)                                 Tenant shall, at its sole cost and expense
and with counsel reasonably acceptable to Landlord, indemnify, defend and hold
harmless Landlord and the Landlord’s Agents from and against any and all claims,
liabilities, obligations, penalties, fines, actions, losses, damages, costs or
expenses (including without limitation reasonable attorneys’ fees) incurred or
suffered arising from generating, bringing, using, storing, creating, releasing
or disposing of Hazardous Materials in or about the Premises by Tenant or
Tenant’s Agents (other than Landlord or Landlord’s Agents) during the Lease
Term, or the violation of any Environmental Laws by Tenant or Tenant’s Agents
(other than Landlord or Landlord’s Agents) during the Lease Term.  This
indemnification, defense and hold harmless obligation applies whether or not the
concentrations of any such Hazardous Materials exceed applicable maximum
contaminant or action levels or any governmental agency has issued a cleanup
order.  Tenant’s indemnification, defense, and hold harmless obligations
include, without limitation, the following:  (i) claims, liabilities, costs or
expenses resulting from or based upon administrative, judicial (civil or
criminal) or other action, legal or equitable, brought by any private or public

 

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person under present or future Laws, including Environmental Laws; (ii) claims,
liabilities, costs or expenses pertaining to the assessment and identification,
monitoring, cleanup, containment, or removal of Hazardous Materials from soils,
riverbeds or aquifers including the provision of an alternative public drinking
water source; (iii) losses attributable to diminution in the value of the
Premises, Buildings, or Project; (iv) loss or restriction of use of rentable
space in the Buildings or Project; (v) adverse effect on the marketing of any
space in the Buildings or Project, and (vi) all other liabilities, obligations,
penalties, fines, claims, actions (including remedial or enforcement actions of
any kind and administrative or judicial proceedings, orders or judgments),
damages(including consequential damages), and costs (including attorney,
consultant, and expert fees and expenses) resulting from the release of
Hazardous Materials at the Premises by Tenant or Tenant’s Agents or the
violation of Environmental Laws at the Premises by Tenant or Tenant’s Agents. 
Notwithstanding the foregoing, nothing herein shall be construed as requiring
Tenant to indemnify or clean up or remediate any Hazardous Materials existing
in, on or about the Premises which have migrated onto the Premises from
neighboring property and Tenant did not cause the release on the neighboring
property.  This Section shall survive the expiration or termination of this
Lease.

 

(b)                                 If, during the Lease Term (including any
extensions), Tenant becomes aware of (i) any actual or threatened release of any
Hazardous Materials on, under or about the Premises or (ii) any inquiry,
investigation, proceeding, claim, notice or order by any private or public
person or entity regarding the presence of Hazardous Materials on, under or
about the Premises, including without limitation alleged violations of
Environmental Laws by Tenant or Tenant’s Agents, Tenant shall give Landlord
written notice of the release or investigation within five (5) business days
after learning of it and shall simultaneously and thereafter furnish Landlord
with copies of any claims, notices of violation, reports, or other writings
received by Tenant concerning the release or investigation.  In the event of an
actual release of Hazardous Materials in violation of Environmental Laws, Tenant
shall also give Landlord immediate verbal notice of such release.  In the event
of any release on or into the Premises or into the soil or ground water under
the Premises or the Buildings of any Hazardous Materials used, treated, stored
or disposed of by Tenant or Tenant’s Agents (other than Landlord or Landlord’s
Agents) onto the Premises during the Lease Term in violation of Environmental
Laws (excluding any Hazardous Materials that may have migrated onto the Premises
from a neighboring property and Tenant did not cause the release on the
neighboring property), Tenant agrees to comply, at its sole cost, with all laws,
regulations, ordinances and orders of any federal, state or local agency
relating to the monitoring or remediation of such Hazardous Materials.  In the
event of any such release of Hazardous Materials Tenant shall immediately give
verbal and follow-up written notice of the release to Landlord, and Tenant
agrees to meet and confer with Landlord and any lender designated by Landlord to
attempt to eliminate and mitigate any financial exposure to such lender and
resultant exposure to Landlord under California Code of Civil Procedure Section
736(b) as a result of such release, and promptly to take reasonable monitoring,
cleanup and remedial steps given, inter alia, the historical uses to which the
Premises has and continues to be used, the risks to public health posed by the
release, the then available technology and the costs of remediation, cleanup and
monitoring, consistent with acceptable customary practices for the type and
severity of such contamination and all applicable Laws.  Nothing in the
preceding sentence shall eliminate, modify or reduce the obligation of Tenant
under this Lease to indemnify, defend and hold Landlord and Landlord’s Agents
harmless.  Tenant shall provide Landlord prompt written notice of Tenant’s
monitoring, cleanup and remedial steps.  In the

 

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absence of an order of any federal, state or local governmental or
quasi-governmental agency relating to the cleanup, remediation or other response
action required by applicable law, any dispute arising between Landlord and
Tenant concerning Tenant’s obligation to Landlord under this Section concerning
the level, method, and manner of cleanup, remediation or response action
required in connection with such a release of Hazardous Materials shall be
resolved by mediation and/or arbitration pursuant to this Lease.

 

(c)                                  In the event of any release on, under or
about the Premises of any Hazardous Materials generated, brought onto, used,
stored, created or disposed of by Tenant or Tenant’s Agents (other than Landlord
or Landlord’s Agents) during the Lease Term in violation of Environmental Laws,
Tenant shall, at its sole cost, promptly take all necessary and appropriate
actions required by all applicable Environmental Laws, to remove or remediate
such Hazardous Materials, whether or not any governmental agency has issued a
cleanup order, so as to return the Premises to the condition that existed before
the introduction of such Hazardous Materials.  Tenant shall obtain Landlord’s
written consent prior to implementing any proposed removal or remedial action;
provided, however, that Tenant shall be entitled to respond immediately to an
emergency without first obtaining Landlord’s written consent.  Nothing in the
preceding sentence shall in any way eliminate, modify or reduce the obligation
of Tenant under this Lease to indemnify, defend and hold Landlord and Landlord’s
Agents harmless.

 

(d)                                 Landlord and its agents and consultants
shall have the right to inspect, investigate, sample and monitor the Premises,
including any air, soil, water, ground water, or to conduct any other sampling
or testing, digging, drilling or analysis, to determine whether Tenant is
complying with the terms of this Section.  Landlord shall use commercially
reasonable efforts to not interfere with Tenant’s operations of its business or
use of the Premises in performing such testing.  If Landlord discovers that
Tenant is not in compliance with Environmental Laws, any costs incurred by
Landlord in determining Tenant’s non- compliance, including attorneys’,
consultants’ and experts’ fees, shall be due and payable by Tenant to Landlord
within thirty (30) days following Landlord’s written demand and receipt of any
and all documents relating to Landlord’s claimed costs and fees.  Specifically,
should Tenant decide to seek registration as a Large Quantity Generator of
Hazardous Waste, as defined under 40 Code of Federal Regulations sec. 262, et
seq., among other regulations, Tenant shall inform Landlord no later than thirty
(30) days prior to submission of application or registration documents to a
government agency. Landlord and its agents and consultants shall have the right
to inspect and audit all documents, equipment, protocols, plans, or procedures
associated with Tenant’s anticipated registration as a Large Quantity Generator.

 

(e)                                  Prior to the Effective Date, Landlord shall
have delivered to Tenant copies of all environmental reports on the Premises in
Landlord’s possession.  Landlord shall indemnify, defend and hold Tenant
harmless from any and all claims, judgments, damages, penalties, fines, costs,
liabilities, expense or losses (including, without limitation, sums paid in
settlement of claims, investigation of site conditions, or any cleanup, removal
or restoration work required by any federal, state or local governmental agency,
attorney’s fees, consultant fees and expert fees) which arise as a result of or
in connection with the existence, release or discharge of Hazardous Materials
on, in, under or about the Premises prior to the Effective Date or by Landlord
or a Landlord Party.  Landlord acknowledges that nothing herein shall obligate
Tenant to remove or remediate any Hazardous Materials that exist in, on, under
or about the Premises as

 

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of the Effective Date, or that subsequently migrate onto or are introduced onto
the Premises through no fault or action of Tenant.

 

(f)                                   Tenant shall not use or permit the
Premises, or any part thereof, to be used for any purpose other than that for
which the Premises are hereby leased; and no use of the Premises shall be made
or permitted, nor acts done, which will cause an increase in premiums (unless,
with Landlord’s approval, Tenant pays 100% of such increased premium) or a
cancellation of any insurance policy covering the Premises or any part thereof,
nor shall Tenant sell or permit to be sold, kept, or used in or about the
Premises, any article prohibited by the required insurance policies.  Tenant
shall, at its sole cost, comply with all requirements of any insurance company
or organization necessary for the maintenance of policies covering the Premises
and appurtenances.

 

Should Tenant seek registration as a Large Quantity Generator of Hazardous
Waste, as defined under 40 Code of Federal Regulations sec. 262, et seq., among
other regulations, Landlord shall determine in good faith whether it will
require Tenant, at its sole cost, to insure its activities involving the use of
Hazardous Materials under a pollution legal liability insurance policy.  Should
Landlord determine such an insurance policy is necessary, Tenant and Landlord
shall negotiate in good faith, with the assistance of an appropriately licensed
and experienced insurance broker, what the appropriate limits, scope, duration,
and operation of coverage for the policy shall be.  Any pollution legal
liability insurance provided by Tenant under this paragraph shall be carried in
favor of Tenant and include Landlord as Loss Payee as their respective interests
may appear, and shall provide that any loss shall be adjusted with and be
payable to both Landlord and Tenant.  The policy shall name Landlord, Landlord’s
affiliates and property manager and Landlord’s lenders as additional insureds on
Tenant’s liability policies and shall name Landlord and Landlord’s lenders as
loss payees on its property insurance.  Tenant shall deliver a copy of the
certificates of insurance to Landlord evidencing the required coverage before
commencing operations as a Large Quantity Generator of Hazardous Waste on the
Premises and shall deliver renewal certificates to Landlord before the
expiration of any such policies.  Any insurance policies required under this
Section shall provide that the insurer shall endeavor to give thirty (30) days’
prior written notice to Landlord of any cancellation or termination of such
policies, and if such notice cannot be provided by the insurer, Tenant shall
provide such notice to Landlord.  Notwithstanding the foregoing, Landlord
retains the right to request that Tenant provide other forms of insurance which
may be reasonably required to cover future risks relating to Hazardous
Materials.  In no event shall the types or limits of any insurance policies
maintained or required to be maintained under this Lease by Tenant or its
contractors limit Tenant’s liability under this Lease, including without
limitation Tenant’s indemnification, defense and hold harmless obligations.

 

ARTICLE VII

 

ASSIGNMENT AND SUBLETTING

 

Section 7.1.                                 Transfers.

 

(a)  Except as expressly provided in Section 7.9 hereof, Tenant shall not,
directly or indirectly, assign, mortgage, pledge or otherwise transfer,
voluntarily or involuntarily, this Lease

 

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or any interest herein or sublet (which term without limitation, shall include
granting of concessions, licenses, and the like) or allow any other person or
entity to occupy the whole or any part of the Premises (each, a “Transfer”),
without, in each instance, having first received the express consent of
Landlord, not to be unreasonably withheld, conditioned or delayed.  Except as
provided in Section 7.9, any Transfer by Tenant without Landlord’s express
consent shall be invalid, void and of no force or effect.  This prohibition
includes, without limitation, any assignment, subletting, or other transfer
which would occur by operation of law, merger, consolidation, reorganization,
acquisition, transfer, or other change of Tenant’s corporate, ownership, and/or
proprietary structure, including, without limitation, a change in the partners
of any partnership or a change in the members and/or managers of any limited
liability company.

 

(b)                                 Subject to the provisions of Section 7.9,
below, if Tenant is a corporation, the transfer (by one or more transfers) of a
majority of the stock of Tenant shall be deemed a voluntary assignment of this
Lease and a Transfer.  For purposes of this Article VII, the term “Transfer”
shall be deemed to include the issuance of new stock or a pledge or other
transfer of issued or outstanding stock, in each case which results in a
majority of the stock of Tenant being held by a person or entity that does not
hold a majority of the stock of Tenant on the date hereof.  If Tenant is a
partnership, the transfer (by one or more transfers) of a majority interest in
the partnership shall be deemed a Transfer of this Lease.  If Tenant is a
limited liability company, trust, or any other legal entity, the transfer (by
one or more transfers) of a majority of the beneficial ownership interests in,
or the right(s) to manage and/or direct the operations of, such entity, however
characterized, shall be deemed a Transfer of this Lease.

 

(c)                                  In any case where Landlord shall consent to
a Transfer or if a Transfer is permitted without Landlord’s consent hereunder,
the Tenant originally named herein shall remain fully liable for all obligations
of Tenant hereunder, including, without limitation, the obligation to pay the
Rent provided under this Lease and such liability shall not be affected in any
way by any future amendment, modification, or extension of this Lease or any
further Transfer and Tenant hereby irrevocably consents to any and all such
transactions and no amendment of this Lease or waiver of, or consent to or
departure from, any of the terms and conditions of this Lease shall constitute a
novation or otherwise release any predecessor tenants.  It shall be a condition
of the validity of any approved assignment that the assignee agree directly with
Landlord, in form reasonably satisfactory to Landlord, to be bound by all
obligations of Tenant hereunder jointly and severally with the Tenant originally
named herein accruing from and after the date of the Transfer, including,
without limitation, the obligation to pay all Rent and other amounts provided
for under this Lease and the covenant against further assignment or other
transfer or subletting.  It shall be a condition of the validity of any approved
subletting that the sublessee agree, in form reasonably satisfactory to
Landlord, not to violate any provisions of this Lease; provided, Landlord agrees
to reasonably consider a sublessee’s request to modify its obligation with
respect to insurance pursuant to Article XIII.  If the Premises or any part
thereof be sublet or occupied by anyone other than Tenant, Landlord may at any
time and from time to time while an Event of Default is continuing, collect Rent
and other charges from the assignee, subtenant or occupant, and apply the net
amount collected to the Rent herein reserved.

 

Section 7.2.                                 Landlord’s consent to any Transfer
shall not relieve Tenant from the obligation to obtain Landlord’s express
consent to any further assignment or subletting.  In no event shall any approved
subtenant enter into any Transfer, or otherwise suffer or permit any

 

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portion of the Premises to be used or occupied by others without Landlord’s
prior written consent, which may be granted or withheld in Landlord’s sole and
absolute discretion.

 

Except where Landlord shall have exercised its option to terminate this Lease or
release Tenant from a portion of the Premises under Section 7.4, below, no
transfer of any interest in this Lease, and no execution and delivery of any
instrument of assumption pursuant to Section 7.1 hereof, shall in any way affect
or reduce any of the obligations of Tenant under this Lease, but this Lease and
all of the obligations of Tenant under this Lease shall continue in full force
and effect as the obligations of a principal (and not as the obligations of a
guarantor or surety).  From and after the effective date of an assignment of
this Lease, the obligations of each such transferee and of the original Tenant
named as such in this Lease to fulfill all of the obligations of Tenant under
this Lease shall be joint and several.  Each violation of any of the covenants,
agreements, terms or conditions of this Lease, whether by act or omission, by
any transferee, shall constitute a violation thereof by Tenant after notice and
expiration of the cure period, if any, set forth in the definition of “Event of
Default” in Rider 1 of this Lease.

 

Section 7.3.                                 If Tenant desires to enter into a
Transfer, then Tenant shall give notice thereof to Landlord, which notice shall
be accompanied by (a) the date Tenant desires the Transfer to be effective, (b)
the material business terms of such proposed Transfer, and (c) in the case of a
sublease, a description of the portion of the Premises to be sublet.  Such
notice shall also include (i) a true and complete statement reasonably detailing
the identity of the proposed assignee or subtenant and any entities and persons
who own, control or direct the proposed transferee, the nature of its business,
and its proposed use of the Premises, (ii) current financial information with
respect to the proposed assignee or subtenant, including, without limitation,
its most recent financial statements, and (iii) such other information Landlord
may reasonably request, which additional information shall be requested by
Landlord within ten (10) business days following the date Tenant delivers the
initial notice to Landlord and any supplemental information provided by Tenant
at Landlord’s request).

 

Section 7.4.                                 Except with respect to a Permitted
Transfer (as defined below), if such notice relates to a sublease of all or
substantially all of the Premises for all or substantially all of the balance of
the Lease Term, such notice shall be deemed an offer from Tenant to Landlord
whereby Landlord (or Landlord’s designee) shall be granted the right, at
Landlord’s option, to terminate this Lease, upon the terms and conditions
hereinafter set forth.  Such option may be exercised by notice from Landlord to
Tenant within forty-five (45) days after Landlord’s receipt of Tenant’s notice. 
If Landlord exercises its option to terminate this Lease pursuant to the
foregoing provisions, then (a) this Lease shall end and expire on the date that
such assignment or sublease was to commence (as if such date were the expiration
date of the term hereof), (b) Rent shall be apportioned, paid or refunded as of
such date, (c) Tenant, upon Landlord’s request, shall enter into an agreement
confirming such termination, and (d) Landlord shall be free to lease the
Premises or any part thereof, to any person or persons, including, without
limitation, to Tenant’s prospective assignee or subtenant.

 

Section 7.5.                                 If Landlord shall not exercise
Landlord’s option to terminate this Lease as aforesaid, and provided that there
is no Event of Default hereunder, then, subject to the following provisions,
Landlord’s consent to the proposed Transfer shall not be unreasonably withheld
or conditioned, and shall be granted or withheld within fifteen (15) business
days following the date

 

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upon which Landlord receives a ‘complete’ transfer notice from Tenant (i.e., a
notice that includes all documents and information required pursuant to Section
7.3 above).  Tenant shall, within thirty (30) days after written request by
Landlord, reimburse Landlord for all actual, out-of-pocket expenses incurred by
Landlord in connection with such Transfer including, without limitation, all
legal fees and expenses reasonably incurred by Landlord in connection with the
granting of any requested consent.

 

Section 7.6.                                 In no event shall Landlord be
considered to have withheld its consent unreasonably to any proposed Transfer
if, in Landlord’s reasonable judgment:

 

(i)                                     the proposed transferee is not a
reputable person or entity of good character suitable for a building comparable
to the Building and with sufficient financial means to perform all of its
obligations under this Lease or the sublease, as the case may be, and/or
Landlord has not been furnished with reasonable proof thereof;

 

(ii)                                  the proposed transferee may, in Landlord’s
reasonable determination, use the Premises for (a) a use which does not comply
with the conditions and restrictions set forth in this Lease, or (b) a use which
could overburden the Premises, the Building or the Common Areas, or (c) a use
which could cause an increase in the insurance premiums payable with respect to
the Property or in the Operating Charges, unless Tenant agrees to pay for such
increased costs;

 

(iii)                               the proposed transferee is a person or
entity (or affiliate of a person or entity) with whom Landlord or Landlord’s
agent is then or has been within the prior three (3) months negotiating in
connection with the rental of space in the Building; for purposes of this
subsection (iii) “negotiating” shall be deemed to mean an exchange of written
proposals between Landlord and such proposed transferee;

 

(iv)                              the form of the proposed agreement of Transfer
is not reasonably satisfactory to Landlord;

 

(v)                                 after such Transfer, there shall be more
than two (2) subtenants of the Premises;

 

(vi)                              the proposed transferee shall be entitled,
directly or indirectly, to diplomatic or sovereign immunity, regardless of
whether the proposed transferee agrees to waive such diplomatic or sovereign
immunity, and/or shall not be subject to the service of process in, and the
jurisdiction of the courts of, the State of California;

 

(vii)                           The proposed transferee shall be an employment
agency or a domestic or foreign governmental or quasi-governmental entity or
agency;

 

(viii)                        any mortgagee whose consent to such Transfer is
required fails to consent thereto;

 

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(ix)                              a lawsuit is then pending or threatened
between Landlord or any affiliate of Landlord or any Landlord Party and the
proposed transferee (or affiliates thereof); or

 

(x)                                 following the Transfer, any portion of the
second floor of the Premises will not be used as office space.

 

If an Event of Default shall occur at any time prior to the effective date of an
approved assignment or subletting, then Landlord’s consent thereto shall be
immediately deemed revoked without further notice to Tenant, and such consent
shall be void and without force and effect, and such assignment or subletting
shall constitute a further Default of Tenant hereunder.

 

Section 7.7.                                 Each sublease shall be subject and
subordinate to this Lease and to the matters that this Lease is or shall be
subordinate, it being the intention of Landlord and Tenant that Tenant shall
assume and be liable to Landlord for any and all acts and omissions of all
subtenants and anyone claiming under or through any subtenants which, if
performed or omitted by Tenant, would be a default under this Lease.  Each
sublease shall terminate upon the expiration or termination of this Lease,
provided that if this Lease shall expire or terminate during the term of any
sublease for any reason, or if Tenant shall surrender this Lease to Landlord
during the term of any sublease, Landlord, in its sole discretion, upon written
notice given to Tenant and the subtenant not more than thirty (30) days after
the effective date of such expiration, termination or surrender, without any
additional or further agreement of any kind on the part of subtenant, may elect
to continue such sublease with the same force and effect as if Landlord as
lessor and subtenant as lessee had entered into a direct lease as of such
effective date for a term equal to the then unexpired term of such sublease and
containing the same terms and conditions as those contained in the sublease,
and, if Landlord shall so elect, the subtenant shall attorn to Landlord and
Landlord and the subtenant shall thereupon have the same rights, obligations and
remedies thereunder as were had by Tenant and the subtenant thereunder prior to
such effective date, respectively, except that in no event shall Landlord be (a)
liable for any act or omission by Tenant, or (b) subject to any offsets or
defenses which the subtenant had or might have against Tenant, (c) bound by any
rent or additional rent or other payment paid by the subtenant to Tenant in
advance or (d) bound by any amendment to the Sublease not consented to by
Landlord.

 

Section 7.8.                                 If Tenant shall enter into any
Transfer consented to by Landlord, Tenant shall, within sixty (60) days after
such Transfer, deliver to Landlord a complete list of Tenant’s reasonable
third-party brokerage fees, legal fees and architectural fees paid or to be paid
in connection with such transaction, together with a list of all of Tenant’s
personal property to be transferred to such assignee or sublessee.  Tenant shall
deliver to Landlord evidence of the payment of such fees promptly after the same
are paid.  In consideration of such assignment or subletting, Tenant shall pay
to Landlord:

 

(a)                                 In the case of an assignment of this Lease,
on the effective date of the assignment, an amount equal to 50% of all sums and
other consideration paid to Tenant by the assignee for or by reason of such
Lease assignment (including sums paid for the sale or rental of Tenant’s
personal property, less, in the case of a sale thereof, the then fair market
value of such personal property, as reasonably determined by Landlord) after
first

 

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deducting (i) Tenant’s reasonable third-party brokerage fees, legal fees and
architectural fees in connection with such assignment, and (ii) any free base
rent reasonably provided to the transferee in connection with the Transfer
(provided that such free rent shall be deducted only to the extent the same is
included in the calculation of total consideration payable by such transferee
and isn’t otherwise recovered in the rent otherwise payable by such transferee
(collectively, “Tenant’s Transfer Costs”); or

 

(b)                                 In the case of a sublease, 50% of the excess
of the rent and other sums payable under the sublease to Tenant by the subtenant
(together with any sums paid for the sale or rental of Tenant’s personal
property, less, in the case of the sale of such personal property, the then fair
market value thereof, as reasonably determined by Landlord) over the Base Rent
and other sums payable under this Lease (appropriately pro-rated for any
sublease of less than the entire Premises) and Tenant’s Transfer Costs in
connection with such sublease amortized ratably over the term of such sublease. 
The sums payable under this clause shall be paid by Tenant to Landlord on a
monthly basis together with Tenant’s monthly installment of Base Rent.

 

Section 7.9.                                 The provisions of this Article VII
shall not apply to the transfer of shares of stock of Tenant or an Affiliate of
Tenant if and so long as the voting stock of Tenant or such Affiliate of Tenant
is publicly traded on a nationally recognized stock exchange.  Further, the
provisions of this Article VII (aside from Section 7.2 and this Section 7.9)
shall not apply to any transaction with a corporation into or with which Tenant
is merged or consolidated or to which substantially all of Tenant’s assets are
transferred, or to any other transactions with any Affiliate of Tenant so long
as (a) there is no Event of Default under this Lease as of the date of the
transfer, (b) such transfer was made for a legitimate independent business
purpose and not for the purpose of transferring this Lease, (c) the successor to
Tenant has a tangible net worth computed in accordance with generally accepted
accounting principles at least equal to the tangible net worth of Tenant, as so
computed, immediately prior to such merger, consolidation or transfer and proof
satisfactory to Landlord of such net worth is delivered to Landlord at least ten
(10) days prior to the effective date of any such transaction (unless prohibited
by law in which event such proof shall be delivered as soon as legally
permitted, but in all events not later than three (3) Business Days after such
transfer), (d) there will be no violation of the last paragraph of Section 7.6,
and (e) the assignee or surviving entity (if not Tenant) agrees to assume the
obligations of Tenant and be bound by the provisions of this Lease pursuant to
documents in a form approved in advance by Landlord, (f) Landlord receives
notice of such transfer at least thirty (30) days prior to the effective date of
such transfer (unless prohibited by law in which event such notice shall be
delivered as soon as legally permitted, but in all events not later than three
(3) Business Days after such transfer), together with evidence that the
conditions of this Section 7.9 have been satisfied and (g) following such
transfer the entire second floor of the Premises will continue to be used as
office space.  A Transfer permitted under this Section 7.9 without the consent
of Landlord is referred to herein as a “Permitted Transfer” and the tenant
following such Permitted Transfer is referred to herein as a “Permitted
Transferee.”  Tenant shall, within thirty (30) days after written request by
Landlord, reimburse Landlord for all actual, out-of-pocket expenses incurred by
Landlord in connection with such Permitted Transfers including, without
limitation, all legal fees and expenses reasonably incurred by Landlord in
connection therewith.

 

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Section 7.10.                          The acceptance by Landlord of the payment
of Rent, Additional Rent or other charges from a transferee shall not be
considered to be a consent by Landlord to any Transfer, nor shall the same
constitute a waiver of any right or remedy of Landlord.  The listing of any name
other than that of Tenant on the doors of the Premises or elsewhere shall not
vest any right or interest in this Lease or in the Premises, nor be deemed to
constitute Landlord’s consent to any Transfer or to the use or occupancy thereof
by others.  Any such listing shall constitute a privilege revocable in
Landlord’s discretion by notice to Tenant.

 

Section 7.11.                          Notwithstanding anything to the contrary
in this Lease, if Tenant or any proposed transferee claims that Landlord has
unreasonably withheld or delayed its consent or otherwise has breached or acted
unreasonably under this under this Article VII, the sole remedies shall be a
suit for contract damages (other than damages for injury to, or interference
with, Tenant’s business including, without limitation, loss of profits, however
occurring) or a declaratory judgment and an injunction for the relief sought,
and, except as set forth in this Section 7.11 above, Tenant hereby waives the
provisions of Section 1995.310 of the California Civil Code, or any successor
statute, and all other remedies, including, without limitation, any right at law
or equity to terminate this Lease, on its own behalf and, to the extent
permitted under all applicable Laws, on behalf of the proposed transferee.

 

ARTICLE VIII

 

MAINTENANCE AND REPAIRS

 

Section 8.1.                                 Tenant, at all times during the
Lease Term, at Tenant’s sole cost and expense, shall promptly make all repairs
and replacements, and perform all maintenance, in and to the Premises to keep
the Premises in good operating condition and repair, in a clean, safe and
tenantable condition, well-ventilated and moisture controlled, and otherwise in
accordance with all Laws and the requirements of this Lease.  Tenant shall
likewise maintain all fixtures, furnishings and equipment located in, or
exclusively serving, the Premises and make all required repairs and replacements
thereto.  Tenant shall also maintain, repair and replace, at Tenant’s sole cost
and expense, the Tenant Items and shall keep in force customary maintenance and
service contracts therefor.  Tenant shall not be required to repair the Building
Structure and Systems except that Tenant shall be responsible for the increased
costs to repair or maintain or increased frequency of replacement of any
Building Structure or Systems to the extent caused by Tenant’s “excessive use”
of such Building Structure and Systems.  For the purposes hereof, to the extent
Tenant uses Building Structure and Systems serving the Premises for more than
sixty (60) hours per week or at levels higher than those anticipated for the
Building Structure or Systems, the same shall constitute “excessive use” of the
Building Structure and Systems.  Tenant agrees that it shall be responsible for
any and all additional costs incurred by Landlord as a result of such excessive
use of the Building Structure or Systems by Tenant, including without
limitation, the increased or accelerated cost of repairing and/or replacing any
portion of such Building Structure and Systems, but which shall exclude the use
of any systems installed by Tenant at its cost as a Special Tenant Improvement
(as defined in the Work Agreement).

 

Tenant shall give Landlord prompt written notice of any defects or damage to the
structure of, or equipment or fixtures in, the Building or any part thereof, or
any mold or moisture condition, of which Tenant has knowledge.  Tenant shall
suffer no waste or injury to

 

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any part of the Premises, and shall, at the expiration or earlier termination of
the Lease Term, surrender the Premises in the condition that Tenant is required
to maintain the Premises pursuant to this Article VIII, except for (a) ordinary
wear and tear, (b) damage caused by the gross negligence or willful misconduct
of Landlord or any affiliate of Landlord, Landlord’s managing agents for the
Building, or any of their Agents, or (c) damage that Landlord is required to
repair, and as otherwise provided in this Article VIII and Article XVII.  Except
as otherwise provided in Section 13.4 and Article XVII, all injury, breakage and
damage to the Premises or to any part of the Building or the Land caused by any
act or omission of Tenant or any Agent of Tenant, shall be repaired by and at
Tenant’s expense, except that if either an emergency condition exists or the
Lease Term has expired or Tenant fails to commence and diligently prosecute to
completion repair of any such injury, breakage or damage within a reasonable
period (not to exceed ten (10) days) following Tenant’s receipt of notice from
Landlord, then Landlord shall have the right at Landlord’s option to make any
such repair and to charge Tenant for all costs and expenses incurred in
connection therewith.

 

Section 8.2.                                 All light bulbs and tubes for the
Premises shall be provided and installed at Tenant’s expense; provided that if
Tenant elects to supply the bulbs or tubes to Landlord, then Landlord shall
provide the labor involved for such replacement at Tenant’s expense.

 

Section 8.3.                                 Except as otherwise provided in
this Lease and subject to normal wear and tear, Landlord at its expense (subject
to reimbursement pursuant to Article V if and to the extent permitted thereby)
shall keep the Common Areas and the Building Structure and Systems, clean and in
good operating and watertight condition and, promptly after becoming aware of
any item needing repair or replacement, will make such repair or replacement. 
In the event of an emergency of which Landlord has been notified, Landlord shall
take such action as is reasonably necessary as quickly as practicable to prevent
further damage to property and personal injury and shall thereafter repair any
damage promptly pursuant to this Section 8.3, subject to the provisions of
Article XVII.  The manner in which the Common Areas are maintained shall be
consistent with the manner in which common areas of comparable buildings are
maintained and the costs associated therewith shall be included in Operating
Charges.  Notwithstanding any of the foregoing to the contrary:  (a) maintenance
and repair of all Tenant Items shall be the sole responsibility of Tenant and
shall be deemed not to be a part of the Building Structure and Systems; and (b)
Landlord shall have no obligation to make any repairs whatsoever brought about
by any act or omission of Tenant or any Agent of Tenant.  Tenant hereby waives
any and all rights under and benefits of Section 1932, Subdivision 1 and
Sections 1941 and 1942 of the California Civil Code or under any similar law,
statute, or ordinance now or hereafter in effect.

 

ARTICLE IX

 

BASE BUILDING WORK, TENANT IMPROVEMENTS AND ALTERATIONS

 

Section 9.1.                                 The Base Building Work shall be
constructed at Landlord’s sole cost and expense in accordance with the
provisions of the Base Building Exhibit attached as Exhibit 1.7 and the Work
Agreement.  Landlord shall construct the Base Building Work in a good and
workmanlike manner, using new materials of first quality.  On the Delivery Date,
the roof, structure, exterior windows and skylights (including seals), and
Building Structure and Systems installed by Landlord shall be in good operating
condition and repair, in compliance with

 

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applicable Laws, and with the roof and skylights in watertight condition.  In
addition, on the Delivery Date, the exterior doors of the Building, the path of
travel into the Building and all areas of the Property outside of the Building
shall comply with the ADA.  Landlord shall warrant the same for a period of one
(1) year following Substantial Completion of the Base Building Work.  Landlord
shall obtain all local licenses, permits and approvals (whether governmental or
non-governmental) required to perform the construction of the Base Building Work
from the applicable local and state authorities.  Notwithstanding anything
contained in this Lease to the contrary, it shall not be Landlord’s
responsibility to obtain the approval of such authorities or any other required
federal, state and/or local licenses, permits and approvals (governmental or
private) required to operate and use the Premises for the Permitted Use except
to the extent any such licenses, permits or approvals are required from the
applicable authorities to sign off on construction of the Base Building Work for
general occupancy of the Premises and not related to Tenant’s particular use of
the Premises.  Landlord will use commercially reasonable efforts and due
diligence to achieve Substantial Completion of the Base Building Work on or
before the Anticipated Delivery Date.

 

Section 9.2.                                 When the Base Building Work is
substantially complete, Landlord shall so notify Tenant in writing (such notice,
the “Completion Notice”) and shall tender full possession of the Premises to
Tenant, subject to Landlord’s right for it and its contractors to enter the
Premises in order to complete the Base Building Work.  As used with respect to
the Base Building Work, “Substantial Completion” and phrases of a similar nature
shall mean the Base Building Work shall have been substantially completed in
accordance with Section 9.1 and this Section 9.2 and Exhibit 1.7, as determined
by Landlord and Landlord’s architect and Landlord has obtained signoff on the
job card for the Base Building Work from the Department of Building Inspection. 
Landlord shall notify Tenant of Landlord’s determination that the Base Building
Work is Substantially Complete and Landlord and Tenant shall set a mutually
convenient time for Landlord, Landlord’s architect and Tenant and Tenant’s
Architect to develop an agreed upon list of punch list items to be completed by
Landlord.  Landlord shall use commercially reasonable efforts to complete the
punchlist items within thirty (30) days after such walk through, subject to
Force Majeure and delays caused by Tenant or Tenant’s Agents.  Notwithstanding
the foregoing, Landlord’s failure to have any portion of Base Building Work done
by the Anticipated Delivery Date, for any reason, shall not give rise to any
liability of Landlord hereunder, shall not constitute a Landlord’s default and
shall not affect the validity of this Lease, except as expressly set forth
herein to the contrary.

 

Section 9.3.                                 Tenant’s acceptance of the Premises
shall not be deemed a waiver of Tenant’s right to have defects in the Base
Building Work repaired at no cost to Tenant within the first twelve (12) months
following Substantial Completion of the Base Building Work (the “Corrective Work
Period Expiration Date”).  If Tenant shall discover any such defect prior to the
Corrective Work Period Expiration Date, Tenant shall give notice to Landlord of
the same and Landlord shall cause Landlord’s contractor to remedy, repair or
replace any such defects identified by Tenant, such action to occur as soon as
practicable during normal working hours and so as to avoid any unreasonable
interruption of the construction of the Tenant Improvements or the operation of
Tenant’s business, as the case may be.  Tenant shall be deemed to have waived
any claim under this Lease for correction or cure of any “defects” in the Base
Building Work on the Corrective Work Period Expiration Date if Tenant has not
given notice of such defect to Landlord by such date.  For the purposes of this
Lease, “defects” shall mean defects,

 

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deficiencies, and/or non-compliance with the provisions of Exhibit 1.7 in the
construction of the Base Building Work.

 

Section 9.4.                                 In addition to Landlord’s
obligations as set forth above, in the event that Tenant gives Landlord notice
of, or Landlord otherwise obtains actual knowledge of, one or more defects in
the design or construction of the Base Building Work which Tenant shall
otherwise be obligated to maintain and repair in accordance with the provisions
of this Lease, from time to time during the initial Lease Term, after the
Corrective Work Period Expiration Date, Landlord shall meet with Tenant (a
“3rd Party Warranty Review Meeting”) to review such claimed defect and the
underlying facts and circumstances in order to determine whether such defect
reasonably appears to be covered by one or more written third party warranties
or guarantees (a “3rd Party Warranty”).  In the event that Landlord determines
that such defect may reasonably be covered by any such 3rd Party Warranty,
(Landlord being obligated to make a determination one way or the other and to
advise Tenant of such determination in writing no later than five (5) business
days after the relevant 3rd Party Warranty Review Meeting, failing which, such
event shall be deemed a Landlord Non-Coverage Determination (as defined below)),
Landlord shall, at Landlord’s sole cost and expense, promptly commence and
diligently and continuously prosecute to completion one or more claims against
the relevant third party(ies) in order to cause such party(ies) to correct the
defect.  Notwithstanding the foregoing, if (i) Landlord reasonably determines,
whether in connection with or after the relevant 3rd Party Warranty Review
Meeting, but subject to the timing requirements set forth in immediately
preceding sentence, that the subject defect(s) are not reasonably likely to be
covered by a 3rd Party Warranty (a “Landlord Non-Coverage Determination”) or
(ii) following Landlord’s reasonable determination that such defect(s) are
reasonably likely to be covered by a 3rd Party Warranty, Landlord fails to
promptly commence and diligently and continuously prosecute such claim(s) as
required pursuant to this subparagraph (a “Landlord Warranty Prosecution
Failure”) within five (5) business days following notice of such failure from
Tenant (provided that Tenant need not give such notice more than one time with
respect to any Landlord Warranty Prosecution Failure arising out of a particular
3rd Party Warranty claim), then Tenant shall have the exclusive right, but not
the obligation, to pursue such claim(s) to the extent such condition affects the
Premises pursuant to an assignment of rights (but not of any duties or
obligations) as described below, subject to the terms and conditions of the
applicable 3rd Party Warranties. In the event Tenant’s right to prosecute such
claims arises out of a Landlord Non-Coverage Determination, Tenant’s prosecution
of such claim(s), if and to the extent it elects to do so and from and then only
after the date of any such election, shall be undertaken at Tenant’s sole cost
and expense, provided, however, if Tenant is ultimately successful in the
prosecution of such claim(s), Landlord shall promptly reimburse Tenant for all
of the reasonable out of pocket costs and expenses incurred in connection with
such claim(s), including without limitation, reasonable attorneys’ fees and
court and alternative dispute resolution costs.  If Tenant’s right to prosecute
such claims arises out of a Landlord Warranty Prosecution Failure, Tenant’s
prosecution of such claim(s), if and to the extent it elects to do so and then
only from and after the date of any such election, shall be undertaken at
Landlord’s sole cost and expense, to be invoiced monthly on net thirty (30)
terms.

 

Section 9.5.                                 If Tenant elects to pursue a claim
under a 3rd Party Warranty pursuant to the provisions of Section 9.4, above,
then, without limiting any of Landlord’s other obligations hereunder, Landlord
shall within two (2) business days of such election execute and deliver to

 

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Tenant a legally-effective non-exclusive assignment (a “3rd Party Warranty
Assignment”) of Landlord’s right to enforce the applicable 3rd Party Warranty
(but not as to any duty or obligation of Landlord), in a form reasonably
satisfactory to the parties, subject to the terms and conditions of the
applicable 3rd Party Warranties.  Notwithstanding the foregoing, Tenant’s rights
under any 3rd Party Warranty Assignment shall, as between Landlord and Tenant
and as to the particular defects which give rise to the 3rd Party Warranty
Assignment, be exclusive.  The obligations in Sections 9.3 through Section 9.5
constitute Landlord’s entire obligation with respect to all defects in the Base
Building Work (subject to Landlord’s obligations pursuant to Article VIII of
this Lease).

 

Section 9.6.                                 Intentionally omitted.

 

Section 9.7.                                 Tenant shall not make or permit
anyone to make any Alterations in or to the Premises or the Building without the
prior written consent of Landlord, which consent may be withheld in Landlord’s
sole and absolute discretion with respect to Structural and System Alterations
and any Alterations which are visible from the exterior of the Premises, and
which consent shall not be unreasonably withheld, conditioned or delayed with
respect to all other Alterations.  Notwithstanding the foregoing, Tenant shall
have the right to make Cosmetic Changes within the Premises without requiring
the consent of Landlord.

 

Section 9.8.                                 All Alterations made by Tenant
shall be made:  (a) in a good, workmanlike, first class and prompt manner; (b)
using new or comparable materials only; (c) by a contractor who qualifies under
Section 9.11 and has been approved in writing by Landlord; (d) under the
supervision of an architect reasonably approved in writing by Landlord; (e) in
accordance with plans and specifications reasonably acceptable to Landlord,
approved in writing at Landlord’s standard charge; (f) in accordance with all
applicable Laws; (g) after having obtained any required consent of the holder of
any Mortgage of whom Tenant has notice; (h) after obtaining public liability and
worker’s compensation insurance policies reasonably approved in writing by
Landlord; and (i) upon request, after Tenant has delivered to Landlord
documentation reasonably satisfactory to Landlord evidencing Tenant’s financial
ability to complete the Alteration in accordance with the provisions of this
Lease (including without limitation, a payment or performance bond for any job
that exceeds Two Hundred Thousand Dollars ($200,000)).  Within ten (10) business
days following completion of any Alterations, Tenant, at its expense, shall
obtain and deliver to Landlord: (i) copies of paid invoices covering all of the
Alterations, (ii) final waivers of lien from all contractors, subcontractors and
material suppliers performing work or providing material in connection with the
Alterations, (iii)  proof of the satisfactory completion of all required
inspections and the issuance of any required approvals and sign-offs by
governmental authorities with respect thereto, (iv)  “as-built” plans and
specifications for such Alterations, (v) a written certification in the form of
the AIA Document G702 (or, if such document is no longer in use, such other form
as Landlord shall reasonably approve) from Tenant’s architect stating that (A)
the Alterations have been completed in accordance with the plans and
specifications approved by Landlord, (B) such work has been paid in full by
Tenant, and (C) all contractors, subcontractors and materialmen have delivered
to Tenant waivers of lien with respect to such work (copies of which shall be
included with such architect’s certification), and (vi) such other documents and
information as Landlord may reasonably request.

 

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Section 9.9.                                 If any lien (or a petition to
establish such lien) is filed in connection with any Alteration made by or on
behalf of Tenant, such lien (or petition) shall be discharged by Tenant within
ten (10) business days thereafter, at Tenant’s sole cost and expense, by the
payment thereof or by the filing of a reasonably acceptable bond.  If Landlord
gives its consent to the making of any Alteration, such consent shall not be
deemed to be an agreement or consent by Landlord to subject its interest in the
Premises or the Building to any liens which may be filed in connection
therewith.  Tenant acknowledges that any Alterations are accomplished for
Tenant’s account, Landlord having no obligation or responsibility in respect
thereof.  Landlord’s approval of any plans and drawings (and changes thereto)
regarding any Alterations or any contractor or subcontractor performing such
Alterations shall not constitute Landlord’s representation that such approved
plans, drawings, changes or Alterations comply with all Laws.  Any deficiency in
design or construction, although same had prior approval of Landlord, shall be
solely the responsibility of Tenant.

 

Section 9.10.                          All Alterations involving the Building
Structure or Systems, or any areas outside of the Premises shall, at Landlord’s
election, be performed by Landlord’s designated contractor or subcontractor at
Tenant’s expense (provided the cost therefor is competitive); provided, however,
that if Landlord elects to make any such Alteration, (a) Landlord shall be paid
a construction supervision fee in an amount equal to three percent (3%) of the
total cost of such Alteration, except to the extent set forth in the Work
Agreement, (b) Landlord shall obtain competitive bids from not less than three
(3) qualified general contractors approved by Landlord to perform work at the
Property (if available, or such smaller number of qualified contractors that is
available); (c) Landlord shall require such general contractors to obtain
competitive bids for each major trade (as reasonably determined by Landlord)
from at least three (3) qualified subcontractors selected by Landlord and
approved to perform work at the Property (if available, or such smaller number
of qualified subcontractors that is available); (d) Tenant shall have the right
to review all bids and to select any bidder; (e) the construction contract shall
expressly acknowledge that Tenant is a third party beneficiary thereunder and
shall authorize Tenant to directly enforce all warranties or guaranties; and (f)
Landlord shall use commercially reasonable efforts to enforce the terms of the
construction contract.

 

Section 9.11.                          Promptly after the completion of an
Alteration, Tenant at its expense shall deliver to Landlord three (3) sets of
accurate as built (or record) drawings and CAD drawings showing such Alteration
in place.  All contractors and subcontractors shall be required to procure and
maintain insurance against such risks, in such amounts, and with such companies
as Landlord may reasonably require.  Certificates of such insurance must be
received by Landlord before any work is commenced.  All contracts between Tenant
and a contractor must explicitly require the contractor to (a) name Landlord and
Landlord’s agents as additional insureds and (b) indemnify and hold harmless
Landlord and Landlord’s Agents (except to the extent caused by the gross
negligence or willful misconduct of Landlord or Landlord’s Agents).

 

Section 9.12.                          All voice, data, video, audio and other
low voltage control transport system cabling and/or cable bundles installed in
the Building by Tenant or its contractor (collectively, “Cables”) shall be (i)
plenum rated and/or have a composition makeup suited for its environmental use
in accordance with NFPA 70/National Electrical Code; (ii) labeled every 3 meters
with Tenant’s name and origination and destination points; (iii) installed in
accordance with all EIA/TIA standards and the National Electric Code; and (iv)
installed and routed in

 

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accordance with a routing plan shown “as built” or “as installed” configurations
of cable pathways, outlet identification numbers, locations of all wall, ceiling
and floor penetrations, riser cable routing and conduit routing (if applicable),
and such other information as Landlord may request.  The routing plan shall be
available to Landlord and its agents at the Building upon request.  Upon the
expiration or earlier termination of this Lease, Tenant shall remove from the
Premises and/or Building all Cables installed by or on behalf of Tenant to the
extent the same must be removed pursuant to applicable Laws.

 

Section 9.13.                          Tenant acknowledges and agrees that,
notwithstanding any provision contained in this Lease, all contractors and
subcontractors at any tier performing any construction, repair, refurbishment or
restoration in the Building (collectively, “Work”), including, without
limitation, tenant improvements, build-out, Alterations, additions,
improvements, renovations, repairs, remodeling, painting and installations of
fixtures, mechanical, electrical, plumbing, data, security, telecommunication,
low voltage or elevator equipment or systems or other equipment, or with respect
to any other construction work in, on, or to the Building (including Work
performed by any person providing any services to the Building such as DSL,
cable, communications, telecommunications or similar services) are required to
be approved in advance by ASB Capital Management, LLC (“ASB”) on behalf of
Landlord, and the business manager of the applicable local AFL-CIO Building and
Construction Trades Council.  ASB will only approve such contractors or
subcontractors that: (i) are bound by and signatory to a collective bargaining
agreement with a labor organization (a) whose jurisdiction covers the type of
work to be performed at the Building, and (b) that is an Approved Building
Trades Department Contractor or Subcontractor; and (ii) observe area standards
for wages and other terms and conditions of employment, including fringe
benefits.  For purposes hereof, an “Approved Building Trades Department
Contractor or Subcontractor” is a contractor or subcontractor that is currently
affiliated with the Building and Construction Trades Department of the AFL-CIO
(the “BCTD”) or, if no such BCTD-affiliated contractor or subcontractor is
available for a particular trade (e.g., carpentry work), a contractor or
subcontractor that is affiliated with a national trade union which was formerly
affiliated with the BCTD and which recognizes (and will recognize and respect,
for its work at the Building), the jurisdictional limitations established by the
local BCTD.  Further, Tenant shall comply with any contractor selection and
payment policy promulgated by Landlord from time to time.  Upon the request of
Landlord, each such contractor and subcontractor shall provide written
certification that all work performed by such contractor or subcontractor was
performed in compliance with this policy.  Contractors may not engage any
subcontractor that does not satisfy the provisions of clauses (i) and (ii)
above.  If at any time a contractor or subcontractor does not satisfy clauses
(i) and (ii) above, such contractor or subcontractor shall not be considered to
be approved by Landlord or ASB.

 

Section 9.14.                          If any Alterations that require
Landlord’s consent are made without the prior written consent of Landlord, then
Landlord shall have the right, at Tenant’s expense, to so remove and correct
such Alterations and restore the Premises and the Building.  All Alterations to
the Premises or the Building made by either party shall immediately become the
property of Landlord and shall remain upon and be surrendered with the Premises
as a part thereof at the expiration or earlier termination of the Lease Term;
provided, however, that (a) if there is no Event of Default under this Lease,
then Tenant shall have the right to remove, prior to the expiration or earlier
termination of the Lease Term, all movable furniture, furnishings and

 

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equipment installed in the Premises solely at the expense of Tenant, and (b)
Tenant shall remove at its expense all Alterations and other items (including
any telecommunications, security, data, computer and similar equipment, cabling
and wiring) in the Premises or the Building which Landlord designates in writing
for removal.  Landlord shall make such designation concurrently with Landlord’s
approval of such Alteration.  Notwithstanding the foregoing, Tenant shall not be
required to remove:  (x) Alterations consisting of standard build-out items that
are typically installed by office tenants in the Building’s submarket (such as
partitions, but not interior staircases, for example); (y) any non-specialized
open lab improvements; and (z) any standard Alteration made by Tenant in
initially finishing and completing the Premises in accordance with the Work
Agreement, except any Structural and System Alterations or as otherwise
indicated on any of Tenant’s plans.  Movable furniture, furnishings and trade
fixtures shall be deemed to exclude without limitation any item the removal of
which might cause damage to the Premises or the Building or which would normally
be removed from the Premises with the assistance of any tool or machinery other
than a dolly.  If such removal causes damage or injury to the Premises or the
Building, then Landlord shall have the right, at Tenant’s expense, to repair all
damage and injury to the Premises or the Building caused by such removal as
aforesaid.  If such furniture, furnishings and equipment are not removed by
Tenant prior to the expiration or earlier termination of the Lease Term, the
same shall at Landlord’s option be deemed abandoned or become the property of
Landlord to be surrendered with the Premises as a part thereof; provided,
however, that Landlord shall have the right at Tenant’s expense to remove from
the Premises any or all such items or to require Tenant to do the same, except
as otherwise provided in this Section.  If Tenant fails to return the Premises
to Landlord as required by this Section, then Tenant shall pay to Landlord, all
actual costs (including a reasonable construction management fee not to exceed
three percent (3%)) incurred by Landlord in effectuating such return. 
Notwithstanding any provision to the contrary contained in this Section 9.12,
prior to the expiration, and within five (5) days of the earlier termination, of
the Lease Term, Tenant shall have the right to remove any Specialized Tenant
Improvements installed by Tenant at Tenant’s expense, so long as Tenant repairs
any damage or injury to the Premises or Building caused by such removal.  For
the purposes hereof, “Specialized Tenant Improvements” shall mean Tenant
Improvements which are not customarily found in Class A office buildings such as
backup generators, vented fume hoods and laboratory benches, cold boxes and
server room racks.

 

ARTICLE X

 

SIGNS

 

Section 10.1.                          Tenant, at its sole cost and expense, may
install identifying signage on the exterior of the Building and in the Building
lobby, provided that such signage (including without limitation, its design,
size and placement) (i) shall comply with applicable Laws, and (ii) has been
approved in writing in advance by Landlord, which approval shall not be
unreasonably withheld.  Except as provided in the preceding sentence, Tenant
shall not place, inscribe, paint, affix or otherwise display any sign,
advertisement, picture, lettering or notice of any kind on any part of the
exterior or interior of the Building (including windows and doors), or on any
part of the interior of the Premises which can be seen from outside the
Premises, without the prior written approval of Landlord, which may be granted
or withheld in Landlord’s sole and absolute discretion.  If any such item that
has not been approved by Landlord is so displayed, then

 

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Landlord shall have the right to remove such item at Tenant’s expense.  Landlord
reserves the right to install and display signs, advertisements and notices on
any part of the exterior or interior of the Building; provided, however that
Landlord shall only affix, install, or display signs on the interior of the
Premises which pertain to the management or operation of the Building.

 

ARTICLE XI

 

SECURITY DEPOSIT

 

Section 11.1.                          Within fifteen (15) days after the full
execution of this Lease, Tenant shall deliver to Landlord a clean,
unconditional, irrevocable letter of credit in the amount of the Security
Deposit Amount (the “Letter of Credit”) as security for the performance by
Tenant of all of Tenant’s obligations, covenants, conditions and agreements
under this Lease.  The Letter of Credit shall be:  (a) in form and substance
satisfactory to Landlord in its sole discretion (with the following criteria at
a minimum); (b) at all times in the stated face amount of not less than the
Security Deposit Amount (as defined in Section 1.18), and shall on its face
state that multiple and partial draws are permitted and either (i) that partial
draws will not cause a corresponding reduction in the stated face amount of the
letter of credit or (ii) that, within five (5) business days after any such
partial draw, the issuer will notify Landlord in writing that the Letter of
Credit will not be reinstated to its full amount in which event Landlord shall
have the right to immediately draw on the remainder of the Letter of Credit (it
being understood that the total security deposit on hand, whether in cash or
letter of credit form, shall at all times be not less than the total Security
Deposit Amount as so defined); (c) issued by a commercial bank with the credit
rating described below and located in the San Francisco metropolitan area for
the account of Tenant, and its permitted successors and assigns under this
Lease; (d) made payable to, and expressly transferable and assignable one or
more times at no charge by, the owner from time to time of the Building or its
lender (which transfer/assignment shall be conditioned only upon the execution
of a reasonable and customary written document in connection therewith),whether
or not the original account party of the letter of credit continues to be the
tenant under this Lease by virtue of a change in name or structure, merger,
assignment, transfer or otherwise; (e) payable at sight upon presentment to a
San Francisco metropolitan area branch of the issuer of a simple sight draft
stating only that Landlord is permitted to draw on the Letter of Credit under
the terms of this Lease and setting forth the amount that Landlord is drawing;
(f) of a term not less than one year, and shall on its face state that the same
shall be renewed automatically, without the need for any further written notice
or amendment, for successive minimum one year periods, unless the issuer
notifies Landlord in writing, at least sixty (60) days prior to the expiration
date thereof, that such issuer has elected not to renew the Letter of Credit
(which will thereafter entitle Landlord to draw on the letter of credit); and
(g) at least thirty (30) days prior to the then current expiration date of such
Letter of Credit, either (1) renewed (or automatically and unconditionally
extended) from time to time through the ninetieth (90th) day after the
expiration of the Lease Term, or (2) replaced by Tenant with another letter of
credit meeting the requirements of this Section, in the full amount of the
Security Deposit.  Tenant shall cooperate with Landlord to effect any
modifications, transfers or replacements of the Letter of Credit requested by
Landlord in order to assure that Landlord is at all times fully secured by a
valid letter of credit that may be drawn upon by Landlord, its successors and
assigns.  Notwithstanding anything in this Lease to the contrary, any cure or
grace period provided in connection with an Event of Default shall not apply to
any of the foregoing requirements of the Letter of Credit, and,

 

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specifically, if any of the aforesaid requirements are not complied with timely,
then an immediate Event of Default shall occur and Landlord shall have the right
to immediately draw upon the Letter of Credit without notice to Tenant and apply
the proceeds to the Security Deposit.  If there is an Event of Default, Landlord
shall have the right to draw upon the Letter of Credit in an amount necessary to
be applied to cure such Event of Default of Tenant and/or to compensate Landlord
for any and all damages of any kind or nature sustained resulting from Tenant’s
Event of Default that Landlord reasonably estimates that it will suffer as a
result of such Event of Default.  Landlord shall have the right to draw down the
full stated amount of the Letter of Credit if any of the following shall have
occurred or are applicable: (x) an event has occurred which, with the passage of
time or giving of notice or both, would constitute an Event of Default where
Landlord would reasonably be expected to be prevented from, or delayed in,
giving such notice because of a bankruptcy or other insolvency proceeding, or
(y) the bank has notified Landlord that the Letter of Credit will not be renewed
or extended through the expiration date or Landlord has not received a new
Letter of Credit complying with the terms of this Section.  Each Letter of
Credit shall be issued by a commercial bank that has a credit rating with
respect to certificates of deposit, short term deposits or commercial paper of
at least A-2 (or equivalent) by Moody’s Investor Service, Inc., and shall be
otherwise acceptable to Landlord in its sole and absolute discretion.  If the
issuer’s credit rating is reduced below A-2 (or equivalent) by Moody’s Investors
Service, Inc., or if the financial condition of such issuer changes in any other
materially adverse way, then Landlord shall have the right to require that
Tenant obtain from a different issuer a substitute letter of credit that
complies in all respects with the requirements of this Section, and Tenant’s
failure to obtain such substitute letter of credit within thirty (30) days
following Landlord’s written demand therefor (with no other notice or cure or
grace period being applicable thereto, notwithstanding anything in this Lease to
the contrary) shall entitle Landlord to immediately draw upon the then existing
Letter of Credit in whole or in part, without notice to Tenant.  In the event
the issuer of any letter of credit held by Landlord is insolvent or is placed
into receivership or conservatorship by the Federal Deposit Insurance
Corporation, or any successor or similar entity, or if a trustee, receiver or
liquidator is appointed for the issuer, then, effective as of the date of such
occurrence, said Letter of Credit shall be deemed to not meet the requirements
of this Section, and, within thirty (30) days thereof, Tenant shall replace such
Letter of Credit with such substitute letter of credit (and Tenant’s failure to
do so shall, notwithstanding anything in this Lease to the contrary, constitute
an Event of Default for which there shall be no notice or grace or cure periods
being applicable thereto other than the aforesaid thirty (30) day period).  Any
failure or refusal of the issuer to honor the Letter of Credit shall be at
Tenant’s sole risk and shall not relieve Tenant of its obligations hereunder
with respect to the security deposit.

 

Section 11.2.                          Provided that (a) upon the Reduction
Dates (as hereinafter defined) Tenant’s business operations are profitable (as
evidenced by financial statements of Tenant certified by Tenant to be true,
correct and complete, prepared in accordance with generally accepted accounting
principles and, if it is the normal practice of Tenant, audited by any
independent certified public accountant) and there is not then nor has there
been an Event of Default of this Lease during the preceding twelve (12) month
period, and (b) Tenant provides Landlord with at least thirty (30) days’ advance
written notice, which notice (“Reduction Notice”) shall include (i) an original
replacement Letter of Credit (or an amendment or endorsement of the original
Letter of Credit) complying with the terms hereof, then commencing on the date
that is thirty (30) days following receipt by Landlord of the Reduction Notice
from

 

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Tenant, Landlord shall on the Reduction Date exchange the initial Letter of
Credit for the replacement Letter of Credit provided by Tenant or accept the
amendment to the Letter of Credit in either case pursuant to which the amount of
the Letter of Credit is reduced on each Reduction Date by an amount equal to
$1,032,130.00 (the “Reduction Amount”).  For the purposes hereof, the “Reduction
Dates” shall mean the first day of each of the 49th, 61st and 73rd full calendar
months of the Lease Term.

 

Section 11.3.                          Within approximately sixty (60) days
after the later of the expiration or earlier termination of the Lease Term or
Tenant’s vacating the Premises, Landlord shall return such Security Deposit to
Tenant, less such portion thereof as Landlord shall have appropriated to satisfy
any of Tenant’s obligations under this Lease or to satisfy an Event of Default
(or such other event which, with the giving of notice or the passage of time or
both, would constitute an Event of Default) under this Lease, and subject to
retention of such amount as Landlord may determine to be appropriate to secure
payment of any rentals or charges or adjustments thereof which may become due
following expiration or termination.  If there shall occur an Event of Default,
Landlord shall have the right, but shall not be obligated, to use, apply or
retain all or any portion of the Security Deposit for the payment of any Rent or
other charge or for the payment of any other sum to which Landlord may become
obligated by reason of Tenant’s Event of Default, to repair damages to the
Premises caused by Tenant, to clean the Premises upon expiration or termination,
or to compensate Landlord for any loss or damage which Landlord may suffer
thereby, including, but not limited to, damages recoverable following
termination of this Lease by reason of an Event of Default as herein provided,
and any and all amounts Landlord may spend or become obligated to spend, or for
the compensation of Landlord for any losses incurred, by reason of such Event of
Default.  If Landlord uses any portion of the Security Deposit to cure any Event
of Default by Tenant hereunder during the Lease Term, Tenant shall forthwith
replenish the Security Deposit to the original amount (as such amount may be
reduced pursuant to Section 11.2) within five (5) business days after Landlord
gives written notice to Tenant of such use or application (which may be in the
form of a new or amended Letter of Credit, or in the form of a cash payment),
and Tenant’s failure to do so shall constitute an Event of Default under this
Lease.  If Tenant fails to restore the full amount of the Security Deposit
within such five (5) business day period, then the amount of such deficiency
shall be subject to the charges described in Section 19.7.  During any period
that Landlord is holding the Security Deposit in the form of cash, Landlord
shall not be required to keep the Security Deposit separate from its general
funds, and Tenant shall not be entitled to interest on any such deposit.  Tenant
and Landlord acknowledge and agree that their rights and remedies with respect
to the Security Deposit shall be as provided in this Lease, and each of Landlord
and Tenant hereby waive in its entirety Section 1950.7 of the California Civil
Code and any and all other similar statutes now existing or hereafter enacted.

 

Section 11.4.                          To the extent and so long as Landlord
transfers the Security Deposit to any purchaser or other transferee of
Landlord’s interest in the Property, then Tenant shall look only to such
purchaser or transferee for the return of the Security Deposit, and Landlord
shall be released from all liability to Tenant for the return of such Security
Deposit.  Tenant acknowledges that the holder of any Mortgage shall not be
liable for the return of any Security Deposit made by Tenant hereunder unless
such holder actually receives such Security Deposit.  Tenant shall not pledge,
mortgage, assign or transfer the Security Deposit or any interest therein.

 

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ARTICLE XII

 

INSPECTION

 

Section 12.1.                          Tenant shall permit Landlord, its agents
and representatives, and the holder of any Mortgage, to enter the Premises at
any time and from time to time, without charge therefor and without diminution
of the rent payable by Tenant, in order to examine, inspect or protect the
Premises and the Building, to make such alterations and/or repairs as in the
sole but reasonable judgment of Landlord may be deemed necessary or desirable,
or to exhibit the same to brokers, prospective tenants (during the last twelve
(12) months of the Lease Term), lenders, purchasers and others.  Except in the
event of an emergency, Landlord shall endeavor to give Tenant one (1) business
day’s advance notice of any such entry and to permit Tenant to have a
representative present at such time, and to minimize disruption to Tenant’s
normal business operations in the Premises in connection with any such entry
(but same shall not prohibit Landlord from performing maintenance and repairs
during business hours and Landlord shall have no obligation to employ overtime
or other premium pay labor or other costs in connection therewith).

 

Section 12.2.                          Landlord acknowledges and agrees that
Tenant’s business operations involve access to health information, the access,
use and protection of which is regulated by numerous regulatory schemes,
including, without limitation the Health Insurance Portability and Accessibility
Act (“HIPAA”), as such laws may be updated from time to time.  In connection
with Tenant assuring the confidentiality, safety and security of any such data
in connection with such regulatory dictates, and notwithstanding anything in
this Lease to the contrary, Tenant reserves the right upon reasonable written
prior notice to Landlord to restrict access by others, including Landlord and
Landlord’s Agents, solely to such limited areas of the Premises (the “Secured
Areas”) as Tenant deems reasonably necessary to fulfill its regulatory
responsibilities.  In addition, Tenant shall have the right to designate in
writing certain additional limited portions of the Premises as Secured Areas for
the purpose of securing certain valuable property or confidential information. 
The Secured Areas shall not, in the aggregate, be larger than 62,000 rentable
square feet of the Premises.  Tenant and Landlord agree to work cooperatively,
at Tenant’s sole cost and expense, to establish reasonable restrictions and
guidelines for access to the Secured Areas by Landlord and Landlord’s Agents,
whether in connection with cleaning and trash removal, repairs and maintenance,
or in connection with access necessary in the event of an emergency (provided,
however, that Tenant shall promptly reimburse Landlord for any actual costs and
expenses incurred by Landlord as a result of such restrictions and guidelines)
and Landlord shall not be required to perform any obligations under this Lease
in or with respect to the Secured Areas until Landlord and Tenant establish such
reasonable restrictions and guidelines.  Landlord and Tenant agree that Landlord
shall have access to the Secured Areas upon not more than forty-eight (48)
hours’ notice and at all times in the event of an emergency.  In no events will
the portions of the Premises used for marketing, accounting or the data library
be designated as Secured Areas.

 

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ARTICLE XIII

 

INSURANCE

 

Section 13.1.                          If any increase in the rate of property
or other insurance is due to any activity, equipment or other item of Tenant,
then (whether or not Landlord has consented to such activity, equipment or other
item) Tenant shall pay as additional rent due hereunder the amount of such
increase.  The statement of any applicable insurance company or insurance rating
organization (or other organization exercising similar functions in connection
with the prevention of fire or the correction of hazardous conditions) that an
increase is due to any such activity, equipment or other item shall be
conclusive evidence thereof.

 

Section 13.2.                          Throughout the Lease Term, Tenant shall
obtain and maintain the following insurance coverages written with companies
allowed to conduct operations in the jurisdiction where the Property is located
with an A.M. Best A-, VIII or better rating.

 

A.                                    PUBLIC LIABILITY INSURANCE

 

Tenant agrees to maintain in full force from the date upon which Tenant first
enters the Premises for any reason, throughout the Lease Term, and thereafter so
long as Tenant is in occupancy of any part of the Premises:

 

(a)                                 a policy of Commercial General Liability
insurance (most recent form — CG 0001 or equivalent form), written on an
occurrence basis with a general aggregate per location extension and including
contractual liability coverage to cover liabilities assumed under this Lease,
insuring against claims for bodily injury, property damage, personal injury or
advertising injury on or about the Premises or arising out of the use of the
Premises with limits of not less than $1,000,000 per occurrence, $2,000,000
aggregate. Commercial General Liability insurance regarding products liability
and completed operations liability shall be in substantially similar form,
except that the policy will be written on a claims made basis with minimum
limits of $5,000,000.  If the claims made coverage contains a retroactive date,
the date cannot be after the Effective Date without an extended reporting period
endorsement (ERP) that applies throughout the Term of this Lease and all
subsequent extensions of the Term of this Lease.

 

(b)                                 Business Automobile Liability Insurance on
an “occurrence” basis, with a combined single limit of not less than $1,000,000
per occurrence covering bodily injury and property damage liability arising out
of the use by or on behalf of Tenant, its agents and employees of Tenant
covering any owned, non-owned (i.e., leased or rented) or hired motor vehicle or
automotive equipment.

 

(c)                                  worker’s compensation insurance in
accordance with applicable statutory legal requirements.

 

(d)                                 Employer’s Liability insurance with a limit
of not less than $1,000,000.00 per accident, a $1,000,000.00 policy limit, and
$1,000,000.00 disease limit per employee.

 

(e)                                  Umbrella/excess liability in the amount of
not less than $8,000,000 per occurrence/aggregate excess of Commercial General
Liability (excluding the Products Liability coverage), Employers Liability and
Business Auto Liability.

 

(f)                                   Professional Liability coverage with
limits of $1,000,000 per occurrence/aggregate.

 

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The general liability, products and auto policies shall designate Landlord, its
managing agent, if any, and any mortgagees (and other designees of Landlord as
may be set forth in a notice given from time to time by Landlord) as additional
insureds, as their interests appear, utilizing forms CG2010 ed. 1085 or a
combination of CG 2010 and CG 2037 for GL and similar for auto or equivalent
forms).  The umbrella form will contain a follow-form provision for all insureds
covered on scheduled underlying insurance.

 

Tenant shall give Landlord written notice promptly after Tenant becomes aware of
any cancellation of any insurance required to be carried by Tenant pursuant to
this Lease.  A certificate and applicable endorsements evidencing such insurance
coverages (or, if requested by Landlord, a signed copy of such policy) prior to
the Commencement Date, and thereafter on an annual basis (and in any event prior
to the expiration thereof).  The minimum limits of liability of such insurance
shall be in an amount of not less than the greater of (a) $9,000,000.00 per
occurrence/aggregate or (b) after the 8th Lease Year or such earlier time when
insurance requirements warrant based on a change in the industry or in Tenant’s
operations at the Premises, such amount as determined by Landlord from
time-to-time in its reasonable discretion to be the amounts then customarily
being carried on like property in the San Francisco area.  All insurance
required to be maintained by Tenant pursuant to this Section 13.2 may be
provided under umbrella or blanket policies covering other locations operated by
Tenant, provided that such umbrella or blanket policies otherwise comply with
the provisions of this Article XI.

 

B.                                    HAZARD INSURANCE

 

Tenant agrees to maintain in full force from the date upon which Tenant first
enters the Premises for any reason, throughout the Lease Term, and thereafter so
long as Tenant is in occupancy of any part of the Premises, fire and extended
coverage insurance in so called “special form” including flood (if applicable,
Landlord acknowledging that flood is currently not applicable) and boiler and
machinery (if applicable) and such other insurable hazards as, under good
insurance practices are insured against by other tenants in similar premises. 
Covered property shall include but not be limited to (i) all fixtures, equipment
and other personal property of Tenant (the “Tenant Property”) and (ii) any
Alterations, including the initial Tenant Improvements (the “Tenant-Insured
Improvements”).  Landlord shall be designated as a loss payee with respect to
Tenant’s property insurance on any Tenant-Insured Improvements (but not Tenant’s
Property).  Tenant shall be required to provide copies of its insurance policies
to Landlord if reasonably requested by Landlord, and upon Landlord’s request, in
connection with a claim actually made by Landlord as an additional insured or
loss payee under any such policy, Tenant shall deliver to Landlord such
information as is reasonably necessary for Landlord to enforce such claim under
such policy. The amount of insurance shall not be less than 100% of the
replacement cost of such property, and the policy shall contain a deductible
amount of not more than $10,000. Tenant shall also purchase time element
(business income/extra expense) coverage against the perils insured by the “all
risk” including terrorism (so long as such terrorism insurance is available at
commercially reasonable rates) property policy for a period of indemnity of
twelve (12) months.  Tenant shall also maintain insurance against such other
hazards as may from time to time reasonably be required by Landlord, provided
that such insurance is customarily carried in the area in which the Premises are
located on property similar to the Building and that Tenant receives written
notice specifying all such additional insurance as may be required.

 

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C.                                    CONSTRUCTION PERIOD INSURANCE

 

At any time when demolition or construction work is being performed on or about
the Premises or Building by or on behalf of Tenant, in addition to the insurance
coverages required of Tenant above, Tenant shall keep, or cause its contractors
and subcontractors to keep, in full force and effect the following insurance
coverage, in each instance with policies in form and substance reasonably
satisfactory to Landlord:

 

(i)                                     Builder’s Risk including loss of
income/delay and soft costs, on a completed value form (non-reporting form) in
such form and affording such protections as required by Landlord, naming
Landlord and its mortgagees loss payees with respect to Alterations; and

 

(ii)                                  Workers’ Compensation or similar insurance
in form and amounts required by law.

 

(iii)                               Employer’s liability insurance in the amount
of $500,000.00 per accident, $500,000 per illness, per employee and $500,000.00
per illness, in the aggregate.

 

(iv)                              Business auto liability including hired and
non-owned auto coverage $1,000,000 combined single limit.

 

(v)                                 Commercial general liability and umbrella
excess liability coverage including but not limited to bodily injury, property
damage, personal injury and advertising injury, with limits not less than
$5,000,000.00 per occurrence and in the aggregate per location and
Products/Completed Operations coverage during construction including, at a
minimum, for two (2) years following completion of the Alterations.

 

Subcontractors and sub-subcontractors shall maintain commercial general
liability and umbrella excess liability coverage including but not limited to
bodily injury, property damage, personal injury and advertising injury with
limits not less than $2,000,000.00 per occurrence and in the aggregate per
location/project.  Landlord, its managing agent, its mortgagee and the fee owner
of the Lot shall be listed as additional insureds under each policy utilizing CG
2010 ed 1085 or a combination of CG 2010 and CG 2037 (or equivalent forms).
Tenant shall cause a certificate or certificates of such insurance as well as
all applicable additional insured endorsements to be delivered to Landlord prior
to the commencement of any work in or about the Building or the Premises, in
default of which Landlord shall have the right, but not the obligation, to
obtain any or all such insurance at the expense of Tenant, in addition to any
other right or remedy of Landlord.  In addition, Contractor shall require any
subcontractor or sub-sub-subcontractor to maintain workers compensation and
employers liability as outlined above.  The provisions of this Section shall
survive the expiration or earlier termination of this Lease.

 

Section 13.3.                          LANDLORD INSURANCE

 

A.                                    Landlord shall maintain fire and extended
coverage insurance in so-called “special form” against loss or damage with
respect to the Building, including equipment

 

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breakdown insurance, with customary exceptions, subject to such deductibles and
self-insured retentions as Landlord may reasonably determine, in an amount equal
to at least the replacement value of the Building (as defined by the property
insurance policy).

 

B.                                    Landlord shall keep and maintain in full
force and effect during the Lease Term, rental abatement insurance against
abatement or loss of Rent in case of fire or other casualty, in an amount at
least equal to the amount of the Rent payable by Tenant during the then current
lease year as reasonably determined by Landlord and providing coverage for
twelve (12) months.  All premiums for such insurance shall be included in
Operating Charges for the purposes of this Lease.

 

Section 13.4.                          WAIVER OF SUBROGATION

 

Insofar as and to the extent that the following provisions may be effective
without invalidating or making it impossible to secure insurance coverage from
responsible insurance companies doing business in the State of California (even
though extra premium may result therefrom):  Notwithstanding anything to the
contrary in this Lease, Landlord and Tenant mutually agree that with respect to
any loss which is covered by property insurance then being carried by them (or
required to be carried pursuant to the terms of this Lease), the one carrying
such insurance and suffering said loss releases the other party and its
respective Agents and successors from any and all claims with respect to such
loss; and they further mutually agree that their insurance companies shall have
no right of subrogation against the other and their respective Agents and
successors on account thereof.  In the event that an additional premium is
payable by either party as a result of this provision, the other party shall
reimburse the party paying such premium the amount of such extra premium.  If,
at the written request of one party, this release and non-subrogation provision
is waived, then the obligation of reimbursement shall cease for such period of
time as such waiver shall be effective, but nothing contained in this Section
shall be deemed to modify or otherwise affect any releases elsewhere contained
in this Lease.

 

ARTICLE XIV

 

SERVICES AND UTILITIES

 

Section 14.1.                          Subject to the provisions of Section 8.1
with respect to excessive use and Tenant’s obligation to contract directly for
Utilities Services, from and after the Rent Commencement Date, Landlord will
provide to the Premises:  air conditioning and heating during the seasons they
are required in Landlord’s reasonable judgment ; Janitorial Services to the
extent not being provided by or through Tenant on Monday through Friday (or at
Landlord’s option, Sunday through Thursday) only (excluding Holidays); electric
power from the utility provider sufficient for customary lighting purposes;
standard hot and cold water in Building standard bathrooms and chilled water in
Building standard drinking fountains; elevator service (with at least one (1)
elevator in operation at all times, except in the event of an emergency);
landscaping; and exterior window cleaning service.  To the extent Tenant
provides or contracts for any services relating to any Building Structure or
System or any service or utility being provided by Landlord to the Premises
directly from the supplier (which Tenant shall not be permitted to do without
Landlord’s prior written consent, which consent shall not be

 

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unreasonably withheld, conditioned or delayed or as otherwise provided in this
Lease), Tenant shall enter into and maintain a service contract therefor with a
contractor licensed to do business in the jurisdiction in which the Building is
located and otherwise approved by Landlord.  Landlord shall install a meter to
measure Tenant’s electricity usage.  At Tenant’s or Landlord’s election, Tenant
shall contract directly with the utility providers to supply electric power
sufficient for Tenant’s use of the Premises for the Permitted Use, and standard
hot and cold water in Building standard bathrooms and chilled water in Building
standard drinking fountains.  Tenant agrees that it shall not overtax the
Building’s electrical system or electric capacity, or the Building’s HVAC
capacity.  In the event that, in the reasonable judgment of Landlord’s
engineers, Tenant does overtax the Building’s electrical system or electric
capacity and/or the Building’s HVAC capacity, as aforesaid, including without
limitation as a consequence of Tenant’s excessive use of the Premises, Tenant
shall be responsible for (i) all costs of upgrading the electrical system and/or
the HVAC system of the Building so that such system(s) will have adequate
capacity for Tenant’s operations and (ii) any and all additional or accelerated
costs to Landlord relating to the repair and replacement of any such system. 
Tenant shall have access to the Building twenty four (24) hours per day each day
of the year (except in the event of an emergency).

 

Section 14.2.                          As part of the Base Building Work,
Landlord shall install, at Landlord’s sole cost and expense, an Access Control
and Alarm Monitoring System (ACAMS).  Tenant will operate the ACAMS with respect
to access control and notify Landlord in the event of a call of unauthorized
access.  Landlord will operate and monitor fire and life safety systems. 
Landlord will provide card readers and telephone entry systems at the 16th
Street and Carolina Street entrances for Building access and pathways at each
entrance to the Premises for the installation of card readers.  Tenant shall be
responsible, at Tenant’s sole cost and expense, for furnishing card readers and
cables Tenant elects to install within the Premises.  Landlord shall coordinate
with Tenant to achieve compatibility between the ACAMS and any additional
security systems within the Premises which are installed by Tenant.  Access
cards shall be issued by Tenant to Tenant’s employees only, and Tenant shall
deactivate the access card of any Tenant employee promptly following such
employee’s termination by Tenant.  Tenant shall not permit anyone, except for
Tenant’s Agents, to enter the Building at times other than during Tenant’s
typical business hours.  In the event that Tenant subleases any portion of the
Premises, Tenant shall be responsible for (i) installing additional card readers
at the entrances of the subleased portions of the Premises, (ii) for issuing
access cards to the subtenant and its employees, and (iii) promptly deactivating
the access card of any subtenant employee following such employee’s termination.

 

Section 14.3.                          Landlord shall not have any liability to
Tenant, and Tenant shall not be entitled to terminate this Lease or receive a
rent abatement, in the event of Landlord’s failure or inability to furnish any
of the utilities or services required to be furnished by Landlord hereunder;
provided, however, that (a) if Landlord has failed to furnish any of the
utilities or services required to be furnished by Landlord hereunder for any
reason other than by action or inaction of Tenant or Tenant’s Agents, and if
such failure has rendered unusable by Tenant any material portion of the
Premises for a continuous period of five (5) consecutive business days after
Tenant gives Landlord written notice thereof, and if Tenant does not in fact use
such material portion of the Premises during such period, then, so long as no
Event of Default exists under this Lease, Tenant shall be entitled, as its sole
and exclusive remedy, to an abatement of the Base Rent payable hereunder, pro
rated based on the material portion of the Premises that are

 

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not being used, for the period beginning on the day after such five (5) business
day period ends and continuing until the earlier of the date Tenant resumes use
or occupancy of such portion of the Premises or the date use of the Premises is
restored to Tenant; and (b) Landlord shall use reasonable efforts to restore
such failure or inability so long as such failure or inability is within
Landlord’s reasonable control to correct.

 

Section 14.4.                          Tenant acknowledges that pursuant to
California Public Resources Code Section 25402.10 and the regulations adopted
pursuant thereto (collectively the “Energy Disclosure Requirements”), Landlord
may be required to disclose information concerning Tenant’s energy usage at the
Building to certain third parties, including, without limitation, prospective
purchasers, lenders and tenants of the Building (the “Tenant Energy Use
Disclosure”).  Tenant hereby (A) consents to all such Tenant Energy Use
Disclosures, and (B) acknowledges that Landlord shall not be required to notify
Tenant of any Tenant Energy Use Disclosure.  Further, Tenant hereby releases
Landlord from any and all losses, costs, damages, expenses and liabilities
relating to, arising out of and/or resulting from any Tenant Energy Use
Disclosure.  The terms of this Section 14.3 shall survive the expiration or
earlier termination of this Lease

 

ARTICLE XV

 

LIABILITY OF LANDLORD

 

Section 15.1.                          Landlord and Landlord’s Representatives
shall not be liable to Tenant or any other person or entity for any damage,
injury, loss or claim based on or arising out of any cause whatsoever (except as
otherwise provided in this Lease), including the following:  repair to any
portion of the Premises or the Building; interruption in the use of the Premises
or the Building or any equipment therein; any accident or damage resulting from
any use or operation (by Landlord, Tenant or any other person or entity) of
elevators or heating, cooling, electrical, sewage or plumbing equipment or
apparatus; termination of this Lease by reason of damage to the Premises or the
Building; any fire, robbery, theft, vandalism, mysterious disappearance or any
other casualty; actions of any other tenant of the Building or of any other
person or entity; failure or inability to furnish any service specified in this
Lease; and leakage in any part of the Premises or the Building from water, rain,
ice or snow that may leak into, or flow from, any part of the Premises or the
Building, or from drains, pipes or plumbing fixtures in the Premises or the
Building.  If any condition exists which may be the basis of a claim of
constructive eviction, then Tenant shall give Landlord written notice thereof
and a reasonable opportunity to correct such condition, and in the interim
Tenant shall not claim that it has been constructively evicted or is entitled to
a rent abatement.  Any property placed by Tenant or any of Tenant’s Agents in or
about the Premises or the Building shall be at the sole risk of Tenant, and
Landlord shall not in any manner be held responsible therefor.  Any person
receiving an article delivered for Tenant shall be acting as Tenant’s agent for
such purpose and not as Landlord’s agent.  For purposes of this Article, the
term “Building” shall be deemed to include the Land.  Notwithstanding the
foregoing provisions of this Section, Landlord shall not be released from
liability to Tenant for any physical injury to any natural person caused by the
gross negligence or willful misconduct of Landlord or Landlord’s Representatives
to the extent such injury is not covered by insurance either carried by Tenant
(or such person) or required by this Lease to be carried by Tenant; provided,
however, that neither Landlord nor any of Landlord’s Representatives (nor any
past,

 

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present or future board member, partner, trustee, director, member, officer,
employee, agent, representative or advisor of any of them) shall under any
circumstances be liable for any exemplary, punitive, consequential or indirect
damages (or for any interruption of or loss to business) in connection with or
relating to this Lease.

 

Section 15.2.                          Except to the extent caused by the gross
negligence or willful misconduct of Landlord or Landlord’s Agents, Tenant shall
reimburse Landlord and Landlord’s Agents for (as additional rent), and shall
indemnify, defend upon request and hold them harmless from and against all
reasonable Costs suffered by or claimed against them, directly or indirectly, to
the extent based on or arising out of, in whole or in part, (i) use and
occupancy of the Premises or the business conducted therein, (ii) any negligent
or willful act or omission of Tenant or any Tenant’s Agent, (iii) any breach of
Tenant’s obligations under this Lease, including failure to comply with Laws or
surrender the Premises upon the expiration or earlier termination of the Lease
Term, or (iv) any entry by Tenant or any Tenant’s Agent upon the Land prior to
the Lease Commencement Date.

 

(a)                                 Except to the extent caused by the
negligence or willful misconduct of Tenant or an Agent of Tenant, Landlord shall
reimburse Tenant and shall indemnify and hold Tenant harmless from and against
all Costs suffered or claimed against Tenant as a result of Landlord’s use or
control of the Common Areas of the Building and the Building Structure and
Systems.

 

Section 15.3.                          No landlord hereunder shall be liable for
any obligation or liability based on or arising out of any event or condition
occurring during the period that such landlord was not the owner of the Building
or a landlord’s interest therein.  Within five (5) days after request, Tenant
shall attorn to any transferee landlord and execute, acknowledge and deliver any
document submitted to Tenant confirming such attornment, provided such
transferee assumes the obligations of Landlord hereunder which accrue from and
after the date of the transfer.

 

Section 15.4.                          Except as may otherwise be expressly set
forth in this Lease, Tenant shall not have the right to set off or deduct any
amount allegedly owed to Tenant pursuant to any claim against Landlord from any
Rent or other sum payable to Landlord.  Tenant’s sole remedy for recovering upon
such claim shall be to institute an independent action against Landlord, which
action shall not be consolidated with any action of Landlord; provided, however,
that the foregoing shall not prohibit Tenant from asserting a compulsory
counterclaim in any proceeding instituted by Landlord against the Tenant that is
required to be brought by applicable statute and will be deemed forever waived
if not then asserted by Tenant.

 

Section 15.5.                          If Tenant or any Tenant’s Agent is
awarded a money judgment against Landlord, then recourse for satisfaction of
such judgment shall be limited to execution against Landlord’s estate and
interest in the Building which shall be deemed to include proceeds actually
received by Landlord from any sale of the Building (net of all expenses of
sale), insurance or condemnation proceeds (subject to the rights of any
Mortgagees), and rental income from the Building (net of all expenses) to the
extent all of the foregoing are held in an account for Landlord and have not
been applied or distributed by Landlord in the ordinary course of business
(i.e., not as a fraud against creditors).  No other asset of Landlord, and no
asset of any of Landlord’s Representatives (or any past, present or future board
member, partner, director,

 

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member, officer, trustee, employee, agent, representative or advisor of any of
them (each, an “officer”)) or any other person or entity, shall be available to
satisfy or be subject to any such judgment.  No such Landlord’s Representative,
officer or other person or entity shall be held to have personal liability for
satisfaction of any claim or judgment whatsoever under this Lease.

 

ARTICLE XVI

 

RULES AND REGULATIONS

 

Section 16.1.                          Tenant and Tenant’s Agents shall at all
times abide by and observe the rules and regulations specified in Exhibit C (the
“Building Rules”) as the same may be reasonably modified or supplemented from
time to time in a manner that is not inconsistent with this Lease upon written
notice to Tenant.  Tenant and Tenant’s Agents shall also abide by and observe
any other rule that Landlord may reasonably promulgate from time to time for the
operation and maintenance of the Building, provided that (a) written notice
thereof is given, (b) any such rule is not inconsistent with the provisions of
this Lease, does not unreasonably interfere with the rights granted to Tenant
hereunder, and does not materially increase the cost of Tenant’s occupancy of
the Premises through a material increase in Additional Rent.  All Building Rules
shall be binding upon Tenant and enforceable by Landlord as if they were
contained herein.

 

ARTICLE XVII

 

DAMAGE OR DESTRUCTION

 

Section 17.1.                          the Premises or the Building are totally
or partially damaged or destroyed thereby rendering the Premises totally or
partially inaccessible or unusable, then, except as set forth herein,(a)
Landlord shall diligently repair and restore the Base Building Work to
substantially the same condition as prior to such damage or destruction and (b)
following Substantial Completion of the Base Building Work by Landlord, Tenant
shall diligently repair and restore the Premises to substantially the same
condition it was in prior to such damage or destruction, which repair and
restoration work shall be performed in accordance with all of the applicable
provisions of this Lease (including, without limitation, Article IX) except that
Landlord shall have no obligation to pay for any costs in excess of the cost to
restore the Base Building Work, it being agreed that the cost to restore the
remainder of the improvements shall be paid by Tenant.  Prior to commencement of
such restoration by Tenant, Tenant shall provide Landlord with evidence
satisfactory to Landlord of Tenant’s financial ability to complete such
restoration.  Notwithstanding the foregoing, in the event of any of the
following circumstances, Landlord may elect either to terminate this Lease or to
perform Landlord’s restoration work and shall provide Tenant with written notice
of Landlord’s election (the “Casualty Notice”), which shall contain the
estimated completion date with respect to the Base Building Work (the “Landlord
Estimated Completion Date”) and the additional amount of time after the actual
completion date of the Base Building Work that is expected to be necessary to
complete the remainder of the improvements (the “Tenant Estimated Completion
Date” and the total time expected to complete the Base Building Work and the
remainder of improvements (the “Estimated Completion Date”), within one hundred
twenty (120) days of the damage or destruction, in the following circumstances:

 

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(a)                                 If in Landlord’s reasonable judgment the
Estimated Completion Date is more than one (1) year after the occurrence of such
damage or destruction (taking into account the time needed for effecting a
satisfactory settlement with any insurance company involved, removal of debris,
preparation of plans and issuance of all required governmental permits).

 

(b)                                 If the insurance proceeds plus deductibles
from insurance that Landlord is required to carry under this Lease or any
insurance Landlord actually carries plus Two Million Dollars ($2,000,000) (the
“Landlord Agreed Shortfall Contribution”) are insufficient to pay the full cost
of Landlord’s repair and restoration of the Base Building Work (the “Landlord
Restoration Work”); provided, however, that Landlord may not terminate this
Lease pursuant to this Paragraph 17.1(b), if (i) Tenant agrees, within fifteen
(15) days after its receipt of Landlord’s Casualty Notice, to fund the necessary
amount in excess of the insurance proceeds plus the Landlord Agreed Shortfall
Contribution, and (ii) within thirty (30) days thereafter, Tenant shall promptly
deposit the excess with a third party escrow agent reasonably acceptable to
Landlord and Tenant, in which event Landlord shall proceed with Landlord’s
Restoration Work.  Landlord’s withdrawals from the trust account shall be
proportionate and concurrent to Landlord’s schedule of payments to its
contractors and paid in payment of such contractor’s bills.

 

(c)                                  If the holder of any Mortgage fails or
refuses to make such insurance proceeds available for such repair and
restoration pursuant to such holder’s exercise of legal rights.

 

(d)                                 If, because of applicable Laws, Landlord’s
Restoration Work cannot be completed except (i) in a substantially different
structural form than existed before the Casualty for which insurance proceeds
are not sufficient or (ii) in a size that results in materially less rentable
square footage of the Building.

 

(e)                                  If the damage to the Building exceeds
thirty-five percent (35%) of the rentable area of Building.

 

Landlord shall provide Tenant with the Casualty Notice containing the Estimated
Completion Date and Landlord’s election to either repair or to terminate this
Lease within one hundred twenty (120) days after the occurrence of such damage
or destruction.

 

Section 17.2.                          If this Lease is terminated pursuant to
this Article, then Rent shall be apportioned (based on the portion of the
Premises which is usable or used after such damage or destruction) and paid to
the earlier of the date of termination or the date Tenant completely vacates and
abandons the Premises on account of such damage and Landlord shall be entitled
to any insurance proceeds received by Tenant that are attributable to Tenant
Improvements and other improvements insured or required to be insured by Tenant
that would remain in the Premises at the end of the Lease Term.  If this Lease
is not terminated as a result of such damage or destruction, then until such
repair and restoration of the Base Building Work are Substantially Complete and
for such additional time until the earlier of (a) completion of Tenant’s
restoration of the improvements (the “Tenant Restoration Work”), (b) the date
that completion of the Tenant Restoration Work would have occurred but for
delays that are not the result of Force Majeure or Landlord Delay (but no
earlier than the Tenant Estimated Completion Date) and (c)

 

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Tenant’s occupancy of the affected Premises or any part thereof for the conduct
of its business, Rent shall be equitably abated based upon the extent that
Tenant’s use of the Premises is diminished while such repair and restoration are
being made; provided, however, that (x) if such damage or destruction was caused
by the act or omission of Tenant or any Tenant’s Agent, then after the period
insured by Landlord’s rental interruption insurance, Tenant shall not be
entitled to any such Rent reduction, and (y) if Tenant fails to pay over to
Landlord insurance proceeds promptly following receipt from Tenant’s insurance,
any such rent abatement shall end on the date when Landlord would have been able
to substantially complete repair and restoration of the Premises had Tenant
timely paid Landlord such insurance proceeds.  After receipt of all insurance
proceeds, Landlord shall proceed with and bear the expenses of such Landlord
Restoration Work; provided, however, that (a) if such damage or destruction was
caused by the act or omission of Tenant or any Tenant’s Agent, then Tenant shall
pay Landlord’s actual deductible and the amount by which such expenses exceed
the insurance proceeds, if any, actually received by Landlord on account of such
damage or destruction or the amount of insurance proceeds which Landlord would
have received if Landlord carried the insurance required to be carried by
Landlord under this Lease, (b) Tenant shall pay the amount by which the cost of
restoring any item which Landlord is required to restore and Tenant is required
to insure exceeds the insurance proceeds received with respect thereto, in
accordance with a reasonable progress schedule, and (c) Landlord shall not be
required to repair or restore any tenant improvements installed in the Premises
(except to the extent Landlord receives proceeds therefor from Tenant’s
insurance), any Alterations or any other contents of the Premises (including
Tenant’s trade fixtures, decorations, furnishings, equipment or personal
property).

 

Section 17.3.                          If, within one hundred twenty (120) days
after the occurrence of the damage or destruction described in Section 17.1,
Landlord determines in its sole but reasonable judgment that the Estimated
Completion Date is more than one (1) year after the date of such damage or
destruction, and provided Landlord does not elect to terminate this Lease
pursuant to this Article, then Landlord shall promptly notify Tenant of such
determination in the Casualty Notice.  For a period of thirty (30) days after
receipt of such Casualty Notice, Tenant shall have the right to terminate this
Lease by providing written notice to Landlord (which date of such termination
shall not be more than thirty (30) days after the date of Tenant’s notice to
Landlord).  If the damage occurs during the last twelve (12) months of the Term
(as extended by any extension option which has been exercised by Tenant) and
will reasonably require in excess of thirty (30) days to repair, for a period of
thirty (30) days following Tenant’s receipt of the Casualty Notice Tenant shall
have the right to terminate this Lease by providing written notice to Landlord
(which date of such termination shall be not more than thirty (30) days after
the date of Tenant’s notice to Landlord).  Notwithstanding any of the foregoing
to the contrary, Tenant shall not have the right to terminate this Lease if the
willful misconduct of Tenant or any Tenant’s Agent shall have caused the damage
or destruction.  Landlord and Tenant agree that their respective rights in the
event of any casualty to the Premises shall be governed by the provisions set
forth above in this Article, and the parties hereby waive the provisions of
Section 1932, Subdivision 2, and Section 1933, Subdivision 4, of the California
Civil Code.

 

Section 17.4.                          Notwithstanding anything contained
herein, if neither Landlord nor Tenant has terminated this Lease, and the
Landlord’s Restoration Work is not Substantially Completed for any reason,
including Force Majeure, other than the fault of Tenant, by the date which is
six (6) months following the Landlord Estimated Completion Date set forth in the
Casualty Notice

 

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(the “Outside Completion Date”), then Tenant shall have the right to terminate
this Lease by delivering written notice of such election to Landlord during the
first five (5) business days of each calendar month following the Outside
Completion Date until such time as the Landlord’s Restoration Work is
Substantially Complete, which termination shall be by notice to Landlord (the
“Damage Termination Notice”), effective as of a date set forth in the Damage
Termination Notice (the “Damage Termination Date”), which Damage Termination
Date shall not be less than ten (10) business days following the date such
Damage Termination Notice was delivered to Landlord.  Notwithstanding the
foregoing, if Tenant delivers a Damage Termination Notice to Landlord, then
Landlord shall have the right to suspend the occurrence of the Damage
Termination Date for a period ending thirty (30) days after the Damage
Termination Date set forth in the Damage Termination Notice by delivering to
Tenant, within five (5) business days of Landlord’s receipt of the Damage
Termination Notice, written notice that it is Landlord’s good faith judgment
that the Landlord’s Restoration Work shall be Substantially Completed within
thirty (30) days after the Damage Termination Date.  If the Landlord’s
Restoration Work is Substantially Completed prior to the expiration of such
thirty (30) day period, then the Damage Termination Notice shall be of no force
or effect, but if such work is not Substantially Completed within such thirty
(30) day period, then this Lease shall terminate upon the expiration of such
thirty (30) day period.

 

Notwithstanding anything set forth to the contrary in this Section 17.4, Tenant
shall have the right to terminate this Lease under this Section 17.4 only if
each of the following conditions are satisfied: (a) the damage to the Building
by fire or other casualty was not caused by the negligence or willful misconduct
of Tenant or a Tenant Agent; (b) Tenant is not then in economic default or Event
of Default under this Lease; (c) as a result of the damage, Tenant cannot
reasonably conduct business from the Premises; and (d) as a result of such
damage, Tenant does not occupy or use the Premises at all.  In the event this
Lease is terminated in accordance with the terms of this Section 17.4, Tenant
shall assign to Landlord (or its designee) all insurance proceeds payable to
Tenant under Tenant’s insurance required under Section 13.2 of this Lease.

 

ARTICLE XVIII

 

CONDEMNATION

 

Section 18.1.                          If one-third or more of the Premises, or
the use or occupancy thereof, shall be taken or condemned by any governmental or
quasi-governmental authority for any public or quasi-public use or purpose or
sold under threat of such a taking or condemnation (collectively, “condemned”),
then this Lease shall terminate on the day prior to the date title thereto vests
in such authority and rent shall be apportioned as of such date.  If less than
one-third of the Premises or occupancy thereof is condemned, then this Lease
shall continue in full force and effect as to the part of the Premises not so
condemned, except that as of the date title vests in such authority Tenant shall
not be required to pay Rent with respect to the part of the Premises so
condemned.  Landlord shall notify Tenant of any condemnation contemplated by
this Section promptly after Landlord receives notice thereof.  Within ten (10)
days after receipt of such notice, Tenant shall have the right to terminate this
Lease with respect to the remainder of the Premises not so condemned as of the
date title vests in such authority if such condemnation renders said remainder
of the Premises totally unusable for their intended purpose. 

 

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Notwithstanding anything herein to the contrary, if twenty-five percent (25%) or
more of the Land or the Building is condemned, then whether or not any portion
of the Premises is condemned, Landlord shall have the right to terminate this
Lease as of the date title vests in such authority.

 

Section 18.2.                          All awards, damages and other
compensation paid on account of such condemnation and not attributable to Tenant
Improvements and Alterations to the extent paid for by Tenant and that Tenant is
required or entitled to remove at the expiration or earlier termination of the
Lease Term, Tenant’s personal property, or relocation costs shall belong to
Landlord, and Tenant assigns to Landlord all rights to such awards, damages and
compensation.  Tenant agrees that it shall not make any claim against Landlord
for any portion of such award, damages or compensation attributable to damage to
the Tenant Improvements and Alterations to the Premises funded by Tenant and
which Tenant is required or entitled pursuant to this Lease to remove at the
expiration or earlier termination of the Lease Term, value of the unexpired
portion of the Lease Term, loss of profits or goodwill, or severance damages and
Landlord agrees that it shall not claim such amounts from the condemning
authority, it being agreed that the Tenant may pursue such amounts directly
against the condemning authority.  Landlord and Tenant agree that their
respective rights in the event of any condemnation or taking involving the
Premises shall be governed by the provisions set forth above in this Article,
and the parties hereby waive the provisions of Section 1265.130 of the
California Code of Civil Procedure.

 

ARTICLE XIX

 

DEFAULT

 

Section 19.1.                          If there shall be an Event of Default,
then the provisions of Section 19.2 shall apply.  Any notice given by Landlord
pursuant to this Article or any other provision of this Lease may be the notice
required or permitted pursuant to Section 1161 et seq. of the California Code of
Civil Procedure or successor statutes, and the provisions of this Lease shall
not require the giving of a notice in addition to such statutory notice to
terminate this Lease and Tenant’s right to possession of the Premises.  The
periods herein specified within which Tenant is permitted to cure any default
following notice from Landlord shall run concurrently with any cure period
provided by applicable laws.

 

Section 19.2.                          Upon an Event of Default, in addition to
all other rights and remedies that may be available to Landlord pursuant to this
Lease and applicable law, Landlord may exercise all or any one or more of the
following remedies:

 

(a)                                 Landlord may, at its option, terminate this
Lease by written notice to Tenant and recover possession of the Premises. 
Following such termination, Landlord may recover from Tenant damages arising
from the default and the termination of this Lease, including without limitation
the following:

 

(i)                                     The Worth at the Time of Award of the
unpaid Base Rent and Additional Rent which had been earned at the time of
termination; plus

 

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(ii)                                  The Worth at the Time of Award of the
amount by which the unpaid Base Rent and Additional Rent which would have been
earned after termination until the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided; plus

 

(iii)                               The Worth at the Time of Award of the amount
by which the unpaid Base Rent and Additional Rent for the balance of the Lease
Term after the time of award exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided; plus

 

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

 

(v)                                 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 laws of the State in which the Property is located.

 

As used in subsections (a)(i) and (ii) above, the “Worth at the Time of Award”
shall be computed by allowing interest at the Default Rate.  As used in
subsection (a)(iii) above, the “Worth at the Time of Award” shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).  In connection with any
exercise by Landlord of the rights provided herein, Tenant waives all rights of
redemption or relief from forfeiture under Sections 1174 and 1179 of the
California Code of Civil Procedure and California Civil Code Section 3275 and
under any other present or future law, in the event Tenant is evicted or
Landlord otherwise lawfully takes possession of the Premises by reason of any
default by Tenant.

 

(b)                                 Landlord may exercise the remedy described
in Section 1951.4 of the California Civil Code (Landlord may continue the lease
in effect after lessee’s breach and abandonment and recover rent as it becomes
due, if lessee has the right to sublet or assign, subject only to reasonable
limitations).  Notwithstanding any election to continue this Lease in effect,
Landlord may at any time thereafter elect to terminate this Lease or in any
other manner exercise its rights and remedies for Tenant’s default.

 

Section 19.3.                          Upon the occurrence of an Event of
Default, whether or not this Lease and/or Tenant’s right of possession is
terminated, Landlord shall have the right, at its sole option, to terminate any
renewal or expansion right contained in this Lease and to grant or withhold any
consent or approval pursuant to this Lease in its sole and absolute discretion. 
The provisions contained in this Section shall be in addition to, and shall not
prevent the enforcement of, any claim Landlord may have against Tenant for
anticipatory breach of this Lease (including, the right of injunction and the
right to invoke any remedy allowed at law or in equity as if reentry, summary
proceedings and other remedies were not provided for herein).  If Landlord is
entitled, or Tenant is required, pursuant to any provision hereof to take any
action upon the end of the Lease Term, then Landlord shall be entitled, and
Tenant shall be required, to take such action also upon the termination of
Tenant’s right of possession.

 

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Section 19.4.                          All rights and remedies of Landlord set
forth in this Lease are cumulative and in addition to all other rights and
remedies available to Landlord at law or in equity, including those available as
a result of any anticipatory breach of this Lease.  The exercise by Landlord of
any such right or remedy shall not prevent the concurrent or subsequent exercise
of any other right or remedy.  No delay or failure by Landlord or Tenant to
exercise or enforce any of its respective rights or remedies or the other
party’s obligations (except to the extent a time period is specified in this
Lease therefor) shall constitute a waiver of any such or subsequent rights,
remedies or obligations.  Neither party shall be deemed to have waived any
default by the other party unless such waiver expressly is set forth in a
written instrument signed by the party against whom such waiver is asserted.  If
Landlord waives in writing any default by Tenant, such waiver shall not be
construed as a waiver of any covenant, condition or agreement set forth in this
Lease except as to the specific circumstances described in such written waiver.

 

Section 19.5.                          If Landlord shall institute proceedings
against Tenant and a compromise or settlement thereof shall be made, then the
same shall not constitute a waiver of the same or of any other covenant,
condition or agreement set forth herein, nor of any of Landlord’s rights
hereunder.  Neither the payment by Tenant of a lesser amount than the monthly
installment of Base Rent, additional rent or of any sums due hereunder nor any
endorsement or statement on any check or letter accompanying a check for payment
of rent or other sums payable hereunder shall be deemed an accord and
satisfaction.  Landlord may accept the same without prejudice to Landlord’s
right to recover the balance of such rent or other sums or to pursue any other
remedy.  Notwithstanding any request or designation by Tenant, Landlord may
apply any payment received from Tenant to any payment then due.  No reentry by
Landlord, and no acceptance by Landlord of keys from Tenant, shall be considered
an acceptance of a surrender of this Lease.  No payment by Tenant shall be
deemed a waiver of Tenant’s right to contest the underlying obligation or
payment made, whether or not payment is expressly made under protest.

 

Section 19.6.                          If Tenant fails to make any payment to
any third party or to do any act herein required to be made or done by Tenant,
then Landlord may, after written notice to Tenant, but shall not be required to,
make such payment or do such act.  The taking of such action by Landlord shall
not be considered a cure of such default by Tenant or prevent Landlord from
pursuing any remedy it is otherwise entitled to in connection with such
default.  If Landlord elects to make such payment or do such act, then all
expenses incurred by Landlord, plus interest thereon at the Default Rate from
the date incurred by Landlord to the date of payment thereof by Tenant, shall
constitute additional rent due hereunder and shall be paid by Tenant to Landlord
within thirty (30) days following delivery by Landlord to Tenant of statements
therefor.

 

Section 19.7.                          If Tenant fails to make any payment of
(a) Base Rent or any monthly scheduled payment of Tenant’s Proportionate Share
of Operating Charges or Real Estate Taxes when due or (b) other additional rent
or any other sum within five (5) days after the date such payment is due and
payable, then Landlord shall have the right to impose upon Tenant in writing a
late charge of five percent (5%) of the amount of such payment.  In addition,
such delinquent amount shall bear interest at the Default Rate from the date
such payment became due to the date of payment thereof by Tenant.  Such late
charge and interest shall constitute additional rent due hereunder without any
notice or demand.  Notwithstanding anything to the contrary herein, no such late
charge or interest shall be assessed on the first (1st) occasion in any twelve
(12) month

 

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period that any additional rent or other sum described in clause (b) above is
not received by Landlord or its designee when due.

 

Section 19.8.                          If more than one natural person or entity
shall constitute Tenant, then the liability of each such person or entity shall
be joint and several.  If Tenant is a general partnership or other entity the
partners or members of which are subject to personal liability, then the
liability of each such partner or member shall be joint and several.  No waiver,
release or modification of the obligations of any such person or entity shall
affect the obligations of any other such person or entity.

 

ARTICLE XX

 

BANKRUPTCY

 

Section 20.1.                          Upon occurrence of an Event of
Bankruptcy, Landlord shall have all rights and remedies available pursuant to
Article XIX; provided, however, that while a Case is pending, Landlord’s right
to terminate this Lease shall be subject, to the extent required by the
Bankruptcy Code, to any rights of the Trustee to assume or assume and assign
this Lease pursuant to the Bankruptcy Code.  After the commencement of a Case: 
(i) Trustee shall perform all post-petition obligations of Tenant under this
Lease; and (ii) if Landlord is entitled to damages (including unpaid rent)
pursuant to the terms of this Lease, then all such damages shall be entitled to
administrative expense priority pursuant to the Bankruptcy Code.  Tenant
acknowledges that this Lease is a lease of nonresidential real property and
therefore Tenant, as the debtor in possession, or the Trustee shall not seek or
request any extension of time to assume or reject this Lease or to perform any
obligations of this Lease which arise from or after the order of relief.  Any
person or entity to which this Lease is assigned pursuant to the Bankruptcy Code
shall be deemed without further act or deed to have assumed all of the
obligations arising under this Lease on and after the date of assignment, and
any such assignee shall upon request execute and deliver to Landlord an
instrument confirming such assumption.  Trustee shall not have the right to
assume or assume and assign this Lease unless Trustee promptly (a) cures all
Events of Default, (b) compensates Landlord for damages incurred as a result of
such Events of Default, (c) provides adequate assurance of future performance on
the part of Trustee as debtor in possession or Trustee’s assignee, and (d)
complies with all other requirements of the Bankruptcy Code.  If Trustee desires
to assume and assign this Lease to any person who shall have made a bona fide
offer, then Trustee shall give Landlord written notice of such proposed
assignment (which notice shall set forth the name and address of such person,
all of the terms and conditions of such offer, and the adequate assurance to be
provided Landlord to assure such person’s future performance under this Lease)
no later than fifteen (15) days after receipt by Trustee of such offer, but in
no event later than thirty (30) days prior to the date Trustee shall make
application to the appropriate court for authority and approval to enter into
such assignment and assumption, and Landlord shall thereupon have the prior
right and option, to be exercised by notice to Trustee given at any time prior
to the effective date of such proposed assignment, to accept (or to cause
Landlord’s designee to accept) an assignment of this Lease upon the same terms
and conditions and for the same consideration, if any, as the bona fide offer
made by such person, less any brokerage commissions which may be payable out of
the consideration to be paid by such person for the assignment of this Lease. 
If Trustee fails to assume or assume and assign this Lease in accordance with
the requirements of the Bankruptcy Code within sixty (60) days after the

 

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initiation of the Case (or such other period as may be provided by the
Bankruptcy Code or allowed by the United States Bankruptcy Court for same), then
Trustee shall be deemed to have rejected this Lease.  If this Lease is rejected
or deemed rejected, then Landlord shall have all rights and remedies available
to it pursuant to Article XIX.

 

ARTICLE XXI

 

SUBORDINATION

 

Section 21.1.                          Landlord represents and warrants to
Tenant that, as of the date hereof, there are no existing Mortgages encumbering
or recorded against the Property.  This Lease is subject and subordinate to the
lien, provisions, operation and effect of all Mortgages, to all funds and
indebtedness intended to be secured thereby, and to all renewals, extensions,
modifications, recastings or refinancings thereof; provided that this Lease
shall only be subject and subordinate to any such Mortgage if the mortgagee
executes a subordination and non-disturbance agreement (“SNDA”), in mortgagee’s
customary form consistent with the provisions of Section 21.2 and with such
additional changes as may be requested by Tenant and approved by such mortgagee,
each acting reasonably, whereby such mortgagee agrees that, in consideration of
Tenant’s subordination of this Lease to any such Mortgage, the mortgagee shall
accept this Lease and shall not disturb Tenant’s leasehold interest in the
Premises so long as there is no Event of Default.  The holder of any Mortgage to
which this Lease is subordinate shall have the right (subject to any required
approval of the holders of any superior Mortgage) at any time to declare this
Lease to be superior to the lien, provisions, operation and effect of such
Mortgage.

 

Section 21.2.                          Tenant shall, within fifteen (15)
business days following Landlord’s request, execute any commercially reasonable
document consistent with this Article XXI confirming such subordination.  Tenant
waives the provisions of any statute or rule of law now or hereafter in effect
which may give or purport to give Tenant any right to terminate or otherwise
adversely affect this Lease and Tenant’s obligations hereunder in the event any
foreclosure proceeding is prosecuted or completed or in the event the Building,
the Land or Landlord’s interest therein is transferred by foreclosure, by deed
in lieu of foreclosure or otherwise, provided such mortgagee agrees to accept
this Lease and be bound as Landlord and shall not disturb Tenant’s occupancy
(and shall complete the Base Building Work and pay the Improvements Allowance,
to the extent such obligations are outstanding), so long as there is no Event of
Default and Tenant attorns to any such mortgagee or transferee and shall
recognize such transferee as the landlord under this Lease.  Tenant agrees that
upon any such attornment, such mortgagee or transferee shall not be (a) bound by
or required to credit Tenant with any prepayment of the Base Rent or Additional
Rent more than thirty (30) days in advance or any deposit, rental security or
any other sums deposited with any prior landlord under this Lease (including
Landlord) unless said sum is actually received by such transferee, (b) bound by
any amendment, modification or termination of this Lease made without the
consent of the holder of each Mortgage existing as of the date of such amendment
(except for the extension of the Lease Term which is expressly contemplated by
the Renewal Option granted in this Lease), (c) liable for any breach, act or
omission of any prior landlord under this Lease (including Landlord) or any
damages arising therefrom (provided that nothing in this clause (c) shall
relieve any such successor to Landlord of its obligations from and after the
date of such succession); (d) subject to any offsets or defenses which Tenant
might have against any prior landlord (including Landlord)

 

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except to the extent Tenant has the right to offset any unpaid portion of the
Improvements Allowance), (e) liable for any late completion of any construction
of the Premises or tenant improvement work to the Premises commenced or agreed
to by any prior landlord under the Lease (including Landlord) other than the
Base Building Work, (f) liable for payment of any damages, fees or penalties
payable by any landlord under this Lease (including Landlord) to Tenant
including but not limited to fees or penalties for failure to deliver the
Premises in a timely fashion, or (g) bound by any obligation which may appear in
this Lease to pay any sum of money to Tenant (other than the Improvements
Allowance); provided, however, that after succeeding to Landlord’s interest
under this Lease, such transferee shall agree to perform in accordance with the
terms of this Lease all obligations of Landlord arising after the date of
transfer.  Within fifteen (15) business days following such attornment, if
requested by such transferee, Tenant shall execute, acknowledge and deliver any
requisite or appropriate document submitted to Tenant confirming such attornment
to the extent reasonably acceptable to Tenant consistent with the SNDA or the
terms of this Article 21.

 

ARTICLE XXII

 

HOLDING OVER

 

Section 22.1.                          Tenant acknowledges that it is extremely
important that Landlord have substantial advance notice of the date on which
Tenant will vacate the Premises, and that if Tenant fails to surrender the
Premises or any portion thereof at the expiration or earlier termination of the
Lease Term, then it will be conclusively presumed that the value to Tenant of
remaining in possession, and the loss that will be suffered by Landlord as a
result thereof, far exceed the Base Rent and additional rent that would have
been payable had the Lease Term continued during such holdover period. 
Therefore, if Tenant (or anyone claiming through Tenant) does not immediately
surrender the Premises or any portion thereof upon the expiration or earlier
termination of the Lease Term, then the monthly holdover rent payable by Tenant
(x) for the first thirty (30) days of such holding over, shall be equal to the
greater of (i) fair market rent for the entire Premises, or (ii) the additional
rent and other sums that would have been payable pursuant to the provisions of
this Lease if the Lease Term had continued during such holdover period plus one
hundred fifty percent (150%) of the Base Rent that was payable for the last full
calendar month prior to such expiration or earlier termination of the Lease
Term, and (y) following such thirty (30) day period, shall be equal to the
greater of (i) fair market rent for the entire Premises, or (ii) the additional
rent and other sums that would have been payable pursuant to the provisions of
this Lease if the Lease Term had continued during such holdover period plus two
hundred percent (200%) of the Base Rent that was payable for the last full
calendar month prior to such expiration or earlier termination of the Lease
Term.  Such rent shall be computed by Landlord and paid by Tenant on a monthly
basis and shall be payable on the first day of such holdover period and the
first day of each calendar month thereafter during such holdover period until
the Premises have been vacated.  Notwithstanding any other provision of this
Lease, Landlord’s acceptance of such rent shall not in any manner adversely
affect Landlord’s other rights and remedies, including Landlord’s right to evict
Tenant and to recover all damages.  Any such holdover shall be deemed to be a
tenancy at sufferance and not a tenancy at will or tenancy from month to month. 
In no event shall any holdover be deemed a permitted extension or renewal of the
Lease Term, and nothing contained herein shall be construed to constitute
Landlord’s consent to any holdover or to give Tenant any right with respect
thereto.

 

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ARTICLE XXIII

 

COVENANTS OF LANDLORD

 

Section 23.1.                          Landlord covenants that it has the right
to enter into this Lease, and that if Tenant shall perform all of its
obligations hereunder prior to the expiration of applicable cure periods
following notice of any default, if applicable, then, subject to the provisions
of this Lease, Tenant shall during the Lease Term peaceably and quietly occupy
and enjoy the full possession of the Premises (i.e., quiet enjoyment) without
hindrance by Landlord or Landlord’s Agents.

 

Section 23.2.                          Subject to other applicable terms and
provisions expressly provided in this Lease, Landlord reserves the following
rights:  (a) to change the street address and name of the Building provided that
Tenant’s access to the Premises is not permanently, materially and adversely
affected; (b) to create additional entrances to the Building and to construct
additions to the Building provided that Tenant’s access to the Premises is not
permanently, materially and adversely affected; (c) to erect, use and maintain
pipes, wires, structural supports, ducts and conduits in and through the plenum
areas of the Premises; (d) to use or permit the use of the roof areas (but in a
manner which shall limit any interference with Tenant’s use of the Roof Deck),
the sidewalks and other exterior areas; (e) to resubdivide the Land or to
combine the Land with other lands; (f) if Tenant vacates the Premises prior to
the expiration of the Lease Term, to make Alterations to or otherwise prepare
the Premises for reoccupancy without relieving Tenant of its obligation to pay
all Base Rent, additional rent and other sums due under this Lease through such
expiration; (g) to construct improvements (including kiosks) on the Land and in
the public and Common Areas of the Building; (h) to prohibit smoking in the
entire Building or portions thereof (including the Premises), so long as such
prohibitions are in accordance with applicable law; and (i) if any excavation or
other substructure work shall be made or authorized to be made upon land
adjacent to the Building or the Land, to enter the Premises for the purpose of
doing such work as is required to preserve the walls of the Building and to
preserve the land from injury or damage and to support such walls and land by
proper foundations.  Subject to the other applicable terms and provisions
expressly provided in this Lease, Landlord may exercise any or all of the
foregoing rights without being deemed to be guilty of an eviction, actual or
constructive, or a disturbance of Tenant’s business or use or occupancy of the
Premises and Tenant shall have no claim against Landlord in connection
therewith.  Landlord shall not take any of the foregoing actions if the same
will result in a material reduction in Tenant’s rights or access to the
Premises, or otherwise materially interfere with Tenant’s ability to use the
Premises for the Permitted Uses, and Landlord shall use reasonable efforts to
minimize interference with Tenant’s normal business operations in the Premises
(subject, however, in all cases to governmental requirements, emergencies and/or
temporary maintenance and repair activities, and in no event shall Landlord have
any obligation to employ contractors or labor at overtime or other premium pay
rates or incur any other overtime costs).

 

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ARTICLE XXIV

 

GENERAL PROVISIONS

 

Section 24.1.                          Tenant acknowledges that neither Landlord
nor any broker, agent or employee of Landlord has made any representation or
promise with respect to the Premises or any portion of the Building except as
herein expressly set forth, and no right, privilege, easement or license is
being acquired by Tenant except as herein expressly set forth.

 

Section 24.2.                          Nothing contained in this Lease shall be
construed as creating any relationship between Landlord and Tenant other than
that of landlord and tenant, and no estate shall pass out of Landlord.  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 Premises, use the name of the
Building as Tenant’s business address after Tenant vacates the Premises.

 

Section 24.3.                          Landlord and Tenant each warrants to the
other that in connection with this Lease it has not employed or dealt with any
broker, agent or finder, other than the Brokers.  It is understood that Landlord
shall pay the Brokers pursuant to separate agreements.  Tenant shall indemnify
and hold Landlord harmless from and against any claim for brokerage or other
commissions, or for a lien under any applicable broker’s lien law, asserted by
any broker, agent or finder employed by Tenant or with whom Tenant has dealt,
other than the Brokers.  Landlord shall indemnify and hold Tenant harmless from
and against any claim for brokerage or other commissions asserted by the Brokers
and any other broker, agent or finder employed by Landlord or with whom Landlord
has dealt.  Tenant’s and Landlord’s indemnities set forth in this Section shall
survive the expiration or earlier termination of the Lease Term.

 

Section 24.4.                          At any time and from time to time, upon
not less than ten (10) business days’ prior written notice, Tenant and each
subtenant, assignee, licensee or concessionaire or occupant of Tenant shall
execute, acknowledge and deliver to Landlord and/or any other person or entity
designated by Landlord, a written statement certifying:  (a) that this Lease is
unmodified and in full force and effect (or if there have been modifications,
that this Lease is in full force and effect as modified and stating the
modifications); (b) the dates to which the rent and any other charges have been
paid; (c) to Tenant’s knowledge, whether or not Landlord is in default in the
performance of any obligation, and if so, specifying the nature of such default;
(d) the address to which notices to Tenant are to be sent; (e) that this Lease
is subject and subordinate to all Mortgages encumbering the Building or the Land
(subject to the provisions of Article XXI); (f) that Tenant has accepted the
Premises and that all work thereto has been completed (or if such work has not
been completed, specifying the incomplete work); and (g) such other matters as
Landlord may reasonably request.  Any such statement may be relied upon by any
owner of the Building or the Land, any prospective purchaser of the Building or
the Land, any holder or prospective holder of a Mortgage or any other person or
entity.  Tenant acknowledges that time is of the essence to the delivery of such
statements and that Tenant’s failure to deliver timely such statements may cause
substantial damages resulting from, for example, delays in obtaining financing.

 

Section 24.5.                          TO THE EXTENT PERMITTED BY LAW, LANDLORD,
TENANT, ALL GUARANTORS AND ALL GENERAL PARTNERS EACH WAIVES TRIAL BY JURY IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT IN CONNECTION WITH ANY MATTER
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF
LANDLORD AND TENANT HEREUNDER, TENANT’S USE OR OCCUPANCY OF THE PREMISES, AND/OR
ANY CLAIM OF

 

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INJURY OR DAMAGE.  TENANT CONSENTS TO SERVICE OF PROCESS AND ANY PLEADING
RELATING TO ANY SUCH ACTION AT THE PREMISES; PROVIDED, HOWEVER, THAT NOTHING
HEREIN SHALL BE CONSTRUED AS REQUIRING SUCH SERVICE AT THE PREMISES.  TENANT
WAIVES ANY RIGHT TO RAISE ANY NON-COMPULSORY COUNTERCLAIM IN ANY SUMMARY OR
EXPEDITED ACTION OR PROCEEDING INSTITUTED BY LANDLORD.  LANDLORD, TENANT, ALL
GUARANTORS AND ALL GENERAL PARTNERS EACH WAIVES ANY OBJECTION TO THE VENUE OF
ANY ACTION FILED IN ANY COURT SITUATED IN THE JURISDICTION IN WHICH THE BUILDING
IS LOCATED, AND WAIVES ANY RIGHT, CLAIM OR POWER, UNDER THE DOCTRINE OF FORUM
NON CONVENIENS OR OTHERWISE, TO TRANSFER ANY SUCH ACTION TO ANY OTHER COURT.

 

Section 24.6.                          All notices or other communications
required under this Lease shall be in writing and shall be deemed duly given and
received upon receipt when delivered in person (with receipt therefor), upon
receipt after deposit with a recognized overnight delivery service, or upon
receipt after being sent by certified or registered mail, return receipt
requested, postage prepaid, to the following addresses:  (a) if to Landlord, at
the Landlord Notice Address specified in Article I; (b) if to Tenant, at the
Tenant Notice Address specified in Article I.  Either party may change its
address for the giving of notices by written notice given in accordance with
this Section.  If Landlord or the holder of any Mortgage notifies Tenant in
writing that a copy of any notice of default to Landlord shall be sent to such
holder at a specified address, then Tenant shall send (in the manner specified
in this Section and at the same time such notice is sent to Landlord) a copy of
each notice of default on the part of Landlord to such holder, and no such
notice of default shall be considered duly sent unless such copy is so sent to
such holder.  Any notice shall be deemed given on the date that acceptance is
refused.  Any cure of Landlord’s default by such holder shall be treated as
performance by Landlord.

 

Section 24.7.                          Each provision of this Lease shall be
valid and enforceable to the fullest extent permitted by law.  If any provision
of this Lease or the application thereof to any person or circumstance shall to
any extent be invalid or unenforceable, then such provision shall be deemed to
be replaced by the valid and enforceable provision most substantively similar to
such invalid or unenforceable provision, and the remainder of this Lease and the
application of such provision to persons or circumstances other than those as to
which it is invalid or unenforceable shall not be affected thereby.  Nothing
contained in this Lease shall be construed as permitting Landlord to charge or
receive interest in excess of the maximum rate allowed by law.

 

Section 24.8.                          Feminine, masculine or neuter pronouns
shall be substituted for those of another form, and the plural or singular shall
be substituted for the other number, in any place in which the context may
require such substitution.

 

Section 24.9.                          The provisions of this Lease shall be
binding upon and inure to the benefit of the parties and each of their
respective representatives, successors and assigns, subject to the provisions
herein restricting assignment or subletting.

 

Section 24.10.                   This Lease contains and embodies the entire
agreement of the parties hereto and supersedes all prior agreements,
negotiations, letters of intent, proposals, representations, warranties,
understandings, suggestions and discussions, whether written or oral,

 

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between the parties hereto.  Any representation, inducement, warranty,
understanding or agreement that is not expressly set forth in this Lease shall
be of no force or effect.  This Lease may be modified or changed in any manner
only by an instrument signed by both parties.  This Lease includes and
incorporates all exhibits, schedules and riders attached hereto.  Tenant shall,
at Landlord’s request, promptly execute any requisite document, certificate or
instrument that is reasonably necessary or desirable to clarify or carry out the
force and effect of any terms or conditions of, or obligation of Tenant under,
this Lease, so long as such document shall not (and could not by its terms)
materially adversely affect Tenant’s use or occupancy of the Premises or
materially increase any obligations or decrease any rights of Tenant hereunder.

 

Section 24.11.                   This Lease shall be governed by the Laws of the
jurisdiction in which the Building is located, without regard to the application
of choice of law principles.  There shall be no presumption that this Lease be
construed more strictly against the party who itself or through its agent
prepared it (it being agreed that all parties hereto have participated in the
preparation of this Lease and that each party had the opportunity to consult
legal counsel before the execution of this Lease).  No custom or practice which
may evolve between the parties in the administration of the terms of this Lease
shall be construed to waive Landlord’s right to insist on Tenant’s strict
performance of the terms of this Lease.

 

Section 24.12.                   Headings are used for convenience and shall not
be considered when construing this Lease.

 

Section 24.13.                   The submission of an unsigned copy of this
document to Tenant shall not constitute an offer or option to lease the
Premises.  This Lease shall become effective and binding only upon execution and
delivery by both Landlord and Tenant.

 

Section 24.14.                   Time is of the essence with respect to each of
Tenant’s and Landlord’s obligations hereunder.

 

Section 24.15.                   This Lease may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
together constitute one and the same document.  Faxed signatures shall have the
same binding effect as original signatures.

 

Section 24.16.                   Neither this Lease nor a memorandum thereof
shall be recorded.

 

Section 24.17.                   Subject to the provisions of Section 23.2 above
and to Exhibit 1.7, Landlord reserves the right to make reasonable changes and
modifications to the plans and specifications for the Building without Tenant’s
consent, provided such changes or modifications do not materially and adversely
change the character of same.

 

Section 24.18.                   Except as otherwise provided in this Lease, any
additional rent or other sum owed by Tenant to Landlord, and any cost, expense,
damage or liability incurred by Landlord for which Tenant is liable, shall be
considered additional rent payable pursuant to this Lease to be paid by Tenant
no later than thirty (30) days after the date Landlord notifies Tenant of the
amount thereof.

 

Section 24.19.                   Tenant’s liabilities and obligations with
respect to the period prior to the expiration or earlier termination of the
Lease Term shall survive such expiration or earlier

 

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termination.  Landlord’s liabilities and obligations with respect to refund of
the Security Deposit or overpayments by Tenant of Real Estate Taxes or Operating
Charges, if and to the extent required by the provisions of this Lease, shall
survive the expiration or earlier termination of this Lease.

 

Section 24.20.                   If Landlord or Tenant is in any way delayed or
prevented from performing any obligation (except, with respect to Tenant, its
obligations to pay Rent and other sums due under this Lease, any obligation with
respect to insurance pursuant to Article XIII, any obligation to give notice
with respect to extensions, expansions or otherwise, and any holdover) due to
fire, act of God, governmental act or failure to act, strike, labor dispute,
inability to procure materials, or any cause beyond Landlord’s or Tenant’s (as
applicable) reasonable control (whether similar or dissimilar to the foregoing
events) (“Force Majeure”), then the time for performance of such obligation
shall be excused for the period of such delay or prevention and extended for a
period equal to the period of such delay or prevention.  No force majeure event
shall delay the Rent Commencement Date (except as expressly set forth in this
Lease) or excuse the timely payment of all items of rent by Tenant.  Financial
disability or hardship shall never constitute a force majeure event.

 

Section 24.21.                   Landlord’s review, approval and consent powers
(including the right to review plans and specifications) are for its benefit
only.  Such review, approval or consent (or conditions imposed in connection
therewith) shall be deemed not to constitute a representation concerning
legality, safety or any other matter.

 

Section 24.22.                   The deletion of any printed, typed or other
portion of this Lease shall not evidence the parties’ intention to contradict
such deleted portion.  Such deleted portion shall be deemed not to have been
inserted in this Lease.

 

Section 24.23.                   At the expiration or earlier termination of the
Lease Term, Tenant shall deliver to Landlord all keys and security cards to the
Building and the Premises, whether such keys or security cards were furnished by
Landlord or otherwise procured by Tenant, and shall inform Landlord of the
combination of each lock, safe and vault, if any, in the Premises.

 

Section 24.24.                   Tenant represents and warrants that the person
executing and delivering this Lease on Tenant’s behalf is duly authorized to so
act; that Tenant is duly organized, is qualified to do business in the
jurisdiction in which the Building is located, is in good standing under the
Laws of the state of its organization and the Laws of the jurisdiction in which
the Building is located, and has the power and authority to enter into this
Lease; that Tenant is not, and the entities or individuals constituting Tenant
or which may own or control Tenant or which may be owned or controlled by Tenant
are not, among the individuals or entities identified on any list compiled by
the U.S. Government for the purpose of identifying suspected terrorists, and
Tenant is not engaging in this transaction on behalf of any such individual or
entity; that Tenant is not in violation of any anti-money laundering Law; and
that all action required to authorize Tenant and such person to enter into this
Lease has been duly taken.

 

Section 24.25.                   Landlord represents and warrants that the
person executing and delivering this Lease on Landlord’s behalf is duly
authorized to so act; that Landlord is duly organized, is qualified to do
business in the jurisdiction in which the Building is located, is in good
standing

 

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under the Laws of the state of its organization and the Laws of the jurisdiction
in which the Building is located, and has the power and authority to enter into
this Lease; that Landlord is not, and the entities or individuals constituting
Landlord or which may own or control Landlord or which may be owned or
controlled by Landlord are not, among the individuals or entities identified on
any list compiled by the U.S. Government for the purpose of identifying
suspected terrorists, and Landlord is not engaging in this transaction on behalf
of any such individual or entity; that Landlord is not in violation of any
anti-money laundering Law; and that all action required to authorize Landlord
and such person to enter into this Lease has been duly taken.

 

Section 24.26.                   Any elimination or shutting off of light, air,
or view by any structure which may be erected on lands adjacent to the Building,
or any noise in connection with activities permitted by this Lease, shall in no
way effect this Lease or impose any liability on Landlord.

 

Section 24.27.                   In the event Landlord or Tenant is required or
elects to take legal action against the other party to enforce the provisions of
this Lease, then the prevailing party in such action shall be entitled to
collect from the other party its costs and expenses incurred in connection with
the legal action (including reasonable attorneys’ fees and court costs). 
Notwithstanding the foregoing, if Landlord shall take any legal action for
collection of rent or file any eviction proceedings (whether summary or
otherwise) for the non-payment of rent, and Tenant shall make payment of such
rent prior to the rendering of any judgment, the Landlord shall be entitled to
collect, and Tenant shall pay as additional rent, all filing fees and other
costs in connection therewith (including reasonable attorneys’ fees).

 

Section 24.28.                   If at any time Tenant is not a publicly traded
company, from time to time upon Landlord’s request, but not more often than one
(1) time per year plus at any time from time to time in connection with a
financing, investment, sale or similar transaction by Landlord, Tenant shall
deliver to Landlord financial statements for Tenant (which shall be audited only
if otherwise available) for the most recent annual period for which such
statements are prepared, which statements shall be prepared in accordance with
generally accepted accounting principles and certified by an independent
certified public accountant acceptable to Landlord or by Tenant’s chief
financial officer, and any other materials reasonably requested by Landlord in
connection with Tenant’s financial condition.  Landlord shall keep all such
financial information received from Tenant confidential and shall not disclose
the same to third parties other than Permitted Recipients, in each case after
advising such parties that the information contained therein is to be maintained
confidential.

 

ARTICLE XXV

 

BACKUP GENERATOR

 

Section 25.1.                          Tenant and Landlord shall agree upon a
location (the “Generator Installation Area”) which is mutually agreeable to
Landlord and Tenant to which Tenant shall enjoy 24-hour access either (i) within
the Building or (ii) on the roof of the Building, which Generator Installation
Area is to be used by Tenant solely for the installation, operation,
maintenance, repair and replacement during the Lease Term of a back-up generator
and related fuel supply and infrastructure to support Tenant’s critical
facilities and equipment (the

 

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“Generator”).  Tenant’s installation and operation of the Generator and its
obligations with respect thereto shall be all in accordance with the terms,
provisions, conditions and agreements contained in this Lease.

 

Section 25.2.                          Tenant shall install the Generator in the
Generator Installation Area at its sole cost and expense, at such times and in
such manner as Landlord may reasonably designate (including venting the
Generator exhaust to the exterior of the Building if the Generator is installed
within the Building) and in accordance with all of the applicable provisions of
this Lease (including, without limitation, Article IX).  Landlord shall not be
obligated to perform any work or incur any expense to prepare the Generator
Installation Area for Tenant’s use thereof.

 

Section 25.3.                          Tenant shall not install or operate the
Generator until it receives prior written approval from Landlord, which approval
Landlord agrees shall not be unreasonably withheld, conditioned or delayed,
provided and on the condition that Tenant complies with all of the requirements
of this Lease (including, without limitation, Article IX and this Article XXV). 
Prior to commencing such installation, Tenant shall provide Landlord with
(i) copies of all required permits, licenses and authorizations which Tenant
will obtain at its own expense and which Tenant will maintain at all times
during the operation of the Generator; (ii) a certificate of insurance
evidencing insurance coverage as required by this Lease and any other insurance
reasonably required by Landlord for the installation and operation of the
Generator and (iii) a copy of a service and maintenance agreement in a form
reasonably acceptable to Landlord with a contractor reasonably acceptable to
Landlord, which contract shall provide, at a minimum, for the generation of
annual inspection reports by such contractor, copies of which shall be provided
to Landlord.  Landlord may withhold approval if the installation or operation of
the Generator reasonably would be expected to damage the structural integrity of
the Building.  Tenant agrees to reimburse Landlord for reasonable expenses
incurred in connection with the review and approval of Tenant’s plans showing
the proposed installation of the Generator.

 

Section 25.4.                          Tenant covenants that (i) Tenant shall
repair any damage to the roof or the Building caused by the installation or
operation of the Generator, (ii) the installation and operation of the Generator
shall not cause interference with any telecommunications, mechanical or other
systems either located or servicing the Building (whether belonging to or
utilized by Landlord) or located at or servicing any building, premises or
location in the vicinity of the Building, (iii) if installed within the
Building, exhaust from the Generator shall be vented to the exterior of the
Building, and (iv) the installation, existence, maintenance and operation of the
Generator shall not constitute a violation of any applicable Laws, ordinances,
rules, order, regulations, etc., of any Federal, State, or municipal authorities
having jurisdiction thereover.

 

Section 25.5.                          Tenant shall pay to Landlord as
Additional Rent (the “Generator Rent”), all applicable taxes or governmental
charges, fees, or impositions imposed upon Landlord and arising out of Tenant’s
use of the Generator Installation Area, and the amount, if any, by which
Landlord’s insurance premiums increase as a result of the installation of the
Generator, which Generator Rent shall be Additional Rent hereunder.

 

Section 25.6.                          Tenant covenants and agrees that the
installation, operation and removal of the Generator will be at its sole risk. 
Tenant agrees to indemnify and defend Landlord and its employees and agents
against all Costs (by counsel of Landlord’s choice and reasonably

 

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acceptable to Tenant) incurred in connection with the loss of life, personal
injury, damage to property or business or any other loss or injury or as a
result of any litigation arising out of the installation, use, operation, or
removal of the Generator by Tenant or its transferee, including any liability
arising out of Tenant’s violation of its obligations under Section 25.4 (except
if such liability is caused by the gross negligence or willful misconduct of
Landlord or its employees, agents, or contractors).

 

Section 25.7.                          Within fifteen (15) days following the
expiration or earlier termination of this Lease or the permanent termination of
the operation of the Generator by Tenant, Tenant shall, at its sole cost and
expense if required by Landlord, (i) remove the Generator from the Generator
Installation Area and the Building in accordance with the terms hereof,
(ii) leave the Generator Installation Area in good order and repair, reasonable
wear and tear excepted and (iii) pay all amounts due and owing with respect to
the Generator in accordance with the provisions of this Article XXV.  If Tenant
does not remove the Generator when so required, at Landlord’s election, Landlord
may remove and dispose of the Generator and charge Tenant for actual costs and
expenses incurred as Additional Rent.  Notwithstanding that Tenant’s use of the
Generator Installation Area shall be subject at all times to and shall be in
accordance with the terms, covenants, conditions and agreements contained in
this Lease, if the Generator shall be installed on the roof the Generator
Installation Area shall not be deemed part of the Premises.  All Tenant
obligations under this this Article XXV shall survive the expiration of the
Lease Term or the earlier termination of this Lease.

 

ARTICLE XXVI

 

MEASUREMENT STANDARD

 

Section 26.1.                          The parties agree that the rentable area
figures set forth in this Lease are conclusive except as expressly provided in
this Article XXVI.  Following completion of the improvements to the Premises by
Tenant, Landlord shall provide Tenant with a certification of the square footage
and rentable area figures set forth in this Lease by Landlord’s architect in
accordance with [Floor Area Measurement Best Practice #1; Office Buildings:
Standard Methods for Measurement as published by the Secretariat, Building
Owners and Managers Association International (“BOMA”) (ANSI/BOMA Z65.1-2010,
Method B the Office Buildings and BOMA Gross Area Standard (ANSI/BOMA Z65.3
2009), Approved February 4, 2014].  If Tenant disputes the results within ten
(10) business days following the receipt of such certification, then Landlord,
Landlord’s architect and Tenant shall meet and resolve the dispute within such
ten (10) business day period. If the parties are unable to resolve such dispute
within such ten (10) business days, either of the parties may elect to submit
such dispute to arbitration by directing the California to appoint an arbitrator
who shall have a minimum of ten (10) years’ experience in commercial real estate
disputes and who shall not be affiliated with either Landlord or Tenant.  Both
Landlord and Tenant shall have the opportunity to present evidence and outside
consultants to the arbitrator.  The arbitration shall be conducted in accordance
with the expedited commercial real estate arbitration rules of the AAA insofar
as such rules are not inconsistent with the provisions of this Lease (in which
case the provisions of this Lease shall govern).  The cost of the arbitration
(exclusive of each party’s witness and attorneys’ fees, which shall be paid by
such party) shall be borne equally by the parties.  Within five (5) days of
appointment, the arbitrator shall render a decision and the appropriate
resolution, if any.  The arbitrator’s decision

 

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shall be final and binding on the parties.  In the event that the rentable area
of the Premises shall be adjusted as aforesaid, the parties shall enter into an
amendment to this Lease confirming the rentable square footage of the Premises
and the Building as well as proportional changes in the Base Rent due and any
other charges due under this Lease based upon the rentable square footage of the
Premises.

 

ARTICLE XXVII

 

ROOF DECK

 

Section 27.1.                          Landlord shall construct the Base
Building to accommodate a roof deck as part of the Base Building Work in
accordance with Exhibit 1.7 attached hereto (the “Roof Deck”).  Landlord shall
obtain and maintain any and all licenses, permits, consents or approvals that
may be required by applicable legal requirements in connection with the
construction of the Base Building to accommodate the Roof Deck, all as part of
the Base Building Work, and Tenant shall be responsible for obtaining any
licenses, permits, consents or approvals as necessary for Tenant’s construction
of the Roof Deck and Tenant’s use of the Roof Deck during the Lease Term. 
Subject to Section 27.4 below, Tenant shall have the exclusive right to use the
Roof Deck for outdoor seating and uses ancillary to Tenant’s use of the Premises
(which, in all cases, shall not be open to the general public), and Tenant shall
have the right to install tables, chairs, umbrellas and other furniture to
facilitate outdoor seating and use of the Roof Deck, subject to applicable legal
requirements.  Tenant’s use of the Roof Deck shall be subject to all of the
terms and conditions of this Lease applicable to the Premises except as
otherwise expressly set forth herein.  Tenant shall perform and pay for all
costs associated with Tenant’s use of the Roof Deck, including cleaning costs
related to such use.

 

Section 27.2.                          Landlord shall maintain the roof, roof
membrane and associated supporting structure located underneath the Roof Deck
during the Lease Term in accordance with Landlord’s obligations under
Article VIII of this Lease, provided, however, any additional repairs or
maintenance required to the roof to the extent resulting from Tenant’s use of
the Roof Deck shall be performed by Landlord at Tenant’s sole cost and expense. 
Tenant shall be responsible for any reasonably documented increase in the costs
of normal repairs and maintenance to the roof and roof membrane to the extent
resulting from Tenant’s use of the Roof Deck.  Landlord shall not be required to
provide services to the Roof Deck except as otherwise expressly set forth in
this Lease, provided nothing contained herein shall limit Tenant’s ability to
bring such services to the roof, at Tenant’s sole cost and expense and subject
to the terms of this Lease governing Alterations.  Any Alterations in or to the
Roof Deck shall be deemed to be structural alterations and shall require
Landlord’s approval in accordance with Article IX of this Lease.

 

Section 27.3.                          Tenant shall, on or before the expiration
or earlier termination of the term of this Lease, remove all of Tenant’s
property from the Roof Deck and repair any damage to the roof caused by the
installation or removal of such property, all at Tenant’s expense.  Landlord
shall have no liability for any damage to any of Tenant’s property located in or
on the Roof Deck unless such damage is caused by the gross negligence or willful
misconduct of Landlord or any person claiming by, through or under Landlord.

 

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Section 27.4.                          Notwithstanding the foregoing, Landlord
shall at all times have access to the roof to maintain equipment serving the
Building that is located on the roof.  Landlord shall provide Tenant with
reasonable prior notice of time periods when Landlord intends to access the roof
for the purposes of inspecting or repairing the same.  Landlord shall use
commercially reasonable efforts to minimize interference with Tenant’s use of
the Roof Deck.

 

Section 27.5.                          In addition to the Roof Deck, Tenant, on
a non-exclusive basis and without the payment of any additional rent or other
license fee, but otherwise subject to the terms and conditions of this Lease,
may install, repair and replace, at Tenant’s sole cost and expense, not more
than two satellite dishes/antennae on the roof of the Building each of which
shall be no larger than twenty-four inches (24”) in diameter (and reasonable
equipment and cabling related thereto), for receiving of signals or broadcasts
(as opposed to the generation or transmission of any such signals or broadcasts)
servicing the business conducted by Tenant from within the Premises (all such
equipment is defined collectively as the “Telecommunications Equipment”).  The
location, physical appearance and size of the Telecommunications Equipment shall
be subject to Landlord’s prior reasonable approval.  Tenant shall not install or
operate the Telecommunications Equipment until it receives prior written
approval of the plans and specifications for such work (specifically including,
without limitation, all mounting and waterproofing details), which approval will
not be unreasonably withheld.  Landlord may require Tenant to install screening
around such Telecommunications Equipment, at Tenant’s sole cost and expense, as
reasonably designated by Landlord.  Tenant shall engage Landlord’s roofer before
beginning any rooftop installations or repairs of Telecommunications Equipment,
and shall always comply with the roof warranty governing the protection of the
roof and modifications to the roof.  Tenant shall be responsible for any cost in
relation to interference with or voiding of the roof warranty.

 

Notwithstanding any review or approval by Landlord, Tenant shall remain solely
liable for any damage to any portion of the roof or roof membrane, specifically
including any penetrations, in connection with Tenant’s installation, use,
maintenance and/or repair of such Telecommunications Equipment, and Landlord
shall have no liability in connection therewith.  Tenant shall obtain a letter
from Landlord’s roofer following completion of the installation of and any
subsequent modifications or material repairs to the Telecommunications Equipment
stating that the roof warranty remains in effect.  Tenant, at its sole cost and
expense, shall cause a qualified employee or contractor to inspect the roof at
least quarterly and as often as recommended by the manufacturer of any
Telecommunications Equipment and correct any loose bolts, fittings or other
appurtenances and shall repair any damage to the roof caused by the installation
or operation of Telecommunications Equipment.

 

Tenant shall cooperate with Landlord as reasonably required to accommodate any
re-roofing of the Building during the Lease Term and Tenant shall be responsible
for any costs associated with working around, moving or temporarily relocating
the Telecommunications Equipment.  Landlord shall use commercially reasonable
efforts to complete any such re-roofing as soon as is practicable.  Tenant
agrees that the installation, operation and removal of Telecommunications
Equipment shall be at its sole risk.  Tenant shall indemnify and defend Landlord
and Landlord’s agents and employees against any Costs incurred in connection
with the loss of life, personal injury, damage to property or business or any
other loss or injury (except to the extent due to the negligence or willful
misconduct of Landlord or its employees,

 

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agents or contractors) arising out of the installation, use, operation, or
removal of Telecommunications Equipment by Tenant or its employees, agents, or
contractors, including any liability arising out of Tenant’s violation of this
Section 27.5.  Landlord assumes no responsibility for interference in the
operation of Telecommunications Equipment.  If the Telecommunications Equipment
(i) causes physical damage to the structural integrity of the Building or
damages the roof in any way, or (ii) materially interferes with any
telecommunications, mechanical or other systems located at or servicing the
Building or any building, premises or location in the vicinity of the Building,
in each case in excess of that permissible under applicable Laws (a “Rooftop
Interference”), Tenant shall cooperate with Landlord or any other third party
making such claim to determine the source of the Rooftop Interference and effect
a prompt solution at Tenant’s expense (if Telecommunications Equipment caused
such interference or damage).

 

Landlord reserves the right to cause Tenant to relocate Telecommunications
Equipment located on the roof to comparably functional space on the roof by
giving Tenant prior notice of such intention to relocate and Landlord agrees to
pay the reasonable cost of moving Telecommunications Equipment to such other
space.  Tenant shall arrange for the relocation of Telecommunications Equipment
within sixty (60) days after a comparable space is agreed upon or selected by
Landlord, as the case may be.  In the event Tenant fails to arrange for said
relocation within the sixty (60) day period, Landlord shall have the right to
arrange for the relocation of Telecommunications Equipment.

 

No rights of Tenant under this Section 27.5 may be assigned by Tenant to any
other party, except for Permitted Transferees.  The Telecommunications Equipment
shall, in all instances, comply with all Laws.

 

Section 27.6.                          Except as otherwise set forth in this
Article XXVII, the Roof Deck shall be deemed to be included in the Premises for
all purposes under this Lease, including, without limitation, Tenant’s indemnity
obligations with respect to Landlord pursuant to Section 15.2 above.

 

Section 27.7.                          The rights granted in this Article XXVII
are given in connection with, and as part of the rights created under, this
Lease, and are not separately transferable or assignable.  Tenant shall not
resell in any form the use of the Roof Deck, including, without limitation, the
granting of any licensing or other rights.

 

[Signatures on following page.]

 

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

 

 

LANDLORD:

 

 

 

1400 16TH STREET LLC,

 

a Delaware limited liability company

 

 

 

By:

SKS-PHG 1400 16TH STREET, LLC,

 

 

a Delaware limited liability company,

 

 

its Manager

 

 

 

 

 

 

 

 

By:

/s/ Paul Stein

 

 

Name:

Paul Stein

 

 

Title:

Member

 

 

 

 

 

TENANT:

 

 

 

INVITAE CORPORATION,

 

a Delaware corporation

 

 

 

 

 

By:

/s/ Lee Bendekgey

 

Name:

Lee Bendekgey

 

Title:

CFO

 

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RIDER 1 — GENERAL DEFINITIONS

 

ADA:  the Americans with Disabilities Act and the regulations promulgated
thereunder, as the same may be amended from time to time.

 

Affiliate of Tenant:  (i) a corporation or other business entity into or with
which Tenant shall be merged or consolidated, or to which substantially all of
the assets of Tenant may be transferred or sold; or (ii) a corporation or other
business entity which shall control, be controlled by or be under common control
with Tenant, provided that the proposed use of the Premises is in compliance
with Article VI.  For the purposes hereof, “control” shall be deemed to mean
ownership of not less than fifty percent (50%) of all of the voting stock of
such corporation, or not less than fifty percent (50%) of all of the legal and
equitable interest in any other business entity, if Tenant is not a corporation.

 

Agents:  any agent, employee, subtenant, assignee, contractor, client, licensee,
customer, invitee or guest of a party.

 

Alterations:  any structural or other alterations, decorations, additions,
installations, demolitions, improvements or other changes.

 

Approved Space Plan:  a space plan, approved by both Landlord and Tenant, drawn
to scale which shall include all partition types and locations; all doors and
hardware requirements; all light fixtures and exit lights; all finish materials
including glass, wall and floor finishes; all special ceiling conditions; all
cabinetry and millwork with elevations and details; all modifications to
existing base building HVAC equipment, all electrical receptacles; all data and
voice locations; all floor load requirements which exceed (i) one hundred (100)
pounds per square foot live load and fifteen (15) pounds per square foot dead
load with respect to the first floor of the Building and (ii) fifty (50) pounds
per square foot live load and fifteen (15) pounds per square foot dead load with
respect to the second floor of the Building; and the seating capacity of all
conference rooms and furniture workstation areas.  All of Tenant’s plans shall
be prepared by a licensed architect approved by Landlord and in a form
sufficient to secure approvals of applicable governmental authorities.

 

Bankruptcy Code:  Title 11 of the United States Code, as amended.

 

Building Structure and Systems:  the exterior walls, Common Areas, main lobby in
the Building, slab floors, exterior windows, load bearing elements, foundations,
roof, roof membrane, skylights, columns, beams, shafts, stairs, existing
stairwells, elevators, and the base building mechanical, electrical, life
safety, sprinkler, HVAC, and plumbing systems, pipes and conduits that are
provided by Landlord in the operation of the Building.

 

Cabling:  telephone, computer and other communications and data systems and
cabling.

 

Case:  a formal proceeding in which Tenant is the subject debtor under the
Bankruptcy Code.

 

Common Areas:  those common and public areas and facilities of the Building and
improvements to the Land which are from time to time provided by Landlord for
the use or benefit of both Tenant and the public in general, including (a) fire
rooms, (b) any and all non-

 

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exclusive grounds, parks, landscaped areas, plazas, outside sitting areas,
sidewalks, tunnels, pedestrian ways, sky bridges, loading docks, and
(c) generally all other common and public improvements on the Land and outside
of the Building.

 

Construction Drawings:  the architectural, mechanical and engineering working
drawings that define the total scope of work to be performed by Landlord or
Tenant, as applicable, in sufficient detail to secure required permits from the
local jurisdiction and that include, without limitation:  key plan; all legends
and schedules; construction plan; reflected ceiling plan; telephone and
electrical outlet location plan; finish plan; and all architectural details,
elevations and specifications necessary to construct the Premises.

 

Cosmetic Changes:  those minor, non-structural Alterations of a decorative
nature consistent with a first-class office building for which a building permit
is not required and which cost (including installation) in the aggregate less
than Thirty-Five Thousand Dollars ($35,000) per project or series of related
projects (as reasonably determined by Landlord), such as painting, carpeting and
hanging pictures.

 

Costs:  any costs, damages, claims, liabilities, expenses (including reasonable
attorneys’ fees), losses, penalties and court costs.

 

Default Rate:  greater of twelve percent (12%) per annum or the rate per annum
which is five (5) whole percentage points higher than the Prime Rate published
in the Money Rates section of the Wall Street Journal (but in no event higher
than the highest rate permitted by applicable Law).

 

Environmental Default:  any of the following by Tenant or any Agent of Tenant: 
a violation of an Environmental Law; a release, spill or discharge of a
Hazardous Material on or from the Premises, the Land or the Building; an
environmental condition requiring responsive action; or an emergency
environmental condition.

 

Environmental Law:  any present and future Law and any amendments (whether
common law, statute, rule, order, regulation or otherwise), permits and other
requirements or guidelines of governmental authorities applicable to the
Building or the Land and relating to the environment and environmental
conditions or to any Hazardous Material (including CERCLA, 42 U.S.C. § 9601 et
seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et
seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., the
Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the Clean Air
Act, 42 U.S.C. § 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. §
2601 et seq., the Safe Drinking Water Act, 42 U.S.C. § 300f et seq., the
Emergency Planning and Community Right To Know Act, 42 U.S.C. § 1101 et seq.,
the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., and any so
called “Super Fund” or “Super Lien” law, any Law requiring the filing of reports
and notices relating to hazardous substances, environmental laws administered by
the Environmental Protection Agency, and any similar state and local Laws, all
amendments thereto and all regulations, orders, decisions, and decrees now or
hereafter promulgated thereunder concerning the environment, industrial hygiene
or public health or safety).

 

ERISA:  the Employee Retirement Income Security Act of 1974, as amended.

 

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Event of Bankruptcy:  the occurrence with respect to any of Tenant, any
Guarantor or any other person liable for Tenant’s obligations hereunder
(including any general partner of Tenant) of any of the following:  (a) such
person becoming insolvent, as that term is defined in the Bankruptcy Code or
Insolvency Laws; (b) appointment of a receiver or custodian for any property of
such person, or the institution of a foreclosure or attachment action upon any
property of such person; (c) filing by such person of a voluntary petition under
the provisions of the Bankruptcy Code or Insolvency Laws; (d) filing of an
involuntary petition against such person as the subject debtor under the
Bankruptcy Code or Insolvency Laws, which either (1) is not dismissed within
sixty (60) days after filing, or (2) results in the issuance of an order for
relief against the debtor; (e) such person making or consenting to an assignment
for the benefit of creditors or a composition of creditors; (f) such person
knowingly submitting (either before or after execution hereof) to Landlord any
financial statement containing any material inaccuracy or omission; or (g) an
admission by Tenant or Guarantor of its inability to pay debts as they become
due.

 

Event of Default:  any of the following:  (a) Tenant’s failure to make when due
any payment of the Base Rent, additional rent or other sum, which failure shall
continue for a period of three (3) business days after Tenant’s receipt of
written notice thereof; (b) Tenant’s failure to perform or observe any covenant
or condition of this Lease not otherwise specifically described in Section 19.1,
which failure shall continue for a period of thirty (30) days after Landlord
sends Tenant written notice thereof; provided, however, that if such cure cannot
reasonably be effected within such thirty (30) day period and Tenant begins such
cure promptly within such thirty (30) day period and is pursuing such cure in
good faith and with diligence and continuity during such thirty (30) day period,
then, except in the event of an emergency, Tenant shall have such additional
time (not to exceed ninety (90) days in total) as is reasonably necessary to
effect such cure; (c) Tenant’s failure to take occupancy of the Premises or to
occupy continuously the second floor of the Premises for office uses or to use
the lab portion of the Premises each weekday, subject to Force Majeure; (d) an
Event of Bankruptcy; (e) Tenant’s dissolution or liquidation; (f) any
Environmental Default; or (g) any sublease, assignment or mortgage not permitted
by Article VII; or (h) if aggregate Tenant defaults described in clauses
(a) through (g) occur (without regard to any grace period otherwise allowed)
more than twice in any twelve (12) month period during the Lease Year, provided,
however that a default under clause (b) above shall not count toward the
aggregate total unless such default is of a material covenant or condition of
this Lease.

 

Final Construction Drawings:  the Construction Drawings as approved (or deemed
approved pursuant to the Work Agreement) by Tenant and Landlord.

 

Hazardous Materials:  (a) asbestos and any asbestos containing material and any
substance that is then defined or listed in, or otherwise classified pursuant
to, any Environmental Law or any other applicable Law as a “hazardous
substance,” “hazardous material,” “hazardous waste,” “infectious waste,” “toxic
substance,” “toxic pollutant” or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, or
Toxicity Characteristic Leaching Procedure (TCLP) toxicity, (b) any petroleum
and drilling fluids, produced waters, and other wastes associated with the
exploration, development or production of crude oil, natural gas, or geothermal
resources, (c) toxic mold, mildew or any substance that reasonably can be
expected to give rise to toxic mold or mildew, or (d) any petroleum product,
polychlorinated

 

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biphenyls, urea formaldehyde, radon gas, radioactive material (including any
source, special nuclear, or by product material), medical waste,
chlorofluorocarbon, lead or lead based product, and any other substance whose
presence could be detrimental to the Building or the Land or hazardous to health
or the environment.

 

including:  including, but not limited to; including, without limitation; and
words of similar import.

 

Insolvency Laws:  the insolvency Laws of any state.

 

IRC:  Internal Revenue Code of 1986, as amended.

 

Land:  the site upon which the Building is constructed.

 

Landlord Insured Parties:  Landlord’s advisors, the managing agent of the
Building and the holder of any Mortgage, in each case of whom Landlord shall
have given notice to Tenant, and any other party that Landlord may reasonably
designate in writing from time to time.

 

Landlord’s Representatives:  Landlord’s affiliates, shareholders, partners,
directors, officers, employees, agents and representatives.

 

Laws:  all present and future laws, ordinances (including zoning ordinances and
land use requirements), regulations, orders and recommendations (including those
made by any public or private agency having authority over insurance rates).

 

Lease Year:  a period of twelve (12) consecutive months commencing on the Rent
Commencement Date, and each successive twelve (12) month period thereafter;
provided, however, that if the Rent Commencement Date is not the first day of a
month, then the first Lease Year shall include the partial month in which the
Rent Commencement Date occurs, in addition to the following twelve (12) calendar
months and the second and each succeeding Lease Year shall commence on the first
day following the expiration of the prior Lease Year.

 

Mortgages:  all mortgages, deeds of trust, ground leases or other security
instruments which may now or hereafter encumber any portion of the Building or
the Land.

 

Operating Charges:  all expenses, charges and fees incurred by or on behalf of
Landlord (and calculated in accordance with income tax, accrued basis
accounting, consistently applied from year to year) in connection with the
management, operation, ownership, maintenance, servicing, insuring and repair,
including the following:  (1) all service costs, charges and fees relating to
the maintenance of Building Structures and Systems; (2) premiums, deductibles
(to the extent reasonable and customary) and other charges for insurance;
provided, however that if the deductible with respect to casualty (including
earthquake) is greater than seven percent (7%) of replacement cost of the
Building Structure and Systems, then the deductible shall be amortized over a
five (5) year period commencing when Tenant’s rent abatement due to such
casualty has expired (3) management fees of not more than the lesser of (A) four
percent (4%) of the adjusted gross revenues of the Building plus amounts that
would have been received had there been no rental abatements or other
concessions) and (B) amounts charged at similar properties to the Building for
similar services, plus in each case personnel costs attributable to the Building

 

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(including all fringe benefits, workers’ compensation insurance premiums and
payroll taxes); (4) costs of service, equipment rental, access control,
landscaping and maintenance contracts maintained by Landlord; (5) maintenance,
repair and replacement supplies and expenses incurred by Landlord; (6) the cost
of any capital improvements made by Landlord to the Property or capital assets
acquired by Landlord during the term of this Lease, if such capital improvements
or capital assets are required under any governmental law, regulation or
insurance requirement, that shall come into effect after the Delivery Date, such
cost or allocable portion to be amortized over the useful life thereof, together
with interest on the unamortized balance at a rate per annum equal to the actual
rate of interest paid by Landlord on funds borrowed for the purpose of
constructing or acquiring such capital improvements or capital assets as
reasonably documented by Landlord (the “Loan Rate”) or, if Landlord does not
borrow funds for such purposes, the Prime Rate charged at the time such capital
improvements or capital assets are constructed or acquired plus three percent
(3%) (the “Current Prime Rate”), but in either case not more than the maximum
rate permitted by law; (7) the cost of any capital improvements made by Landlord
to the Building or capital assets acquired by Landlord after the Delivery Date
that are for the protection of the health and safety of the occupants of the
Property, as reasonably determined by Landlord, or that are designed to reduce
other Operating Charges, such cost or allocable portion thereof to be amortized
over the useful life thereof (except that Landlord may include as an Operating
Charge in any calendar year a portion of the cost of such a capital improvement
or capital asset equal to Landlord’s estimate of the amount of the reduction of
other Operating Charges in such year resulting from such capital improvement or
capital asset), together with interest on the unamortized balance at the Loan
Rate, or if Landlord does not borrow funds for such purpose, the Current Prime
Rate, as reasonably documented by Landlord, but in either case not more than the
maximum rate permitted by law at the time such capital improvements or capital
assets are constructed or acquired; (8) the cost of any capital improvements
made by Landlord to the Property or capital assets acquired by Landlord during
the term of this Lease to the extent that the cost of any such improvement or
asset is less than fifty thousand dollars ($50,000) per calendar year and less
than two hundred thousand dollars ($200,000) in the aggregate during any five
(5) year period of the initial Term and the Renewal Period (with the first five
(5) year period commencing on the Delivery Date); (9) the cost of any capital
improvements made by Landlord to the Property or capital assets acquired by
Landlord during the Term that have a useful life of five (5) years or less (and
the cost of which is not otherwise included in Operating Charges), such cost to
be amortized over the useful life thereof, together with interest on the
unamortized balance at the Loan Rate, or, if Landlord does not borrow funds for
such purpose, the Current Prime Rate, but in either case not more than the
maximum rate permitted by law;  (10) any business, professional or occupational
license tax payable by Landlord with respect to the Building and any association
fees; (11) sales, use and personal property taxes payable in connection with
tangible personal property and services purchased for and used in connection
with the Building; (12) reasonable third party accounting and audit fees
relating to the determination of Operating Charges (and tenants’ proportionate
shares thereof) and the preparation of statements required by tenant leases;
(13) special assessments, fees,  penalties and other charges and costs for
transit, transit encouragement traffic reduction programs, or any similar
purpose; (14) costs of maintaining, repairing and replacing the roof deck; (15)
payments required in connection with any reciprocal easement or similar
agreement to which the Landlord shall be bound (there are none currently
affecting the Property); (16) any other expense incurred by Landlord in
arm’s-length transactions in connection with maintaining,

 

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repairing or operating the Building; (17) costs in connection with security at
the Building; (18) costs incurred (capital or otherwise) in order for the
Property, or any portion thereof, to maintain a certification pursuant to the
United States Green Building Council’s LEED rating system, or other applicable
certification agency, in connection with Landlord’s sustainability practices for
the Property and all costs of maintaining, managing, reporting and commissioning
the Property or any part thereof that was designed and/or built to be
sustainable and conform with the LEED rating system (or other applicable
certification standard), except that, with respect to LEED recertification
(currently scheduled for every five (5) years), the costs thereof will be
amortized over the period until the next recertification (currently five
(5) years); and (19) all Common Area expenses.  Notwithstanding any provision
contained in this Lease to the contrary, Operating Charges shall not include: 
(i) Real Estate Taxes; (ii) ground lease payments or principal or interest
payments on any Mortgage; (iii) the costs of special services and utilities
separately charged to Tenant, including without limitation Utilities and
Janitorial Expenses; (iv) ground lease payments; (v) advertising and promotional
expenses directly relating to leasing; (vi) costs for which Landlord is
reimbursed by insurance proceeds or by Tenant (other than Tenants’ regular
contributions to Operating Charges); (vii) costs directly and solely related to
the maintenance and operation of the entity that constitutes the Landlord, such
as accounting fees incurred solely for the purpose of reporting Landlord’s
financial condition; (viii) costs of repairs, replacements or other work
occasioned by fire, windstorm or other casualty, or the exercise by governmental
authorities of the right of eminent domain (except a commercially reasonable
deductible, amortized to the extent required); (ix) leasing commissions,
attorney’s fees, costs, disbursements and other expenses incurred by Landlord or
its agents in connection with negotiations for leases with Tenant or prospective
tenants or other occupants of the Building, and similar costs incurred in
connection with disputes with and/or enforcement of this Lease or leases of
prospective tenants of the Building; (x) tenant allowances, tenant concessions,
and other costs and expenses (including permit, license and inspection fees)
incurred in connection with completing, fixturing, furnishing, renovating or
otherwise improving, decorating or redecorating leased premises for tenants or
other occupants, or vacant, leasable space in the Building, including space
planning/interior architecture fees and/or engineering for same, amortized to
the extent required; (xi) costs or expenses (including fines, penalties and
legal fees) incurred due to the violation (as compared to compliance costs) by
Landlord or Landlord’s Agents of any terms and conditions of this Lease, and/or
of any valid applicable Laws that would not have been incurred but for such
violation by Landlord, its Agent, tenant, or other occupant, it being intended
that Landlord shall be responsible for the costs resulting from its violation of
this Lease and Laws; (provided that reasonable attorneys’ fees to enforce
rules and regulations for the Building shall be included in Operating Charges);
(xii) penalties for any late payment by Landlord, including taxes and equipment
leases; (xiii) costs of correcting defects, including any allowances for same,
in the original construction of the Building and the Base Building Work for
twelve (12) months after the Delivery Date; (xiv) costs in connection with
services (including electricity), items or other benefits of a material type
which are not available to Tenant without specific charge therefor; (xv) costs
or expenses for sculpture, paintings or other works of art, including costs
incurred with respect to the purchase, ownership, leasing, showing, promotion,
securing, repair and/or maintenance of same, other than normal building
decorations customary in buildings comparable to the Building; (xvi) costs
arising from the presence of Hazardous Materials in, about or below the Land or
the Building (including any Hazardous Materials brought to, deposited on or
disposed of at the Building by Landlord or Landlord’s Agents, but

 

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excluding those Hazardous Materials utilized in connection with the operation,
maintenance and repair of the Building in the ordinary course and those brought,
deposited or disposed of by Tenant or Tenant’s Agents with respect to its use or
occupancy of space in the Building) and (xvii) the cost of capital improvements
or repairs or capital assets acquired by Landlord, except as expressly provided
above.  In addition, Landlord acknowledges the existence of the encroachments
into 16th Street (the “Encroachments”) noted in Schedule B, #4, of Chicago Title
Insurance Company Owner’s Policy of Title Insurance Number FWPN-TO14000540 dated
July 2, 2014 and agrees that, in the event that the City of San Francisco forces
the removal of the Encroachments, Landlord agrees to pay any and all costs
related to such removal, and no portion of such cost shall be included in
Operating Charges or otherwise passed through to Tenant.”

 

Permitted Recipient:  the officers, partners and senior level employees of
Landlord who are involved in lease administration, Landlord’s accountants who
have responsibilities related to Operating Charges, Landlord’s attorney if
involved in the dispute or any person or entity to whom disclosure is required
by applicable judicial or governmental authority.

 

Prime Rate:  the prime rate published in the Money Rates section of the Wall
Street Journal.

 

Proposed Sublease Commencement Date:  the anticipated commencement date of the
proposed assignment, subletting or other transaction.

 

Proposed Sublet Space:  the area proposed to be assigned, sublet or otherwise
encumbered.

 

Real Estate Taxes:  (1) all of the real estate taxes and assessments imposed
upon or with respect to the Building and the Property and all of the real estate
taxes and assessments imposed on the land and improvements comprising the
Building and the Property; (2) any tax on the rent, right to rent or other
income from the Building and the Property, or any portion thereof, or as against
the business of leasing the Building and the Property, or any portion thereof;
(3) 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 (“Proposition 13”) was adopted by the
voters of the State of California in the June 1978 election 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, Real Estate Taxes shall also
include any governmental or private assessments or the contribution by the
Building or the Property 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; (4) any assessment, tax,
fee, levy, or charge allocable to or measured by the area of the Premises, the
tenant improvements in the Premises, or the Rent payable hereunder, including,
without limitation, any business or gross income tax, gross receipts tax or
excise tax with respect to the receipt of such Rent, or upon or with respect to
the possession, leasing, operating, management, maintenance, alteration, repair,
use or occupancy by Tenant of the Premises, or any portion thereof; (5) any
assessment, tax, fee, levy or charge, upon this transaction or any document to
which Tenant is a party, creating or transferring an interest or an estate in
the Premises; and (6) reasonable

 

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expenses (including reasonable attorneys’ and consultants’ fees and court costs)
incurred in reviewing, protesting or seeking a reduction or abatement of, or
defending or otherwise participating in any challenge to, real estate taxes,
whether or not such protest or reduction is ultimately successful (provided,
however, that such review, protest, or reduction attempt is undertaken in good
faith by Landlord with the reasonable expectation to reduce Real Estate Taxes
for the Building).  Landlord reserves the right to bill Tenant directly, rather
than include in “Real Estate Taxes,” the amount of taxes attributable to any
above-standard improvements constructed by or for Tenant in the Premises;
provided, however, that the Base Year will include (or be updated to include
upon supplemental assessment) the hard costs to construct the Tenant
Improvements to the extent funded with the Improvements Allowance as and to the
extent set forth in Section 5.3.  Real Estate Taxes shall not include any
inheritance, estate, gift, franchise, corporation, net income or net profits tax
assessed against Landlord from the operation of the Building, or any transfer
tax payable by Landlord pursuant to a transfer or sale of the Building, or any
interest charges or penalties incurred as a result of Landlord’s failure to
timely pay Real Estate Taxes.  All assessments that can be paid by Landlord in
installments shall be paid by Landlord in the maximum number of installments
permitted by law (except to the extent inconsistent with the general practice of
landlords of comparable buildings) and shall be included as Real Estate Taxes in
the year that the installment is actually paid; all interest charges assessed
for such installments shall be deemed Real Estate Taxes).

 

Reconciliation Statement:  a reasonably detailed written statement showing
(1) Tenant’s Proportionate Share of Operating Charges and Real Estate Taxes or
its Proportionate Share of Utilities and Janitorial Expenses incurred during the
preceding calendar year, (2) the aggregate amount of Tenant’s estimated payments
made on account of Operating Charges and Real Estate Taxes or on account of
Utilities and Janitorial Expenses during such year, and (3) the Operating
Charges and Real Estate Taxes for the Base Year on an aggregate basis.  Within a
reasonable time after the conclusion of the Base Year, Landlord will provide
Tenant with its then current itemized statement in reasonable detail of the
Operating Charges and Real Estate Taxes for the Base Year.

 

Structural and System Alterations:  any Alteration that will or may necessitate
any changes, replacements or additions to the load-bearing or exterior walls,
non-drop ceilings, partitions (load-bearing or non-demising), columns or floor,
or to the fire protection, water, sewer, electrical, mechanical, plumbing, HVAC
or other base building systems, of the Premises or the Building.

 

Tenant Items:  all non-Building standard supplemental heating, ventilation and
air conditioning equipment and systems serving exclusively the Premises and any
special tenant areas, facilities and finishes, any special fire protection
equipment, any telecommunications, security, data, computer and similar
equipment, cabling and wiring, kitchen/galley equipment and fixtures, all other
furniture, furnishings, equipment and systems of Tenant and all Alterations.

 

Tenant’s Sublease Request Notice:  a notice to Landlord containing:  the
identity of a proposed assignee, subtenant or other party and its business; the
terms of the proposed assignment, subletting or other transaction (including a
copy of the proposed document for same); the Proposed Sublease Commencement
Date; the Proposed Sublet Space; financial statements for the prior two
(2) years certified by an authorized officer of Tenant or a certified public

 

R-1-8

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accounting firm, or other evidence of financial responsibility of such proposed
assignee, subtenant to other party; and a certification executed by Tenant and
such party stating whether or not any premium or other consideration is being
paid for the assignment, sublease or other transaction.

 

Tenant Improvements:  As defined in the Work Agreement.

 

Trustee:  a trustee-in-bankruptcy of Tenant under a Case.

 

R-1-9

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EXHIBIT 1.7

 

BASE BUILDING WORK As described in the 100% Construction Drawings dated April 8.
2015 not including the alternate, as amended through RFIs and Addenda, to be
updated with As-Built drawings upon Substantial Completion of the Base Building
Work. The Base Building Work includes, without limitation, the following:

 

Costs to achieve initial LEED Certification for the Building,

Including the cost of obtaining such LEED Certification.

 

June 22, 2015

 

1400 16th Street — The McClintock Building

 

BASE BUILDING

 

May 11, 2015

Revisions June 22, 2015

 

1.              LOBBY DESCRIPTION

 

A fully finished lobby will be provided at 16th Street entrance, which will
provide exclusive access to the 2nd floor office suite. This two-story space
will have a new polished concrete floor with concrete and painted gyp walls. The
second floor office suite can be accessed via a two-stop elevator as well as a
steel staircase. The tenant has the option to supplement the finishes to this
lobby at the approval of the owner.

 

The Carolina Street entrance of the building provides access to the “Commons”
via a grinded and sealed concrete ramp. The Commons is a space that will be
constructed at the center of the building adjacent to the first floor PDR
suites. The Commons is a fully finished lobby/circulation space with landscaping
and furnishings enclosed by an operable glass skylight. As this skylight is
operable and small amounts of water may enter the Commons, all finishes within
the Commons are designed to be exposed to weather. The floor will be grinded and
sealed concrete, and the walls will be made up of existing concrete, exterior
grade glass roll-up and man doors (which provide access to the PDR suites and
freight elevator vestibule), as well as reclaimed wood walls. The Commons also
contains a small food service area with a refrigerator, storage cabinets, and
sink. The tenant has the option to supplement the furnishings in the Commons and
food service area at the approval of the owner.

 

The building’s restrooms, showers, lockers, and back-of-house area can be
accessed via a corridor from the Commons. The back-of-house contains bike
storage (for up to 12 bikes), janitor closet/supply, and trash room.

 

2.              LEVEL OF FINISH

 

The 1st floor PDR suites will be delivered with ground, and sealed concrete
floors, existing painted concrete walls, painted wood beam and joist ceiling,
and glass roll-up and man doors that provide access to the Commons. Existing
steel frame exterior windows to be refurbished per the US Department of Interior
standards for historic buildings. All fixed skylights will be new with Solarban
60 glazing. All exterior roll-up doors will be new with anodized aluminum frames
and Solarban 60 glazing.

 

The 2nd floor office tenant space will feature the original wood beam and joist
ceiling. The walls will be raw concrete in one portion of the office suite,
while the other portion of the suite will have walls of painted concrete wall
and painted gypsum board. The floor will be delivered as Gypcrete covering an
acoustic barrier from the floors below. Tenant will be responsible for covering
the Gypcrete with carpet or other flooring material. The exterior windows facing
the street are the existing steel frame windows,

 

1.7-1

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which will be refurbished to the US Dol standards. The windows facing the roof
will be replaced with all new windows with Solarban 60 glazing in powder-coated
aluminum frames.

 

3.              RESTROOM DESCRIPTION

 

Two fully finished restrooms (one per gender) will be provided on each floor.

 

The 1st floor restrooms will have tiled floors and wainscoting, with gypsum
board walls and ceiling. Each restroom on the 1st floor will have a locker room
which contains two shower stalls, lockers, and a private changing area. Access
to locker room facilities are available to all building tenants.

 

The 2nd floor restrooms will serve the office suite exclusively. Each restroom
will have tiled floors and wainscoting, gypsum board walls and ceilings, and
quartz countertops.

 

4.              ROOF DECK ACCOMMODATIONS

 

The base building’s structural system has been upgraded to accommodate a roof
deck of approximately 2,000 square feet on the lower roof with access from the
2nd floor office space. Roof deck and finishes will be supplied by 2nd floor
tenant if desired.

 

5.              STRUCTURAL SPECIFICATIONS

 

The building’s seismic retrofit will be brought to current building code and
will consist of the following components:

 

·                  Roof and floor diaphragm strengthening

·                  New shear walls

·                  New micropile foundation at shearwalls

 

6.              ELEVATORS

 

The building will have two elevators, both of which will be dedicated
exclusively to the office tenant on the 2nd floor. The new passenger elevator in
the 16th Street lobby will be an Otis hydraulic elevator with two stops, on the
1st and 2nd floors. The interior cab will be 6 3/4 feet 6 inches wide by 5 feet
6 inches deep. The elevator will have a brushed stainless steel finish and a
capacity of 3,500 lbs.

 

The freight elevator is an existing hydraulic elevator system in the building
that will be accessed on the 1st floor via a private vestibule off the Commons.
The elevator cab is 7 feet 8 inches wide by 5 feet 4 inches deep. It is finished
with plywood walls and floors, and has a capacity of 5,000 lbs.

 

7.              MECHANICAL SPECIFICATIONS

 

The 1st floor PDR space will be delivered as a “cold shell” with designated
areas on the roof that can accommodate package units for each PDR suite. Tenant
HVAC build-out must comply with LEED requirement of 15.2 SEER & 80% AFUE.

 

For 2nd floor office space will be delivered as a “warm shell” with Carrier
“gas/electric” package units (15.2 SEER & 12.0 EEP cooling efficiencies) and
vertical ducts to tenant spaces. Distribution within Tenant space to be provided
by Tenant.

 

1.7-2

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8.              ELECTRICAL SPECIFICATIONS

 

The core and shell will provide 1600A, 277/408V 3PH, 4W power to the building.
In addition, pathways to and electrical closets at the tenant suites will be
provided by landlord. Tenant is responsible for providing conductors from the
switchgear, as well as tenant panels and submeters at the tenant electrical
closets. Current power to the building provides approximate 13W per square foot
throughout the building. New upgraded service consisting of 4,000 A 277/408V
3PH, 4W power to Building to be provided by Tenant with confirmation by PG&E.
Landlord will coordinate with PG&E and Tenant to provide this new service. A 9.3
kW photovoltaic system will provide power for base building systems.

 

Emergency Power Systems:

 

Emergency power for egress for the core and shell space will be provided by the
Landlord through battery back-up. Back-up generator for tenant use is to be
provided by Tenant.

 

Lighting Design:

 

Lighting is provided in all finished core areas. Emergency/egress lighting and
exit signs are provided throughout the building. Tenant lighting design density
must be at 0.86W/ sf or less.

 

9.              FIRE ALARM AND PROTECTION:

 

The building has an all new fire alarm system including a completely new
sprinkler system throughout the building, a control panel at the Carolina Street
entrance, and a remote annunciator at the 16th Street entrance. The system meets
the standards of NFPA and the San Francisco Fire Department for low-rise
buildings and includes 24/7 monitoring of fire sprinkler flow.

 

10.       TELECOM:

 

Telephone/data will be provided by the landlord to the MPOE room at the first
floor. In addition, pathways from the MPOE room to the tenant suites will be
provided. Tenants are responsible for bringing telephone and data cables to the
tenant suite. Fiber optic service is available in the street, and the landlord
will provide a pathway to the MPOE room. Fiber optic service to the MPOE room
can be provided by AT&T at the election of the tenant.

 

11.       PLUMBING:

 

Building water service is provided by a 2” diameter SFPUC domestic water pipe.
In addition to the finished toilet rooms and showers described above, building
provides janitor closets at each floor. Hot water for toilet rooms, janitor
closets, and showers is provided by a storage-type electric water heater with
circulation at each floor. Circulation pumps are provided to maintain hot water
temperature at the fixtures. The building is also serviced by multiple 4” SFPUC
wastewater pipes that are connected to new and existing sub-slab drainage at
each tenant suite. Additional waste, vent and cold water stub-outs are provided
in each tenant space.

 

1.7-3

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Page 10 of 10

 

12.       SECURITY SYSTEM:

 

The base building will be equipped with an Access Control and Alarm Monitoring
System (ACAMS) that will be operated and monitored by the property manager’s
office. Landlord will provide card readers and telephone entry systems at the
16th Street and Carolina Street entrances for building access. The building will
also have security cameras surveilling all common areas and building exterior.
The landlord will provide pathways at each tenant suite entrance for the
installation of card readers — tenants are responsible for furnishing card
readers and cables for entrance in to tenant suite. Landlord will coordinate
with Tenant to achieve compatibility between the base building’s ACAMS and any
additional security systems within the Tenant’s premises which are to be
provided by Tenant.

 

Notwithstanding the foregoing, Tenant will monitor the Access Control system and
notify Landlord in the event of a call. Landlord will maintain control over fire
and life safety systems.

 

1.7-4

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EXHIBIT 5.5-1

 

1400 16th Street

LEED GREEN CLEANING POLICY

 

Dated August 26, 2015

[g190271ks19i001.jpg]

 

5.5-1-1

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TABLE OF CONTENTS

 

 

 

MISSION STATEMENT

3

RESPONSIBILITIES

3

PROCEDURE AND STRATEGIES

3

PERFORMANCE METRIC FOR SUSTAINABLE PRODUCTS

4

PERFORMANCE METRIC FOR CUSTODIAL EFFECTIVENESS

7

GOALS

7

TIME PERIOD

7

 

5.5-1-2

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MISSION STATEMENT

 

The 1400 16th St. staff/building is committed to environmental stewardship and
sustainability, and seeks to minimize the impact of its cleaning activities on
the environment and on the health of building occupants, building users, and
custodial workers.

 

SCOPE

 

The scope of this policy shall cover all normal cleaning activities conducted on
the property. The scope includes the follow:

·                  Purchasing of cleaning, hard floor, and carpet products

·                  Purchasing of cleaning equipment

·                  Establishing standard operating procedures

·                  Guidelines for the handling and storage of cleaning chemicals

·                  Managing hazardous spills or accidents

·                  Develop strategies for promoting and improving hand hygiene

·                  Staff training of maintenance personal to the sustainable
requirements of this policy

·                  Collecting Occupant feedback

 

RESPONSIBILITIES

 

1400 16th St., and the Building Manager for the 1400 16th St. building, will be
responsible for the overall success of the Green Cleaning Policy, and will be
responsible for the following:

·                  Policy implementation

·                  Educating staff and tenants on the scope, performance metric,
goals, procedures and strategies of this policy

·                  Gathering information on the overall performance of the
sustainable products

·                  Continued education on new material and products in the
sustainable market place

·                  Appoint certain duties relating to the purchasing policy to
staff

·                  Review and update policy at least once a year

 

PROCEDURE AND STRATEGIES

 

Promoting and Improving Hand Hygiene

 

Proper hand hygiene helps to reduce the spread of infectious diseases and
promotes occupant health. To promote hand hygiene, the director of building
operations will:

·                  Educate building staff about the importance of hand hygiene
(e.g. through posted signs, email bulletins, or other notices)

·                  Provide hand soaps in restrooms (see criteria below)

·                  Provide waterless hand-sanitizers in convenient locations

 

Effective cleaning and hard floor and carpet maintenance

 

Standard Operating Procedures (SOPs) will be developed and maintained to provide
for effective cleaning and hard floor and carpet maintenance. The SOPs shall be
reviewed annually at a minimum with janitorial supervisors, staff, and
contractors. SOPs shall contain measures such as:

·                  Removal of dirt and dust

·                  No use of potentially harmful and irritating chemicals

·                  Spot cleaning

·                  Use of microfiber cloths

·                  Protection and preservation of surfaces during cleaning
(particularly hard floors and carpets)

·                  Proactive strategies to reduce contaminant infiltration at
source (walk off mats)

 

5.5-1-3

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Vulnerable building Occupants

 

·                  Identify building occupants with individual needs and
sensitivities.

·                  Modify procedures and/or cleaning schedules as necessary to
accommodate their individual needs

·                  Address ventilation requirements

 

Storage and Disposal of Hazardous Chemicals

 

·                  Cleaning products containing hazardous chemicals will be
stored in a lockable and ventilated space.

·                  Liquids labeled, as hazardous waste shall not be poured into
janitorial sink drains, lavatories, toilets, or shower drains. These liquids
shall be placed in appropriate containers and disposed of properly by facility
management.

 

Training

 

The janitorial staff will receive ongoing training at a minimum, on an annual
basis and in the event of staffing changes to maintain knowledge and stay
up-to-date regarding any new practices, procedures, and/or environmental
standards. The training includes but not limited to the following:

·                  Proper use of sustainable cleaning products and equipment

·                  Maintaining a log for detailing all housekeeping chemicals
used

·                  Efficient usage of supplies including chemical dispensing
equipment and procedures

·                  Proper disposal of all cleaning waste, including recycling
procedure of applicable products

·                  Proper handling of hazardous products

·                  Proper hand hygiene, including both hand washing and the use
of alcohol-based waterless hand sanitizers

 

Page 4 of 8

 

5.5-1-4

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PERFORMANCE METRIC FOR SUSTAINABLE PRODUCTS

 

The 1400 16th St. building purchases effective products that pose the lowest
hazards to building occupants, building users and custodial workers. In
compliance with the Precautionary Purchasing Ordinance (SF Environment Code,
Chapter 2) and Executive Directive 08-02, the Division and its janitorial
services contractor/s purchase only “Approved” cleaning products, janitorial
paper products, and janitorial supplies listed on the City of San Francisco
Department of the Environment Approved Products list. For categories lacking
“Approved” products, the Division and its janitorial services contractor/s
purchase products either listed as “Suggested” products or products that meet
the third-party certification requirements of the US Green Building Council’s
Leadership in Energy and Environmental Design for Existing Buildings —
Operations & Maintenance certification (LEED-EB: O&M EQ Credits 3.4 — 3.6) or
its equivalent in newer editions of LEED.

 

The total cost of all applicable products purchased during the performance
period will be evaluated, calculated and documented accordingly.

 

Compliance with the City & County of San Francisco Environment Code, Chapter 2,
Precautionary Purchasing Ordinance and the City & County of San Francisco
Executive Directive 08-02, Enhancement of Recycling and Resource Conservation.

 

Products that do not meet the following criteria will be labeled non-sustainable
and calculated in contrast to sustainable products.

 

Calculations for sustainable and non-sustainable items will then be compared to
the total cost of all products and quantified through a Sustainable Purchasing
Performance Matrix (SPP Matrix). The SPP Matrix will track all purchases during
the performance period and include appropriate product purchasing information
including: date of purchase, purchasing party, product name, cost, quantity and
sustainable criteria met.

 

Documentation for sustainable products will include product specifications
describing qualifying elements(s).

 

General, Hard Floor, and Carpet Cleaning

 

Products should meet one or more of the following criteria:

·                  Green Seal GS-37, for general-purpose, bathroom, glass and
carpet cleaners

·                  Environmental Choice CCD-110, for cleaning and degreasing
compounds

·                  Environmental Choice CCD-146, for hard surface cleaners

·                  Environmental Choice CCD-148, for carpet and upholstery

 

Each purchase can receive credit for each criterion met. Responsible parties are
encouraged to list all qualifying elements and explore weighted values.

 

·                  Goal: By percentage of cost, at least 30% of general, hard
floor and carpet cleaning products shall meet environmentally preferred
practices noted above.

 

Disinfectants, Metal Polish, Floor Finishes, Strippers (or other products not
addressed by the above standards)

 

Products should meet one or more of the following criteria:

·                  Green Seal GS-40, for industrial and institutional floor care
products

·                  Environmental Choice CCD-112, for digestion additives for
cleaning and odor control

 

5.5-1-5

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·                  Environmental Choice CCD-113, for drain or grease trap
additives

·                  Environmental Choice CCD-115, for odor control additives

·                  Environmental Choice CCD-147, for hard floor care

·                  California Code of Regulations maximum allowable VOC levels
for the specific product category

 

·                  Goal: By percentage of cost, at least 30% of disinfectants,
metal polish, floor finishes, stripper products shall meet environmentally
preferred practices noted above.

 

Disposable Janitorial Paper Products and Trash Bags

 

Products should meet one or more of the following criteria:

·                  Green Seal GS-09, for paper towels and napkins

·                  Green Seal GS-01, for tissue paper

·                  Environmental Choice CCD-082, for toilet tissue

·                  Environmental Choice CCD-086, for hand towels

·                  Janitorial paper products derived from rapidly renewable
resources or made from tree-free fibers

·                  Environmental protection Agency (EPA) Comprehensive
procurement Guidelines for Janitorial Paper and Plastic Trash can Liners

 

·                  Goal: By percentage of cost, at least 30% of disposable
janitorial paper products and trash bags shall meet environmentally preferred
practices noted above.

 

Cleaning Equipment

 

Products should meet one or more of the following criteria:

·                  Vacuum cleaners are certified by the Carpet and Rug Institute
“Green Label” Testing Program for vacuum cleaners and operate with a sound level
of less than 70dB A

·                  Carpet extraction equipment used for restorative deep
cleaning is certified by the Carpet and Rug Institute’s “Seal of Approval”
Testing Program for deep —cleaning extractors

·                  Powered floor maintenance equipment, including electric and
battery-powered floor buffers and burnishers, is equipped with vacuums, guards
and/or other devices for capturing fine particulates and operates with a sound
level of less than 70dB A

·                  Propane-powered floor equipment has high efficiency, low
missions engines with catalytic converters and mufflers that meet California Air
Resources Board (CARB) or EPA standards for the specific engine size and operate
with a sound level of less than 90 dBA

·                  Automated scrubbing machines are equipped with variable-speed
feed pumps and on-board chemical metering to optimize the use of cleaning
fluids. Alternatively, the scrubbing machines use only tap water with no added
cleaning products

·                  Battery-powered equipment is equipped with environmentally
preferable gel batteries

·                  Powered equipment is ergonomically designed to minimize
vibration, noise and user fatigue

·                  Equipment is designed with safeguards, such as rollers or
rubber bumpers, to reduce potential damage to building surfaces

·                  Dusting and mopping tools shall be micro-fiber to effectively
capture particulates

 

·                  Goal: By percentage of cost (at time of purchase) or by
number of equipment items, at least 20% of cleaning equipment shall meet
environmentally preferred practices noted above.

 

Page 6 of 8

 

5.5-1-6

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Hand Soap

 

Products should meet one or more of the following criteria:

·                  No antimicrobial agents (other than as a preservative) except
where required by health codes and other regulations (e.g., food service and
health care requirements)

·                  Green Seal GS-41, for industrial and institutional and
cleaners

·                  Environmental Choice CCD-104, for hand cleaners and hand
soaps

 

·                  Goal: By percentage of cost, at least 30% of hand soap
products shall meet environmentally preferred practices noted above.

 

Page 7 of 8

 

5.5-1-7

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PERFORMANCE METRIC FOR CUSTODIAL EFFECTIVENESS

 

Since building cleanliness if often associated with the well-being of occupants,
input will be collected on a going basis via an occupant communication system.
Occupants will be encouraged to communicate with CBRE, the Building Manager for
1400 16th St., regarding the overall effectiveness of the janitorial practice.

 

GOALS

 

The aim of this policy is to utilize green cleaning products and practices to
improve the indoor air quality of the project building. This policy also aims to
reduce the possible exposure of hazardous contaminants to visitors, building
staff and maintenance personal.

 

TIME PERIOD

 

This policy shall be implemented immediately by CBRE, the Building Manager for
1400 16th St., who is in charge of drafting purchase orders and contracts, will
ensure that new policy language is included and requirements are met.

 

Once the policy is fully implemented, the performance period may begin.

 

Performance Period

Start Date: 9/30/15

End Date: ongoing

 

5.5-1-8

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EXHIBIT 5.5-2

 

The McClintock Building at 1400 16th Street, San Francisco, CA

Solid Waste Management Policy

August 26, 2015

 

SECTION 1: POLICY SCOPE

 

This policy applies to the collection, sorting, diversion, and disposal of
ongoing consumables, durable goods, and building materials associated with
landlord approved facility alterations and additions accrued in the operations
of the McClintock Building at 1400 16th Street, San Francisco, CA. This policy
does not apply to the waste created by the building tenant during the
manufacturing and testing of their products.

 

This policy will apply to, but is not limited to, the following types of
materials:

·                  Ongoing Consumables, including but not limited to:

·                  Paper

·                  Cardboard

·                  Glass

·                  Plastic

·                  Metals

·                  Landscape waste

·                  Batteries

·                  Mercury-containing lamps

·                  Durable Goods, including but not limited to:

·                  Electronic equipment

·                  Furniture

·                  Building Materials used in landlord approved facility
alterations and additions, including but not limited to:

·                  Building components and structures (wall studs, insulation,
doors, windows)

·                  Panels

·                  Attached finishings (drywall, trim, ceiling panels)

·                  Carpet and other flooring material

·                  Adhesives

·                  Sealants

·                  Paints and coatings

 

SECTION 2: POLICY GOALS

 

To manage solid waste in a manner that will:

·                  protect the environment and public health

·                  conserve natural resources

·                  minimize landfilling and/or incineration and reduce toxicity

 

This policy will focus on improving the building controlled purchases in hopes
of reaching an overall goal that 50% of those purchases meet sustainable
criteria. The building is working with individual tenants to improve their
purchasing and follow the guidelines set forth in this policy, with a strong
emphasis on implementing mercury-free LEDs into their space.

 

5.5-2-1

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SECTION 3: PERFORMANCE METRIC

 

The successful implementation of this policy will be measured by the ongoing
recycling rate achieved. The recycling rate is derived by comparing the amount
of consumables diverted from the landfill to those consumables sent to the
landfill over a given time period. The policy’s initial performance metric will
be to achieve the reuse, recycling and/or composting of:

·                  At least 50% of the ongoing consumable waste stream (by
weight or volume)

·                  At least 80% of discarded batteries

·                  100% of all mercury-containing lamps within the building and
site management’s control

·                  At least 75% of the durable goods waste stream (by weight,
volume, or replacement value)

·                  At least 70% of waste (by volume) generated by landlord
approved facility alterations and additions

 

SECTION 4: PERFORMANCE EVALUATION

 

The party(s) responsible under Section (5) shall periodically evaluate the
success of this policy’s implementation. This may include providing a report on
an annual basis to senior management. Whenever possible, the annual reports
should include an evaluation of the performance, safety, cost and
environmental/public health benefits achieved through source reduction, reuse,
recycling and composting. Reports should also relate the progress in meeting the
stated objectives as set forth under Sections (2) and (3). Monthly reports,
including waste recycling and/or disposal receipts, must be provided by the
waste haulers/vendors to allow for ongoing documentation, monitoring and
assessment of the program results.

 

A waste audit will be completed at least annually to ensure that this waste
policy is being followed correctly, and that the goals are being met. This waste
audit will advise the tenant on strategies to improve diversion rates and to
meet the goals of this policy.

 

SECTION 5: RESPONSIBLE PARTY

 

Paul Intieri, Real Estate & Facilities at Invitae (the “Tenant”), shall
implement this policy within the McClintock Building in coordination with other
appropriate organization personnel, including but not limited to a janitorial
contractor (to be determined), and any contracted waste haulers. The Property
Manager shall coordinate training, education and outreach programs throughout
the organization, with the aim of promoting and maintaining the goals of this
policy.

 

Function

 

Company Name

 

Primary Contact

 

Phone

Plan Implementation

 

Invitae (Tenant)

 

Paul Intieri

 

(650) 213-2045

 

 

 

 

 

 

 

Custodial Oversight & Training

 

To be determined

 

To be determined

 

To be determined

 

SECTION 6: PROCEDURES AND STRATEGIES

 

The following table lists recyclable wastes at the building site, their disposal
method and handling procedures.

 

Source/Consumables

 

Disposal Method

 

Handling Procedure

Glass, Plastic, Metals (commingled)

 

Building occupants dispose of these recyclables in commingled recycling

 

Amounts are tracked and taken away by Recology on a regular

 

5.5-2-2

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bins in the kitchen/break rooms on each floor. Cleaning staff takes these
commingled recycling bins to the large recycling bins inside the trash room
inside the building each night.

 

basis.

Mercury-containing Lamps

 

Used lamps are counted and then stored in a secured area in the Chief Engineer’s
office until they are ready for pick up.

 

Lamps are sent to Quick Light Recycling on a quarterly basis. Quick Light
Recycling provides shipping boxes to place the lamps in, and tracks the amounts
sent to them.

Paper/newspapers

 

Occupants dispose of these recyclables in commingled recycling bins in the
kitchen/break rooms on both floors. Cleaning staff takes these commingled
recycling bins to the large recycling bin outside the building each night.

 

 

Amounts are tracked and taken away by a Recology on a regular basis.

Cardboard

 

Building occupants dispose of these recyclables in commingled recycling bins in
the kitchen/break rooms on both floors. Cleaning staff takes these commingled
recycling bins to the large recycling bins outside the building each night.

 

Amounts are tracked and taken away by Recology on a regular basis.

Batteries

 

Building occupants deliver batteries to a specially-designated dry cell batter
recycling pail at a central location on the first floor of the building.

 

Batteries are shipped to Quick Light Recycling when the collection container is
full.

Durable Goods (Electronic Waste and Furniture)

 

The tenant collects and stores all Electronic Waste and furniture on site until
storage space runs out. Then the waste is delivered to a central processing
facility. The property management similarly collects and stores all E-Waste and
furniture that they own and sends it to a separate recycling vendor when
appropriate.

 

Tenant E-Waste amounts are tracked and sent to the processing facility. The
facility looks to reuse the E-Waste first and if that is not possible sends the
waste to Mobius. The tenant sends furniture waste to the Recology to reuse it.
Property Management sends it’s E-Waste to Recology who recycles all of it.

Building Materials

 

Building management coordinates with contractors to collect construction waste
on site for diversion off-site.

 

Amounts are tracked and taken away by tenant contractor throughout the
demolition/ construction period for recycling.

 

3

 

5.5-2-3

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SECTION 7: TIME PERIOD

 

This policy shall take effect on and shall continue indefinitely or until
amended and/or replaced by a subsequent solid waste management plan.

 

 

Signed and executed on:

 

 

 

The McClintock Building at 1400 16th Street, San Francisco, CA

 

By:

 

 

 

 

 

Paul A. Intrieri, Real Estate & Facilities, Invitae

 

 

5.5-2-4

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EXHIBIT A

 

PLAN SHOWING PREMISES

 

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A-1

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A-2

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EXHIBIT B

 

WORK AGREEMENT

 

The purpose of this Work Agreement is to set forth the respective
responsibilities of Landlord and Tenant with respect to the design and
construction of all alterations, additions and improvements that Tenant may deem
necessary or appropriate to prepare the Premises for initial occupancy by Tenant
under the Lease.

 

1.                                      Landlord’s Initial Construction in the
Premises: Landlord shall deliver possession of the Premises to Tenant upon
Substantial Completion of the Base Building Work.

 

2.                                      Tenant Improvements in General:

 

(a)                                 This Work Agreement will set forth how the
initial interior improvements in the Premises (the “Tenant Improvements”) are to
be constructed, who will do the construction of the Tenant Improvements, who
will pay for the construction of the Tenant Improvements, and the time schedule
for completion of the construction of the Tenant Improvements.  The term “Tenant
Improvements” shall exclude the Base Building Work and shall collectively mean
all initial improvements to be constructed in the Premises, the plans and
specifications for which shall be approved by Landlord and Tenant in accordance
with this Work Agreement.

 

(b)                                 Except as defined in this Work Agreement to
the contrary, all terms utilized in this Work Agreement shall have the same
meaning as the defined terms in the Lease.

 

(c)                                  The provisions of the Lease, except where
clearly inconsistent or inapplicable to this Work Agreement, are incorporated
into this Work Agreement.

 

(d)                                 Except for the Base Building Work, Tenant
accepts the Premises in its “as is” condition, except as expressly set forth in
this Work Agreement or the Lease to the contrary.

 

3.                                      Rent Commencement Date; Force Majeure:

 

(a)                                 The Rent Commencement Date shall be
determined in accordance with the Lease.

 

(b)                                 As used in this Work Agreement and the
Lease, “Force Majeure Delay” shall mean any delay in the completion of the
Tenant Improvements due to fire, act of God, governmental act or failure to act
(but excluding any failure on the part of the City to timely issue any licenses,
permits or approvals relating to the Tenant Improvements), strike, labor
dispute, inability to procure materials, or any cause beyond Landlord’s or
Tenant’s (as applicable) reasonable control (whether similar or dissimilar to
the foregoing events).  Any party asserting Force Majeure Delay shall provide
written notice of any Force Majeure Delay to the other party within ten
(10) days of the event triggering the Force Majeure Delay, which shall specify
the nature and anticipated duration of the relevant delay.  Failure to timely
send such written notice shall preclude a party from claiming a Force Majeure
Delay.

 

B-1

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(c)                                  As used in this Work Agreement and the
Lease, “Landlord Delay” shall mean any actual delay in the Substantial
Completion of the Tenant Improvements that causes Substantial Completion of the
Tenant Improvements to occur more than six (6) months after the Delivery Date,
but only to the extent resulting solely from one or more of the following acts
or omissions of Landlord or a Landlord Party: (i) failure of Landlord to timely
approve or disapprove any Working Drawings, Final Plans, or Tenant Changes
within the time frame set forth in this Work Agreement; (ii) failure of Landlord
to approve or disapprove any proposed contractors or subcontractors within ten
(10) days; (iii) Landlord’s failure to disburse the Improvements Allowance as
and when required under this Work Agreement following Tenant’s submission of a
complete Application for Payment; (iv) unreasonable and material interference by
Landlord or Landlord Parties with access by Tenant or Tenant’s Agents to the
Building or any Building facilities (including loading docks and freight
elevators) or service (including temporary power and parking areas as provided
herein), or the use thereof; or (v) any failure to complete the Base Building
Work in accordance with the plans and specifications described on Exhibit 1.7 to
the Lease that is first identified after the Delivery Date and in a manner that
either requires a repair that the Tenant needs made in order to complete the
Tenant Improvements or that requires Tenant to change the Final Plans for the
Tenant Improvements.  Tenant shall provide written notice of any asserted
Landlord Delay to the Landlord within ten (10) days of the alleged event
triggering the Landlord Delay, which shall specify the nature and anticipated
duration of the relevant delay.   Failure to timely send such written notice
shall preclude Tenant from claiming a Landlord Delay.

 

4.                                      Selection of Designer/Architect:  The
Final Plans (as defined below) shall be prepared by an architect selected by
Tenant and reasonably approved by Landlord (the “Architect”) who is familiar
with the plans and specifications for the Base Building Work and with all Laws
applicable to construction in the Building.  Tenant acknowledges that it has
received from Landlord a copy of the LEED Tenant Design and Construction
Guidelines for Tenant’s consideration in preparing the Final Plans.

 

5.                                      Preparation of Plans and Construction
Schedule and Procedures:

 

(a)                                 Tenant shall submit to Landlord for its
approval working drawings for the Tenant Improvements prepared by the Architect
and engineering drawings showing complete plans for telephone outlets,
electrical, plumbing work, heating, ventilating and air conditioning, fire
sprinkler, security and fiber optics (collectively, the “Working Drawings”). 
The Working Drawings shall be reflective of a 100% schematic design
architectural set inclusive of interior usage, specifically noting wall
locations, ceilings, and any Special Tenant Improvements (as described in
Paragraph 7 below) that Tenant intends to include, and shall include a 100%
schematic design mechanical, electrical, plumbing, fire sprinkler (MEPFS) set,
inclusive of mechanical zoning, rooftop equipment locations, emergency
generator, and any structural implications resulting from Special Tenant
Improvements.  Landlord agrees that Tenant may construct portions of the Tenant
Improvements on a design-build basis, subject to Landlord’s reasonable
requirements, including without limitation submission of Working Drawings and
Final Plans to Landlord for Landlord’s prior approval consistent with this Work
Agreement.

 

(b)                                 Within fifteen (15) business days of
receipt, Landlord shall approve such Working Drawings or designate by notice to
Tenant the specific changes required to be made to

 

B-2

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the Working Drawings, which Tenant shall make and re-submit to Landlord
promptly.  This procedure shall be repeated until the Working Drawings are
finally approved by Landlord.

 

(c)                                  After Landlord has approved the Working
Drawings, Tenant shall submit to Landlord final plans (the “Final Plans”), which
shall be defined as, and shall consist of, complete architectural plans
(inclusive of Working Drawings), ready to submit for permit review, and
specifications necessary to allow Tenant’s Contractor (as defined below) to
build the Tenant Improvements in accordance with the Final Plans.  The term
“Tenant Improvements” shall include all improvements to be constructed in the
Premises as shown on the Final Plans approved by Landlord.

 

(d)                                 Within ten (10) business days of receipt,
Landlord shall approve the Final Plans or designate by notice to Tenant the
specific changes required to be made to the Final Plans, which Tenant shall make
and re-submit to Landlord promptly.  This procedure shall be repeated until the
Final Plans are finally approved by Landlord.

 

(e)                                  Any approval to be granted or withheld by
Landlord pursuant to this Work Agreement shall not be unreasonably conditioned,
delayed, or withheld; if approval is withheld, Landlord shall provide specified
reasons for such withholding at the time notice of same is provided to Tenant.
For purposes of this Work Agreement, Landlord may only withhold approval to any
Working Drawings, Final Plans, or Tenant Changes if a “Design Problem” exists,
as reasonably determined by Landlord.  For purposes hereof, a “Design Problem”
shall mean a condition that will either (i) not be in compliance with applicable
Laws if constructed in accordance with the proposed plans; (ii) have an adverse
effect on Building Structure and Systems; (iii) have an adverse effect on the
exterior appearance of the Building; or (iv) will require a change to the Base
Building Work.  Tenant agrees and understands that Landlord, by its review and
approval thereof, shall not be the guarantor of, nor responsible for, the
correctness or accuracy of any such Working Drawings or Final Plans or Tenant
Changes or compliance of such Working Drawings or Final Plans or Tenant Changes
with applicable Laws. Tenant also acknowledges and agrees that the Working
Drawings, Final Plans and Tenant Changes shall be prepared consistent with the
Base Building Work, including the Building Structure and Systems. Landlord
shall, concurrently with Landlord’s approval of the Working Drawings and Final
Plans, inform Tenant if any of such drawings or plans requires changes to the
Base Building Work, the cost of which will be included in the Total Cost.

 

(f)                                   Concurrently with its approval of the
Final Plans, Landlord shall notify Tenant if Landlord considers that any of the
Tenant Improvements are non-standard for office or laboratory use (the
“Non-Standard Improvements”) and must be removed by Tenant prior to the
expiration or promptly following the earlier termination of the Lease and the
Premises repaired. Tenant acknowledges and agrees that Non-Standard Improvements
shall include, without limitation, Tenant’s interior signage and any of the
Special Tenant Improvements.  Following Landlord’s notification, Tenant may
revise the Final Plans to exclude some or all of the Non-Standard Improvements
that Landlord requires be removed and resubmit the Final Plans for Landlord’s
review, approval of which shall be granted or withheld by Landlord within five
(5) business days of receipt.

 

B-3

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(g)                                  No material changes or material
modifications to the design scope in the Final Plans shall be made except by a
written change order signed by Landlord and Tenant.  If Tenant desires any
material change in the Final Plans (a “Tenant Change”), Tenant shall cause the
Architect or Tenant’s Contractor to prepare and to submit to Landlord a copy of
the change order reflecting the proposed Tenant Change.  Landlord shall approve
or disapprove of a Tenant Change within two (2) business days after receipt
thereof; provided that Landlord may only withhold its consent if there is a
Design Problem.  If Landlord disapproves a Tenant Change, Landlord shall notify
Tenant of the revisions required, if any, that would make the change order
acceptable to Landlord.  If Tenant approves of the Tenant Change, then Tenant
and Landlord shall execute the change order, and the Final Plans shall be
revised to incorporate the Tenant Change.

 

6.                                      Improvements Allowance:

 

(a)                                 Landlord will pay an amount equal to $50.00
per rentable square foot of the Premises (the “Improvements Allowance”) toward
the cost of the design and construction of the Tenant Improvements, including,
but not limited to, (i) the fees of the Architect, consulting fees, fees for
engineering, mechanical and electrical services, construction and/or project
management fees, (ii) costs of any changes in the Base Building Work when such
changes are required by the Final Plans, (iii) information technology,
telephone/data cabling and building permits associated with the Tenant
Improvements, (iv) sales and use taxes and Title 24 fees, and (v) the
Coordination Fee (the “Total Cost”); provided, however that the Improvements
Allowance may not be used for any costs associated with the design and
construction of the Non-Standard Improvements or any of the Special Tenant
Improvements (collectively, the “Tenant Obligations”). Notwithstanding the
foregoing, in no event shall Tenant be permitted to use more than seven and
50/100 dollars ($7.50) per rentable square foot of the Premises from the
Improvements Allowance to pay architectural and engineering fees (combined). 
The Total Cost shall include all costs associated with the design and
construction of the Tenant Improvements, including, without limitation, all
building permit fees, payments to design consultants for services and
disbursements, all preparatory work, premiums for insurance and bonds, general
conditions, such inspection fees as Landlord may reasonably incur, reimbursement
to Landlord for permit and other fees Landlord may reasonably incur that are
fairly attributable to the Tenant Improvements work and the cost of installing
any additional electrical capacity or telecommunications capacity required by
Tenant and the Tenant Obligations.  In addition to the Improvements Allowance,
Landlord shall pay an amount equal to $0.15 per rentable square foot of the
Premises toward the cost of the initial space planning, which shall be paid at
the time of the next monthly disbursement for the Base Building Work that is
made at least thirty (30) days after submission of a complete Application for
Payment.  Landlord and Tenant hereby acknowledge and agree that Landlord shall
be solely responsible for, any and all costs to the extent related to and
arising from the gross negligence or willful misconduct of Landlord or Landlord
Parties.  If the Total Cost of the eligible Tenant Improvements is less than the
Improvements Allowance, Tenant shall not be entitled to receive a credit against
Rent for any unused portion of the Improvements Allowance that is not used to
pay for the Tenant Improvements.

 

(b)                                 The obligation of Landlord to make any one
or more payments pursuant to the provisions of this Work Agreement, including
payment of the Improvements Allowance,

 

B-4

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shall be suspended without further act of the parties during any such time as
there exists an Event of Default under the Lease.

 

7.                                      Special Tenant Improvements:  Landlord
agrees that Tenant shall have the right to include in the Final Plans for the
Tenant Improvements the facilities described below (the “Special Tenant
Improvements”); provided, however, that all costs associated with the design and
construction of such Special Tenant Improvements shall be at Tenant’s sole cost
and expense and shall not be paid for from the Improvements Allowance:

 

(a)                                 A gym facility located within the Premises,
the scope and specific location of which shall be subject to Landlord’s
reasonable approval;

 

(b)                                 Shower facilities, in addition to those
included in the Base Building Work, located within the Premises, the scope and
specific location of which shall be subject to Landlord’s reasonable approval;

 

(c)                                  Any cafeteria-style kitchen installations;
and

 

(d)                                 Communicating stairs through some or a
portion of the Premises, the design and specific location of which shall be
subject to Landlord’s reasonable approval, which approval may include the
requirement (as provided above) that, at the expiration or promptly following
the earlier termination of the Lease, Tenant remove the communicating stairs and
restore each connecting floor to a condition necessary to allow the full
functionality of the floor after removal of the communicating stairs.

 

8.                                      Tenant Construction of Tenant
Improvements:

 

(a)                                 Tenant shall enter into a contract to build
the Tenant Improvements (the “Construction Contract”) with a contractor selected
by Tenant and reasonably approved by Landlord to construct the Tenant
Improvements (the “Tenant’s Contractor”) as soon as reasonably possible after
final approval of the Final Plans.  All subcontractors, laborers, materialmen,
and suppliers, and Tenant’s Contractor are collectively referred to herein as
“Tenant’s Agents.” Major Subcontractors shall mean any contractor subcontractors
performing Tenant Improvements costing in excess of One Hundred Thousand Dollars
($100,000) in the aggregate or performing work affecting the Building Structure
and Systems. All Major Subcontractors must be approved in writing by ASB Capital
Management LLC and Landlord, which approval shall be deemed to also include
approval under Section 9(g) of this Work Agreement; provided that, in any event,
Tenant must contract with Landlord’s base building subcontractors for any life
safety, and fire sprinkler work in the Premises. Tenant will include in any
competitive bid Landlord’s base building subcontractors for any mechanical,
electrical, plumbing, structural, and heating, ventilation, and air conditioning
work in the Premises.

 

(b)                                 Tenant shall be responsible for obtaining
all necessary permits for the Tenant Improvements.  Promptly after receipt of
the necessary permits, Tenant shall instruct Tenant’s Contractor to build the
Tenant Improvements at Tenant’s sole and entire cost in accordance with the
Final Plans and any Tenant Changes, subject to Tenant’s ability to utilize the
Improvements Allowance to pay for such costs to the extent permitted in this
Work Agreement.  Tenant shall be solely responsible for, and Landlord
specifically reserves the right to require

 

B-5

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Tenant to make at any time and from time to time during the construction of the
Tenant Improvements, any changes to the Final Plans necessary to obtain any
permit or to comply with all applicable Laws or to achieve functional
compatibility with the Building Structure and Systems and the Base Building Work
and any third-party warranties applicable thereto.  Tenant shall pay a
logistical coordination fee (the “Coordination Fee”) to Landlord in an amount
equal to the product of (i) two percent (2%), and (ii) the Total Cost including
Tenant Obligations, which Coordination Fee shall be for services relating to the
oversight of the construction of the Tenant Improvements, and which fee will be
deducted from the Improvements Allowance concurrently with payment of any
Application for Payment (as defined below).

 

(c)                                  The Tenant Contractor and its
subcontractors and materialmen shall keep in full force and effect the insurance
coverage, in each instance with policies in form and substance reasonably
satisfactory to Landlord, and required by Section 13.2(C) of the Lease.  In
addition, if any portion of the Tenant Improvements are constructed as part of a
design/build process, the applicable Tenant’s Agents shall maintain errors and
omissions insurance coverage in an amount of not less than five million dollars
($5,000,000) and Tenant’s Architect shall maintain errors and omissions
insurance coverage in an amount of not less than five million dollars
($5,000,000).

 

(d)                                 Landlord shall disburse the Improvements
Allowance on a progress payment basis during the construction of the Tenant
Improvements, as follows: From time to time, but in no event more frequently
than once every thirty (30) days, Tenant shall deliver to Landlord on or before
the fifteenth (15th) day of any month:  (i) an Application and Certificate for
Payment (AIA Document G702) (“Application for Payment”) signed by Tenant’s
Architect; (ii) invoices from all of Tenant’s Agents for labor rendered and
materials delivered to the Premises and for which Tenant is seeking payment
pursuant to the applicable Application for Payment; (iii) executed conditional
lien releases from all of Tenant’s Agents for whom Tenant is seeking payment
pursuant to the applicable Application for Payment, which shall comply with the
appropriate provisions of California Civil Code Section 3262(d); (iv) to the
extent not previously provided, executed unconditional lien releases from all of
Tenant’s Agents demonstrating that all previously invoiced items for which an
Application for Payment has been submitted and paid have been duly paid as of
such date; (v) certifications that the work has been completed in accordance
with Landlord’s contractor selection and payment policy and (vi) a document
outlining the tasks of the previous month; including project meetings and
design, permitting, and construction milestones.  Within forty-five (45) days
after receipt of the foregoing, Landlord shall deliver a check to Tenant made
payable to Tenant, in payment of Landlord’s Share, if applicable, of the total
amounts shown in the applicable Application for Payment; provided, however that
each such payment by Landlord shall be subject to a ten percent (10%) holdback
(the aggregate of such hold back amounts, the “Final Retention”) and provided
further that the final payment(s) prior to the payment of the Final Retention
may not cover all costs shown in the Application for Payment.  Notwithstanding
the foregoing, Landlord acknowledges and agrees that, to the extent Tenant is
already retaining ten percent (10%) under its construction contracts for the
Tenant Improvements and not requesting such retention in its Application for
Payment, Landlord shall not retain an additional ten percent (10%) of the
Improvements Allowance. Landlord’s and Tenant’s respective shares of the Total
Costs shall be paid as follows.  “Landlord’s Share” shall be a fraction, the
numerator of which is the Improvements Allowance and the denominator of which is
the Total Cost including the Tenant

 

B-6

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Obligations.  “Tenant’s Share” shall be a fraction, the numerator of which is
the portion of the Total Cost including the Tenant Obligations that exceeds the
Improvements Allowance, and the denominator of which is the Total Cost including
the Tenant Obligations.  If the Total Cost changes during the course of
construction due to changes in the scope of the work, increased costs of
materials, delays, or any other reason, Landlord’s Share and Tenant’s Share
shall be appropriately adjusted to reflect the Total Cost at the time of each
draw request; provided, however in no event will Landlord be responsible to fund
any (i) amounts in excess of the Improvements Allowance or (ii) Tenant
Obligations.

 

(e)                                  Subject to the provisions of this Work
Agreement, a check for the Final Retention payable to Tenant shall be delivered
by Landlord to Tenant following the completion of construction of the Tenant
Improvements, provided that (i) Tenant delivers to Landlord properly executed
unconditional mechanics lien releases in compliance with both California Civil
Code Section 8134 and either Section 8136 or Section 8138 and any successor
statutes, and (ii) Landlord has determined that no substandard work exists which
adversely affects the Building Structure or Systems.

 

(f)                                   If Landlord breaches its obligation to
disburse all or any portion of the Improvements Allowance when due, Tenant may
apply any unpaid portion of the Improvements Allowance against the Rent next due
under the Lease, until such amount has been paid in full.

 

(g)                                  The Tenant Improvements shall be
constructed in accordance with the Final Plans and any Tenant Changes, and in
accordance with the provisions of the Lease including, without limitation, the
provisions of Article IX of the Lease, to the extent not inconsistent with this
Work Agreement.

 

(h)                                 In addition to the indemnity obligations of
Tenant under the Lease, except to the extent caused by the gross negligence or
willful misconduct of Landlord or Landlord’s Agents, Tenant shall indemnify,
defend and protect Landlord and hold Landlord harmless from any and all Costs to
the extent (i) arising out of or related to claims of injury to or death of
persons or damage to property occurring or resulting from the performance of the
Tenant Improvements or the acts or omissions of Tenant, Tenant Contractor or
Tenant’s Agents in or about the Premises or Building during the construction
period, and (ii) arising out of any negligent act of Tenant or Tenant’s Agents,
or anyone directly or indirectly employed by any of them, or in connection with
Tenant’s nonpayment of any amount arising out of the Tenant Improvements.  Such
indemnity by Tenant shall also apply with respect to any and all Costs related
in any way to Landlord’s performance of any ministerial acts reasonably
necessary to permit Tenant to complete the Tenant Improvements, and/or to enable
Tenant to obtain any building permit or certificate of occupancy for the
Premises. The foregoing indemnity shall survive the expiration or sooner
termination of the Lease.

 

(i)                                     During the period of construction of the
Tenant Improvements, Tenant shall keep, or cause Tenant’s Agents to keep, in
full force and effect the insurance coverage, in each instance with policies in
form and substance reasonably satisfactory to Landlord, required by
Section 13.2(C) of the Lease.

 

B-7

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(j)                                    Within ten (10) days after completion of
construction of the Tenant Improvements, Tenant shall cause a Notice of
Completion to be recorded in the office of the Recorder of the County in which
the Building is located in accordance with Section 8182 of the Civil Code of the
State of California or any successor statute, and shall furnish a copy thereof
to Landlord upon such recordation.  If Tenant fails to do so, Landlord may
execute and file the same on behalf of Tenant as Tenant’s agent for such
purpose, at Tenant’s sole cost and expense.  At the conclusion of construction
of the Tenant Improvements, (i) Tenant shall cause the Architect and Tenant’s
Contractor (A) to update the Final Plans as necessary to reflect all changes
made to the Final Plans during the course of construction, (B) to certify to the
best of their knowledge that the “record set” of as built drawings are true and
correct, which certification shall survive the expiration or termination of the
Lease, (C) to deliver to Landlord within sixty (60) days of completion of the
Tenant Improvements, a computer disk containing the Final Plans in AutoCAD
format, (ii) Tenant shall deliver to the Landlord a completed AIA Document G704
(i.e. Form of Certificate of Substantial Completion) from the Architect with
respect to the Tenant Improvements whereby the Architect certifies that the
Tenant Improvements were completed in accordance with Final Plans and Tenant
Changes (as used in this clause (ii), “certify” means an expression of the
Architect’s professional opinion to the best of its knowledge, information and
belief, and does not constitute a warranty or guarantee by the Architect), and
(iii) Tenant shall deliver to Landlord an electronic copy of all warranties,
guaranties, and operating manuals and information relating to the Tenant
Improvements in the Premises.

 

9.                                      Additional Construction Requirements.

 

(a)                                 Following the Delivery Date, Tenant, at
Tenant’s expense subject to payment of the Improvements Allowance, shall perform
all work considered necessary or desirable by Tenant to make the Premises ready
for Tenant’s occupancy (the “Tenant Improvements”) in accordance with the
provisions of this Work Agreement and all other applicable provisions of the
Lease other than Sections 9.7 through 9.14.

 

(b)                                 Intentionally omitted.

 

(c)                                  All Tenant Improvements made by Tenant
shall be made:  (i) in a good, workmanlike, first class and prompt manner;
(ii) using new or comparable materials only; (iii) by a contractor who qualifies
under this Work Agreement, including without limitation, paragraph (h) below and
has been approved in writing by Landlord; (iv) under the supervision of an
architect reasonably approved in writing by Landlord; (v) in accordance with
plans and specifications reasonably acceptable to Landlord, approved in writing;
(vi) in accordance with all Laws; and (vii) after obtaining public liability and
worker’s compensation insurance policies reasonably approved in writing by
Landlord.  Tenant shall not be required to post a payment or performance bond
for the Tenant Improvements.

 

(d)                                 If any lien (or a petition to establish such
lien) is filed in connection with any Tenant Improvements made by or on behalf
of Tenant, such lien (or petition) shall be discharged by Tenant within ten
(10) business days thereafter, at Tenant’s sole cost and expense, by the payment
thereof or by the filing of a reasonably acceptable bond.  If Landlord gives its
consent to the making of any Tenant Improvements, such consent shall not be
deemed to be an agreement or consent by Landlord to subject its interest in the
Premises or the Building to any

 

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liens which may be filed in connection therewith.  Tenant acknowledges that any
Tenant Improvements are accomplished for Tenant’s account, Landlord having no
obligation or responsibility in respect thereof.  Any deficiency in design or
construction, although same had prior approval of Landlord, shall be solely the
responsibility of Tenant.

 

(e)                                  All contractors and subcontractors shall be
required to procure and maintain insurance against such risks, in such amounts,
and with such companies as Landlord may reasonably require.  Certificates of
such insurance must be received by Landlord before any work is commenced.  All
contracts between Tenant and a contractor must explicitly require the contractor
to (a) name Landlord and Landlord’s agents as additional insureds and
(b) indemnify and hold harmless Landlord and Landlord’s Agents (except to the
extent caused by the gross negligence or willful misconduct of Landlord or
Landlord’s Agents).

 

(f)                                   All voice, data, video, audio and other
low voltage control transport system cabling and/or cable bundles installed in
the Building by Tenant or its contractor (collectively, “Cables”) shall be
(i) plenum rated and/or have a composition makeup suited for its environmental
use in accordance with NFPA 70/National Electrical Code; (ii) labeled every 3
meters with Tenant’s name and origination and destination points;
(iii) installed in accordance with all EIA/TIA standards and the National
Electric Code; and (iv) installed and routed in accordance with a routing plan
shown “as built” or “as installed” configurations of cable pathways, outlet
identification numbers, locations of all wall, ceiling and floor penetrations,
riser cable routing and conduit routing (if applicable), and such other
information as Landlord may request.  The routing plan shall be available to
Landlord and its agents at the Building upon request.  Upon the expiration or
earlier termination of this Lease, Tenant shall remove from the Premises and/or
Building all Cables installed by or on behalf of Tenant to the extent the same
must be removed pursuant to applicable Laws.

 

(g)                                  Tenant acknowledges and agrees that,
notwithstanding any provision contained in this Lease, all contractors and
subcontractors at any tier performing any construction, repair, refurbishment or
restoration in the Building (collectively, “Work”), including, without
limitation, tenant improvements, build-out, Tenant Improvements, additions,
improvements, renovations, repairs, remodeling, painting and installations of
fixtures, mechanical, electrical, plumbing, data, security, telecommunication,
low voltage or elevator equipment or systems or other equipment, or with respect
to any other construction work in, on, or to the Building (including Work
performed by any person providing any services to the Building such as DSL,
cable, communications, telecommunications or similar services) are required to
be approved in advance by ASB Capital Management, LLC (“ASB”) on behalf of
Landlord, and the business manager of the applicable local AFL-CIO Building and
Construction Trades Council.  ASB will only approve such contractors or
subcontractors that: (i) are bound by and signatory to a collective bargaining
agreement with a labor organization (a) whose jurisdiction covers the type of
work to be performed at the Building, and (b) that is an Approved Building
Trades Department Contractor or Subcontractor; and (ii) observe area standards
for wages and other terms and conditions of employment, including fringe
benefits.  For purposes hereof, an “Approved Building Trades Department
Contractor or Subcontractor” is a contractor or subcontractor that is currently
affiliated with the Building and Construction Trades Department of the AFL-CIO
(the “BCTD”) or, if no such BCTD-affiliated contractor or subcontractor is
available for a particular trade (e.g., carpentry work), a contractor or

 

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subcontractor that is affiliated with a national trade union which was formerly
affiliated with the BCTD and which recognizes (and will recognize and respect,
for its work at the Building), the jurisdictional limitations established by the
local BCTD.  Further, Tenant shall comply with any contractor selection and
payment policy promulgated by Landlord from time to time.  Upon the request of
Landlord, each such contractor and subcontractor shall provide written
certification that all work performed by such contractor or subcontractor was
performed in compliance with this policy.  Contractors may not engage any
subcontractor that does not satisfy the provisions of clauses (i) and
(ii) above.  If at any time a contractor or subcontractor does not satisfy
clauses (i) and (ii) above, such contractor or subcontractor shall not be
considered to be approved by Landlord or ASB.

 

(h)                                 If any Tenant Improvements that require
Landlord’s consent are made without the prior written consent of Landlord, then
Landlord shall have the right, at Tenant’s expense, to so remove and correct
such Tenant Improvements and restore the Premises and the Building.  All Tenant
Improvements to the Premises or the Building made by either party shall
immediately become the property of Landlord and shall remain upon and be
surrendered with the Premises as a part thereof at the expiration or earlier
termination of the Lease Term; provided, however, that (i) if there is no Event
of Default under this Lease, then Tenant shall have the right to remove, prior
to the expiration or earlier termination of the Lease Term, all movable
furniture, furnishings and equipment installed in the Premises solely at the
expense of Tenant, and (ii) Tenant shall remove at its expense all Tenant
Improvements and other items (including any telecommunications, security, data,
computer and similar equipment, cabling and wiring) in the Premises or the
Building which Landlord designates in writing for removal.  Landlord shall make
such designation concurrently with Landlord’s approval of such Tenant
Improvement.  Notwithstanding the foregoing, Tenant shall not be required to
remove:  (x) Tenant Improvements consisting of standard build-out items that are
typically installed by office tenants in the Building’s submarket (such as
partitions, but not interior staircases, for example); (y) any non-specialized
open lab improvements; and (z) any standard Tenant Improvements made by Tenant
in initially finishing and completing the Premises in accordance with this Work
Agreement.  Movable furniture, furnishings and trade fixtures shall be deemed to
exclude without limitation any item the removal of which might cause damage to
the Premises or the Building or which would normally be removed from the
Premises with the assistance of any tool or machinery other than a dolly.  If
such removal causes damage or injury to the Premises or the Building, then
Landlord shall have the right, at Tenant’s expense, to repair all damage and
injury to the Premises or the Building caused by such removal as aforesaid.  If
such furniture, furnishings and equipment are not removed by Tenant prior to the
expiration or earlier termination of the Lease Term, the same shall at
Landlord’s option be deemed abandoned or become the property of Landlord to be
surrendered with the Premises as a part thereof; provided, however, that
Landlord shall have the right at Tenant’s expense to remove from the Premises
any or all such items or to require Tenant to do the same, except as otherwise
provided in this Section.  If Tenant fails to return the Premises to Landlord as
required by this Section, then Tenant shall pay to Landlord, all actual costs
(including a reasonable construction management fee not to exceed three percent
(3%)) incurred by Landlord in effectuating such return.  Notwithstanding any
provision to the contrary contained in this Work Agreement, prior to the
expiration, and within five (5) days of the earlier termination, of the Lease
Term, Tenant shall have the right to remove any Specialized Tenant Improvements
installed by Tenant at Tenant’s

 

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expense, so long as Tenant repairs any damage or injury to the Premises or
Building caused by such removal.

 

10.                               Miscellaneous:

 

(a)                                 If no other response time is stated in this
Work Agreement, Landlord shall have five (5) business days to respond to a
request for information, consent or approval (or similar request) from Tenant. 
Tenant hereby designates Paul Intrieri as its primary representative and Gabe
Perez as its secondary representative with respect to the matters set forth in
this Work Agreement, which representatives, until further notice to Landlord,
shall have full authority and responsibility to act on behalf of the Tenant as
required in this Work Agreement, and Landlord shall be entitled to rely upon the
decisions and agreements made by either of such representatives as binding upon
Tenant.  Landlord hereby designates David Tech as its sole representative with
respect to the matters set forth in this Work Agreement, which representative,
until further notice to Tenant, shall have full authority and responsibility to
act on behalf of the Landlord as required in this Work Agreement, and Tenant
shall be entitled to rely upon the decisions and agreements made by such
representative as binding upon Landlord.

 

(b)                                 Time is of the essence in this Work
Agreement.  Unless otherwise indicated, all references herein to a “number of
days” shall mean and refer to calendar days.

 

(c)                                  In the event of any conflict between the
provisions of this Work Agreement and the provisions of the ASB Contractor and
Payment Policy Statement, the provisions of this Work Agreement shall govern. 
Without limiting the generality of the foregoing, Landlord shall have the right
to approve only Major Subcontractors (not all subcontractors), and neither
Landlord nor ASB’s legal counsel shall have the right to approve any
construction contracts entered into by Tenant or Tenant’s Agents.

 

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EXHIBIT C

 

RULES AND REGULATIONS

 

The following rules and regulations have been formulated for the safety and
well-being of all tenants of the Building.  Strict adherence to these rules and
regulations is necessary to guarantee that every tenant will enjoy a safe and
undisturbed occupancy of its premises.  Any violation of these rules and
regulations by Tenant shall constitute a default by Tenant under this Lease.

 

(1)                                 Tenant shall not obstruct or encumber or use
for any purpose other than ingress and egress to and from the Premises any
sidewalk, entrance, passage, court, elevator, vestibule, stairway, corridor,
hall or other part of the Building not exclusively occupied by Tenant.  No
bottles, parcels or other articles shall be placed, kept or displayed on window
ledges, in windows or in corridors, stairways or other public parts of the
Building.  Tenant shall not place any showcase, mat or other article outside the
Premises.  Nothing may be placed on or about balcony areas, if any, of the
Building without Landlord’s prior written approval.  Tenant shall keep all
portions of the Premises which are visible from the Building’s central atrium
(if any) in a tasteful, neat and orderly condition characteristic of similar
buildings.

 

(2)                                 Canvassing, soliciting and peddling in the
Building are prohibited, and Tenant shall cooperate to prevent the same.  Public
corridor doors, when not in use, shall be kept closed.  Nothing, including mats
and trash, shall be placed, swept or thrown into the corridors, halls, elevator
shafts, stairways or other public or Common Areas.

 

(3)                                 Tenant shall not attach, hang or use in
connection with any window or door of the Premises any drape, blind, shade or
screen, without Landlord’s prior written consent.  All awnings, drapes
projections, curtains, blinds, shades, screens and other fixtures shall be of a
quality, type, design and color, and shall be attached in a manner, approved in
writing by Landlord.  Any Tenant supplied window treatments shall be installed
behind Landlord’s standard window treatments so that Landlord’s standard window
treatments will be what is visible to persons outside the Building.  Drapes
(whether installed by Landlord or Tenant) which are visible from the exterior of
the Building shall be cleaned by Tenant at least once a year, without notice
from Landlord, at Tenant’s own expense.

 

(4)                                 Tenant shall not use the water fountains,
water and wash closets, and plumbing and other fixtures for any purpose other
than those for which they were constructed, and Tenant shall not place any
debris, rubbish, rag or other substance therein (including coffee grounds).  All
damages and costs resulting from misuse of fixtures shall be borne by Tenant.

 

(5)                                 Tenant shall not construct, maintain, use or
operate within the Premises any electrical device, wiring or apparatus in
connection with a loudspeaker system (other than an ordinary telephone and
paging system) or other sound system, in connection with any excessively bright,
changing, flashing, flickering or moving light or lighting device, or in
connection with any similar device or system, without Landlord’s prior written
consent.  Tenant shall not construct, maintain, use or operate any such device
or system outside of its Premises or within such Premises so that the same can
be heard or seen from outside the Premises.  No flashing, neon or

 

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search lights shall be used which can be seen outside the Premises.  Only warm
white lamps may be used in any fixture that may be visible from outside the
Building or Premises.  Tenant shall not maintain, use or operate within the
Premises any space heater.

 

(6)                                 Tenant shall not bring any vehicle other
than bicycles into the Building.  Landlord shall provide Secured Class I and
on-street Class II bicycle storage to meet LEED and local Code requirements. 
Tenant shall endeavor to have its employees store their bicycles in racks
furnished for such purpose by Landlord.  Except while loading and unloading
vehicles, there shall be no parking of vehicles or other obstructions placed in
the loading dock area.

 

(7)                                 Except as specifically provided to the
contrary in the Lease, Tenant shall not cook or permit any cooking on the
Premises, except for microwave cooking and use of coffee machines by Tenant’s
employees for their own consumption.  Tenant shall not cause or permit any
unusual or objectionable odor to be produced upon or emanate from the Premises.

 

(8)                                 Tenant shall not generate or permit
unreasonable noise at the Premises, which noises would disturb or interfere with
occupants of neighboring Buildings, whether by the use of any musical
instrument, radio, talking machine or in any other way.

 

(9)                                 Tenant shall not place on any floor a load
exceeding the floor load per square foot which such floor was designed to
carry.  Landlord shall have the right to prescribe the weight, position and
manner of installation of safes and other heavy equipment and fixtures. 
Landlord shall have the right to repair at Tenant’s expense any damage to the
Premises or the Building caused by Tenant’s moving property into or out of the
Premises or due to the same being in or upon the Premises or to require Tenant
to do the same.  Tenant shall not receive into the Building or carry in the
elevators any safes, freight, furniture, equipment or bulky item except as
approved by Landlord, and any such furniture, equipment and bulky item shall be
delivered only through the designated delivery entrance of the Building and the
designated freight elevator at designated times.  Tenant shall remove promptly
from any sidewalk adjacent to the Building any furniture, furnishing, equipment
or other material there delivered or deposited for Tenant.  Landlord reserves
the right to inspect all freight to be brought into the Building, except for
government classified and confidential client materials, and to exclude from the
Building all freight which violates any of these rules and regulations or the
Lease.

 

(10)                          Tenant shall not place additional locks or bolts
of any kind on any of the doors or windows, and shall not make any change in any
existing lock or locking mechanism therein, without Landlord’s prior written
approval.  At all times Tenant shall provide Landlord with a “master” key for
all locks on all doors and windows.  Tenant shall keep doors leading to a
corridor or main hall closed at all times except as such doors may be used for
ingress or egress and shall lock such doors during all times the Premises are
unattended.  Tenant shall, upon the termination of its tenancy:  (a) restore to
Landlord all keys and security cards to offices, storage rooms, toilet rooms,
the Building and the Premises which were either furnished to, or otherwise
procured by, Tenant, and in the event of the loss of any such keys, Tenant shall
pay the replacement cost thereof; and (b) inform Landlord of the combination of
any lock, safe and vault in the Premises.  At Landlord’s request, Landlord’s
then customary charge per key shall be paid for all keys in excess of two (2) of
each type.  Tenant’s key system shall be consistent with that for the Building.

 

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(11)                          Except as shown in the Final Construction
Drawings, Tenant shall not install or operate in the Premises any electrically
operated equipment or machinery (other than standard servers, desk-top office
equipment, including desk-top computers and copiers, typewriters, facsimile
machines, printers or other similar equipment used in connection with standard
office operations) without obtaining the prior written consent of Landlord. 
Landlord may condition such consent upon Tenant’s payment of actual costs for
the excess consumption of electricity or other utilities and for the actual cost
of any additional wiring or apparatus that may be occasioned by the operation of
such equipment or machinery.  Landlord shall have the right at any time and from
time to time to designate the electric service providers for the Building. 
Tenant shall cooperate with Landlord and such service providers and shall allow,
as reasonably necessary, access to the Building’s electric lines, feeders,
risers, wiring and any other Building machinery.  Tenant shall not install any
equipment of any type or nature that will or may necessitate any changes,
replacements or additions to, or changes in the use of, the water system,
heating system, plumbing system, air conditioning system or electrical system of
the Premises or the Building, without obtaining Landlord’s prior written
consent, which consent may be granted or withheld in Landlord’s sole and
absolute discretion.  In no event shall Tenant use or permit the use of any
space heaters or similar devices in the Premises.

 

(12)                          All telephone and telecommunications services
desired by Tenant shall be ordered by and utilized at the sole expense of
Tenant.  Unless Landlord otherwise requests or consents in writing, all of
Tenant’s telecommunications equipment shall be and remain solely in the Premises
and the telephone closet(s) designated by Landlord except as otherwise set forth
in Section 27.5.  Landlord shall have no responsibility for the maintenance of
Tenant’s telecommunications equipment (including wiring) nor for any wiring or
other infrastructure to which Tenant’s telecommunications equipment may be
connected.  Landlord shall have the right, upon reasonable prior notice to
Tenant (except in the event of an emergency), to interrupt telecommunications
facilities as necessary in connection with any repairs or with installation of
other telecommunications equipment.  Subject to the provisions of the Lease,
Tenant shall not utilize any wireless communications equipment (other than usual
and customary cellular telephones), including antennae and satellite receiver
dishes, at the Premises or the Building, without Landlord’s prior written
consent, which may be granted or withheld in Landlord’s sole and absolute
discretion.

 

(13)                          No telephone, telecommunications or other similar
provider whose equipment is not then servicing the Building shall be permitted
to install its lines or other equipment within or about the Building without
first securing the prior written approval of Landlord, which approval shall not
be unreasonably withheld, conditioned or delayed.  Landlord’s approval shall not
be deemed any kind of warranty or representation by Landlord, including any
warranty or representation as to the suitability, competence, or financial
strength of the provider.  Without limitation of the foregoing standards, as
specific conditions of any consent:  (i) Landlord shall incur no expense
whatsoever with respect to any aspect of the provider’s provision of its
services (including the costs of installation, materials and services);
(ii) prior to commencement of any work in or about the Building by the provider,
the provider shall supply Landlord with such written indemnities, insurance,
financial statements, and such other items as Landlord reasonably determines and
Landlord shall have reasonably determined that there is sufficient space in the
Building for the placement of the necessary equipment and materials; (iii) the
provider agrees to abide by such rules and regulations, building and other
codes, job site rules and such other requirements as are

 

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reasonably determined by Landlord to be necessary; (iv) the provider shall agree
to use existing building conduits and pipes or use building contractors (or
other contractors approved by Landlord); (v) the provider shall pay Landlord
such compensation as is reasonably determined by Landlord to compensate it for
space used in the building for the storage and maintenance of the provider’s
equipment, the fair market value of a provider’s access to the Building, and the
costs which may reasonably be expected to be incurred by Landlord; (vi) the
provider shall agree to deliver to Landlord detailed “as built” plans promptly
after the installation of the provider’s equipment is complete; and (vii) all of
the foregoing matters shall be documented in a written agreement between
Landlord and the provider on Landlord’s standard form and otherwise reasonably
satisfactory to Landlord.

 

(14)                          Landlord reserves the right to exclude from the
Building at all times any person who does not properly identify himself to the
Building management or attendant on duty.  Landlord shall have the right to
exclude any undesirable or disorderly persons from the Building at any time. 
Landlord may require all persons admitted to or leaving the Building to show
satisfactory identification.  Tenant shall be responsible for all persons for
whom it authorizes entry into the Building and shall be liable to Landlord for
all acts of such persons.  Landlord has the right to evacuate the Building in
the event of emergency or catastrophe or for the purpose of holding a reasonable
number of fire drills.

 

(15)                          Tenant shall not permit or encourage any loitering
in or about the Premises and shall not use or permit the use of the Premises for
lodging, dwelling or sleeping.

 

(16)                          Tenant, before closing and leaving the Premises at
the end of each business day, shall see that all lights and equipment are turned
off, including coffee machines.

 

(17)                          Tenant shall not request Landlord’s employees to
perform any work or do anything outside of such employees’ regular duties
without Landlord’s prior written consent.  Tenant’s special requirements will be
attended to only upon application to Landlord, and any such special requirements
shall be billed to Tenant in accordance with the schedule of charges maintained
by Landlord from time to time or as is agreed upon in writing in advance by
Landlord and Tenant.  Tenant shall not employ any of Landlord’s employees for
any purpose whatsoever without Landlord’s prior written consent.  Tenant shall
not employ any person or entity to do janitorial work within the Premises
without Landlord’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed, and any and all such work shall
be done in compliance with all instructions issued by Landlord or its
representatives.

 

(18)                          There shall not be used in any space, or in the
public halls of the Building, either by Tenant or by jobbers or others in the
delivery or receipt of merchandise, any hand trucks, except those equipped with
rubber tires and side guards.  Tenant shall be responsible for any loss or
damage resulting from any deliveries made by or for Tenant.

 

(19)                          Tenant shall not install or permit the
installation of any wiring for any purpose on the exterior of the Premises,
except as set forth in the Final Construction Plans or Section 27.5.  Landlord
will direct electricians as to where and how telephone and telegraph wires are
to be introduced.  No boring or cutting for wires or stringing of wires will be
allowed without written consent of Landlord.  The location of telephones, call
boxes and other office equipment affixed

 

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to the Premises shall be subject to the approval of Landlord.  All such work
shall be effected pursuant to permits issued by all applicable governmental
authorities having jurisdiction.  Tenant shall not do anything, or permit
anything to be done, in or about the Building, or bring or keep anything
therein, that will in any way increase the possibility of fire or other casualty
or obstruct or interfere with the rights of, or otherwise injure or annoy, other
tenants, or do anything in conflict with the valid pertinent laws, rules, or
regulations of any governmental authority.

 

(20)                          Tenant acknowledges that it is Landlord’s
intention that the Building be operated in a manner which is consistent with the
highest standards of cleanliness and decency in the community which it serves. 
Toward that end, Tenant shall not sell, distribute, display or offer for sale
any item which, in Landlord’s reasonable judgment, is inconsistent with the
quality of operation of the Building or may tend to impose or detract from the
image of the Building.  Tenant shall not use the Premises for any illegal
purpose.  Tenant shall cooperate with Building employees in keeping the Premises
neat and clean.

 

(21)                          Unless otherwise expressly provided in the Lease,
Tenant shall not use, occupy or permit any portion of the Premises to be used or
occupied for the storage, manufacture, or sale of liquor.

 

(22)                          Tenant shall purchase or contract for waxing, rug
shampooing, venetian blind washing, interior glass washing, furniture polishing,
janitorial work, removal of Tenant’s garbage or for towel service in the
Premises, only from contractors, companies or persons approved by Landlord,
which approval shall not be unreasonably withheld, delayed or conditioned. 
Tenant may have any such service provided within the Premises only upon prior
written notice to Landlord or the Building manager in each instance, and Tenant
shall provide Landlord or the Building manager with identifying information
regarding each individual performing any such services, other than full-time
employees of Tenant, prior to such individual’s commencing work, and Tenant
shall direct and cause each such individual, while in the Building and outside
of the Premises, to comply with all instructions issued by Landlord or its
representatives.

 

(23)                          Tenant shall not remove, alter or replace the
ceiling light diffusers, ceiling tiles or air diffusers in any portion of the
Premises without the prior written consent of Landlord.

 

(24)                          Tenant shall not purchase water, ice, coffee, soft
drinks, towels, or other merchandise or services from any company or person
whose repeated violation of Building regulations has caused, in Landlord’s
opinion, a hazard or nuisance to the Building and/or its occupants.

 

(25)                          Tenant shall not pay any employee on the Premises
except those actually employed therein; nor shall Tenant use the Premises as
headquarters for large scale employment of workers for other locations.

 

(26)                          Tenant shall not in any manner deface any part of
the Premises or the Building.  Other than ordinary office decorations, no
stringing of wires, boring or cutting shall be permitted except with Landlord’s
prior written consent.  Any floor covering installed by Tenant shall have an
under layer of felt rubber, or similar sound deadening substance, which shall
not be affixed to the floor by cement or any other non-soluble adhesive
materials.

 

(27)                          Any installations to provide supplemental cooling
for any portion of the Premises shall be made in such manner and using such
equipment and facilities as Landlord may designate and

 

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direct, and all work relating to any such installations shall in all respects be
performed at Tenant’s sole cost and expenses pursuant to plans approved in
advance in writing by Landlord, and in all other respects in the manner required
pursuant to the Lease.

 

(28)                          Tenant shall handle its newspapers, “office
paper,” garbage, trash and other waste products (collectively, “waste”) in the
manner required by applicable law (as the same may be amended from time to time)
whether required of Landlord or otherwise and shall conform with any recycling
plan instituted by Landlord.  All waste shall be kept within the Building or in
areas outside the Building designated by Landlord.  Landlord reserves the right
to require Tenant to arrange for waste collection, at Tenant’s sole cost and
expense, utilizing a contractor reasonably satisfactory to Landlord, and to
require Tenant to pay all actual costs, expenses, fines, penalties, or damages
that may be imposed on Landlord or Tenant by reason of Tenant’s failure to
comply with any such requirements.  If Tenant is unable to comply with
Landlord’s standard procedures regarding the internal collection, sorting,
separation and recycling of waste, then, upon reasonable advance notice to
Landlord, Landlord shall use reasonable efforts to arrange for alternative
procedures for Tenant, provided Tenant shall pay Landlord all actual costs
incurred by Landlord with respect thereto.

 

(29)                          Tenant shall not bring or keep, or permit to be
brought or kept, in the Building any weapon or flammable, combustible or
explosive fluid, chemical or substance, except as otherwise expressly permitted
in the Lease.

 

(30)                          Tenant shall comply with all workplace smoking
Laws.  There shall be no smoking in bathrooms, elevator lobbies, elevators,
terraces, loading docks, plaza areas, and other Common Areas.

 

(31)                          All wiring and cabling installed by Tenant shall
be marked and coded, in a manner reasonably acceptable to Landlord, to identify
such facilities as belonging to Tenant and the point of commencement and
termination of such facilities.  All such cabling and wiring shall, at
Landlord’s request, be removed by Tenant upon the expiration or termination of
the Lease if required by the terms of the Lease or if applicable governmental
agencies require removal of such facilities upon the termination of their use or
abandonment.

 

(32)                          Landlord may, upon request of Tenant, waive
Tenant’s compliance with any of the Building Rules, provided that (a) no waiver
shall be effective unless signed by Landlord, (b) no waiver shall relieve Tenant
from the obligation to comply with such Rule in the future unless otherwise
agreed in writing by Landlord, (c) no waiver granted to Tenant shall relieve
Tenant from the obligation of complying with the remaining Building Rules, and
(d) no waiver shall relieve Tenant from any liability for any loss or damage
resulting from Tenant’s failure to comply with any Rule.  Landlord reserves the
right to rescind any of the Building Rules and make such other and further
Rules as in the judgment of Landlord shall from time to time be needed for the
safety, protection, care, and cleanliness of the Building, the operation
thereof, the preservation of good order therein, and the protection and comfort
of Tenant and Tenant’s Agents, which Rules when made and notice thereof given to
Tenant shall be binding upon it in like manner as if originally herein
prescribed, so long as any such rule is not inconsistent with the provisions of
this Lease, does not unreasonably interfere with the rights granted to Tenant
hereunder, and does not materially increase the cost of Tenant’s occupancy of
the Premises

 

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through a material increase in Additional Rent.  In the event of any conflict or
inconsistency between the terms and provisions of the Building Rules, as now or
hereafter in effect, and the terms and provision of the Lease, the terms and
provision of the Lease shall prevail.

 

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EXHIBIT D

 

CERTIFICATE AFFIRMING LEASE DATES

 

This Certificate is being provided pursuant to that certain Lease Agreement
dated as of               , 2015 (the “Lease”), by and between 1400 16TH STREET
LLC, a Delaware limited liability company (“Landlord”), and Invitae Corporation
(“Tenant”).  The parties to the Lease desire to confirm the following:

 

 

(1)

The Delivery Date is              , 201    .

 

 

 

 

(2)

The Rent Commencement Date is              , 201    .

 

 

 

 

(3)

The initial Lease Term shall expire on                , 202    .

 

Attached to this Certificate is evidence of payment of premiums for all
insurance required pursuant to the Lease.

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Certificate under
seal on                    , 201    .

 

 

LANDLORD:

 

 

 

1400 16TH STREET LLC,

 

a Delaware limited liability company 

 

 

 

 

By:

SKS-PHG 1400 16TH STREET, LLC,

 

 

a Delaware limited liability company, its Manager

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

TENANT:

 

 

 

INVITAE CORPORATION,

 

a Delaware corporation

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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EXHIBIT E

 

LEGAL DESCRIPTION

 

For APN/Parcel ID(s): Lot 001, Block 3938

 

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SAN FRANCISCO,
COUNTY OF SAN FRANCISCO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:

 

Beginning at the point of intersection of the Northerly line of Sixteenth Street
and the Westerly line of Carolina Street, running thence Westerly along said
line of Sixteenth Street, 200 feet to the Easterly line of De Haro Street;
thence Northerly along said line of De Haro Street 400 feet to the Southerly
line of Fifteenth Street; thence Easterly along the Southerly line of Fifteenth
Street 200 feet to the Westerly line of Carolina Street; thence Southerly along
said line of Carolina Street 400 feet to the point of beginning.

 

E-1

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EXHIBIT F

 

PERMITTED HAZARDOUS SUBSTANCES

 

 

 

 

 

 

 

Daily Max

 

Reporting

Common Name

 

CAS #

 

Phase

 

Quantity

 

Units

2-propanol

 

67-63-0

 

Liquid

 

1.06

 

Gallons

70% isopropyl alcohol

 

67-63-0

 

Liquid

 

0.25

 

Gallons

Acid sanitizer (dodecylbenzenesulfonic acid (15%)

 

 

 

Liquid

 

0.26

 

Gallons

Ammonium sulfate

 

7783-20-2

 

Solid

 

0.22

 

Pounds

Betaine monohydrate

 

17146-86-0

 

Solid

 

0.22

 

Pounds

Compressed Nitrogen

 

7727-37-9

 

gas

 

608.00

 

ft3

Dimethyl sulfoxide

 

67-68-5

 

Liquid

 

0.01

 

Gallons

Ethanol

 

64-17-5

 

Liquid

 

15.00

 

Gallons

Ethylene Glycol

 

107-21-1

 

Liquid

 

1.32

 

Gallons

Fluorescein sodium salt

 

518-47-8

 

Solid

 

0.06

 

Pounds

Formamide

 

 

 

Liquid

 

54.00

 

Gallons

Gasoline

 

 

 

liquid

 

20.00

 

Gallons

Hydrochloric acid

 

57-55-6

 

Liquid

 

0.03

 

Gallons

Hydrochloric acid solution

 

7647-01-0

 

Liquid

 

0.40

 

Gallons

Hydrogen peroxide

 

 

 

liquid

 

1.00

 

Gallons

Liquid Nitrogen

 

7727-37-9

 

liquid

 

50.00

 

Gallons

Magnesium chloride solution

 

 

 

Liquid

 

0.03

 

Gallons

Methanol

 

67-56-1

 

Liquid

 

0.50

 

Gallons

Mineral oil

 

8042-47-5

 

Liquid

 

0.53

 

Gallons

pH buffer solutions

 

 

 

Liquid

 

0.79

 

Gallons

Potassium chloride

 

7447-40-7

 

Solid

 

1.10

 

Pounds

Potassium chloride solution

 

 

 

Liquid

 

0.03

 

Gallons

Potassium hydroxide solution

 

 

 

Liquid

 

0.03

 

Gallons

Propylene glycol

 

57-55-6

 

Liquid

 

1.55

 

Gallons

Protectaclear

 

 

 

Liquid

 

0.01

 

Gallons

RNAse away

 

 

 

Liquid

 

0.25

 

Gallons

Sodium acetate

 

127-09-3

 

Solid

 

0.55

 

Pounds

Sodium Azide

 

26628-22-8

 

Liquid

 

0.36

 

Gallons

Sodium chloride solution

 

 

 

Liquid

 

0.13

 

Gallons

Sodium dodecyl sulfate (sodium lauryl

 

151-21-3

 

Liquid

 

0.01

 

Gallons

sodium hydroxide solution

 

 

 

liquid

 

2.00

 

Gallons

Tween 20 (Polyoxyethylene Sorbitan

 

9005-64-5

 

Liquid

 

0.13

 

Gallons

 

* Process materials handled include potentially biohazardous materials and
waste, including blood and saliva samples.

 

F-1

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