Exhibit 10.1

115 SANSOME STREET

OFFICE LEASE

SAN FRANCISCO, CALIFORNIA

LANDLORD: AG/SIC-115 SANSOME, LLC, a Delaware limited liability company

TENANT: NILE THERAPEUTICS, INC., a Delaware corporation

Dated for reference purposes as of: January 25, 2008

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TABLE OF CONTENTS

 

          Page    Basic Lease Information   

1.

   Lease    3

2.

   Term    3

3.

   Base Monthly Rental    3

4.

   Additional Rental for Increased Expenses and Real Estate Taxes    4

5.

   Security Deposit; Late Charge    7

6.

   Use of Premises    8

7.

   Alterations, Mechanics’ Liens    8

8.

   Work to be Performed by Landlord    8

9.

   Restrictions on Use    8

10.

   Compliance with Law    10

11.

   Indemnity and Exculpation    10

12.

   Public Liability and Property Damage Insurance    10

13.

   Rules and Regulations    12

14.

   Utilities    12

15.

   Personal Property Taxes    13

16.

   Maintenance    13

17.

   Restoration of Premises    13

18.

   Entry by Landlord    14

19.

   Estoppel Certificates    14

20.

   Abandonment of Premises    14

21.

   Removal of Trade Fixtures of Tenant at End of Term    14

22.

   Surrender of Lease    15

23.

   Holding Over    15

24.

   Grace Period    15

25.

   Landlord’s Remedies Upon Default    15

26.

   Attorneys’ and Administrative Fees on Default    17

27.

   Insolvency    17

28.

   Assignment or Subletting    18

29.

   Transfer by Landlord - Release from Liability    20

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30.

   Damage    20

31.

   Condemnation    21

32.

   Subordination to Encumbrances    22

33.

   Substitute Premises    22

34.

   Miscellaneous    22

35.

   Additional Provisions    27

 

RULES AND REGULATIONS OF 115 SANSOME STREET

A.

   Signs

B.

   Window Coverings

C.

   Building Directory

D.

   Building Directory Strips and Keys

E.

   Hallways and Passages

F.

   Locks

G.

   Restrooms

H.

   Moving In and Out of Premises; Heavy Equipment

I.

   Janitorial Services and Cleaning

J.

   Use of Premises

K.

   Floor Coverings

L.

   Deliveries and Messenger Services

M.

   Access Refused

N.

   Soliciting on Premises

O.

   Landlord’s Employees

P.

   Bicycles and Pets

Q.

   Vending Machines

R.

   No Smoking; Loitering

S.

   Building Name and Address

T.

   Trash

U.

   Floor Warden

V.

   Amendments

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115 Sansome Street

Basic Lease Information

 

Lease Date

   January 25, 2008

Tenant

   NILE THERAPEUTICS, INC., a Delaware corporation

Address

  

2850 Telegraph Ave. Suite #310

Berkeley, CA 94705

Telephone

   (510) 281-7700

Landlord

   AG/SIC-115 SANSOME, LLC, a Delaware limited liability company

Address

  

220 Montgomery Street, Suite 1060

San Francisco, California 94104

Contact Person

   Building Manager

Telephone

   (415) 421-1444

Building

   115 Sansome Street, San Francisco, California. The term “Building” includes
the building and the land and improvements surrounding the building and
designated from time to time by Landlord as appurtenant thereto together with
utilities, facilities, driveways, sidewalks, underground vaults, walkways, and
other amenities appurtenant to or servicing the buildings.

Building Rentable Square Footage

   116,885 rentable square feet

Premises

  

Suite

Floor(s)

Rentable Square Footage

  

Suite 310

Portion of Third Floor

Approximately 2,891 rentable square feet

Term

   3 Years

Commencement Date

   Upon Landlord’s substantial completion of the Tenant Improvement Work
described below.

Expiration Date

   The day before the third anniversary of the Commencement Date.

Base Monthly Rental

   $38.00 per rentable square foot of Premises per year. Said Base Monthly
Rental shall be increased on each and every anniversary of the Term Commencement
Date by 3% of the Base Monthly Rental payable during the prior Lease year.

Tenant’s Share (of increased Expenses and Real Estate

Taxes)

   2.474%

Base Real Estate Tax Year

   2008 calendar year.

Base Expense Year

   2008 calendar year.

Use

   General office use consistent with a Class A office building.

Security Deposit

   $54,929.00

Broker

   CB Richard Ellis representing Tenant; Grubb & Ellis Company representing
Landlord.

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Other

  

TENANT IMPROVEMENTS: Landlord at its sole cost and expense shall improve the
Premises using Building Standard materials and finishes in accordance with the
space plan prepared by ___________ and dated . Said improvements shall include
new paint and carpet throughout the Premises, the removal of existing shelf and
millwork in offices and production room, and the installation of sidelights on
all existing offices. Tenant shall make one selection of carpet and one
selection of paint from the Building Standard palette. Tenant shall respond in
writing to any Landlord request pertaining to said tenant improvements within 24
hours of receipt thereof.

 

BUILDING STANDARD SIGNAGE: Building Standard Signage shall be provided at Term
Commencement by Landlord at Landlord’s sole cost and expense.

 

AG/SIC-115 Sansome, L.L.C., a Delaware limited liability company     NILE
THERAPEUTICS, INC., a Delaware corporation   By:     AG/SIC-115 Sansome Parent,
L.L.C.,
a Delaware limited liability company, its sole member     By:   /s/ Peter
Strumph           Its:   Peter Strumph, Chief Executive Officer     By:  

AG Sansome Manager, Inc.,

a Delaware corporation, its manager

    By:   /s/ Daron Evans           Its:   Daron Evans, Chief Financial Officer
    By:   The Swig Company, LLC, property manager             By:   /s/ Kennard
P. Perry               Name:   Kennard P. Perry               Title:   CIO      

 

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115 SANSOME OFFICE LEASE

This lease (“Lease”) is made and entered into in San Francisco, California, on
January 25, 2008 by and between AG/SIC-115 SANSOME, LLC, a Delaware limited
liability company (“Landlord”) and NILE THERAPEUTICS, INC., a Delaware
corporation (“Tenant”). If Tenant is comprised of more than one person or
entity, the obligations under this Lease imposed on Tenant shall be joint and
several.

1. Lease. Landlord hereby leases to Tenant and Tenant hereby hires from Landlord
the Premises described in the Basic Lease Information upon and subject to all of
the terms, covenants and conditions herein set forth. Tenant covenants as a
material part of the consideration for this Lease to keep and perform each and
all of said terms, covenants and conditions, and Tenant agrees that this Lease
is made upon the condition of such performance. Except as otherwise specifically
set forth in this Lease, Tenant accepts the Premises in their “as is” state of
repair and condition, and it is specifically agreed that Landlord has made no
representations to Tenant regarding the condition of the Premises or the
Building. Landlord shall, however, keep and maintain the Building structure and
Building systems in good working order. Tenant’s lease of the Premises shall
include the right to use, in common with others and subject to the other
provisions of this Lease, the public lobbies, entrances, stairs, elevators and
other public portions of the Building, all as may be designated by Landlord from
time to time. All of the windows and outside walls of the Premises and any
spaces in the Premises used for shafts, stacks, pipes, conduits, ducts,
electrical equipment or other utilities or Building facilities are reserved
solely to Landlord and Landlord shall have a right of access through the
Premises for the purpose of operating, maintaining and repairing the same.

2. Term. The Premises are leased to Tenant for a term (herein called the “Term”)
to commence and end on the dates respectively specified in the Basic Lease
Information, unless the Term shall sooner terminate as hereinafter provided.
Notwithstanding the foregoing, if the Term is scheduled to end on a date that is
other than the last day of the month, the Term shall be extended so that it ends
on the last day of the applicable month.

The commencement date and expiration date of the Term shall be confirmed at
Landlord’s election by written notice to Tenant promptly following delivery of
possession of the Premises to Tenant.

If the Term has not commenced on or before May 1, 2008 for reasons not
attributable to Tenant, Tenant shall have the right to terminate this Lease by
written notice to Landlord.

3. Base Monthly Rental.

A. Tenant agrees to pay Base Monthly Rental to Landlord, without notice, in
advance, on the first day of each calendar month of the Term. The Base Monthly
Rental for the first full rent paying month of the Term shall be paid upon the
execution of this Lease. In the event the Term commences on a day other than the
first day of a calendar month, then the Base Monthly Rental for said fractional
month shall be prorated on the basis of a 30-day month.

B. Base Monthly Rental shall be paid by Tenant to Landlord, without deduction or
offset, in lawful money of the United States of America, in accordance with such
procedures and to such persons and/or places as Landlord may from time to time
designate in a notice to Tenant.

C. In addition to the Base Monthly Rental, Tenant shall pay to Landlord all
charges and other amounts required under this Lease (herein called “Additional
Rent”), including, without limitation, Additional Rent resulting from increased
Expenses and Real Estate Taxes pursuant to the provisions of Article 4 hereof.
All such Additional Rent shall be payable to Landlord at the place where the
Base Monthly Rent is payable and Landlord shall have the same remedies for a
default in the payment of Additional Rent as for a default in the payment of
Rent. All sums payable by Tenant under this Lease are collectively referred to
as “Rent”.

 

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4. ADDITIONAL RENT FOR INCREASED EXPENSES AND REAL ESTATE TAXES

A. For purposes of this Article 4, the following terms shall have the meanings
hereinafter set forth:

(a) “Tenant’s Share” shall mean the percentage figure so specified in the Basic
Lease Information. Tenant’s Share has been computed by dividing the rentable
area of the Premises by the total rentable area of the office space in the
Building. In the event that either the rentable area of the Premises or the
total rentable area of the office space of the Building is changed, Tenant’s
Share may, at Landlord’s election, be appropriately adjusted, and, as to the Tax
Year or Expense Year (as said terms are hereinafter defined) in which such
adjustment occurs, Tenant’s Share shall be determined on the basis of the number
of days during such Tax Year and Expense Year at each such percentage.

(b) “Tax Year” shall mean each twelve (12) month consecutive period commencing
January 1st of each year during the Term, including any partial years during
which the Lease may commence or end; provided that Landlord, upon notice to
Tenant, may change the Tax Year from time to time to any other twelve (12) month
consecutive period and, in the event of any such change, Tenant’s Share of
Increased Taxes (as hereinafter defined) shall be equitably adjusted for the Tax
Years involved in any such change.

(c) “Real Estate Taxes” shall mean all taxes, assessments and charges levied
upon or with respect to the Building and any personal property of Landlord used
in the operation thereof, or Landlord’s interest in the Building and such
personal property. Real Estate Taxes shall include, without limitation, all
general real property taxes and general and special assessments, supplemental
assessments which may result from changes in ownership or completion of new
construction; escape assessments, charges, fees or assessments for transit,
housing, police, fire, improvement districts, or other governmental services or
purported benefits to the Building, service payments in lieu of taxes, and any
tax, fee or excise on the act of entering into this Lease or any other lease of
space in the Building, or on the use or occupancy of the Building or any part
thereof, or on the rent payable under any lease or in connection with the
business of renting space in the Building, that are now or hereafter levied or
assessed against Landlord by the United States of America, the State of
California, the City and County of San Francisco, or any political subdivision,
public corporation, district or other political or public entity, and shall also
include any other tax, fee or other excise, however described, that may be
levied or assessed as a substitute for, or as an addition to, in whole or in
part, any other Real Estate Taxes, whether or not now customary or in the
contemplation of the parties on the date of this Lease. Real Estate Taxes shall
not include franchise, transfer, inheritance or capital stock taxes or income
taxes measured by the net income of Landlord from all sources, unless, due to a
change in the method of taxation, any of such taxes is levied or assessed
against Landlord as a substitute for, or as an addition to, in whole or in part,
any other tax that would otherwise constitute a Real Estate Tax. Real Estate
Taxes shall also include reasonable legal fees, costs and disbursements incurred
in connection with proceedings to contest, determine or reduce Real Estate
Taxes.

(d) “Increased Taxes” with respect to any Tax Year shall mean the amount, if
any, by which Real Estate Taxes for such Tax Year exceed the amount of Real
Estate Taxes for the Base Real Estate Tax Year set forth in the Basic Lease
Information. Notwithstanding the foregoing, if any reassessment, reduction or
recalculation of any item included in Real Estate Taxes during the Term results
in a reduction of Real Estate Taxes, then for purposes of calculating Tenant’s
Share of Increased Real Estate Taxes from and after the year in which such
adjustment occurs, Real Estate Taxes for the Base Real Estate Year shall be
adjusted to reflect such reduction.

(e) “Expense Year” shall mean each twelve (12) month consecutive period
commencing January 1st of each year during the Term, including any partial years
during which the Lease may commence or end; provided that Landlord, upon notice
to Tenant, may change the Expense Year from time to time to any other twelve
(12) month consecutive period, and, in the event of any such change, Tenant’s
Share of Increased Expenses (as hereinafter defined) shall be equitably adjusted
for the Expense Years involved in any such change.

 

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(f) “Expenses” shall mean the total costs and expenses paid or incurred by
Landlord in connection with the management, operation, maintenance and repair of
the Building, including, without limitation, (i) the cost of air conditioning,
electricity, electrical surcharges for excessive or peak time use, steam,
heating, mechanical, ventilating, elevator systems and all other utilities and
the cost of supplies and equipment and maintenance and service contracts in
connection therewith, (ii) the cost of Building repairs, fluorescent tubes and
ballasts, and general maintenance cleaning, (iii) the cost of fire, extended
coverage, boiler, sprinkler, public liability, property damage, rental
interruption, earthquake and other insurance together with any deductibles
charged to or paid by Landlord, (iv) wages, salaries and other labor costs,
including taxes, insurance, retirement, medical and other employee benefits,
(v) fees, charges and other costs, including management fees, consulting fees,
legal fees and accounting and audit fees, of all independent contractors engaged
by Landlord or reasonably charged by Landlord if Landlord performs management
services in connection with the Building, (vi) the cost of supplying, replacing
and cleaning employee uniforms, the cost of Building engineer services, costs of
upkeep and decoration of all common areas of the Building (vii) the fair market
rental value of Landlord’s and the property manager’s offices in the Building,
(viii) the costs of normal repair and replacement of worn-out equipment,
facilities and installations, (and if the cost of any such item exceeds
$100,000) the cost thereof shall be amortized with reasonable interest over such
commercially reasonable period as determined by Landlord) (ix) the cost of any
capital improvements made by Landlord to the Building or capital assets acquired
by Landlord after the Base Year in order to comply with any local, state, or
federal law, ordinance, rule, regulation, code or order of any governmental
entity or insurance requirement (collectively “Legal Requirement”), or to comply
with any amendment or change to the enactment or interpretation on any Legal
Requirement, (x) the cost of any capital improvements made to the Building for
the protection of the health or safety of the occupants, in order to supply a
continuous or reliable source of electricity, or as a labor-saving device or to
effect other economies or efficiencies in the operation or maintenance of the
Building, such costs under (ix) and (x) above to be amortized over such
reasonable period as Landlord shall determine, together with interest on the
unamortized balance at the rate of ten percent (10%) per annum or such higher
rate as may have been paid by Landlord on funds borrowed for the purpose of
constructing such capital improvements, and (xi) any other expenses of any other
kind whatsoever reasonably incurred in managing, operating, maintaining, and
repairing the Building. Expenses shall be adjusted to reflect a ninety-five
percent (95%) occupancy of the Building during any period in which the Building
is not at least ninety-five percent (95%) occupied. In addition, if any
particular work or service includable in Expenses is not furnished to a tenant
who has undertaken to perform such work or service itself, Expenses shall be
deemed to be increased by an amount equal to the additional Expenses which would
have been incurred if Landlord had furnished such work or service to such
tenant, and in no event shall any component of Expenses for any year subsequent
to the Base Year consisting of natural gas, electricity, steam, or water be less
than the amount of such component in the Base Year. The parties agree that any
statements to the effect that Landlord is to perform certain of its obligations
hereunder at its own or sole cost or expense shall not be interpreted as
excluding any cost from constituting an Expense or a component of Real Estate
Taxes if such cost is otherwise an Expense or component of Real Estate Taxes.
Specifically excluded from Expenses are (i) legal fees and other costs related
to disputes with tenants, and (ii) costs, such as legal fees and brokers
commissions, related to leasing space to tenants. Any proceeds from insurance
shall be used to offset previously charged Expenses related thereto.

(g) “Increased Expenses” with respect to any Expense Year shall mean the amount,
if any, by which Expenses for such Expense Year exceed the amount of Expenses
for the Base Expense Year set forth in the Basic Lease Information; provided
however, Expenses for the Base Expense Year shall not include extraordinary
and/or temporarily increased costs due to events such as conservation
surcharges, boycotts and strikes, embargoes, shortages in supply, or other
shortages, or amortized costs related to capital improvements.

 

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B. Tenant shall pay to Landlord as Additional Rent one twelfth (1/12th) of
Tenant’s Share of the Increased Taxes of each Tax Year on or before the first
day of each month during such Tax Year, in advance, in an amount estimated by
Landlord and billed by Landlord to Tenant; provided that Landlord shall have the
right initially to determine monthly estimates and to revise such estimates from
time to time. With reasonable promptness after Landlord has received the tax
bills for any Tax Year, Landlord shall furnish Tenant with a statement (herein
called “Landlord’s Tax Statement”) setting forth the amount of Real Estate Taxes
for such Tax Year, and Tenant’s Share, if any, of Increased Taxes. If the actual
Increased Taxes for such Tax Year exceed the estimated Increased Taxes paid by
Tenant for such Tax Year, Tenant shall pay to Landlord the difference between
the amount paid by Tenant and the actual Increased Taxes within fifteen
(15) days after the receipt of Landlord’s Tax Statement, and if the total amount
paid by Tenant for any such Tax Year shall exceed the actual Increased Taxes for
such Tax Year, such excess shall be refunded to Tenant or credited against the
next installment of Increased Taxes due from Tenant to Landlord hereunder.

C. Tenant shall pay to Landlord as Additional Rent one-twelfth (1/12th) of
Tenant’s Share of the Increased Expenses for each Expense Year on or before the
first day of each month of such Expense Year, in advance, in an amount estimated
by Landlord and billed by Landlord to Tenant; provided that Landlord shall have
the right initially to determine monthly estimates and to revise such estimates
from time to time. With reasonable promptness after the expiration of each
Expense Year, Landlord shall furnish Tenant with a statement (herein called
“Landlord’s Expense Statement”), setting forth in reasonable detail the Expenses
for the Expense Year, and Tenant’s Share, it any, of Increased Expenses. If the
actual Increased Expenses for such Expense Year exceed the estimated Increased
Expenses paid by Tenant for such Expense Year, Tenant shall pay to Landlord the
difference between the amount paid by Tenant and the actual Increased Expenses
within fifteen (15) days after the receipt of Landlord’s Expense Statement, and
if the total amount paid by Tenant for any such Expense Year shall exceed the
actual Increased Expenses for such Expense Year, such excess shall be credited
against the next installment of the estimated Increased Expenses due from Tenant
to Landlord hereunder.

D. If the Expiration Date of the Term shall occur on a date other than the end
of a Tax Year or Expense Year, Tenant’s Share of Increased Taxes, if any, and
Increased Expenses, if any, for the Tax Year and the Expense Year in which the
Expiration Date falls shall be in the proportion that the number of days from
and including the first day of the Tax Year or Expense Year in which the
Expiration Date occurs to and including the Expiration Date bears to 365;
provided, however, Landlord may, pending the determination of the amount, if
any, of Increased Taxes and Increased Expenses for such partial Tax Year and
Expense Year, furnish Tenant with statements of estimated Increased Taxes,
estimated Increased Expenses, and Tenant’s Share of each thereof for such
partial Tax Year and Expense Year. Within fifteen (15) days after receipt of
such estimated statement, Tenant shall remit to Landlord, as Additional Rent,
the amount of Tenant’s Share of such Increased Taxes and Increased Expenses. If,
after such Increased Taxes and such Increased Expenses have been finally
determined and Landlord’s Tax Statement and Landlord’s Expense Statement have
been furnished to Tenant, there shall have been an underpayment of Tenant’s
Share of Increased Taxes or Increased Expenses, Tenant shall remit the amount of
such underpayment to Landlord within fifteen (15) days of receipt of such
statements, and if there shall have been an overpayment, Landlord shall remit
the amount of any such overpayment to Tenant, but only if Tenant has provided
Landlord with a valid forwarding address.

E. Landlord shall maintain adequate records of Expenses and Real Estate Taxes in
accordance with standard accounting principles. Any statements provided by
Landlord in connection with Tenant’s Share thereof shall be final and binding on
Tenant unless Tenant, within 60 days of its receipt thereof, shall contest any
item therein by giving written notice to Landlord, specifying each item
contested and the reasons therefor. In such event, Landlord and Tenant shall
endeavor in good faith to promptly resolve any disagreement set forth in
Tenant’s notice provided that Tenant shall not withhold payment of any contested
or disputed item.

F. In the event of any mutually agreed termination of this Lease prior to its
scheduled expiration date, then notwithstanding any agreement to the contrary,
Tenant shall remain liable for all Rent accrued or payable under this Lease
through said date of termination.

 

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5. Security Deposit; Late Charge. Upon the execution of this Lease, Tenant shall
deliver to Landlord in the form of a clean, irrevocable, stand-by and
unconditional letter of credit in the amount of the Security Deposit (the
“Letter of Credit”) issued by and drawable upon any commercial bank, trust
company, national banking association or savings and loan association acceptable
to Landlord with offices for banking purposes in the City of San Francisco (the
“Issuing Bank”). The Letter of Credit shall (a) name Landlord as beneficiary,
(b) be in the amount of the Security Deposit, (c) have a term of not less than
one year, (d) permit multiple drawings, (e) be fully transferable by Landlord
without the payment of any fees or charges by Landlord, and (f) otherwise be in
form and content satisfactory to Landlord. If upon any transfer of the Letter of
Credit, any fees or charges shall be so imposed, then such fees or charges shall
be payable solely by Tenant and the Letter of Credit shall so specify. The
Letter of Credit shall provide that it shall be deemed automatically renewed,
without amendment, for consecutive periods of one year each thereafter during
the Term through the date that is at least 60 days after the Expiration Date,
unless the Issuing Bank sends a notice (the “Non-Renewal Notice”) to Landlord by
certified mail, return receipt requested, not less than 45 days next preceding
the then expiration date of the Letter of Credit stating that the Issuing Bank
has elected not to renew the Letter of Credit. Landlord shall have the right,
upon receipt of the Non-Renewal Notice, to draw the full amount of the Letter of
Credit, by sight draft on the Issuing Bank, and shall thereafter hold or apply
the cash proceeds of the Letter of Credit pursuant to the terms of this Article.
The Letter of Credit shall state that drafts drawn under and in compliance with
the terms of the Letter of Credit will be duly honored upon presentation to the
Issuing Bank at an office location in Manhattan. The Letter of Credit shall be
subject in all respects to the Uniform Customs and Practice for Documentary
Credits (1993 revision), International Chamber of Commerce Publication No. 500.

If Tenant defaults in the payment or performance of any of the terms, covenants
or conditions of this Lease, including the payment of Rent, Landlord may notify
the Issuing Bank and thereupon receive all or a portion of the Security Deposit
represented by the Letter of Credit and use, apply or retain the whole or any
part of such proceeds, as the case may be, to the extent required for the
payment of any Rent or any other sum as to which Tenant is in default, including
(a) any sum which Landlord may expend or may be required to expend by reason of
Tenant’s default, and/or (b) any damages to which Landlord is entitled pursuant
to this Lease, whether such damages accrues before or after summary proceedings
or other reentry by Landlord. If Landlord applies or retains any part of the
Security Deposit, Tenant, upon demand, shall deposit with Landlord the amount so
applied or retained so that Landlord shall have the full Security Deposit on
hand at all times during the Term. If Tenant shall fully and faithfully comply
with all of the terms, covenants and conditions of this Lease, the Security
Deposit (or so much thereof as remains) shall be returned to Tenant after the
Expiration Date and after delivery of possession of the Premises to Landlord in
the manner required by this Lease. Tenant expressly agrees that Tenant shall
have no right to apply any portion of the Security Deposit against any of
Tenant’s obligations to pay Rent hereunder.

Upon a sale of the Real Property or the Building or a leasing of the Building,
or any financing of Landlord’s interest therein, Landlord shall have the right
to transfer the Letter of Credit, as applicable, to the vendee, lessee or
lender. With respect to the Letter of Credit, within 5 days after notice of such
sale, leasing or financing, Tenant, at its sole cost, shall arrange for the
transfer of the Letter of Credit to the new landlord or the lender, as
designated by Landlord in the foregoing notice or have the Letter of Credit
reissued in the name of the new landlord or the lender. Tenant shall look solely
to the new landlord or lender for the return of such Letter of Credit and the
provisions hereof shall apply to every transfer or assignment made of the
Security Deposit to a new landlord. Tenant shall not assign or encumber or
attempt to assign or encumber the Letter of Credit and neither Landlord nor its
successors or assigns shall be bound by any such action or attempted assignment,
or encumbrance.

Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent or
other sums due hereunder will cause Landlord to incur costs not contemplated by
this Lease, the exact amount of which would be extremely difficult to ascertain.
Such costs include, but are not limited to, processing and accounting charges,
and late charges which may be imposed upon Landlord. Accordingly, if any
installment of Base Monthly Rental or any other sum due from Tenant shall not be
received by Landlord within three (3) days after said amount is due, Tenant
shall pay to Landlord, in addition to any other sums payable hereunder, a late
charge of ten percent (10%) of the amount due, plus any attorneys’ fees incurred
by Landlord by reason of Tenant’s failure to pay Base Monthly Rental and/or
other charges when due hereunder. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs which Landlord will incur
by reason of the late payment by Tenant. Acceptance of such late charges by the
Landlord shall in no event constitute a waiver of Tenant’s default with respect
to any such overdue amount, nor prevent Landlord from exercising any of the
other rights and remedies granted hereunder.

 

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6. Use of Premises. The Premises shall be used for the Purpose specified in the
Basic Lease Information and for no other purposes without the prior written
consent of Landlord, which consent Landlord may withhold in its sole and
absolute discretion.

7. Alterations, Mechanics’ Liens.

A. Tenant shall not make or suffer to be made, directly or indirectly, any
addition or change to or modification of the Premises, including, without
limitation, the installation of fixtures, trade fixtures, and leasehold
improvements (hereinafter, “alteration”) without first obtaining the written
consent of Landlord; provided, however, that no alteration shall be permitted if
it is structural or will affect the Building’s heating, electrical, or plumbing
systems. Any alteration (excluding trade fixtures and movable furniture
installed by Tenant that shall belong to Tenant) shall become at once a part of
the realty and belong to Landlord subject to Landlord’s rights under
Paragraph 17. Any alterations shall be done in accordance with plans and
specifications approved by Landlord. Landlord shall have the right to charge
Tenant a reasonable amount for the approval of plans and specifications.

B. All alterations shall be made only by fully licensed, insured and bonded
contractors and subcontractors approved in writing by Landlord in advance.

C. In the event Tenant makes said alterations, it shall first obtain all permits
required for the making of same and shall perform any work in connection
therewith in accordance with all applicable laws, rules, regulations and
ordinances. All such work shall be performed in a first class manner causing no
interference with the operation of the Building and no unreasonable noise, odors
or inconvenience to Landlord and the other tenants of the Building. In the event
that as a result of any alterations made by Tenant it shall be necessary for
Landlord to make any other alterations, improvements or repairs to the Building,
whether within or without the Premises, such work shall be done at Tenant’s
expense.

D. In making any alterations, Tenant shall keep the Premises and the Building
free from any liens arising out of any work performed, materials furnished, or
obligations incurred by Tenant. Tenant agrees that Tenant shall not make any
alterations of the Premises until five (5) days after receipt by it of the
written consent of Landlord in order that Landlord may post or request Tenant to
post any appropriate notices to avoid any possible liability with respect to
liens. Tenant shall, at Landlord’s request, prepare, record and post such
notices and shall at all times permit such notices to be posted and to remain
posted until the completion and acceptance of such work. In addition, at
Landlord’s request, Tenant shall secure at Tenant’s own cost and expense a
completion and lien indemnity bond, satisfactory to Landlord, for all such work.
Tenant further agrees that there shall be no construction, partitions, or other
obstructions which might interfere with Landlord’s free access to mechanical
installations or service facilities of the Building or with the moving of
Landlord’s equipment to or from the enclosures containing said installations or
facilities.

8. Work to be Performed by Landlord. Landlord shall not be required to perform
any work or make any improvements in or about the Premises of any type or nature
unless a special agreement to that effect is expressly set forth in this Lease.

9. Restrictions on Use.

A. No use shall be made or permitted to be made of the Premises, nor acts done,
that will increase the existing rate of insurance upon the Building or cause a
cancellation of any insurance policy covering the Building or any part thereof,
nor shall Tenant sell, or permit to be kept, used, or sold in, on or about the
Premises or the Building, any illegal substance or any article that may be
prohibited by the standard form of fire insurance policy. Tenant shall, at its
sole cost and expense, comply with any and all requirements pertaining to the
Premises and/or Tenant’s use thereof, made by any insurance organization or
company providing fire and public liability insurance covering the Building.

 

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B. Tenant shall not do or permit anything to be done in or about the Premises
which will in any way obstruct or interfere with the rights of other tenants or
occupants of the Building or injure or annoy them, nor shall Tenant use or allow
the Premises or any part of the Building to be used for any immoral, unlawful,
or objectionable purposes. Without limiting the generality of the foregoing,
Tenant not use or permit the usage of any illegal drug or substance and shall
not make or permit any unreasonable or unnecessary noises or odors in or upon
the Premises or the Building. Tenant shall not commit, or suffer to be
committed, any waste upon the Premises or any nuisance (public or private) or
other act or thing of any kind or nature whatsoever that may disturb the quiet
enjoyment or cause unreasonable annoyance of any other tenant in the Building.
The provisions of this paragraph are for the benefit of Landlord only and are
not, and shall not be construed to be, for the benefit of any tenant or occupant
of the Building or any third party.

C. Tenant shall comply with all Environmental Laws pertaining to and shall not
engage in any activity involving, nor bring upon the Premises, any Hazardous
Materials (Except for immaterial amounts of Hazardous Materials incidental to
office use (e.g. copier toner, cleaning supplies) and which are used in strict
compliance with applicable law and any rules and regulations promulgated by
Landlord) without the express prior written consent of Landlord. For the purpose
of this Lease, “Hazardous Materials” shall be defined, collectively, as any and
all substances, chemicals, wastes, sewage or other materials that are now or
hereafter regulated, controlled or prohibited by any local, state or federal law
or regulation requiring removal, warning or restrictions on the use, generation,
disposal or transportation thereof including, without limitation, (a) any
substance defined as a “hazardous substance”, “hazardous material”, “hazardous
waste”, “toxic substance”, or “air pollutant” in the Comprehensive Environmental
Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. 9601, et seq.,
the Hazardous Materials Transportation Act, 49 U.S.C. 1801, et seq., the
Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. 6901, et seq., the
Federal Water Pollution Control Act (“FWPCA”), 33 U.S.C. 1251 et seq., the Clean
Air Act (“CAA”), 42 U.S.C. 7401 et seq., or the Toxic Substances Control Act
(“TSCA”), 15 U.S.C. 2601, et seq., all as previously amended and amended
hereafter; and (b) any hazardous substance, hazardous waste, toxic substance,
toxic waste, air pollutant, hazardous material, waste, chemical, or compound
described in any other federal, state, or local statute, ordinance, code, rule,
regulation, order, decree or other law now or at any time hereafter in effect
regulating, relating to or imposing liability or standards of conduct concerning
any hazardous, toxic, or dangerous substance, chemical, material, compound or
waste. As used herein, the term “Hazardous Materials” also means and includes,
without limitation, asbestos; flammable, explosive or radioactive materials;
gasoline or gasoline additives; oil; motor oil; waste oil; petroleum (including,
without limitation, crude oil or any component thereof); petroleum-based
products; paints and solvents; lead; cyanide; DDT; printing inks; acids;
pesticides; ammonium compounds; polychlorinated biphenyls; and other regulated
chemical products. The statutes, regulations, court and administrative agency
decisions, and other laws now or at any time hereafter in effect that govern or
regulate Hazardous Materials are herein collectively referred to as
“Environmental Laws”. In connection therewith, Tenant shall indemnify, defend
and hold Landlord harmless from and against any and all losses, damages,
liabilities, judgments, costs, claims, expenses, penalties, permits, and
attorneys’ and consultant’s fees arising out of or involving any Hazardous
Materials brought onto the Premises or used in the Premises by any person
whatsoever, other than Landlord, its agents, employees independent contractors
or invitees, or brought onto the Building or used therein by Tenant, its agents,
employees, independent contractors or invitees. Tenant’s obligations under this
Paragraph shall include, but not be limited to, the effects of any contamination
or injury to person, property or the environment and the cost of investigation,
removal, remediation, restoration and/or abatement thereof, and shall survive
the expiration or earlier termination of this Lease. Tenant further acknowledges
that it is aware of the fact that the Building contains materials containing
asbestos and that a report pertaining thereto is available for Tenant’s review
at the office of the Building. Tenant shall comply with all Environmental Laws
as well as rules and regulations promulgated from time to time by Landlord
relating to the use and disposal of asbestos containing materials. Tenant’s
indemnification hereunder shall include, but is not limited to, any claimed
injury or death to Tenant or its agents, employees or independent contractors
related to exposure to asbestos containing materials.

 

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10. Compliance with Law. Tenant shall, at its sole cost and expense, promptly
comply with all laws pertaining to the Premises or Tenant’s use or occupancy
thereof, and shall faithfully observe all laws applicable to the Premises and
Tenant’s use and occupancy thereof and all requirements of any board of fire
underwriters or other similar body now or hereafter constituted related to or
affecting the condition, use, or occupancy of the Premises. Tenant, at its sole
cost and expense, shall promptly perform all work to the Premises or other
portions of the Building required to effect such compliance. The judgment of any
court of competent jurisdiction, or the admission of Tenant in any action or
proceeding against Tenant, whether or not Landlord is a party thereto, that
Tenant has violated any law pertaining to the Premises shall be conclusive of
that fact as between Landlord and Tenant. Without limiting the generality of the
foregoing, the duties of Tenant under this provision shall include the making of
all such alterations of the Premises as may be required by law by reason of
Tenant’s use of the Premises, occasioned by reason of the failure of Tenant to
effect repairs, maintenance, replacement or cleaning of the Premises as required
under this Lease, or required by reason of Tenant’s alteration of the Premises,
Tenant’s particular employees or employment practices, and/or the construction
of the initial improvements to the Premises.

11. Indemnity and Exculpation. As a material part of the consideration for this
Lease, Tenant hereby agrees that Landlord and any lender holding a mortgage or
deed of trust covering the Premises shall not be liable to Tenant or any other
party for any damage to Tenant or damage, theft or vandalism to Tenant’s
property, or the property of Tenant’s employees, agents, independent contractors
and/or invitees, and Tenant agrees to indemnify, defend and hold Landlord and
its lender harmless from and against any claims pertaining thereto. Unless
attributable to Landlord’s gross negligence or intentional misconduct, Tenant
further agrees to indemnify Landlord and any such lender and defend and hold
them harmless from and against all claims, damages, liabilities, causes of
action, costs, and expenses (including attorneys’ fees) arising out of any
injury to person or damage to property occurring in, on, or about the Premises,
or the Building if arising due to the negligence or intentional misconduct of
Tenant or its employees, agents, independent contractors and/or invitees, from
any cause whatsoever. Tenant’s obligation under this paragraph to indemnify,
defend and hold Landlord and any such lender harmless shall not be limited to
the amount of available insurance proceeds, but rather shall extend to the full
amount of the claim.

12. Public Liability and Property Damage Insurance.

(1) Tenant at its sole cost and expense shall maintain during the entire Term
(including any additional period that Tenant shall have possession of or
otherwise occupy or conduct activities in or about the Premises whether before
or after the Term) public liability and property damage insurance with liability
limits of not less than $3,000,000 per occurrence, combined single limit bodily
injury and/or property damage liability, insuring against all liability of
Tenant and Landlord and their authorized representatives arising out of and in
connection with Tenant’s use or occupancy of the Premises and the Building, and
insuring Tenant and Landlord from legal liability for damage to person or
property, however arising. Landlord shall be named as an additional insured
under such policy or policies, and the policy or policies shall contain
cross-liability endorsements, shall be primary insurance insofar as Landlord is
concerned, and shall be non-contributing to any other insurance carried by
Landlord.

(2) In the event Tenant fails, at any time during the Term, to keep said
insurance in full force and effect, Landlord may pay the necessary premiums
therefor and the repayment thereof shall be deemed to be a part of the Rent due
hereunder, payable as such on the next date upon which Base Monthly Rental
becomes due.

(3) All public liability insurance and property damage insurance shall insure
performance by Tenant of the indemnity provisions of Paragraph 11; provided,
however, the procuring of insurance within the minimum limits herein set forth
shall not be deemed satisfaction of Tenant’s obligation to indemnify under said
Paragraph.

 

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A. Increase in Amount of Public Liability and Property Damage Insurance. Not
more frequently than every three years, if, in the opinion of Landlord’s lender
or in the commercially reasonable opinion of the insurance broker retained by
Landlord, the amount of public liability and/or property damage insurance
coverage at that time is not adequate, Tenant shall increase the insurance
coverage as reasonably required by either said lender or insurance broker.

B. Workers’ Compensation Insurance. Tenant shall also carry and maintain in full
force and effect during the entire Term hereof (and during any additional period
that Tenant shall have possession of or otherwise occupy or conduct activities
in or about the Premises whether before or after the Term), at Tenant’s sole
cost and expense, employer’s liability and workers’ compensation insurance as
required by law.

C. Extended Coverage and “All Risk” Insurance. Tenant shall also carry and
maintain in full force and effect during the entire Term hereof (and during any
additional period that Tenant shall have possession of or otherwise occupy or
conduct activities in, on or about the Premises whether before or after the
Term), at Tenant’s sole cost and expense, a policy or policies of insurance for
damage caused by the perils insured under Standard Fire, Extended Coverage and
“All Risk” coverage forms, including business interruption coverage and
providing insurance coverage on Tenant’s furniture, fixtures, equipment,
improvements, alterations, trade fixtures, and other personal property. The
limits of coverage shall be equal to the full current replacement value of such
property.

D. Builder’s Risk Insurance. If Tenant shall at any time make any alterations of
the Premises, while performing such work Tenant shall, at Tenant’s sole cost and
expense, carry “All-Risk” builder’s risk insurance, completed value form, in an
amount satisfactory to Landlord.

E. Liquor Liability Insurance. If the Tenant is in the business of
manufacturing, selling, serving, furnishing or distributing alcoholic beverages
from the Premises, Tenant shall, at Tenant’s sole cost and expense, carry liquor
liability insurance with liability limits of not less than Five Million Dollars
($5,000,000).

F. Waiver of Subrogation. Tenant hereby releases Landlord, its authorized
representatives, and the holders of any liens or encumbrances covering the
Building, from any claims for damage to any person; to the Premises, the
Building, and other improvements in which the Premises are located; and to the
fixtures, personal property, trade fixtures, improvements, and alterations of
Tenant in, on or about the Premises or the Building, that are caused by or
result from risks insured against under any fire or extended coverage insurance
policy or policies carried by or that should be carried by Tenant at the time of
any such damage. Tenant shall cause each insurance policy obtained by it to
provide that the insurance company waives all right of recovery by way of
subrogation against Landlord in connection with any damage covered by any
policy.

G. Other Insurance Matters. All the insurance required under this Lease shall:

(1) Be issued by insurance companies authorized to do business in the State of
California, with a financial rating of at least an A-10 status as rated in the
most recent edition of Best’s Insurance Reports.

(2) Contain an endorsement requiring thirty (30) days’ written notice from the
insurance company to both parties and to Landlord’s lender before cancellation
or change in the coverage, scope, or amount of any policy.

(3) Be renewed not less than twenty (20) days before expiration of the term of
the policy.

Each policy of insurance required under this Lease, or a certificate of the
policy, together with evidence of payment of premiums, shall be deposited with
Landlord prior to delivery and/or admittance of Tenant to the Premises, and on
each renewal of the policy.

 

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H. Construction. Nothing contained in this Paragraph 12 shall be construed as
creating or implying the existence of (i) any ownership by Tenant of any
alterations in, on or about the Premises or (ii) any right of Tenant to make any
alterations in, on or about the Premises.

13. Rules and Regulations. Tenant shall faithfully observe and comply with the
rules and regulations promulgated for the Building and all modifications of and
additions thereto placed into effect from time to time by Landlord. Landlord
shall not be responsible to Tenant for the nonperformance by any other tenant or
occupant of the Building of any of said rules and regulations.

14. Utilities and Services.

A. Landlord shall furnish to the Premises, during reasonable hours determined by
Landlord and subject to applicable laws and the rules and regulations of the
Building, electricity suitable for general office use (provided, however, that
Tenant shall not at any time have a connected electrical load for lighting
purposes in excess of one watt per square foot of the Premises or a connected
load for all other power requirements in excess of two watts per square foot of
the Premises, and further provided that Tenant will comply with all directives
of Landlord related to energy conservation), janitorial service, building
heating and elevator service. Tenant agrees at all times to cooperate fully with
Landlord and to abide by all the regulations and requirements which Landlord may
prescribe for the proper functioning and protection of the Building’s heating
systems if any.

B. Landlord shall not be liable for, and Tenant shall not be entitled to, any
abatement or reduction of any amounts owing hereunder by reason of Landlord’s
failure to furnish any of the foregoing utilities and/or services when such
failure is caused by accident, breakage, repairs, strikes, lockouts or other
labor disturbances or disputes of any character, or by any other cause, similar
or dissimilar, beyond the reasonable control of Landlord including, without
limitation, any governmental energy conservation program, and any such failure
shall not constitute or be construed as a constructive or other eviction of
Tenant. In the event any governmental entity promulgates or revises any law
applicable to the Building, or any part thereof, relating to the use or
conservation of energy, water, gas, light, or electricity, or relating to the
reduction of automobile or other emissions, or the provision of any other
utility or service provided with respect to this Lease, or in the event Landlord
makes improvements to the Building or any part thereof in order to comply with
such a law, whether the law is mandatory or voluntary, Landlord may, in its sole
discretion, comply with such law or make such improvements to the Building or
any part thereof related thereto. Such compliance and the making of such
improvements shall in no event entitle Tenant to any damages, relieve Tenant of
the obligation to pay Rent or any other amounts reserved or payable hereunder,
or constitute or be construed as a constructive or other eviction of Tenant.

C. Landlord makes no representation regarding the adequacy or fitness of the
heating or ventilation equipment in the Building to maintain temperatures that
may be required for any equipment of Tenant, and Landlord shall have no
liability for damage suffered by Tenant or others in connection therewith.
Wherever, as the result of (i) the heat-generating machines or equipment;
(ii) the lights; (iii) the occupancy of the Premises by more than one person per
100 square feet of net rentable area therein; (iv) an electrical load for
lighting or power in excess of the limits per square foot of the Premises
specified herein; or (v) any rearrangement of partitioning or other
improvements, the Building heating and ventilation system supplied by Landlord
is affected, Landlord shall have the right (but not the obligation) to install
or cause the installation of supplementary heating and ventilation units or
other equipment in the Premises. On demand, Tenant shall pay for all such
supplementary services and utilities, and shall pay the costs of installation
and maintenance of such supplementary equipment.

D. Tenant will not operate its business in such a way or use any apparatus or
device as will increase the amount of electricity or water usually furnished or
supplied by Landlord for the purpose of using the Premises for general office
use during regular business hours, or connect with electric current, except
through existing electrical outlets in the Premises, or connect with water
pipes, any apparatus or device for the purpose of using electric current or
water. If Tenant shall require water or electric current in excess of that
customarily furnished or supplied to other tenants of the Building for use of
their premises for general office purposes during regular business hours, Tenant
shall first procure the consent of

 

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Landlord, which Landlord in its sole discretion may refuse, to the use thereof,
and Landlord may cause an electric-current or water meter to be installed in the
Premises so as to measure the amount of excess electric current or water so
consumed by Tenant. The costs of any such meter and of the installation and
maintenance thereof shall be borne by Tenant. Tenant agrees to pay to Landlord
promptly upon notice thereof the costs of all such excess water and electric
current consumed, as shown by said meters, at the highest marginal rates charged
Landlord for such services by the local public utility furnishing the same, plus
any additional expense incurred by Landlord in providing such excess current
and/or keeping account of the excess electric current or water so consumed.

E. Tenant acknowledges that during non-business hours, weekends and Building
holidays, as the same may be designated by Landlord from time to time, public
access to the Building may be limited and heating, janitorial and other normal
building services will not be provided or may be provided on a limited or
“additional cost to tenant” basis.

15. Personal Property Taxes. Tenant shall be responsible for and shall pay
before delinquency all taxes and other governmental charges and impositions
levied against Tenant, Tenant’s improvements, fixtures, trade fixtures,
alterations, furniture, fixtures, equipment, or other personal property,
Tenant’s leasehold interest, the Rent or other charges payable by Tenant, any
business carried on at the Premises, or in connection with the use or occupancy
thereof, including, without limitation, City of San Francisco Gross Receipts
Taxes, payroll taxes, any general or special assessments, levies, fees or
charges, transit or transportation charges, housing subsidies and/or housing
fund assessments, possessory interest taxes, business or license taxes or fees,
job training subsidies and/or assessments, or open space charges, irrespective
of whether any of the foregoing is assessed or designated as a real or personal
property tax, and irrespective of whether any of the foregoing is assessed to or
against Landlord or Tenant. Should any of the foregoing be applied in any manner
to the real property taxes levied on the Building or appurtenances thereto,
Tenant, upon demand, will pay such personal property taxes to Landlord who in
turn will pay the same to the property tax collector.

16. Maintenance.

A. By entry hereunder, Tenant accepts the Premises as being in good and sanitary
order, condition and repair. Tenant, at its sole cost and expense, shall keep
the Premises and every part thereof in good and sanitary condition and repair,
damage thereto by fire, earthquake, act of God or the elements excepted unless
caused by Tenant’s negligence or willful act. Tenant agrees to carry out
promptly all maintenance that at any time may become necessary to put and keep
the Premises in as good and sanitary a condition as when received by Tenant from
Landlord, reasonable wear and tear excepted, and, the preceding sentence
notwithstanding, to replace immediately all glass now or hereafter installed in
the Premises, however broken. Maintenance or repair required because of burglary
or vandalism shall be the sole responsibility of Tenant.

B. Tenant hereby waives all rights under, and the benefits of, Subsection 1 of
Section 1932 and Sections 1941 and 1942 of the California Civil Code, and under
any similar law, permitting Tenant to make repairs at the expense of Landlord or
to terminate a lease by reason of the condition of, or damage to, the leased
premises.

17. Restoration of Premises. Tenant agrees that upon the expiration of the Term,
the earlier termination of the Lease for whatever reason, or Tenant’s
abandonment of the Premises, whichever occurs first, Tenant shall surrender or
leave the Premises in good condition and repair, free of all personal property
and trade fixtures, and generally in the same condition as when received,
reasonable wear and tear excepted, and damage by fire, earthquake, acts of God,
or the elements excepted, unless caused by Tenant’s negligent or willful act or
omission, and if Tenant has made any alteration or improvement of the Premises,
Tenant will in all cases effect the restoration of the Premises unless Landlord
has expressly set forth in writing that a particular alteration or improvement
shall not be removed. As used throughout this paragraph, “restoration” means the
reconstruction, rebuilding, rehabilitation, and repairs necessary to return
altered, improved, or damaged portions of the Premises and other damaged
property in, on or about the Premises to substantially the same physical
condition in which they were immediately before the alteration, improvement, or
damage.

 

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18. Entry by Landlord. Landlord reserves the right and Tenant shall permit
Landlord and its authorized representatives to enter the Premises at all
reasonable times for purposes of (i) inspecting, performing maintenance or
making alterations of the Premises or any other portion of the Building,
including the erection and maintenance of such scaffolding, canopies, fences,
and props as Landlord may reasonably require; (ii) posting notices of
non-responsibility or non-liability for alterations or repairs; (iii) placing
upon the Premises any usual or ordinary “for rent” signs; or (iv) showing or
submitting the Premises to prospective purchasers or tenants, all of which
actions Landlord may take without any abatement of Rent. Tenant hereby waives
any claim for damages for any injury or inconvenience to or interference’s with
Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises, and
any other loss occasioned by such entry. Landlord shall use reasonable efforts
in order that the entrance to the Premises shall not be blocked by the making of
such alterations or the performing of such maintenance and that the business of
Tenant shall not thereby be interfered with unreasonably. For each of the
aforesaid purposes, Landlord shall at all times have and retain a key with which
to unlock all of the doors in, upon, and about the Premises, excluding Tenant’s
vaults and safes, and Landlord shall have the right to use any and all means
which Landlord may deem proper to open said doors in an emergency in order to
obtain entry to the Premises. Any entry to the Premises obtained by Landlord by
any of said means, or otherwise, shall not under any circumstances be construed
or deemed to be a forcible or unlawful entry into or a detainer of the Premises,
or an eviction of Tenant from the Premises or any portion thereof. Landlord has
the right to make alterations to or demolish the Building or erect other
buildings on the real property adjacent thereto. Tenant will not in such event
be entitled to any direct or consequential damages for any damage or
inconvenience occasioned thereby, but Landlord will use its reasonable efforts
to accomplish such work in such a manner as to inconvenience Tenant as little as
possible. In the event Tenant is deprived of the use of the Premises by reason
of the demolition of the Building, this Lease will terminate without any
liability of Landlord to Tenant.

19. Estoppel Certificates. At any time and from time to time upon not more than
ten (10) days after a request is received from Landlord, Tenant shall execute,
acknowledge and deliver to Landlord, or to such party as Landlord may designate,
a written statement certifying the date of commencement of this Lease, that this
Lease is unmodified and in full force and effect (or, if there have been any
modifications of this Lease, that the Lease is in full force and effect as
modified and stating the date and nature of the modification or modifications),
that Landlord is not in default under this Lease (or, if there is any claimed
default, stating the nature and extent thereof), that Tenant is not in default
under this Lease (or, if Tenant is in default, specifying the nature and extent
thereof), the current amounts of and the dates up to which Rent has been paid,
the period for which Rent and other charges have been paid in advance, and any
additional matters or information that may reasonably be requested by Landlord.
It is expressly understood and agreed that any such statement delivered pursuant
to this paragraph may be relied upon by any prospective purchaser of the
Building or any lender, prospective lender, or any assignee or prospective
assignee of any lender, and by any third person designated by Landlord. Tenant’s
failure to deliver such a statement within said 10-day period shall constitute a
default by Tenant under this Lease and shall be conclusive against Tenant
(i) that this Lease is in full force and effect, without modifications except as
may be represented by Landlord, (ii) that there are no defaults in Landlord’s
performance hereunder, (iii) that not more than one month’s Rent has been paid
in advance, and (iv) as to the accuracy of any other matters specified in the
statement that was delivered to Tenant.

20. Abandonment of Premises. Tenant shall not vacate, cease doing business in,
or abandon the Premises at any time during the Term. If Tenant abandons, vacates
or surrenders the Premises, or is dispossessed by process of law or otherwise,
any personal property belonging to Tenant and left in or on the Premises shall
be deemed to be abandoned and, at the option of Landlord, such property may be
removed and stored in any public warehouse or elsewhere at the cost of and for
the account of Tenant.

21. Removal of Trade Fixtures of Tenant at End of Term. Upon the expiration of
the Term of this Lease, Tenant may remove, and upon the request of Landlord
shall remove, at Tenant’s sole cost and expense, all trade fixtures and movable
furniture installed in, on or about the Premises by Tenant, provided that such
removal may be effected without damage to the Premises.

 

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22. Surrender of Lease. The voluntary or other surrender of this Lease by
Tenant, accepted by Landlord, or the mutual cancellation hereof, shall not work
a merger and, at the option of Landlord, shall either terminate any or all
existing subleases or subtenancies or operate as an assignment to Landlord of
any or all of such subleases or subtenancies.

23. Holding Over. Any holding over after the expiration of the Term with or
without the written consent of Landlord shall be construed at Landlord’s
election to be either a tenancy at sufference or a tenancy from month to month,
at a rent equal to 150% of the Rent payable under this Lease during the last
full Rent-paying month before the date of such expiration. In addition, Tenant
shall indemnify Landlord and hold it harmless from and against all damages,
costs, claims, causes of action, liabilities, and expenses (including, without
limitation, attorneys’ fees and expenses and claims for damages by any other
person to whom Landlord may have leased all or any part of the Premises
effective upon such expiration) sustained by Landlord by reason of such
retention.

24. Grace Period.

A. No default or breach of any of the terms, covenants or conditions of this
Lease shall exist on the part of Landlord until (i) Tenant shall serve upon
Landlord a notice specifying with particularity wherein said default or breach
is alleged to exist and (ii) Landlord shall fail to perform or observe said
term, covenant or condition, as the case may be, within thirty (30) days after
receiving said notice.

B. If Landlord shall be delayed or prevented from the performance of any act
required by this Lease by reason of acts of God, strikes, lockouts, labor
troubles, inability to procure materials, restrictive laws, or any other cause
beyond Landlord’s reasonable control, the performance of such act shall be
excused for the period of the delay, and the period for the performance of any
such act shall be extended for a period equivalent to the period of such delay.

25. Landlord’s Remedies Upon Default. Landlord shall have the following remedies
if Tenant breaches or defaults on this Lease. These remedies are not exclusive
but are in addition to any rights and remedies now or later allowed by law or in
equity.

A. Landlord shall have the right either to terminate Tenant’s right of
possession to the Premises and thereby terminate this Lease or to have this
Lease continue in full force and effect with Tenant at all times having the
right of possession to the Premises. Should Landlord elect to terminate Tenant’s
right of possession to the Premises and thereby terminate this Lease, then
Landlord shall have the immediate right of entry to and may remove all persons
and property from the Premises. Such property so removed may be stored in a
public warehouse or elsewhere at the cost and for the account of Tenant. Upon
such termination Landlord, in addition to any other rights and remedies,
including rights and remedies under Subparagraphs (1), (2) and (4) of
Subdivision (a) of Section 1951.2 of the California Civil Code, or any amendment
thereto or any successor law thereof, shall be entitled to recover from Tenant
the worth at the time of award of the amount by which the unpaid Rent for the
balance of the Term after the time of the award exceeds the amount of such
rental loss that the Tenant proves could be reasonably avoided. The amount
Landlord may recover under Subparagraph (4) of Subdivision (a) of Section 1951.2
of the California Civil Code shall include, without limitation, the cost of
recovering possession of the Premises, expenses of reletting (including
advertising), brokerage commissions and fees, costs of placing the Premises in
good order, condition and repair, including necessary maintenance, alteration
and restoration of the Premises, attorneys’ fees, court costs, and costs
incurred in the appointment of and performance by a receiver to protect the
Premises or Landlord’s interest under this Lease. The worth at the time of the
award of the amount referred to in Subparagraph (3) of Subdivision (a) of
Section 1951.2 of the California Civil Code shall be computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San Francisco at
the time of the award plus one percent (1%). The worth at the time of the award
referred to in Subparagraphs (1) and (2) of Subdivision (a) of Section 1951.2 of
the California Civil Code shall be computed by allowing interest at the maximum
rate permitted by law. Prior to such award, Landlord may relet the Premises for
the purpose of mitigating damages suffered by Landlord because of Tenant’s
failure to perform its obligations hereunder.

 

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B. Any proof by Tenant under Subparagraphs (2) or (3) of Subdivision (a) of
Section 1951.2 of the California Civil Code of the amount of rental loss that
could be reasonably avoided shall be made in the following manner: Landlord and
Tenant shall each select a licensed real estate broker in the business of
renting property of the same type and Purpose as the Premises and in the same
geographic vicinity; said two real estate brokers shall select a third licensed
real estate broker of similar qualifications; the two licensed real estate
brokers selected by the parties shall determine the amount of rental loss that
could be reasonably avoided for the balance of the Term after the time of the
award. The third licensed real estate broker shall then decide which of the two
brokers has made the better determination of the worth at the time of the award,
and his decision shall be final and binding on the parties.

C. Should Landlord, following any breach or default of this Lease by Tenant,
elect to keep this Lease in full force and effect with Tenant retaining the
right of possession to the Premises (notwithstanding the fact that Tenant may
have vacated or abandoned the Premises), Landlord shall have the right to
enforce all of its rights and remedies under this Lease or allowed by law or in
equity including, but not limited to, the right to recover the installments of
Rent as they become due under this Lease and all other rights provided by
Section 1951.4 of the California Civil Code. Notwithstanding any such election
to have this Lease remain in full force and effect, Landlord may at any time
thereafter elect to terminate Tenant’s right of possession to the Premises and
thereby terminate this Lease for any previous breach or default which remains
uncured, or for any existing or subsequent breach or default. For purposes of
Landlord’s right to continue this Lease in effect upon Tenant’s breach or
default, acts of maintenance or preservation or efforts by Landlord to relet the
Premises or the appointment of a receiver on initiative of Landlord to protect
its interest under this Lease do not constitute a termination of Tenant’s right
of possession.

D. In the event Landlord elects, upon breach or default of this Lease by Tenant,
to keep this Lease in full force and effect, Landlord may, as attorney-in-fact
of Tenant, sublet the Premises, or any part thereof, from time to time and for
such term, at such rent, and upon such other terms, covenants and conditions as
Landlord in its sole discretion may deem advisable with the unqualified right to
make alterations, effect restoration, and perform maintenance to the Premises.
Upon each such subletting (i) Tenant shall be immediately liable to pay to
Landlord, in addition to Tenant’s indebtedness to Landlord other than Rent due
hereunder, the costs of such subletting and of such alterations, restoration and
maintenance incurred by Landlord, and the amount by which the Rent hereunder for
the period of such subletting (to the extent such period does not exceed the
Term hereof) exceeds the amount agreed to be paid as Rent for the Premises for
the period of such subletting, or (ii) at the option of Landlord, rents received
from such subletting shall be applied: first, to the payment of Tenant’s
indebtedness to Landlord other than Rent due hereunder; second, to the payment
of costs of such subletting and of such alterations, restoration and
maintenance; third, to the payment of Rent due and unpaid hereunder; and fourth,
the residue, if any, to be held by Landlord and applied in payment of future
Rent as the same becomes due hereunder. If Tenant has been credited with any
rent to be received by such subletting and such rent is not promptly paid to
Landlord by the subtenant(s), or if such rent received from such subletting
during any month is less than the Rent to be paid during that month by Tenant
hereunder, Tenant shall pay any such deficiency to Landlord. Such deficiency
shall be calculated and paid monthly on the date Rent is due and payable
hereunder. No taking possession of the Premises by Landlord, as attorney-in-fact
for Tenant, shall be construed as an election on Landlord’s part to terminate
this Lease unless a notice of such election is given to Tenant. Notwithstanding
any such subletting without termination of this Lease, Landlord may at any time
thereafter elect to terminate this Lease for any previous, existing or
subsequent breach or default. At Landlord’s option and application, a receiver
for Tenant shall be appointed to take possession of the Premises, to exercise
Landlord’s right to sublet the Premises as attorney-in-fact for Tenant, and to
apply any rent collected from the Premises as provided herein.

E. Nothing in this paragraph shall affect the right of Landlord hereunder to
indemnification for liability arising prior to the termination of the Lease for
damage to person or property.

 

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F. If Tenant shall be in default in the performance of any term, covenant or
condition to be performed by it under this Lease, then, after notice and without
waiving or releasing Tenant from the performance of such term, covenant or
condition, Landlord may, but shall not be obligated to, perform the same, and,
in exercising any such right, may pay necessary and incidental costs and
expenses in connection therewith. All sums so paid by Landlord, together with
interest thereon at the maximum rate of interest allowed by law, shall be deemed
Additional Rent hereunder and shall be payable to Landlord by Tenant on the next
rent-paying day.

G. Rent not paid when due shall bear interest, in addition to any late charge
provided hereunder, at the maximum rate of interest allowed by law from the date
due until paid.

H. No security or guaranty which may now or hereafter be furnished Landlord for
the payment of the Rent or for performance by Tenant of the other terms,
covenants or conditions of this Lease shall in any way be a bar or defense to
any action in unlawful detainer, for the recovery of the Premises, or to any
action which Landlord may at any time commence for a breach of any of the terms,
covenants or conditions of this Lease.

I. IF ANY ACTION OR PROCEEDING BETWEEN LANDLORD AND TENANT TO ENFORCE THE
PROVISIONS OF THIS LEASE (INCLUDING AN ACTION OR PROCEEDING BETWEEN LANDLORD AND
THE TRUSTEE OR DEBTOR IN POSSESSION WHILE TENANT IS A DEBTOR IN A PROCEEDING
UNDER ANY BANKRUPTY LAW) PROCEEDSTO TRIAL, LANDLORD AND TENANT HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY IN SUCH TRIAL. LANDLORD AND TENANT HEREBY
AGREE THAT THIS PARAGRAPH CONSTITUTES A WRITTEN CONSENT TO WAIVER OF TRIAL BY
JURY WITHIN THE MEANING OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 631(A)(2),
AND TENANT DOES HEREBY AUTHORIZE AND EMPOWER LANDLORD TO FILE THIS PARAGRAPH
AND/OR LEASE, AS REQUIRED, WITH THE CLERK OR JUDGE OF ANY COURT OF COMPETENT
JURISDICTION AS A WRITTEN CONSENT TO WAIVER OF JURY TRIAL.

26. Attorneys’ and Administrative Fees on Default. If either Landlord or Tenant
shall obtain legal counsel or bring an action against the other by reason of the
breach or default of any term, covenant or condition hereof or otherwise arising
out of this Lease, the unsuccessful party shall pay to the prevailing party its
attorneys’ fees, which shall be payable whether or not such action is prosecuted
to judgment. The term “prevailing party” shall include, without limitation, a
party who obtains substantially the relief sought whether by compromise,
settlement or judgment. In addition, if Landlord becomes involved in any dispute
or litigation, threatened or actual, by or against anyone not a party to this
Lease, but arising by reason of or related to any act or omission of Tenant,
Tenant agrees to pay Landlord’s reasonable attorneys’ fees and other costs
incurred by Landlord in connection therewith. Notwithstanding anything in this
Lease to the contrary and in addition to any and all other sums due under this
Lease and all other remedies that may be available to Landlord, Tenant shall be
assessed a minimum charge of Five Hundred Dollars ($500) for each failure to
timely cure any default of Tenant within the applicable grace periods set forth
in this Lease. Said charge shall be immediately due and payable upon notice from
Landlord to Tenant and is intended to compensate Landlord for its administrative
costs incurred as a result of Tenant’s failure to fulfill its obligations under
this lease in a timely manner. Said minimum charge shall be subject to increase
to reflect actual costs and expenses incurred by Landlord and actual
administrative time spent in causing Tenant to comply with its obligations
hereunder.

27. Insolvency.

Either:

A. The appointment of a receiver to take possession of all or substantially all
of the assets of Tenant; or

B. A general assignment by Tenant for the benefit of creditors; or

 

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C. Any action taken or suffered by Tenant under any insolvency, bankruptcy, or
reorganization act; or

D. The admission by Tenant in writing of its inability to pay its debts as they
become due; or

E. The levying of execution upon any interest of Tenant in or under this Lease
or upon the property of Tenant within the Premises, unless the same shall be
bonded against or discharged within twenty (20) days following the levy or
within five (5) days prior to the proposed sale thereunder, whichever is
earlier; or

F. The attachment or garnishment of any interest of Tenant in, to, or under this
Lease or upon the property of Tenant in the Premises, unless the same is
discharged within twenty (20) days after the levy thereof,

shall constitute a breach of this Lease by Tenant and a default hereunder. On
the happening of such an event, this Lease shall terminate five (5) days after
receipt by Tenant of notice of termination; provided, however, that
notwithstanding such termination Landlord may enforce its remedies under
Paragraph 25 and provided further that neither such termination nor such
exercise of remedies shall terminate the right of Landlord or any lender to
enforce any and all indemnities given by Tenant under the terms of this Lease.
In no event shall this Lease be assigned or assignable by reason of any
voluntary or involuntary bankruptcy proceedings, nor shall any rights or
privileges hereunder be an asset of Tenant in any bankruptcy, insolvency, or
reorganization proceedings, except at the election of Landlord so to treat the
same. In the event this Lease is assumed and assigned by Tenant’s trustee in
bankruptcy, Landlord shall require that such assignee deposit with it security
in an amount equal to Landlord’s then standard security deposit requirements for
similar tenants of the Building.

28. Assignment or Subletting.

A. Tenant shall not, directly or indirectly, voluntarily or involuntarily,
assign, pledge, encumber, or otherwise transfer this Lease or any interest
therein, and shall not sublet the Premises or any part thereof or any right or
privilege appurtenant thereto, or permit any other person (the authorized
representatives of Tenant excepted) to occupy or use the Premises or any portion
thereof (collectively “assign”) without first receiving the written consent of
Landlord. Landlord agrees not to unreasonably withhold such consent, but may in
lieu of granting such consent terminate this Lease or exercise its other rights,
all as hereinafter provided. Any such assignment without Landlord’s consent
shall be void and shall, at the option of Landlord, constitute a default
hereunder entitling Landlord to terminate this Lease and giving rise to all
other remedies available to Landlord for breach of this Lease. A consent to one
assignment shall not be deemed to be a consent to any other or further
assignment. This Lease and any interest in it shall not be assignable as to the
interest of Tenant by operation of law without the prior written consent of
Landlord.

B. In the event Tenant contemplates an action under Subparagraph A, Tenant shall
give Landlord forty-five (45) days’ notice thereof, designating the terms
proposed and, if a sublease, the term thereof and space proposed to be sublet.
Tenant shall also provide a current financial statement of any proposed assignee
or subtenant. Landlord shall have the prior right and option, to be exercised by
notice to Tenant given within thirty (30) days after receipt of Tenant’s notice
of intention to assign, (i) to assign from Tenant any portion of the Premises
proposed by Tenant to be assigned, for the term for which such portion is
proposed to be assigned, but at the same Rent as Tenant is required to pay to
Landlord under this Lease for the same space, computed on a pro rata share of
rentable square footage basis, (ii) to terminate this Lease as it pertains to
the portion of the Premises so proposed by Tenant to be assigned, (iii) to
approve Tenant’s proposal to assign, subject to Landlord’s subsequent written
approval of the specific agreement between Tenant and the proposed assignee, and
which agreement shall require, among other things, that the sublease or assignee
maintain insurance for the benefit of Landlord in accordance with Article 12
hereof, or (iv) to terminate this Lease in its entirety if, after said
subleasing or

 

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assignment, Tenant shall have then subleased or assigned more than 25% of the
original square footage of the Premises. Upon acceptance of the offer to
terminate this Lease as it pertains to the portion of the Premises Tenant seeks
to assign or upon acceptance of the offer to terminate this Lease in its
entirety, this Lease (in its entirety or as it pertains to said portion, as the
case may be) shall terminate as of the end of the calendar month in which such
notice of acceptance is given to Tenant. Tenant shall thereupon vacate and
surrender to Landlord all or such portion of the Premises and the provisions of
this Lease applicable to termination upon expiration of the Term shall apply to
all or to such portion of the Premises. Such termination shall not relieve
Tenant from liability for any breach or default with respect to all or such
portion of the Premises occurring prior to termination.

C. For purposes of this paragraph, the following events shall be deemed an
assignment of this Lease or a sublease of the Premises, as appropriate: (i) the
issuance of an equity interest (whether a stock or partnership interest or
otherwise) to any person or group of related persons, in a single transaction or
a series of related or unrelated transactions such that, following such
issuance, such person or group shall have control of Tenant; or (ii) a transfer
of control in a single transaction or a series of related or unrelated
transactions (including, without limitation, by consolidation, merger, or
reorganization), except that the transfer of the outstanding stock of any
corporate Tenant by persons or parties other than “insiders” within the meaning
of the Securities Exchange Act of 1934, as amended, through any recognized
national or international securities exchange or through the “over-the-counter”
market shall not be included in the determination of whether control has been
transferred. For purposes of this paragraph, “control” shall mean ownership of
not less than 50% of all of the voting stock of a corporation or of not less
than 50% of all of the legal or equitable interest in any other business entity.

D. A corporate Tenant shall have the right in the event of a merger,
consolidation, reorganization, or recapitalization, whether or not Tenant
survives as the surviving corporation, to assign or transfer this Lease to such
surviving corporation; provided, however, such right of assignment or transfer
shall be limited to an assignee whose net worth is equal to or greater than the
net worth of Tenant at the time of such assignment or transfer. In the event
Tenant contemplates making an assignment or transfer as provided in this
subparagraph, Tenant shall give thirty (30) days’ notice to Landlord of its
intention to make such assignment or transfer and shall furnish Landlord with
all pertinent information as to the net worth of the proposed assignee or
transferee.

E. In all events, if this Lease is assigned, Tenant shall continue to be
primarily liable under this Lease and the assignee shall execute an agreement by
which it assumes and agrees to be jointly and severally liable for the complete
performance by Tenant of all of its obligations hereunder.

F. Tenant irrevocably assigns to Landlord, as security for the performance of
Tenant’s obligations under this Lease, all rent from any assignment of all or
any part of the Premises. A receiver for Tenant, appointed on Landlord’s
application, may collect such rent and apply it toward Tenant’s obligations
under this Lease except that, until the occurrence of an act of default by
Tenant, Tenant shall have the right to collect such rent.

G. In no event shall Tenant assign this Lease or sublet the Premises, or any
portion thereof, to any then-existing or prospective tenant of the Building, or
at a Rent that is less than Landlord is then charging for comparable space in
the Building. In addition, neither Tenant nor any other person having an
interest in the possession, use, occupancy, or utilization of the Premises shall
enter into any lease, sublease, license, concession, or other agreement for use,
occupancy, or utilization of space in the Premises which provides for rental or
other payment for such use, occupancy, or utilization based in whole or in part
on the net income or profits derived by any person from the property leased,
used, occupied, or utilized (other than an amount based on a fixed percentage or
percentages of receipt or sales) and any such purported lease, sublease,
license, concession, or other agreement shall be absolutely void and ineffective
as a conveyance of any right or interest in the possession, use, occupancy, or
utilization of any part of the Premises.

 

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H. Any net profits earned by Tenant from subleasing or from an assignment of
this Lease shall be divided and paid 80% to Landlord and 20% to Tenant. Net
profits shall be determined by subtracting from the rent and other consideration
paid by the subtenant or assignee, the rent and other sums due to Landlord under
this Lease for the applicable period; provided however that Tenant shall be
entitled to reimbursement, out of such net profits, for any reasonable amount
expended by Tenant for subleasing broker’s commissions, and for costs of
demising or otherwise improving the space for the particular subtenant or
assignee.

I. Tenant shall pay to Landlord the amount of Landlord’s cost of processing
every proposed assignment (including, without limitation, the cost of attorneys’
and other professional fees and the administrative, accounting, and clerical
time of Landlord), and the amount of all direct and indirect expenses incurred
by Landlord arising from any assignee’s or subtenant’s taking occupancy
(including, without limitation, the expenses of freight elevator operation for
the moving of furnishings, trade fixtures and other personal property, security
service, janitorial and cleaning service, and rubbish removal service).
Notwithstanding anything to the contrary contained in this Lease, Landlord shall
have no obligation to process any request for its consent to assignment or
sublease prior to Landlord’s receipt of payment by Tenant of the amount of
Landlord’s estimate of the processing costs and expenses and all other direct
and indirect costs and expenses of Landlord and its authorized representatives
arising from such matter, and in no event shall the processing fee charged
hereunder be less than $1,000.

29. Transfer by Landlord - Release from Liability. In the event Landlord shall
sell or transfer the Building, or shall assign its interest as Landlord in and
to this Lease, then, from the effective date of such sale, assignment or
transfer, Landlord shall be released from all further liability to Tenant,
express or implied, under this Lease, and Tenant agrees to look solely to the
successor in interest of Landlord in and to the Building or this Lease, except
as to any matters of liability that have accrued and remain unsatisfied as of
the date of such sale, assignment or transfer. It is intended that the covenants
and obligations contained in this Lease on the part of Landlord shall be binding
upon Landlord and its successors and assigns only during their respective
periods of ownership of the fee or leasehold estate, as the case may be. If any
security is given by Tenant to secure the faithful performance of all or any
part of the terms, covenants and conditions of this Lease on the part of Tenant,
Landlord may transfer and deliver the security to the successor in interest of
Landlord, and thereupon Landlord shall be discharged from any further liability
in reference thereto. Landlord may enter into any transaction described in this
paragraph without the consent of Tenant.

30. Damage. Except as hereinafter set forth, in the event the Premises or the
Building is damaged from any cause, Landlord shall forthwith repair such damage
and this Lease shall remain in full force and effect. Provided such damage was
not caused by Tenant’s, or by its agents, employees, contractors, invitees or
licensees, negligent or willful act, Tenant shall be entitled to a proportionate
reduction of Rent while such repairs are being made in an amount not to exceed
the applicable rental interruption insurance proceeds received by Landlord, and
that is in the same proportion to the Rent as the rentable area of the portion
of the Premises so damaged and is unusable bears to the total rentable area of
the Premises.

In the event the cost of repairing such damage is not covered by Landlord’s
insurance, or in the event the cost of repairs exceeds the insurance proceeds
payable, Landlord may elect, at its option, not to make such repairs, in which
event this Lease may be terminated at the option of either party upon the giving
of notice and without liability to the other party.

In the event the Premises are rendered untenantable for more than 360 days as a
result of any such damage, Landlord or Tenant may elect to terminate this Lease
provided notice thereof is given to the other party hereto within 30 days
following the date such party is notified that such damage may not be repaired
within said 360 day period.

Landlord shall under no circumstances be required to repair any damage to the
property of Tenant, or to any improvements installed in, on or about the
Premises by Tenant. Tenant hereby specifically waives the provisions of
Section 1932, Subdivision 2 and Section 1933, Subdivision 4, of the California
Civil Code.

 

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In the event the Building is damaged to the extent of more than twenty percent
(20%) of the then replacement cost thereof, Landlord may elect to terminate this
Lease, whether the Premises are damaged or not and without liability to Tenant.
A total destruction of the Building shall terminate this Lease without liability
to Landlord or Tenant.

31. Condemnation.

A. As used throughout this Lease, the word “condemn” is coextensive with the
phrase “right of eminent domain”, i.e., the right of people or government to
take property for government or public use, and shall include the intention to
condemn expressed in writing as well as the filing of any action or proceeding
for condemnation.

B. In the event any action or proceeding is commenced for the condemnation of
the Premises or any part thereof, or of the Building or any part thereof, or if
Landlord is advised in writing by any agency, entity or body having the right or
power of condemnation of its intention to condemn the same, then and in any of
said events, Landlord may:

(1) Without any obligation or liability to Tenant, and without affecting the
validity and existence of this Lease other than as hereinafter provided, agree
to sell or convey to the condemnor the part or portion of the Premises or
Building sought by the condemnor free from this Lease and the rights of Tenant
hereunder. Such agreement may be made without first requiring that any action or
proceeding be instituted, or if such action or proceeding shall have been
instituted, without requiring any trial or hearing thereof, and Landlord is
expressly empowered to stipulate to judgment therein.

(2) Terminate this Lease and all rights of Tenant hereunder if a portion of the
Premises is condemned.

(3) Continue this Lease in full force and effect, provided that such
condemnation does not result in a taking of the Premises. In the event this
Lease is continued in full force and effect and by reason of the condemnation an
alteration of the Building is required, and such alteration materially
interferes with Tenant’s business in the Premises, then Tenant shall be entitled
to a reasonable abatement in Rent during the period of such modification or
alteration to the extent such work interferes with Tenant’s business.

C. In the event a portion of the Premises is permanently condemned and taken,
and such condemnation and taking materially affects Tenant’s business in the
Premises, then Tenant shall have the option of either terminating all of its
obligations under this Lease or continuing this Lease in full force and effect
with respect to such portion of the Premises not taken. In such latter event,
Rent for the remainder of the Term shall be reduced in the proportion which the
rentable square footage of the Premises taken bears to the total rentable square
footage of the original Premises.

D. If, as a result of any such condemnation proceedings, a leasehold interest or
right of possession only is so condemned or taken for a period of time less than
the then unexpired Term of this Lease, this Lease shall continue in full force
and effect and any condemnation award shall be payable to Landlord and shall be
credited by Landlord against the Rent payable by Tenant for said period. If the
amount received by Landlord is in excess of said Rent, Tenant shall be entitled
to receive such excess, and, if the amount so received by Landlord is less than
said Rent, then Tenant shall pay the amount of such deficiency to Landlord. If
such condemnation is for a period of time extending beyond the expiration of the
Term of this Lease, the foregoing provisions shall apply only up to the date of
expiration of the Term. Upon said expiration, Landlord shall receive all awards
thereafter payable, and no accounting shall be made to Tenant for such period
extending beyond said expiration.

 

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E. All compensation and damages awarded for the taking of the Premises,
Building, or any portion or portions thereof, shall, except as otherwise herein
provided, belong to and be the sole property of Landlord, and Tenant shall not
have any claim or be entitled to any award for diminution in value of its
leasehold interest hereunder or for the value of any unexpired Term of this
Lease; provided, however, Tenant shall be entitled to any separate award that
may be made for the taking of or damage to, or on account of any cost or damage
Tenant may sustain in the removal of, Tenant’s merchandise, fixtures, trade
fixtures, equipment and furnishings.

F. If this Lease is terminated, in whole or in part, pursuant to any of the
provisions of this paragraph, all Rent and other charges payable by Tenant to
Landlord hereunder and attributable to the Premises taken shall be paid up to
the date upon which actual physical possession shall be taken by the condemnor,
and the parties shall thereupon be released from all further liability in
relation thereto.

32. Subordination to Encumbrances. This Lease, and the leasehold estate created
hereby, shall at all times be subordinate to all liens and encumbrances, and
replacements thereof, in any amount whatsoever now existing or hereafter placed
on or against the Building or any part thereof, or against Landlord’s interest
or estate therein, without the necessity of having further instruments executed
on the part of Tenant to effectuate such subordination. Tenant shall, however
within 10 days following Landlord’s request, execute any documentation related
thereto as Landlord’s lender may request. In addition, Tenant shall, upon
demand, attorn to the purchaser at any foreclosure sale or pursuant to the
exercise of any power of sale, in which event Tenant shall automatically be and
become the Tenant of said purchaser and, at such purchaser’s option, Tenant
shall enter into a new lease for the balance of the Term upon the same terms,
covenants and conditions as are contained in this Lease.

33. Substitute Premises. Landlord reserves the right, on not less than sixty
(60) days’ prior notice to Tenant, to substitute for the Premises under this
Lease premises elsewhere in the Building (provided such substitute premises are
at least as large as the Premises and have at lease the same number of offices)
and, if Landlord exercises said right, Landlord shall be responsible only for
any pre-approved and reasonable out-of-pocket expenses of moving Tenant’s
furnishings, equipment and other personal property from the Premises to such
substitute premises. The substitute premises shall then become the Premises
hereunder and the Rent and other sums payable hereunder shall be adjusted, if
necessary, but not by more than 10%, to reflect any increase in the square
footage of the Premises.

34. Miscellaneous.

A. Effect of Exercise of or Failure to Exercise Privilege by Landlord. Neither
the exercise of nor failure to exercise any right, option, or privilege
hereunder by Landlord shall exclude Landlord from exercising any and all other
rights, options, or privileges hereunder at any other time, nor shall such
exercise or nonexercise relieve Tenant from Tenant’s obligation to perform each
and every term, covenant and condition to be performed by Tenant hereunder, or
from damages or other remedy for failure to perform or meet its obligations
under this Lease.

B. Waiver. The purported waiver by Landlord of any performance or breach of any
term, covenant or condition contained herein shall not be deemed to be a waiver
of such term, covenant or condition, or of any subsequent or continuing breach
of the same, or of any other term, covenant or condition contained herein,
unless such waiver is specifically made in writing. Nor shall any custom or
practice that may arise between the parties in the administration of the
provisions of this Lease be deemed a waiver of, or in any way affect, the right
of Landlord to insist upon the performance by Tenant in strict accordance with
the provisions of this Lease. The subsequent acceptance of Rent hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of
any term, covenant or condition of this Lease other than Tenant’s breach in
failing to pay the particular Rent so accepted regardless of Landlord’s
knowledge of such additional preceding breach at the time of the acceptance of
such Rent.

 

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C. Labor Relations. Tenant agrees to conduct its labor relations and its
relations with its employees in such a manner as to attempt to avoid all
strikes, picketing, and boycotts of, on, or about the Premises or the Building.
Tenant further agrees that if any of its employees strike or if a picket line or
a boycott is established, conducted or carried out against Tenant or its
employees, or any of them, Tenant, on Landlord’s request, shall forthwith cease
operations in and upon the Premises and remain closed until all disputes are
settled.

D. Notices. All notices required or permitted hereunder, except for routine
bills or invoices for Rent which Landlord may elect to deliver by first class
U.S. mail, shall be contained in a writing personally delivered or sent by
United States certified or registered mail, postage prepaid, return receipt
requested, and addressed: if to Tenant, at the Premises or at such other address
as Tenant may from time to time designate by giving written notice thereof to
Landlord under this Paragraph; and if to Landlord, at the Building office or at
such other address(es) as Landlord may from time to time designate by giving
written notice thereof to Tenant under this Paragraph. Mailed notice shall be
deemed given on the date of delivery as shown on the return receipt or 5
business days after mailing in the case delivery is not accepted. Tenant further
agrees to give the beneficiary of any mortgage or deed of trust covering the
Building, by registered or certified mail, a copy of any default notice served
upon the Landlord, provided that prior to such notice Tenant has been notified
in writing of the address of such beneficiary and the requirement to deliver
such beneficiary copies of Landlord default notices. If Landlord fails to cure
such default within the time provided for in this Lease, then the beneficiary
shall have an additional thirty (30) days after the expiration of such cure
period within which to cure such default (provided that Tenant notifies the
beneficiary concurrently with Tenant’s delivery of the default notice to
Landlord; otherwise, the beneficiary shall have thirty (30) days from the later
of the date on which it receives notice of the default from Tenant and the
expiration of Landlord’s cure period). If such default cannot be cured by said
beneficiary within the cure period, Tenant may not exercise any of its remedies
so long as beneficiary has commenced and is diligently pursuing the remedies
necessary to cure such default (including, but not limited to, commencement of
foreclosure proceedings, if necessary to effect such cure).

E. Entire Agreement; Amendments. This Lease represents the entire agreement of
the parties with respect to the parties’ rights and duties under this Lease, and
no promises or representations, express or implied, whether written or oral, not
set forth herein shall be binding upon or inure to the benefit of Landlord or
Tenant. Tenant acknowledges that neither Landlord nor any authorized
representative of Landlord, or any other person purporting to act on Landlord’s
behalf, has made any representation, warranty, or statement with respect to the
amount of taxes that may or will be assessed against the Premises, the cost of
any insurance required to be maintained by Tenant hereunder, or any other matter
relating to this Lease that is not expressly covered in this Lease. With respect
to such matters, Tenant is relying upon its own independent investigation and
sources of information, and Tenant expressly waives any right Tenant might
otherwise have to rescind this Lease or to claim damages by reason of Tenant’s
misunderstanding or mistake. This Lease shall not be amended or modified by any
oral agreement, either express or implied; all amendments and modifications
hereof shall be in writing and signed by both Landlord and Tenant.

F. Landmark. Tenant acknowledges that the Building has been declared a
Historical Landmark in the City and County of San Francisco, and agrees to be
bound by all of the applicable rules and regulations related thereto.

G. Parking. Tenant acknowledges that any parking provided in the adjacent Mills
Building is provided by an independent contractor pursuant to a separate
agreement to be entered into between Tenant and such independent contractor. In
no event shall Landlord have any liability to Tenant as a result of loss or
damage suffered or incurred by Tenant in using The Mills Building parking
garage.

H. Light and Air. Tenant covenants and agrees that no diminution of light, air
or view by any structure which may hereafter be erected (whether or not by
Landlord) shall entitle Tenant to any reduction of Rent hereunder, result in any
liability of Landlord to Tenant, or in any other way affect this Lease.

 

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I. Building Security. Notwithstanding the fact that access to the Building is
controlled and that lobby attendants monitor the lobby area of the Building,
Tenant acknowledges and agrees that Landlord does not provide security services
or other protection for Tenant’s property in the Building. Accordingly, in no
event shall Landlord be liable for any theft of property or other damages which
may be suffered as the result of any unauthorized entry into Tenant’s premises
nor shall Landlord be responsible for any glass breakage within the Premises
caused by theft, vandalism, or the negligence of Tenant or Tenant’s employees,
invitees, agents or independent contractors.

J. Building Telecommunications Systems. If Tenant desires telephone or other
communications or computer connections or installations to, in or about the
Premises, the design, installation, repair and maintenance thereof from the
point where the telephone company’s or other provider’s service enters the
Building shall be at Tenant’s sole cost and expense but shall nonetheless
require the prior written approval of Landlord and be within the complete
control and authority of Landlord. All such work shall be performed only at
locations approved by Landlord and by vendors or contractors set forth on the
then effective list of “115 Sansome Street Approved Telecommunication
Contractors”, which list is available at Tenant’s request the Building office.
In the event the installation of Tenant’s cabling and equipment results in
Tenant exceeding its Building riser allowance of 5 pairs/1,000 rentable square
of Premises, Tenant shall rent additional Building riser space from Landlord in
accordance with the then applicable 115 Sansome Street Riser Rent Rate Schedule.
As a condition to obtaining Landlord’s approval, Tenant shall be required to
increase its Security Deposit by an amount reasonably anticipated to cover the
cost of removing any wiring, cabling and equipment installed in the Building by
Tenant or at Tenant’s request. Under no circumstances shall any communications
cabling or wiring within the Premises be surface mounted and Tenant acknowledges
that as a result of current Building cabling specifications and other
requirements, it is unlikely that Tenant will be able to utilize any existing
cabling serving the Premises.

In no event shall Landlord be responsible for any disruption to or failure of
the Building or Tenant’s telephone or communications system, unless due to the
gross negligence or willful misconduct of Landlord or its employees; but in the
event of any such gross negligence or willful misconduct Landlord shall be only
responsible for the cost of correcting the actual portions of the system which
it or its employees damaged and in no event shall Landlord be liable for damages
to other portions of any system, or for other damages suffered by Tenant,
including without limitation lost profits and/or consequential damages.

Tenant further agrees to indemnify, defend, and hold Landlord harmless from and
against any and all claims, damages, expenses, and liabilities arising from
Tenant’s or its agents, employees, invitees, vendors, contractors or
subcontractors use of the Premises or Building or work done thereto which
interfere in any way or in any manner with the telecommunications system in the
Building.

Upon the expiration or earlier termination of the Lease, Landlord shall have the
right at Tenant’s sole cost and expense, to remove all telephone and
communications or computer equipment installed by Tenant or at Tenant’s request,
together with all associated wiring and cabling, and Tenant shall pay all costs
reasonably incurred to remove such items and to restore any damage to the
Premises or the Building related thereto.

K. Auctions and Signs. Tenant shall not conduct any auctions in, upon, or from
the Premises, affix any signs, awnings, notices, or other advertising matter to
the Premises, or issue or circulate any advertising matter in the Building
without the prior written consent of Landlord. The design and character of any
such signs, awnings, notices, or other advertising matter shall also be subject
to Landlord’s prior written approval.

L. Execution; Recordation. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for a lease,
and this instrument shall not be effective as a lease or otherwise until
execution and delivery by both Landlord and Tenant. Tenant shall not record this
Lease or any memorandum of this Lease.

 

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M. Financial Information. Tenant will furnish to the Landlord within thirty
(30) days following Landlord’s request, copies of true and accurate financial
statements reflecting Tenant’s (and if applicable, any Guarantor’s) then current
financial condition, and if available, audited, consolidated financial
statements, prepared in accordance with generally accepted accounting
principles, and certified and audited by independent public accountants of
recognized standing. Tenant hereby covenants and warrants to Landlord that all
financial information and other descriptive information regarding Tenant’s
business, which has been or shall be furnished to Landlord, is and shall be
accurate and complete at the time of delivery to Landlord.

N. Limitation of Tenant’s Remedies. If any default hereunder by Landlord is not
cured within the applicable cure period provided in this Lease, Tenant’s
exclusive remedies shall be an action for specific performance or an action for
actual damages, and Tenant hereby waives the benefit of any laws granting it the
right to perform Landlord’s obligation, or the right to terminate this Lease or
withhold Rent on account of any Landlord default. Tenant shall look solely to
Landlord’s interest in the Building for the recovery of any judgment from
Landlord. Landlord, or if Landlord is a partnership, its partners whether
general or limited, or if Landlord is a limited liability company, its members
or managers, or if Landlord is a corporation, its directors, officers or
shareholders, shall never be personally liable for any such judgment. Any lien
obtained to enforce such judgment and any levy of execution thereon shall be
subject and subordinate to any mortgage or deed of trust covering the Building.

O. Time and Applicable Law. Time is of the essence of this Lease and each and
all of its provisions. This Lease shall be construed and interpreted in
accordance with the laws of the State of California.

P. Name. Tenant shall not use the name of the Building for any purpose other
than as the address of the business conducted by Tenant in the Premises.

Q. Provisions are Covenants and Conditions. All provisions, whether set forth
herein as covenants or conditions on the part of Tenant, shall be deemed to be
both covenants and conditions.

R. Severability. The unenforceability, invalidity, or illegality of any
provision of this Lease, for any reason, shall not render its other provisions
unenforceable, invalid, or illegal. In such an event, this Lease shall be
equitably construed as if it did not contain the invalid, illegal, or
unenforceable provision to the extent permitted by applicable law, it being the
intent of the parties that this Lease shall be enforced to the greatest extent
possible.

S. Captions. The table of contents and the headings to the paragraphs of this
Lease are for convenience only, are not part of this Lease, and shall have no
effect on the construction or interpretation hereof.

T. Successors. The terms, covenants and conditions herein contained shall,
subject to the provisions as to assignment and sublease, apply to, inure to the
benefit of, and bind the heirs, successors, administrators, executors, and
assigns of the parties hereto.

U. Relationship of Parties. Neither anything contained in this Lease nor any
acts of the parties shall be construed to create any relationship between the
parties other than that of Landlord and Tenant.

V. Brokers. Except as specifically set forth in the Basic Lease Information,
Tenant warrants and represents to Landlord that in the negotiation or making of
this Lease neither Tenant nor anyone acting on Tenant’s behalf has dealt with
any broker or finder who might be entitled to a fee or commission for this
Lease. Tenant shall indemnify and hold Landlord harmless from any claim or
claims, including costs, expenses and attorneys’ fees incurred by Landlord which
may asserted by any other broker or finder for a fee or commission based upon
any dealings with or statements made by Tenant or Tenants’ representatives.

 

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W. Tenant’s Authority. If Tenant is a corporation, partnership, trust,
association, limited liability company, or other entity, Tenant and each person
executing this Lease on behalf of Tenant do hereby covenant and warrant that
(i) Tenant is duly incorporated or otherwise established or formed and validly
existing under the laws of its state of incorporation, establishment, or
formation; (ii) Tenant has and is duly qualified to do business in California;
(iii) Tenant has full corporate, partnership, trust, association, limited
liability company, or other appropriate power and authority to enter into this
Lease and to perform all of Tenant’s obligations hereunder; (iv) each person
(and all persons if more than one signs) signing this Lease on behalf of Tenant
is duly and validly authorized to do so; and (v) when executed by both parties,
this Lease and all of the terms and conditions contained herein shall be binding
and enforceable against Tenant.

X. Nondisclosure of Lease Terms. From and after the date lease negotiations were
entered into and throughout the term of this Lease, Tenant shall not disclose
the amount of rent that it is obligated to pay hereunder or any other of the
terms, covenants, conditions or agreements set forth in any letter of intent,
this Lease, any amendments hereto, nor provide any copies of the foregoing, to
any person, including without limitation any brokers, any other tenants in the
Building or any affiliates, agents or employees of such tenants or brokers,
except to any accountants of Tenant in connection with the preparation of
Tenant’s financial statements or tax returns, to an assignee of this Lease or a
sublessee of the Premises, or to an entity or person to whom disclosure is
required by applicable law or in connection with any action brought to enforce
the terms hereof. Tenant hereby acknowledges that the disclosure of any of the
foregoing confidential information or of any of the terms, covenants, conditions
and agreement set forth in the letter of intent, this Lease, or any amendment
hereto, to any third party would constitute a material non-curable breach of
this Lease, would cause material damage to Landlord, and Tenant agrees that any
such violation by Tenant shall constitute sufficient cause for Landlord to
immediately terminate this Lease. Tenant further agrees to indemnify, protect,
defend, save and hold Landlord harmless from and against any and all damages
suffered by Landlord which are attributable to any disclosure by Tenant in
violation of the terms of this provision.

Y. USA Patriot Act and Anti-Terrorism Laws. Tenant represents and warrants to,
and covenants with, Landlord that neither Tenant nor any of its respective
constituent owners, affiliates or employees currently are, or shall be at any
time during the Term hereof, in violation of any laws relating to terrorism or
money laundering (collectively, the “Anti-Terrorism Laws”), including without
limitation Executive Order No. 13224 on Terrorist Financing, effective
September 24, 2001 and relating to Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(the “Executive Order”) and/or the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (Public Law 107-56) (the “USA Patriot Act”).

Tenant covenants with Landlord that neither Tenant nor any of its respective
constituent owners, affiliates or employees is or shall be during the Term
hereof a “Prohibited Person,” which is defined as follows: (i) a person or
entity that is listed in the Annex to, or is otherwise subject to, the
provisions of the Executive Order; (ii) a person or entity owned or controlled
by, or acting for or on behalf of, any person or entity that is listed in the
Annex to, or is otherwise subject to the provisions of, the Executive Order;
(iii) a person or entity with whom Landlord is prohibited from dealing with or
otherwise engaging in any transaction by any Anti-Terrorism Law, including
without limitation the Executive Order and the USA Patriot Act; (iv) a person or
entity who commits, threatens or conspires to commit or support “terrorism” as
defined in Section 3(d) of the Executive Order; (v) a person or entity that is
named as a “specially designated national and blocked person” on the then-most
current list published by the U.S. Treasury Department Office of Foreign Assets
Control at its official website,
http://www.treas.gov/offices/eotffc/ofac/sdn/t11sdn.pdf, or at any replacement
website or other replacement official publication of such list; and (vi) a
person or entity who is affiliated with a person or entity listed in items (i)
through (v) above.

At any time and from time to time during the Term, Tenant shall deliver to
Landlord, within ten (10) days after receipt of a written request therefor, a
written certification or such other evidence reasonably acceptable to Landlord
evidencing and confirming Tenant’s compliance with this Section.

 

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35. Additional Provisions. NONE

IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto have
executed this Lease as of the date first set forth above.

 

TENANT:     NILE THERAPEUTICS, INC., a Delaware corporation     By:   /s/ Peter
Strumph       January 25, 2008 Title:   CEO       Date

 

LANDLORD:     AG/SIC-115 Sansome, L.L.C., a Delaware limited liability company  
  By:   AG/SIC-115 Sansome Parent, L.L.C.,           a Delaware limited
liability company, its sole member             By:   AG Sansome Manager, Inc.,  
        a Delaware corporation, its manager           By:   The Swig Company,
LLC, property manager      

 

By:   /s/ Kennard P. Perry       March 3, 2008         Date

 

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RULES AND REGULATIONS OF

115 SANSOME STREET

A. Signs. No sign, placard, picture, advertisement, directory strip, name or
notice shall be inscribed, displayed, printed, or affixed on or to any part of
the outside or inside of the Building without the prior written consent of
Landlord, and Landlord shall have the right to remove any such sign, placard,
picture, advertisement, directory strip, name, or notice without notice to and
at the expense of Tenant. All approved signs or approved lettering on doors
shall be printed, painted, affixed or inscribed at the expense of Tenant by a
person approved by Landlord. In no event shall any paper signs be attached to
any door or window of the Premises.

B. Window Coverings. Only the standard Building window coverings as established
by Landlord shall be hung in the windows in the Premises and the use of any
other curtains, blinds, shades, or screens attached to or hung in or used in
connection with any window or door of the Premises shall be discontinued
immediately by Tenant. No awning shall be permitted on any part of the Premises.

C. Building Directory. The directory of the Building will be provided
exclusively for the display of the name and location of tenants only, and
Landlord reserves the right to exclude any other names therefrom. In no event
shall any tenant be entitled to use more than its pro rata share of any building
directory which pro rata share shall be based upon each tenant’s share of
rentable office space in the Building.

D. Building Directory Strips and Keys. Landlord shall initially provide Tenant
with two keys to the Premises together with two keys the men’s restroom and two
keys to the women’s restroom. Building directory strips and additional keys
shall be supplied by Landlord at Tenant’s sole cost and expense.

E. Hallways and Passages. The sidewalks, halls, passages, exits, entrances,
elevators, and stairways in the Building shall not be obstructed by Tenant or
used for any purpose other than for ingress to and egress from the Premises. The
halls, passages, exits, entrances, elevators, stairways, balconies and roof are
not for the use of the general public, and the Landlord shall in all cases
retain the right to control and prevent access thereto by all persons whose
presence in the judgment of the Landlord shall be prejudicial to the safety,
character, reputation, and interest of the Building and its tenants, provided
that nothing herein contained shall be construed to prevent such access to
persons with whom Tenant normally deals in the ordinary course of Tenant’s
business unless such persons are engaged in illegal or improper activities. The
doors, windows, glass lights, and any lights or skylights that reflect or admit
light into the halls or other places of the Building shall not be covered or
obstructed by Tenant. Neither Tenant nor any employees or invitees of Tenant
shall go upon the roof of the Building.

F. Locks. Tenant shall not alter any lock nor install any new or additional
locks or any bolts on any door on the Premises. Tenant shall make sure that
Landlord, at all times, has a key to each lock on the Premises. Tenant, upon the
termination of its tenancy, shall deliver to Landlord the keys to all offices,
rooms, and toilet rooms which shall have been furnished Tenant or which Tenant
shall have made, and in the event of loss of any keys so furnished, shall pay
Landlord therefore, including the cost of installing new locks if Landlord deems
it necessary. Tenant shall keep its doors and windows locked and securely
fastened at all appropriate times so as to maintain the Premises in a secure and
safe condition and Landlord shall have no responsibility for any loss or damage
suffered by Tenant, its agents, employees or invitees as a result of Tenant’s
failure to adequately secure the Premises.

 

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G. Restrooms. The toilet rooms, toilets, urinals, wash bowls, and other restroom
apparatus within the Building shall not be used for any purpose other than that
for which they were constructed, and no foreign substance of any kind whatsoever
shall be thrown therein, and the expense of any breakage, stoppage, or damage
resulting from the violation of this rule by Tenant or its employees or invitees
shall be borne by Tenant.

H. Moving In and Out of Premises; Heavy Equipment. No furniture, freight, or
equipment of any kind shall be brought into the Building without the consent of
Landlord, and all moving of the same into or out of the Building shall be done
at such time and in such manner as Landlord shall designate. All persons
employed to move furniture, freight or equipment of any kind must be approved by
Landlord in writing in advance. No hand trucks except those equipped with rubber
tires and side guards or such other material handling equipment as Landlord may
approve shall be used in any space, including the common areas, of the Building,
either by Tenant or by others. No other vehicles of any kind shall be brought by
Tenant into the Building or kept in, on or about the Premises. Tenant shall not
overload the floor of the Premises and Landlord shall have the right to
prescribe the weight, size, and position of all safes and other heavy equipment
brought into the Building and also the times and manner of moving the same in
and out of the Building. Safes or other heavy objects shall, if considered
necessary by Landlord, stand on wood strips of such thickness as is necessary to
properly distribute the weight. Landlord will not be responsible for loss of or
damage to any such safe or property from any cause. All damage done to the
Building by moving or maintaining any such safe or other property shall be
repaired at the expense of Tenant.

I. Janitorial Services and Cleaning. Tenant shall not employ any person or
persons other than the janitor of Landlord for the purpose of cleaning the
Premises unless otherwise agreed by Landlord. Except with the written consent of
Landlord, no person or persons other than those approved by Landlord shall be
permitted to enter the Building for the purpose of cleaning the same. Tenant
shall not cause any unnecessary labor by reason of Tenant’s carelessness or
indifference in the preservation of good order and cleanliness. Landlord shall
not be responsible to Tenant for any loss of property on the Premises, however
occurring, or for any damage done to the effects of Tenant by the janitor or any
other employee or any other person. Janitor service shall include ordinary
dusting and cleaning by the janitor assigned to such work, and janitor service
will not be furnished on holidays or after normally scheduled hours. Window
cleaning shall be done only by Landlord’s employees, and only between 6:00 a.m.
and 5:00 p.m. No article shall be hung out of any window of the Building, and
Tenant shall not sweep or throw or permit to be swept or thrown from the
Premises any dirt or other substance into any of the corridors, halls,
elevators, or stairways, or out of the doors or windows of the Building.

J. Use of Premises. Tenant shall not mark, drive nails, screw, or drill into the
partitions, woodwork, or plaster, or in any way deface the Premises or any part
thereof. No loudspeaker or other similar device, system, or apparatus which can
be heard or experienced outside the Premises shall, without the prior written
approval of Landlord, be used in or at the Premises. Tenant shall not use, keep,
or permit to be used or kept any foul or noxious gas or substance in or on the
Premises; permit any odor, smell, or vapor to escape from the Premises to other
portions of the Building; or permit or suffer the Premises to be occupied or
used in a manner offensive or objectionable to Landlord or other occupants of
the Building by reason of noise, odors, and/or vibrations, or interfere in any
way with other tenants or those having business therein. With the exception of
the creation and use of a small food preparation area with a microwave oven,
toaster, refrigerator and other small appliances used only by Tenant and its
employees on an incidental basis in connection with Tenant’s normal office
operations and which shall be kept and maintained by Tenant in a neat and clean,
odor free condition, no cooking shall be done or permitted by Tenant on the
Premises, nor shall the Premises be used for the storage of merchandise, for
washing clothes, for lodging, or for any improper, objectionable, or immoral
purposes. Tenant shall not

 

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use or keep in or on the Premises or in the Building any kerosene, gasoline, or
inflammable or combustible fluid or material, or use any method of heating or
air conditioning other than that supplied by Landlord. Tenant shall close and
securely lock the windows, transoms, and doors of the Premises as may be
appropriate to maintain adequate security and observe strict care not to leave
windows open when it rains. Particular attention shall be paid to keeping doors
locked where access is not controlled by an attendant or security system. Tenant
shall exercise extraordinary care and caution that all water faucets or water
apparatus are entirely shut off before Tenant or Tenant’s employees leave the
Building and that all electricity, gas, or air conditioning shall likewise be
carefully shut off, so as to prevent waste or damage. For any default or
carelessness Tenant shall make good all injuries sustained by Landlord or other
tenants or occupants of the Building.

K. Floor Coverings. Tenant shall not install linoleum, tile, carpet, or other
floor covering so that the same shall be affixed to the floor of the Premises in
any manner except as approved by Landlord. The expense of repairing any damage
resulting from a violation of this rule or removal of any floor covering
installed by Tenant or his contractors, employees, or invitees shall be borne by
Tenant.

L. Deliveries and Messenger Services. No furniture, packages, supplies,
equipment, or merchandise will be received in the Building or carried up or down
in the elevators, except between such hours and in such elevators as shall be
designated by Landlord. At Landlord’s election, messengers providing pick up and
delivery services shall not be allowed to make deliveries or pickups directly to
or from the Premises. In such event, all such deliveries and pickups shall be
made to the Building office.

M. Access Refused. On Saturdays, Sundays and legal holidays, and on other days
between the hours of 6:00 p.m. and 5:00 a.m., access to the Building, or to the
halls, corridors, elevators, or stairways in the Building, or to the Premises,
may be refused unless the person seeking access complies with the requirements
of Landlord’s security personnel. Landlord shall in no case be liable for
damages for any error with regard to the admission to or exclusion from the
Building of any person. In case of invasion, mob, riot, public excitement, or
other commotion, Landlord reserves the right to prevent access to the Building
during the continuance of the same by closing the doors or otherwise.

N. Soliciting on Premises. Canvassing, peddling, soliciting and the distribution
of handbills or any other written materials in the Building are prohibited, and
Tenant shall cooperate to prevent the same.

O. Landlord’s Employees. The requirements of Tenant will be attended to only
upon application at the office of the Building. Employees of Landlord shall not
perform any work or do anything outside of their regular duties unless under
special instructions from the Landlord, and no employee will admit any person
(Tenant or otherwise) to any office without specific instructions from Landlord.

P. Bicycles and Pets. No bicycles, motorized scooters or pets (except for guide
dogs for the blind) shall be permitted in the Premises, the Building or in the
approaches or entranceways thereto. All bicycles shall be parked only in such
bicycle racks as may be provided by Landlord from time to time in no event shall
Landlord have any responsibility with respect to any theft or vandalism thereto.

Q. Vending Machines. No vending machines or similar machines of any description
shall be installed, maintained, or operated upon the Premises without the
written consent of the Landlord.

 

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R. No Smoking; Loitering. Pursuant to San Francisco Ordinance and Building
policy, smoking is not permitted anywhere in or about The Building, including
but not limited to, any premises, common areas, and the approaches and
entranceways surrounding the Building. Tenant and its employees shall not
congregate or loiter at or near the entrances to the Building.

S. Building Name and Address. Landlord shall have the right, exercisable without
notice and without liability to Tenant, to change the name and the street
address of the Building.

T. Trash. Tenant shall store all of its trash and garbage within its Premises.
No material shall be placed in the trash boxes or receptacles if such material
is of such nature that it may not be removed or disposed of in the ordinary and
customary manner of removing or disposing of trash and garbage in the City and
County of San Francisco. All garbage and refuse removal and disposal shall be
made only through entrances and elevators provided for such purposes and at such
times as Landlord shall designate. Landlord shall have the right to charge
Tenant for the removal of any trash and garbage in excess of that resulting from
normal office use.

U. Floor Warden. Each tenant shall identify among its employees a floor warden
who will attend Building safety meetings scheduled by Landlord from time to time
and who will educate the remainder of the tenant’s employees as to the Building
fire and safety procedures and the requirements of Title 19 of the California
Administrative Code.

V. Amendments. Landlord reserves the right to expand, modify or otherwise change
or amend these Rules and Regulations from time to time with or without notice to
Tenant, and such changed rules and regulations shall be complied with by all
tenants in the Building. Each tenant may obtain a copy of the most current Rules
and Regulations at the Building Office.

 

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