Exhibit 10.6(b)
THIRD AMENDMENT
     THIS THIRD AMENDMENT (the “Amendment”) is made and entered into as of
November 30, 2005, by and between CA-EMERYVILLE PROPERTIES LIMITED PARTNERSHIP,
a Delaware limited partnership (“Landlord”) and ZIPREALTY, INC., a Delaware
corporation (“Tenant”).
RECITALS

A.   Landlord (as successor in interest to EOP-Emeryville Properties, L.L.C., a
Delaware limited liability company) and Tenant (as successor by merger to
zipRealty, Inc., a California corporation) are parties to that certain lease
dated November 28, 2001, which lease has been previously amended by instruments
dated March 22, 2002 and February 15, 2005 (collectively, the “Lease”). Pursuant
to the Lease, Landlord has leased to Tenant space currently containing
approximately 15,825 rentable square feet (the “Original Premises”) described as
Suite No. 1555 on the 15th floor of the building commonly known as Emeryville
Tower III located at 2000 Powell Street, Emeryville, California (the
“Building”).

B.   Tenant and Landlord agree to relocate Tenant from the Original Premises to
23,803 rentable square feet of space described as Suite No. 300 on the 3rd floor
of the Building as shown on Exhibit A attached hereto (the “Substitution
Space”).

C.   The Lease by its terms shall expire on January 31, 2007 (“Prior Termination
Date”), and the parties desire to extend the Term, all on the following terms
and conditions.

     NOW, THEREFORE, in consideration of the above recitals which by this
reference are incorporated herein, the mutual covenants and conditions contained
herein and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Landlord and Tenant agree as follows:
1.      Substitution.

  1.01.   Effective as of the Substitution Effective Date (hereinafter defined),
the Substitution Space is substituted for the Premises and, from and after the
Substitution Effective Date, the Premises, as defined in the Lease, shall be
deemed to mean the Substitution Space containing 23,803 rentable square feet and
described as Suite No. 300 on the 3rd floor of the Building.

  1.02.   The Term for the Substitution Space shall commence on the Substitution
Effective Date and, unless sooner terminated pursuant to the terms of the Lease,
shall end on the Extended Termination Date (as hereinafter defined). The
Substitution Space is subject to all the terms and conditions of the Lease
except as expressly modified herein and except that Tenant shall not be entitled
to receive any allowances, abatements or other financial concessions granted
with respect to the Original Premises unless such concessions are expressly
provided for herein with respect to the Substitution Space. Effective as of the
Substitution Effective Date, the Lease shall be terminated with respect to the
Original Premises only, and, unless otherwise specified herein, “Premises” (as
such term is used in the Original Lease) shall mean the Substitution Space.
Except as otherwise set forth herein, Tenant shall vacate the Original Premises
as of February 7, 2006 (such date that Tenant is required to vacate the Original
Premises being referred to herein as the “Original Premises Vacation Date”) and
return the same to Landlord in “broom clean” condition and otherwise in
accordance with the terms and conditions of the Lease. Notwithstanding anything
to the contrary contained herein, if the Original Premises Vacation Date is
subsequent to the Substitution Effective Date (such period commencing on the
Substitution Effective Date and ending on the Original Premises Vacation Date is
referred to herein as the “Vacation Period”), then, during the Vacation Period,
Tenant shall comply with all terms and provisions of the Lease with respect to
the Original Premises as though the Original Premises were still deemed part of
the Premises hereunder, except that Tenant shall not be

 

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obligated to pay Base Rent or Additional Rent with respect to the Original
Premises during the Vacation Period. Following the Vacation Period, Tenant’s
obligation for payment of Base Rent or Additional Rent for the Original Premises
shall be determined in accordance with Section 10 hereof. However, nothing
provided in this Paragraph 1.02 shall alter Tenant’s requirement to pay Rent for
the Substitution Space as of the Substitution Effective Date.
2.  Substitution Effective Date.

  2.01.   The “Substitution Effective Date” shall be January 1, 2006.

  2.02.   The Substitution Effective Date shall be delayed to the extent that
Landlord fails to deliver possession of the Substitution Space as a result of
holding over by prior occupants or to the extent that Landlord fails to complete
its review of the final plans for the Initial Alterations and the contractors to
perform such Initial Alterations within the time provided for such review in the
Work Letter attached hereto as Exhibit B. Any such delay in the Substitution
Effective Date shall not subject Landlord to any liability for any loss or
damage resulting therefrom. If the Substitution Effective Date is delayed, the
Extended Termination Date shall not be similarly extended.

3.   Extension. The Term of the Lease is extended for a period of sixty
(60) months from the Prior Termination Date and shall expire on January 31, 2012
(“Extended Termination Date”), unless sooner terminated in accordance with the
terms of the Lease or this Amendment. That portion of the Term commencing the
day immediately following the Prior Termination Date (“Extension Date”) and
ending on the Extended Termination Date shall be referred to herein as the
“Extended Term”.

4.   Base Rent. As of the Substitution Effective Date, the schedule of Base Rent
payable with respect to the Premises during the remainder of the current Term
and the Extended Term is the following:

                           
Months of Term or Period
    Annual Rate Per Square Foot     Monthly Base Rent    
Substitution Effective Date — 12/31/2006
      $25.32         $50,224.33      
1/1/2007 — 12/31/2007
      $26.21         $51,989.72      
1/1/2008 — 12/31/2008
      $27.12         $53,794.78      
1/1/2009 — 12/31/2009
      $28.07         $55,679.18      
1/1/2010 — 12/31/2010
      $29.06         $57,642.93      
1/1/2011 — 12/31/2011
      $30.07         $59,646.35      
1/1/2012 — 1/31/2012
      $31.12         $61,729.11      

     All such Base Rent shall be payable by Tenant in accordance with the terms
of the Lease.

5.   Reduction in Letter of Credit. Landlord currently holds the Letter of
Credit, as defined in the Lease, in the amount of $180,000.00. Upon Tenant’s
execution hereof, Tenant shall either deliver to Landlord a

 

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    substitute Letter of Credit in the amount of $90,000.00, or an amendment to
the existing Letter of Credit, reducing the amount of such Letter of Credit to
$90,000.00. The substitute Letter of Credit or the amended Letter of Credit, as
the case may be, must be in compliance with the requirements set forth in
Section VI of the Lease. If Tenant delivers a substitute Letter of Credit,
Landlord shall promptly return the original Letter of Credit to Tenant.

6.   Tenant’s Pro Rata Share. For the period commencing with the Substitution
Effective Date and ending on the Extended Termination Date, Tenant’s Pro Rata
Share for the Premises is 6.4718%.

7.   Expenses and Taxes. For the period commencing with the Substitution
Effective Date and ending on the Extended Termination Date, Tenant shall pay for
Tenant’s Pro Rata Share of Expenses and Taxes applicable to the Premises in
accordance with the terms of the Lease, provided, however, during such period,
the Base Year for the computation of Tenant’s Pro Rata Share of Expenses and
Taxes applicable to the Premises is 2006.

8.      Improvements to Substitution Space.

  8.01.   Condition of Substitution Space. Tenant has inspected the Substitution
Space and agrees to accept the same “as is” without any agreements,
representations, understandings or obligations on the part of Landlord to
perform any alterations, repairs or improvements, except as may be expressly
provided otherwise in this Amendment, including the Work Letter attached hereto
as Exhibit B. Landlord, at its sole cost and expense (except to the extent
properly included in Expenses), shall be responsible for correcting any
violations of Title III of the Americans with Disabilities Act with respect to
the Common Areas of the Building, including any Common Areas on the 3rd floor of
the Building where the Substitution Space is located. Notwithstanding the
foregoing, Landlord shall have the right to contest any alleged violation in
good faith, including, without limitation, the right to apply for and obtain a
waiver or deferment of compliance, the right to assert any and all defenses
allowed by Law and the right to appeal any decisions, judgments or rulings to
the fullest extent permitted by Law. Landlord, after the exhaustion of any and
all rights to appeal or contest, will make all repairs, additions, alterations
or improvements necessary to comply with the terms of any final order or
judgment. Notwithstanding the foregoing, Tenant, not Landlord, shall be
responsible for the correction of any violations that arise out of or in
connection with any claims brought under any provision of the Americans with
Disabilities Act other than Title III, the specific nature of Tenant’s business
in the Substitution Space (other than general office use), the acts or omissions
of Tenant, its agents, employees or contractors, Tenant’s arrangement of any
furniture, equipment or other property in the Substitution Space, any repairs,
alterations, additions or improvements performed by or on behalf of Tenant and
any design or configuration of the Substitution Space specifically requested by
Tenant after being informed that such design or configuration may not be in
strict compliance with the ADA.

  8.02.   Responsibility for Improvements to Substitution Space. Tenant shall
perform improvements to the Substitution Space in accordance with the Work
Letter, and Tenant shall be entitled to an improvement allowance in connection
with such work as more fully described in the Work Letter.

9.   Early Access to Substitution Space. During the Vacation Period, Tenant’s
possession of the Substitution Space shall be subject to the terms and
conditions of the Lease and, as of the Substitution Effective Date, Tenant shall
pay Base Rent and Additional Rent applicable to the Substitution Premises to
Landlord. However, except for the cost of services requested by Tenant (e.g.
freight elevator usage), Tenant shall not be required to pay Rent for the
Substitution Space for any days of possession before the Substitution Effective
Date during which Tenant, with the approval of Landlord, is in possession of the
Substitution Space for the sole purpose of performing improvements or installing
furniture, equipment or other personal property.

 

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10.   Holding Over. If Tenant continues to occupy the Original Premises after
the expiration of the Vacation Period (as defined in Section 1.02 above),
occupancy of the Original Premises after the expiration of the Vacation Period
shall be that of a tenancy at sufferance and in no event for month-to-month or
year-to-year, but Tenant shall, throughout the entire holdover period, be
subject to all the terms and provisions of the Lease and shall pay for its use
and occupancy an amount (on a per month basis without reduction for any partial
months during any such holdover) equal to twice the sum of the Base Rent and
Additional Rent due for the period immediately preceding such holding over,
provided that in no event shall Base Rent and Additional Rent during the
holdover period be less than the fair market rental for the Original Premises.
No holding over by Tenant in the Original Premises or payments of money by
Tenant to Landlord after the expiration of the Vacation Period shall be
construed to prevent Landlord from recovery of immediate possession of the
Original Premises by summary proceedings or otherwise. In addition to the
obligation to pay the amounts set forth above during any such holdover period,
Tenant also shall be liable to Landlord for all damage, including any
consequential damage, which Landlord may suffer by reason of any holding over by
Tenant in the Original Premises, and Tenant shall indemnify Landlord against any
and all claims made by any other tenant or prospective tenant against Landlord
for delay by Landlord in delivering possession of the Original Premises to such
other tenant or prospective tenant. Notwithstanding the foregoing, if Tenant
continues to occupy the Original Premises, but for a period of less than 30 days
after the expiration of the Vacation Period, Tenant shall be charged the
holdover rent set forth in this Section 10 on a per diem basis only.

11.   Other Pertinent Provisions. Landlord and Tenant agree that, effective as
of the date of this Amendment (unless different effective date(s) is/are
specifically referenced in this Section), the Lease shall be amended in the
following additional respects:

  11.01   Parking. As of the Substitution Effective Date, Section 2 of the
Parking Agreement attached to the Lease as Exhibit F is deleted in its entirety
and the following is substituted therefor: “Landlord hereby grants to Tenant and
persons designated by Tenant a license to use seventy-one (71) parking spaces in
the parking facility (“Parking Facility”) located partially beneath the
Property. Of these 71 parking spaces, seventy (70) shall be non-reserved and one
(1) shall be reserved, which space is identified as parking space 1A. The term
of such license shall commence on the Substitution Effective Date and shall
continue until the earlier to occur of the Extended Termination Date, the sooner
termination of the Lease, or Tenant’s abandonment of the Premises thereunder.
During the term of this license, Tenant shall pay Landlord the prevailing
monthly charges established from time to time for parking in the Parking
Facility, payable in advance, with Tenant’s payment of monthly Base Rent. The
initial charge for such parking spaces is $65.00 per non-reserved parking pass,
per month. No deductions from the monthly charge shall be made for days on which
the Parking Facility is not used by Tenant. Tenant may, from time to time
request additional parking spaces, and if Landlord shall provide the same, such
parking spaces shall be provided and used on a month-to-month basis, and
otherwise on the foregoing terms and provisions, and at such prevailing monthly
parking charges as shall be established from time to time.”

  11.02   Renewal Option. The parties hereby confirm that Section I (entitled
“Renewal Option”) of Exhibit E to the Lease continues in full force and effect
in accordance with its terms.

  11.03   Notice Addresses. Section I.M (Basic Lease Information) of the Lease
is as of the Substitution Effective Date deleted in its entirety and the
following substituted therefore:

 

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     Landlord:
CA-Emeryville Properties Limited Partnership
c/o Equity Office Management, L.L.C.
One Market, Spear Tower
Suite 600
San Francisco, California 94105
Attn: Property Manager
          A copy of any notices to Landlord shall be sent to Equity Office, One
Market, Spear Tower, Suite 600, San Francisco, California 94105, Attn: Managing
Counsel — San Francisco Region.
          Tenant: Notices shall be sent to Tenant at the Premises (i.e., the
Substitution Space as of the Substitution Effective Date).
          A copy of any notice of Tenant default shall be sent to:
          Michael Polentz
          300 Hamilton Avenue, Third Floor
          Palo Alto, California 94301
          If any additional person listed above fails to receive the copy of the
notice of Tenant default, the validity of the notice served on Tenant shall not
be affected thereby.
         11.04      Right of First Offer.

  A.   Grant of Option; Conditions. Tenant shall have the one time right of
first offer (the “Right of First Offer”) with respect to the 23,803 rentable
square feet known as Suite No. 400 on the 4th floor of the Building shown on the
demising plan attached hereto as Exhibit C (the “Offering Space”). Tenant’s
Right of First Offer shall be exercised as follows: The termination date of the
lease between Landlord and the existing tenant in the Offering Space is
November 30, 2008. If Tenant is interested in leasing the Offering Space, Tenant
shall provide Landlord with a written notice of such interest no earlier than
120 days prior to such termination date and no later than 90 days prior to such
termination date. If Landlord has determined that the existing tenant in the
Offering Space will not extend or renew its lease of the Offering Space (but
prior to leasing such Offering Space to a party other than the existing tenant),
Landlord shall advise Tenant (the “Advice”) of the terms under which Landlord is
prepared to lease the Offering Space to Tenant for the remainder of the Term,
which terms shall reflect the Prevailing Market (hereinafter defined) rate for
such Offering Space as reasonably determined by Landlord. Tenant may lease such
Offering Space in its entirety only, under such terms, by delivering written
notice of exercise to Landlord (the “Notice of Exercise”) within 5 days after
the date of the Advice, except that Tenant shall have no such Right of First
Offer and Landlord need not provide Tenant with an Advice, if:

 

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                              1.      Tenant is in default under the Lease
beyond any applicable cure periods at the time that Landlord would otherwise
deliver the Advice; or
                              2.      the Premises, or any portion thereof, is
sublet (other than pursuant to a Permitted Transfer, as defined in Article XII
of the Lease) at the time Landlord would otherwise deliver the Advice; or
                              3.      the Lease has been assigned (other than
pursuant to a Permitted Transfer, as defined in Article XII of the Lease) prior
to the date Landlord would otherwise deliver the Advice; or
                              4.      Tenant is not occupying the Premises on
the date Landlord would otherwise deliver the Advice; or
                              5.      the Offering Space is not intended for the
exclusive use of Tenant during the Term; or
                              6.      the existing tenant in the Offering Space
is interested in extending or renewing its lease for the Offering Space or
entering into a new lease for such Offering Space.
     B.    Terms for Offering Space.

  1.   The term for the Offering Space shall commence upon the commencement date
stated in the Advice and thereupon such Offering Space shall be considered a
part of the Premises, provided that all of the terms stated in the Advice shall
govern Tenant’s leasing of the Offering Space and only to the extent that they
do not conflict with the Advice, the terms and conditions of this Lease shall
apply to the Offering Space.

  2.   Tenant shall pay Base Rent and Additional Rent for the Offering Space in
accordance with the terms and conditions of the Advice, which terms and
conditions shall reflect the Prevailing Market rate for the Offering Space as
determined in Landlord’s reasonable judgment.

  3.   The Offering Space (including improvements and personalty, if any) shall
be accepted by Tenant in its condition and as-built configuration existing on
the earlier of the date Tenant takes possession of the Offering Space or as of
the date the term for such Offering Space commences, unless the Advice specifies
any work to be performed by Landlord in the Offering Space, in which case
Landlord shall perform such work in the Offering Space. If Landlord is delayed
delivering possession of the Offering Space due to the holdover or unlawful
possession of such space by any party, Landlord shall use reasonable efforts to
obtain possession of the space, and the commencement of the term for the
Offering Space shall be postponed until the date Landlord delivers possession of
the Offering Space to Tenant free from occupancy by any party.

     C.     Termination of Right of First Offer. The rights of Tenant hereunder
with respect to the Offering Space shall terminate on the earlier to occur of:
(i) January 31, 2010; (ii) Tenant’s failure to exercise its Right of First Offer
within the 5 day period provided in Section A above; and (iii) the date Landlord
would have provided Tenant an Advice if Tenant had not been in violation of one
or more of the conditions set forth in Section A above. In addition, if Landlord
provides Tenant with an Advice for any portion of the Offering Space that
contains expansion rights (whether such rights are described as an expansion
option, right of first refusal, right of first offer or otherwise) with respect
to any other portion of the Offering Space (such other portion of the Offering
Space subject to such expansion

 

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rights is referred to herein as the “Encumbered Offering Space”) and Tenant does
not exercise its Right of First Offer to lease the Offering Space described in
the Advice, Tenant’s Right of First Offer with respect to the Encumbered
Offering Space shall be subject and subordinate to all such expansion rights
contained in the Advice.
     D.      Offering Amendment. If Tenant exercises its Right of First Offer,
Landlord shall prepare an amendment (the “Offering Amendment”) adding the
Offering Space to the Premises on the terms set forth in the Advice and
reflecting the changes in the Base Rent, Rentable Square Footage of the
Premises, Tenant’s Pro Rata Share and other appropriate terms. A copy of the
Offering Amendment shall be sent to Tenant within a reasonable time after
Landlord’s receipt of the Notice of Exercise executed by Tenant, and Tenant
shall execute and return the Offering Amendment to Landlord within 15 days
thereafter, but an otherwise valid exercise of the Right of First Offer shall be
fully effective whether or not the Offering Amendment is executed.
     E.      Definition of Prevailing Market. For purposes of this Right of
First Offer provision, "Prevailing Market” shall mean the annual rental rate per
square foot for space comparable to the Offering Space in the Building and
office buildings comparable to the Building in the Emeryville, California area
under leases and renewal and expansion amendments being entered into at or about
the time that Prevailing Market is being determined, giving appropriate
consideration to tenant concessions, brokerage commissions, tenant improvement
allowances, existing improvements in the space in question, and the method of
allocating operating expenses and taxes. Notwithstanding the foregoing, space
leased under any of the following circumstances shall not be considered to be
comparable for purposes hereof: (i) the lease term is for less than the lease
term of the Offering Space, (ii) the space is encumbered by the option rights of
another tenant, or (iii) the space has a lack of windows and/or an awkward or
unusual shape or configuration. The foregoing is not intended to be an exclusive
list of space that will not be considered to be comparable.
     F.      Subordination. Notwithstanding anything herein to the contrary,
Tenant’s Right of First Offer is subject and subordinate to the expansion rights
(whether such rights are designated as a right of first offer, right of first
refusal, expansion option or otherwise) of any tenant of the Building existing
on the date hereof.
12.      Miscellaneous.

  12.01.   This Amendment and the attached exhibits, which are hereby
incorporated into and made a part of this Amendment, set forth the entire
agreement between the parties with respect to the matters set forth herein.
There have been no additional oral or written representations or agreements.
Under no circumstances shall Tenant be entitled to any Rent abatement,
improvement allowance, leasehold improvements, or other work to the Substitution
Space, or any similar economic incentives that may have been provided Tenant in
connection with entering into the Lease, unless specifically set forth in this
Amendment or in the Work Letter. Tenant agrees that neither Tenant nor its
agents or any other parties acting on behalf of Tenant shall disclose any
matters set forth in this Amendment or disseminate or distribute any information
concerning the terms, details or conditions hereof to any person, firm or entity
without obtaining the express written consent of Landlord. Landlord understands
and acknowledges that Tenant is a publicly traded company and as such has
disclosure and reporting requirements that may require disclosure of this
Amendment. Landlord hereby consents to disclosure of this Amendment or of the
Lease as may be required under applicable Law. Landlord further consents to
Tenant’s disclosure of this Amendment or the Lease to Tenant’s attorneys,
accountants, auditors and, on a “need to know” basis, investors.

  12.02.   Except as herein modified or amended, the provisions, conditions and
terms of the Lease shall remain unchanged and in full force and effect.

  12.03.   In the case of any inconsistency between the provisions of the Lease
and this Amendment, the provisions of this Amendment shall govern and control.

 

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  12.04.   Submission of this Amendment by Landlord is not an offer to enter
into this Amendment but rather is a solicitation for such an offer by Tenant.
Landlord shall not be bound by this Amendment until Landlord has executed and
delivered the same to Tenant.

  12.05.   The capitalized terms used in this Amendment shall have the same
definitions as set forth in the Lease to the extent that such capitalized terms
are defined therein and not redefined in this Amendment.

  12.06.   Tenant hereby represents to Landlord that Tenant has dealt with no
broker other than Aegis Realty Partners in connection with this Amendment.
Tenant agrees to indemnify and hold Landlord and the Landlord Related Parties
harmless from all claims of any other brokers claiming to have represented
Tenant in connection with this Amendment. Landlord hereby represents to Tenant
that Landlord has dealt with no broker in connection with this Amendment.
Landlord agrees to indemnify and hold Tenant and the Tenant Related Parties
harmless from all claims of any brokers claiming to have represented Landlord in
connection with this Amendment.

  12.07.   Each signatory of this Amendment represents hereby that he or she has
the authority to execute and deliver the same on behalf of the party hereto for
which such signatory is acting.

[SIGNATURES ARE ON FOLLOWING PAGE]

 

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          IN WITNESS WHEREOF, Landlord and Tenant have duly executed this
Amendment as of the day and year first above written.
LANDLORD:
CA-EMERYVILLE PROPERTIES LIMITED PARTNERSHIP,
a Delaware limited partnership

    By: EOM GP, L.L.C., a Delaware limited liability company, its general
partner

      By: Equity Office Management, L.L.C., a Delaware limited liability
company,
its non-member manager

      By: /s/ Mark Geisreiter         Name: Mark Geisreiter         Title:
Senior Vice President

TENANT:
ZIPREALTY, INC., a Delaware corporation
     By: /s/ Gary M. Beasley
     Name: Gary M. Beasley
     Title: EVP & CFO
     By:                                                                      
     Name:                                                                 
     Title:                                                                   

 

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EXHIBIT A
OUTLINE AND LOCATION OF SUBSTITUTION SPACE
     This Exhibit is attached to and made a part of the Amendment by and between
CA-EMERYVILLE PARTNERS LIMITED PARTNERSHIP, a Delaware limited partnership
(“Landlord”) and ZIPREALTY, INC., a Delaware corporation (“Tenant”) for space in
the Building located at 2000 Powell Street, Emeryville, California, commonly
known as Emeryville Tower III.

 

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EXHIBIT B
WORK LETTER
     This Exhibit is attached to and made a part of the Amendment by and between
CA-EMERYVILLE PARTNERS LIMITED PARTNERSHIP, a Delaware limited partnership
(“Landlord”) and ZIPREALTY, INC., a Delaware corporation (“Tenant”) for space in
the Building located at 2000 Powell Street, Emeryville, California, commonly
known as Emeryville Tower III.
     As used in this Work Letter, the “Premises” shall be deemed to mean the
Substitution Space, as defined in the Amendment to which this Work Letter is
attached.
     I.     Alterations and Allowance.

A.   Tenant, following the delivery of the Premises by Landlord and the full and
final execution and delivery of the Amendment to which this Exhibit is attached,
the amended or substitute Letter of Credit, and all prepaid rental required
under such agreement, if any, shall have the right to perform alterations and
improvements in the Premises (the “Initial Alterations”). Notwithstanding the
foregoing, Tenant and its contractors shall not have the right to perform
Initial Alterations in the Premises unless and until Tenant has complied with
all of the terms and conditions of Section IX of the Lease, including, without
limitation, approval by Landlord of the final plans for the Initial Alterations
and the contractors to be retained by Tenant to perform such Initial
Alterations. Upon receipt by Landlord of all documentation required by Landlord
to complete its review of the final plans for the Initial Alterations and the
contractors to be retained, Landlord shall have 10 Business Days to complete
such review and inform Tenant as to the results of the review. Tenant shall be
responsible for all elements of the design of Tenant’s plans (including, without
limitation, compliance with Law, functionality of design, the structural
integrity of the design, the configuration of the Premises and the placement of
Tenant’s furniture, appliances and equipment), and Landlord’s approval of
Tenant’s plans shall in no event relieve Tenant of the responsibility for such
design. Landlord’s approval of the contractors to perform the Initial
Alterations shall not be unreasonably withheld or delayed. The parties agree
that Landlord’s approval of the general contractor to perform the Initial
Alterations shall not be considered to be unreasonably withheld if any such
general contractor (i) does not have trade references reasonably acceptable to
Landlord, (ii) does not maintain insurance as required pursuant to the terms of
this Lease, (iii) does not have the ability to be bonded for the work in an
amount of no less than 150% of the total estimated cost of the Initial
Alterations, (iv) does not provide current financial statements reasonably
acceptable to Landlord, or (v) is not licensed as a contractor in the
state/municipality in which the Premises is located. Tenant acknowledges the
foregoing is not intended to be an exclusive list of the reasons why Landlord
may reasonably withhold its consent to a general contractor.

B.   Provided Tenant is not in default, Landlord agrees to contribute the sum of
$523,666.00 ($22.00 per rentable square foot of the Substitution Space) (the
“Allowance”) toward the cost of performing the Initial Alterations in
preparation of Tenant’s occupancy of the Premises, of which a maximum of
$47,606.00 ($2.00 per rentable square foot of the Substitution Space) may be
used for code compliance upgrades and alterations required to be performed
within the Premises by the City of Emeryville or any of its agencies with
jurisdiction over required code upgrades. The Allowance may only be used for the
cost of preparing design and construction documents and mechanical and
electrical plans for the Initial Alterations and for hard costs in connection
with the Initial Alterations. The Allowance, less a 10% retainage (which
retainage shall be payable as part of the final draw), shall be paid to Tenant
or, at Landlord’s option, to the order of the general contractor that performs
the Initial Alterations, in periodic disbursements within 30 days after receipt
of the following documentation: (i) an application for payment and sworn
statement of

 

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    contractor substantially in the form of AIA Document G-702 covering all work
for which disbursement is to be made to a date specified therein; (ii) a
certification from an AIA architect substantially in the form of the Architect’s
Certificate for Payment which is located on AIA Document G702, Application and
Certificate of Payment; (iii) Contractor’s, subcontractor’s and material
supplier’s waivers of liens which shall cover all Initial Alterations for which
disbursement is being requested and all other statements and forms required for
compliance with the mechanics’ lien laws of the state in which the Premises is
located, together with all such invoices, contracts, or other supporting data as
Landlord or Landlord’s Mortgagee may reasonably require; (iv) a cost breakdown
for each trade or subcontractor performing the Initial Alterations; (v) plans
and specifications for the Initial Alterations, together with a certificate from
an AIA architect that such plans and specifications comply in all material
respects with applicable Law; (vi) copies of all construction contracts for the
Initial Alterations, together with copies of all change orders, if any; and
(vii) a request to disburse from Tenant containing an approval by Tenant of the
work done and a good faith estimate of the cost to complete the Initial
Alterations. Upon completion of the Initial Alterations, and prior to final
disbursement of the Allowance, Tenant shall furnish Landlord with: (1) general
contractor and architect’s completion affidavits, (2) full and final waivers of
lien, (3) receipted bills covering all labor and materials expended and used,
(4) as-built plans of the Initial Alterations, and (5) the certification of
Tenant and its architect that the Initial Alterations have been installed in a
good and workmanlike manner in accordance with the approved plans, and in
accordance with applicable laws, codes and ordinances. In no event shall
Landlord be required to disburse the Allowance more than one time per month. If
the Initial Alterations exceed the Allowance, Tenant shall be entitled to the
Allowance in accordance with the terms hereof, but each individual disbursement
of the Allowance shall be disbursed in the proportion that the Allowance bears
to the total cost for the Initial Alterations, less the 10% retainage referenced
above. Notwithstanding anything herein to the contrary, Landlord shall not be
obligated to disburse any portion of the Allowance during the continuance of an
uncured default under the Lease, and Landlord’s obligation to disburse shall
only resume when and if such default is cured.

C.   In no event shall the Allowance be used for the purchase of equipment,
furniture or other items of personal property of Tenant. If Tenant does not
submit a request for payment of the entire Allowance to Landlord in accordance
with the provisions contained in this Exhibit by April 30, 2006, any unused
amount shall accrue to the sole benefit of Landlord, it being understood that
Tenant shall not be entitled to any credit, abatement or other concession in
connection therewith. Tenant shall be responsible for all applicable state sales
or use taxes, if any, payable in connection with the Initial Alterations and/or
Allowance.

D.   Subject to the terms of this Amendment, Tenant agrees to accept the
Premises in its “as-is” condition and configuration, it being agreed that
Landlord shall not be required to perform any work or, except as provided above
with respect to the Allowance, incur any costs in connection with the
construction or demolition of any improvements in the Premises.

E.   This Exhibit shall not be deemed applicable to any additional space added
to the Premises at any time or from time to time, whether by any options under
the Lease or otherwise, or to any portion of the original Premises or any
additions to the Premises in the event of a renewal or extension of the original
Term of the Lease, whether by any options under the Lease or otherwise, unless
expressly so provided in the Lease or any amendment or supplement to the Lease.

F.   Within ten (10) days after the date upon which Landlord has reported to the
Tenant the results of its review of the final plans and of the contractors to
perform the Initial Improvements, as provided for in Section 1.A above, Landlord
shall inform Tenant in writing of its determination as to whether the Initial
Alterations or any portion thereof constitute Required Removables in accordance
with Section VIII of the Lease. If Landlord fails to provide such written

 

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determination on or before such date, none of the elements of the Initial
Alterations shall be deemed to be Required Removables pursuant to the terms of
Section VIII of the Lease.

 

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EXHIBIT C
OFFERING SPACE