Exhibit 10.16

LEASE

BETWEEN

LJ GATEWAY OFFICE LLC

AND

ZAFGEN, INC.

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LEASE

(Short Form)

THIS LEASE is made as of October 2, 2015, by and between LJ GATEWAY OFFICE LLC,
a Delaware limited liability company, hereafter called “Landlord,” and ZAFGEN,
INC., a Delaware corporation, hereafter called “Tenant.”

ARTICLE 1. BASIC LEASE PROVISIONS

Each reference in this Lease to the “Basic Lease Provisions” shall mean and
refer to the following collective terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease.

 

1. Tenant’s Trade Name: N/A

 

2. Premises:                       Suite No. L103

Address of Building:    9191 Towne Centre Drive, San Diego, CA 92122

Project Description:     La Jolla Gateway

(The Premises are more particularly described in Section 2.1).

 

3. Use of Premises: General office and for no other use.

 

4. Estimated Commencement Date: October 1, 2015, as more fully described in
Section 3.1 of this Lease

 

5. Lease Term: 48 months, plus such additional days as may be required to cause
this Lease to expire on the final day of the calendar month.

 

6. Basic Rent:

 

Months of Term

or Period

  

Monthly Rate Per Rentable

Square Foot

  

Monthly Basic Rent (rounded to

the nearest dollar)

1 to 12

   $2.60    $8,005.00

13 to 24

   $2.72    $8,375.00

25 to 36

   $2.84    $8,744.00

37 to 48

   $2.97    $9,145.00

 

7. Property Tax Base: The Property Taxes per rentable square foot incurred by
Landlord and attributable to the twelve month period ending June 30, 2016 (the
“Base Year”).

Project Cost Base: The Project Costs per rentable square foot incurred by
Landlord and attributable to the Base Year.

Expense Recovery Period: Every twelve month period during the Term (or portion
thereof during the first and last Lease years) ending June 30.

 

8. Floor Area of Premises: approximately 3,079 rentable square feet (Landlord
and Tenant stipulate and agree that the Floor Area of Premises is correct).

Floor Area of Building: approximately 181,317 rentable square feet

 

9. Security Deposit: $18,619.00

 

10. Broker(s): Irvine Realty Company (“Landlord’s Broker”) is the agent of
Landlord exclusively and Colliers International/San Diego—La Jolla Village Dr
(“Tenant’s Broker”) is the agent of Tenant exclusively.

 

11. Parking: a minimum of 10, but no more than 20 parking passes in accordance
with the provisions set forth in Exhibit F to this Lease.

 

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12. Address for Payments and Notices:

 

LANDLORD    TENANT

Payment Address:

 

LJ GATEWAY OFFICE LLC

PO Box #846785

Los Angeles, CA 90084-6785

  

ZAFGEN, INC.

9191 Towne Centre Drive, Suite L103

San Diego, CA 92122

Attn: Kevin Dushney

Notice Address:   

The Irvine Company LLC

9191 Towne Center Drive,

Suite 125 San Diego, CA, 92122

Attn: Building Manager

 

with a copy of notices to:

  

THE IRVINE COMPANY LLC

550 Newport Center Drive

Newport Beach, CA 92660

Attn: Senior Vice President, Property Operations

          Irvine Office Properties

  

 

13. List of Lease Exhibits (all exhibits, riders and addenda attached to this
Lease are hereby incorporated into and made a part of this Lease):

 

Exhibit A

   Description of Premises

Exhibit B

   Operating Expenses

Exhibit C

   Utilities and Services

Exhibit D

   Tenant’s Insurance

Exhibit E

   Rules and Regulations

Exhibit F

   Parking

Exhibit G

   Additional Provisions

Exhibit X

   Work Letter

 

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ARTICLE 2. PREMISES

2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant leases from Landlord
the Premises shown in Exhibit A (the “Premises”), containing approximately the
floor area set forth in Item 8 of the Basic Lease Provisions (the “Floor Area”).
The Premises are located in the building identified in Item 2 of the Basic Lease
Provisions (the “Building”), which is a portion of the project described in
Item 2 (the “Project”).

2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that neither Landlord nor any
representative of Landlord has made any representation or warranty with respect
to the Premises, the Building or the Project or the suitability or fitness of
either for any purpose, except as set forth in this Lease. The taking of
possession or use of the Premises by Tenant for any purpose other than
construction shall conclusively establish that the Premises and the Building
were in satisfactory condition and in conformity with the provisions of this
Lease in all respects. Nothing contained in this Section 2.2 shall affect the
commencement of the Term or the obligation of Tenant to pay rent.

ARTICLE 3. TERM

3.1. GENERAL. The term of this Lease (“Term”) shall commence (“Commencement
Date”) on the earlier of (a) the date the Premises are deemed “ready for
occupancy” (as hereinafter defined) and possession thereof is delivered to
Tenant, or (b) the date Tenant commences its business activities within the
Premises and shall expire (“Expiration Date”) at the end of the period set forth
in Item 5 of the Basic Lease Provisions. Promptly following request by Landlord,
the parties shall memorialize on a form provided by Landlord (the “Commencement
Memorandum”) the actual Commencement Date and the Expiration Date of this Lease;
should Tenant fail to execute and return the Commencement Memorandum to Landlord
within 5 business days (or provide specific written objections thereto within
that period), then Landlord’s determination of the Commencement and Expiration
Dates as set forth in the Commencement Memorandum shall be conclusive. The
Premises shall be deemed “ready for occupancy” if and when Landlord, to the
extent applicable, (i) has substantially completed all the work required to be
completed by Landlord pursuant to the Work Letter (if any) attached to this
Lease but for minor punch list matters, and has obtained the requisite
governmental approvals for Tenant’s occupancy in connection with such work,
(ii) has provided reasonable access to the Premises for Tenant so that the
Premises may be used without unreasonable interference, and (iii) has put into
operation all building services required to be provided by Landlord under this
Lease and essential for the use of the Premises by Tenant.

3.2. DELAY IN POSSESSION. If Landlord, for any reason whatsoever, cannot deliver
possession of the Premises to Tenant on or before the Commencement Date set
forth in Item 4 of the Basic Lease Provisions, this Lease shall not be void or
voidable nor shall Landlord be liable to Tenant for any resulting loss or
damage. However, Tenant shall not be liable for any rent until the Commencement
Date occurs as provided in Section 3.1 above, except that if Landlord’s failure
to substantially complete all work required of Landlord pursuant to Section
3.1(i) above is attributable to any action or inaction by Tenant (including
without limitation any Tenant Delay described in the Work Letter, if any,
attached to this Lease), then the Premises shall be deemed ready for occupancy,
and Landlord shall be entitled to full performance by Tenant (including the
payment of rent), as of the date Landlord would have been able to substantially
complete such work and deliver the Premises to Tenant but for Tenant’s delay(s).

ARTICLE 4. RENT AND OPERATING EXPENSES

4.1. BASIC RENT. From and after the Commencement Date, Tenant shall pay to
Landlord without deduction or offset a Basic Rent for the Premises in the total
amount shown (including subsequent adjustments, if any) in Item 6 of the Basic
Lease Provisions (the “Basic Rent”). If the Commencement Date is other than the
first day of a calendar month, any rental adjustment shown in Item 6 shall be
deemed to occur on the first day of the next calendar month following the
specified monthly anniversary of the Commencement Date. The Basic Rent shall be
due and payable in advance commencing on the Commencement Date and continuing
thereafter on the first day of each successive calendar month of the Term, as
prorated for any partial month. No demand, notice or invoice shall be required.
An installment in the amount of 1 full month’s Basic Rent at the initial rate
specified in Item 6 of the Basic Lease Provisions shall be delivered to Landlord
concurrently with Tenant’s execution of this Lease.

4.2. OPERATING EXPENSES. Tenant shall pay Tenant’s Share of Operating Expenses
in accordance with Exhibit B of this Lease.

        4.3. SECURITY DEPOSIT. Concurrently with Tenant’s delivery of this
Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 of
the Basic Lease Provisions (the “Security Deposit”), to be held by Landlord as
security for the full and faithful performance of Tenant’s obligations under
this Lease, to pay any rental sums, including without limitation such additional
rent as may be owing under any provision hereof, and to maintain the Premises as
required by this Lease. Upon any breach of the foregoing obligations by Tenant
beyond all applicable notice and cure periods, Landlord may apply all or part of
the Security Deposit as full or partial compensation. If any portion of the
Security Deposit is so applied, Tenant shall within 5 days after written demand
by Landlord deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its original amount. Landlord shall not be required to keep
this Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on the Security Deposit. In no event may Tenant utilize all
or any portion of the Security Deposit as a payment toward any rental sum due
under this Lease. Any unapplied balance of the Security Deposit shall be
returned to Tenant or, at Landlord’s option, to the last assignee of Tenant’s
interest in this Lease within 30 days following the termination of this Lease
and Tenant’s vacation of the Premises. Tenant hereby waives the provisions of
Section 1950.7 of the California Civil Code, or any similar or successor laws
now or hereafter in effect.

ARTICLE 5. USES

5.1. USE. Tenant shall use the Premises only for the purposes stated in Item 3
of the Basic Lease Provisions and for no other use whatsoever. Tenant shall not
do or permit anything to be done in or about the Premises which will in any way
interfere with the rights or quiet enjoyment of other occupants of the Building
or the Project, or use or allow the Premises to be used for any unlawful
purpose, nor shall Tenant permit any nuisance in the Premises or the Project.
Tenant shall comply at its expense with all present and future laws, ordinances
and requirements of all governmental

 

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authorities that pertain to Tenant or its use of the Premises, and with all
energy usage reporting requirements of Landlord. As of the date of this Lease,
there has been no inspection of the Building and Project by a Certified Access
Specialist as referenced in Section 1938 of the California Civil Code.

5.2. SIGNS. Landlord, at Landlord’s sole cost, shall affix and maintain a sign
(restricted solely to Tenant’s name as set forth herein or such other name as
Landlord may consent to in writing) adjacent to the entry door of the Premises,
together with a directory strip listing Tenant’s name as set forth herein in the
lobby directory of the Building and a directional sign within the corridor. Any
subsequent changes to that initial signage shall be at Tenant’s sole expense.
Tenant shall not place or allow to be placed any other sign, decoration or
advertising matter of any kind that is visible from the exterior of the
Premises.

5.3 HAZARDOUS MATERIALS. Tenant shall not generate, handle, store or dispose of
hazardous or toxic materials (as such materials may be identified in any
federal, state or local law or regulation) in the Premises or Project without
the prior written consent of Landlord. Tenant acknowledges that it has read,
understands and, if applicable, shall comply with the provisions of Exhibit H to
this Lease, if that Exhibit is attached.

ARTICLE 6. LANDLORD SERVICES

6.1. UTILITIES AND SERVICES. Landlord and Tenant shall be responsible to furnish
those utilities and services to the Premises to the extent provided in Exhibit
C, subject to the conditions and payment obligations and standards set forth in
this Lease. Landlord’s failure to furnish, or any interruption, diminishment or
termination of, services due to the application of laws, the failure of any
equipment, the performance of repairs, improvements or alterations, utility
interruptions or the occurrence of an event of force majeure (defined in
Section 20.8) shall not render Landlord liable to Tenant, constitute a
constructive eviction of Tenant, give rise to an abatement of Rent, nor relieve
Tenant from the obligation to fulfill any covenant or agreement. However, if the
Premises, or a material portion of the Premises, are made untenantable for a
period in excess of 5 consecutive business days as a result of a service
interruption or repair that is reasonably within the control of Landlord to
correct and through no fault of Tenant and for reasons other than as
contemplated in Article 11, then Tenant, as its sole remedy, shall be entitled
to receive an abatement of Rent payable hereunder during the period beginning on
the 6th consecutive business day of the service interruption or repair and
ending on the day the service has been restored.

6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term, Landlord shall
operate all Common Areas within the Building and the Project. The term “Common
Areas” shall mean all areas within the Building, Project and other buildings in
the Project which are not held for exclusive use by persons entitled to occupy
space.

6.3. USE OF COMMON AREAS. The occupancy by Tenant of the Premises shall include
the use of the Common Areas in common with Landlord and with all others for
whose convenience and use the Common Areas may be provided by Landlord, subject,
however, to compliance with Rules and Regulations described in Article 17 below.
Landlord shall at all times during the Term have exclusive control of the Common
Areas, and may restrain or permit any use or occupancy. Landlord may temporarily
close any portion of the Common Areas for repairs, remodeling and/or
alterations, to prevent a public dedication or the accrual of prescriptive
rights, or for any other reasonable purpose. Landlord’s temporary closure of any
portion of the Common Areas for such purposes shall not deprive Tenant of
reasonable access to the Premises.

ARTICLE 7. REPAIRS AND MAINTENANCE

7.1. TENANT’S MAINTENANCE AND REPAIR. Subject to Articles 11 and 12, Tenant at
its sole expense shall make all repairs necessary to keep the Premises and all
improvements and fixtures therein in good condition and repair, excepting
ordinary wear and tear. Tenant’s maintenance obligation shall include without
limitation all appliances, interior glass, doors, door closures, hardware,
fixtures, electrical, plumbing, fire extinguisher equipment and other equipment
installed in the Premises, together with any supplemental HVAC equipment
servicing only the Premises. Should Landlord or its management agent agree to
make a repair on behalf of Tenant and at Tenant’s request, Tenant shall promptly
reimburse Landlord as additional rent for all reasonable costs incurred
(including the standard supervision fee) upon submission of an invoice.

        7.2. LANDLORD’S MAINTENANCE AND REPAIR. Subject to Articles 11 and 12,
Landlord shall provide service, maintenance and repair with respect to the
heating, ventilating and air conditioning (“HVAC”) equipment of the Building
(exclusive of any supplemental HVAC equipment servicing only the Premises) and
shall maintain in good repair the Common Areas, roof, foundations, footings, the
exterior surfaces of the exterior walls of the Building (including exterior
glass), and the structural, electrical, mechanical and plumbing systems of the
Building (including elevators, if any, serving the Building), except to the
extent provided in Section 7.1 above. Notwithstanding any provision of the
California Civil Code or any similar or successor laws to the contrary, Tenant
understands that it shall not make repairs at Landlord’s expense or by rental
offset. Except as provided in Section 11.1 and Article 12 below, there shall be
no abatement of rent and no liability of Landlord by reason of any injury to or
interference with Tenant’s business arising from the making of any repairs,
alterations or improvements to any portion of the Building, including repairs to
the Premises, nor shall any related activity by Landlord constitute an actual or
constructive eviction. Tenant hereby waives any and all rights under and
benefits of subsection 1 of Section 1932, and Sections 1941 and 1942 of the
California Civil Code, or any similar or successor laws now or hereafter in
effect.

7.3. ALTERATIONS. Except for cosmetic alteration projects that do not exceed
$10,000.00 during each calendar year and that do not affect the structural,
electrical or mechanical components or systems of the Building, are not visible
from the exterior of the Premises, do not change the basic floor plan of the
Premises, and utilize only Landlord’s building standard materials (which work
shall require notice to Landlord but not Landlord’s consent), Tenant shall make
no alterations, additions, decorations or improvements (collectively referred to
as “ Alterations”) to the Premises without the prior written consent of
Landlord, it being understood that Tenant’s installation of audio visual
equipment and wiring shall not be considered Alterations. Landlord may impose,
as a condition to its consent, any requirements that Landlord in its discretion
may deem reasonable or desirable. Tenant shall use Landlord’s designated
mechanical and electrical contractors, obtain all required permits for the
Alterations and shall perform the work in compliance with all applicable laws,
regulations and ordinances with contractors reasonably acceptable to Landlord.
Except for cosmetic Alterations not requiring a permit, Landlord shall be
entitled to a supervision fee in the amount of 5% of the cost of the
Alterations.

 

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Landlord may elect to cause its architect to review Tenant’s architectural
plans, and the reasonable cost of that review shall be reimbursed by Tenant.
Should the Alterations proposed by Tenant and consented to by Landlord change
the floor plan of the Premises, then Tenant shall, at its expense, furnish
Landlord with as-built drawings and CAD disks compatible with Landlord’s
systems. Unless Landlord otherwise agrees in writing, all Alterations affixed to
the Premises, including without limitation all Tenant Improvements constructed
pursuant to the Work Letter (except as otherwise provided in the Work Letter),
but excluding moveable trade fixtures and furniture, shall become the property
of Landlord and shall be surrendered with the Premises at the end of the Term,
except that Landlord may, by notice to Tenant given at least 30 days prior to
the Expiration Date, require Tenant to remove by the Expiration Date, or sooner
termination date of this Lease, all or any Alterations (including without
limitation all telephone and data cabling) installed either by Tenant or by
Landlord at Tenant’s request (collectively, the “Required Removables”). In
connection with its removal of Required Removables, Tenant shall repair any
damage to the Premises arising from that removal and shall restore the affected
area to its pre-existing condition, reasonable wear and tear excepted.

7.4. MECHANIC’S LIENS. Tenant shall keep the Premises free from any liens
arising out of any work performed, materials furnished, or obligations incurred
by or for Tenant. In the event that Tenant shall not, within 15 days following
the imposition of any lien, cause the lien to be released of record by payment
or posting of a proper bond in accordance with California Civil Code Section
8424 or any successor statute, Landlord shall have, in addition to all other
available remedies, the right to cause the lien to be released by any means it
deems proper, including payment of or defense against the claim giving rise to
the lien. All expenses so incurred by Landlord shall be reimbursed by Tenant
promptly following Landlord’s demand. Tenant shall give Landlord no less than 20
days’ prior notice in writing before commencing construction of any kind on the
Premises.

7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable times and with
reasonable prior verbal notice, except in emergencies or to provide Building
services, have the right to enter the Premises to inspect them, to supply
services in accordance with this Lease, to make repairs and renovations as
reasonably deemed necessary by Landlord, and to submit the Premises to
prospective or actual purchasers or encumbrance holders (or, during the final
twelve months of the Term or when an uncured Default exists, to prospective
tenants), all without being deemed to have caused an eviction of Tenant and
without abatement of rent except as provided elsewhere in this Lease.

ARTICLE 8. SPACE PLANNING AND SUBSTITUTION

[Intentionally omitted.]

ARTICLE 9. ASSIGNMENT AND SUBLETTING

9.1. RIGHTS OF PARTIES. Tenant shall not, directly or indirectly, assign,
sublease, transfer or encumber any interest in this Lease or allow any third
party to use any portion of the Premises (collectively or individually, a
“Transfer”) without the prior written consent of Landlord, which consent shall
not be unreasonably withheld if Landlord does not exercise its recapture rights.
Tenant agrees that it is not unreasonable for Landlord to withhold consent to a
Transfer to a proposed assignee or subtenant who is an existing tenant or
occupant of the Building or Project or to a prospective tenant with whom
Landlord or Landlord’s affiliate has been actively negotiating. Within 30 days
after receipt of executed copies of the transfer documentation and such other
information as Landlord may request, Landlord shall either: (a) consent to the
Transfer by execution of a consent agreement in a form reasonably designated by
Landlord; (b) refuse to consent to the Transfer; or (c) recapture the portion of
the Premises that Tenant is proposing to Transfer. Tenant hereby waives the
provisions of Section 1995.310 of the California Civil Code, or any similar or
successor Laws, now or hereinafter in effect, and all other remedies, including,
without limitation, any right at law or equity to terminate this Lease, on its
own behalf and, to the extent permitted under all applicable laws, on behalf of
the proposed transferee. In no event shall any Transfer release or relieve
Tenant from any obligation under this Lease, as same may be amended. Tenant
shall pay Landlord a review fee of $1,000.00 for Landlord’s review of any
requested Transfer. Tenant shall pay Landlord, as additional Rent, 50% of all
rent and other consideration which Tenant receives as a result of a Transfer
that is in excess of the Rent payable to Landlord for the portion of the
Premises and Term covered by the Transfer. For purposes herein, such transfer
costs shall include all reasonable and customary expenses directly incurred by
Tenant attributable to the Transfer, including brokerage fees, legal fees,
construction costs, and Landlord’s review fee. If Tenant is in Default, Landlord
may require that all sublease payments be made directly to Landlord, in which
case Tenant shall receive a credit against Rent in the amount of Tenant’s share
of payments received by Landlord.

9.2. PERMITTED TRANSFER. Notwithstanding the foregoing, Tenant may assign this
Lease to a successor to Tenant by merger, consolidation or the purchase of
substantially all of Tenant’s assets, or assign this Lease or sublet all or a
portion of the Premises to an Affiliate (defined below), without the consent of
Landlord, provided that all of the following conditions are satisfied (a
“Permitted Transfer”): (i) Tenant is not then in Default hereunder; (ii) Tenant
gives Landlord written notice prior to such Permitted Transfer; and (iii) the
successor entity resulting from any merger or consolidation of Tenant or the
sale of all or substantially all of the assets of Tenant, has a net worth at the
time of the Permitted Transfer that is at least equal to the net worth of Tenant
immediately before the Permitted Transfer. “Affiliate” shall mean an entity
controlled by, controlling or under common control with Tenant.

ARTICLE 10. INSURANCE AND INDEMNITY

10.1. TENANT’S INSURANCE. Tenant, at its sole cost and expense, shall provide
and maintain in effect the insurance described in Exhibit D. Evidence of that
insurance must be delivered to Landlord prior to the Commencement Date.

10.2. TENANT’S INDEMNITY. To the fullest extent permitted by law, but subject to
Section 10.4 below, Tenant shall defend, indemnify and hold harmless Landlord
and Landlord’s agents, employees, lenders, and affiliates, from and against any
and all negligence, claims, liabilities, damages, costs or expenses arising
either before or after the Commencement Date which arise from or are caused by
Tenant’s use or occupancy of the Premises, the Building or the Common Areas of
the Project, or from the conduct of Tenant’s business, or from any activity,
work, or thing done, permitted or suffered by Tenant or Tenant’s agents,
employees, subtenants, vendors, contractors, invitees or licensees in or about
the Premises, the Building or the Common Areas of the Project, or from any
Default in the performance of any obligation on Tenant’s part to be performed
under this Lease, or from any act, omission or negligence on the part of

 

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Tenant or Tenant’s agents, employees, subtenants, vendors, contractors, invitees
or licensees. Landlord may, at its option, require Tenant to assume Landlord’s
defense in any action covered by this Section 10.2 through counsel reasonably
satisfactory to Landlord. Notwithstanding the foregoing, Tenant shall not be
obligated to indemnify Landlord against any liability or expense to the extent
it is ultimately determined that the same was caused by the sole negligence or
willful misconduct of Landlord, its agents, contractors or employees.

10.3. LANDLORD’S NONLIABILITY. Landlord shall not be liable to Tenant, its
employees, agents and invitees, and Tenant hereby waives all claims against
Landlord, its employees and agents for loss of or damage to any property, or any
injury to any person, resulting from any condition including, but not limited
to, acts or omissions (criminal or otherwise) of third parties and/or other
tenants of the Project, or their agents, employees or invitees, fire, explosion,
falling plaster, steam, gas, electricity, water or rain which may leak or flow
from or into any part of the Premises or from the breakage, leakage, obstruction
or other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, electrical works or other fixtures in the Building, whether the
damage or injury results from conditions arising in the Premises or in other
portions of the Building, regardless of the negligence of Landlord, its agents
or any and all affiliates of Landlord in connection with the foregoing.
Notwithstanding anything to the contrary contained in this Lease, in no event
shall Landlord be liable for Tenant’s loss or interruption of business or income
(including without limitation, Tenant’s consequential damages, lost profits or
opportunity costs), or for interference with light or other similar intangible
interests.

10.4. WAIVER OF SUBROGATION. Landlord and Tenant each hereby waives all rights
of recovery against the other on account of loss and damage occasioned to the
property of such waiving party to the extent that the waiving party is entitled
to proceeds for such loss and damage under any property insurance policies
carried or otherwise required to be carried by this Lease; provided however,
that the foregoing waiver shall not apply to the extent of Tenant’s obligation
to pay deductibles under any such policies and this Lease.

ARTICLE 11. DAMAGE OR DESTRUCTION

11.1. RESTORATION.

(a) If the Building of which the Premises are a part is damaged as the result of
an event of casualty, then subject to the provisions below, Landlord shall
repair that damage as soon as reasonably possible unless Landlord reasonably
determines that: (i) the Premises have been materially damaged and there is less
than 1 year of the Term remaining on the date of the casualty; (ii) any
Mortgagee (defined in Section 13.1) requires that the insurance proceeds be
applied to the payment of the mortgage debt; or (iii) proceeds necessary to pay
the full cost of the repair are not available from Landlord’s insurance,
including without limitation earthquake insurance. Should Landlord elect not to
repair the damage for one of the preceding reasons, Landlord shall so notify
Tenant in the “Casualty Notice” (as defined below), and this Lease shall
terminate as of the date of delivery of that notice.

(b) As soon as reasonably practicable following the casualty event but not later
than 60 days thereafter, Landlord shall notify Tenant in writing (“Casualty
Notice”) of Landlord’s election, if applicable, to terminate this Lease. If this
Lease is not so terminated, the Casualty Notice shall set forth the anticipated
period for repairing the casualty damage. If the anticipated repair period
exceeds 270 days and if the damage is so extensive as to reasonably prevent
Tenant’s substantial use and enjoyment of the Premises, then either party may
elect to terminate this Lease by written notice to the other within 10 days
following delivery of the Casualty Notice.

(c) In the event that neither Landlord nor Tenant terminates this Lease pursuant
to Section 11.1(b), Landlord shall repair all material damage to the Premises or
the Building as soon as reasonably possible and this Lease shall continue in
effect for the remainder of the Term. Upon notice from Landlord, Tenant shall
assign or endorse over to Landlord (or to any party designated by Landlord) all
property insurance proceeds payable to Tenant under Tenant’s insurance with
respect to any Alterations. Within 15 days of demand, Tenant shall also pay
Landlord for any additional excess costs that are determined during the
performance of the repairs to such Alterations.

(d) From and after the casualty event, the rental to be paid under this Lease
shall be abated in the same proportion that the Floor Area of the Premises that
is rendered unusable by the damage from time to time bears to the total Floor
Area of the Premises.

11.2. LEASE GOVERNS. Tenant agrees that the provisions of this Lease, including
without limitation Section 11.1, shall govern any damage or destruction and
shall accordingly supersede any contrary statute or rule of law.

ARTICLE 12. EMINENT DOMAIN

        Either party may terminate this Lease if any material part of the
Premises is taken or condemned for any public or quasi-public use under Law, by
eminent domain or private purchase in lieu thereof (a “Taking”). Landlord shall
also have the right to terminate this Lease if there is a Taking of any portion
of the Building or Project which would have a material adverse effect on
Landlord’s ability to profitably operate the remainder of the Building. The
termination shall be effective as of the effective date of any order granting
possession to, or vesting legal title in, the condemning authority. All
compensation awarded for a Taking shall be the property of Landlord. Tenant
agrees that the provisions of this Lease shall govern any Taking and shall
accordingly supersede any contrary statute or rule of law.

ARTICLE 13. SUBORDINATION; ESTOPPEL CERTIFICATE

13.1. SUBORDINATION. Tenant accepts this Lease subject and subordinate to any
mortgage(s), deed(s) of trust, ground lease(s) or other lien(s) now or
subsequently arising upon the Premises, the Building or the Project, and to
renewals, modifications, refinancings and extensions thereof (collectively
referred to as a “Mortgage”). The party having the benefit of a Mortgage shall
be referred to as a “Mortgagee.” This clause shall be self-operative, but upon
request from a Mortgagee, Tenant shall execute a commercially reasonable
subordination and attornment agreement in favor of the Mortgagee, provided such
agreement provides a non-disturbance covenant benefitting Tenant. Alternatively,
a Mortgagee shall have the right at any time to subordinate its Mortgage to this
Lease. Upon request, Tenant, without charge, shall attorn to any successor to
Landlord’s interest in this Lease in the event of a foreclosure of any mortgage.
Tenant agrees that any purchaser at a foreclosure sale or lender taking title
under a deed in lieu of foreclosure shall not

 

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be responsible for any act or omission of a prior landlord, shall not be subject
to any offsets or defenses Tenant may have against a prior landlord, and shall
not be liable for the return of the Security Deposit not actually recovered by
such purchaser nor bound by any rent paid in advance of the calendar month in
which the transfer of title occurred; provided that the foregoing shall not
release the applicable prior landlord from any liability for those obligations.
Tenant acknowledges that Landlord’s Mortgagees and their successors-in-interest
are intended third party beneficiaries of this Section 13.1.

13.2. ESTOPPEL CERTIFICATE. Tenant shall, within 10 days after receipt of a
written request from Landlord, execute and deliver a commercially reasonable
estoppel certificate in favor of those parties as are reasonably requested by
Landlord (including a Mortgagee or a prospective purchaser of the Building or
the Project).

ARTICLE 14. DEFAULTS AND REMEDIES

14.1. TENANT’S DEFAULTS. In addition to any other event of default set forth in
this Lease, the occurrence of any one or more of the following events shall
constitute a “Default” by Tenant:

(a) The failure by Tenant to make any payment of Rent required to be made by
Tenant, as and when due, where the failure continues for a period of 3 business
days after written notice from Landlord to Tenant. The term “Rent” as used in
this Lease shall be deemed to mean the Basic Rent and all other sums required to
be paid by Tenant to Landlord pursuant to the terms of this Lease.

(b) Except where a specific time period is otherwise set forth for Tenant’s
performance in this Lease (in which event the failure to perform by Tenant
within such time period shall be a Default), the failure or inability by Tenant
to observe or perform any of the covenants or provisions of this Lease to be
observed or performed by Tenant, other than as specified in any other subsection
of this Section 14.1, where the failure continues for a period of 30 days after
written notice from Landlord to Tenant.

The notice periods provided herein are in lieu of, and not in addition to, any
notice periods provided by law, and Landlord shall not be required to give any
additional notice under California Code of Civil Procedure Section 1161, or any
successor statute, in order to be entitled to commence an unlawful detainer
proceeding.

14.2. LANDLORD’S REMEDIES.

(a) Upon the occurrence of any Default by Tenant, then in addition to any other
remedies available to Landlord, Landlord may exercise the following remedies:

(i) Landlord may terminate Tenant’s right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Premises to Landlord. Such termination
shall not affect any accrued obligations of Tenant under this Lease. Upon
termination, Landlord shall have the right to reenter the Premises and remove
all persons and property. Landlord shall also be entitled to recover from
Tenant:

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

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

(3) The worth at the time of award of the amount by which the unpaid Rent for
the balance of the Term after the time of award exceeds the amount of such loss
that Tenant proves could be reasonably avoided;

(4) Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result from
Tenant’s default, including, but not limited to, the cost of recovering
possession of the Premises, commissions and other expenses of reletting,
including necessary repair, renovation, improvement and alteration of the
Premises for a new tenant, reasonable attorneys’ fees, and any other reasonable
costs; and

(5) At Landlord’s election, all other amounts in addition to or in lieu of the
foregoing as may be permitted by law. Any sum, other than Basic Rent, shall be
computed on the basis of the average monthly amount accruing during the 24 month
period immediately prior to Default, except that if it becomes necessary to
compute such rental before the 24 month period has occurred, then the
computation shall be on the basis of the average monthly amount during the
shorter period. As used in subparagraphs (1) and (2) above, the “worth at the
time of award” shall be computed by allowing interest at the rate of 10% per
annum. As used in subparagraph (3) above, the “worth at the time of award” shall
be computed by discounting the amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus 1%.

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

(b) The various rights and remedies reserved to Landlord in this Lease or
otherwise shall be cumulative and, except as otherwise provided by California
law, Landlord may pursue any or all of its rights and remedies at the same time.
No delay or omission of Landlord to exercise any right or remedy shall be
construed as a waiver of the right or remedy or of any breach or Default by
Tenant. The acceptance by Landlord of rent shall not be a (i) waiver of any
preceding breach or Default by Tenant of any provision of this Lease, other than
the failure of Tenant to pay the particular rent accepted, regardless of
Landlord’s knowledge of the preceding breach or Default at the time of
acceptance of rent, or (ii) a waiver of Landlord’s right to exercise any remedy
available to Landlord by virtue of the breach or Default. No payment by Tenant
or receipt by Landlord of a lesser amount than the rent required by this Lease
shall be deemed to be other than a partial payment on account of the earliest
due stipulated rent, nor shall any endorsement or statement on any

 

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check or letter be deemed an accord and satisfaction and Landlord shall accept
the check or payment without prejudice to Landlord’s right to recover the
balance of the rent or pursue any other remedy available to it. Tenant hereby
waives any right of redemption or relief from forfeiture under California Code
of Civil Procedure Section 1174 or 1179, or under any successor statute, in the
event this Lease is terminated by reason of any Default by Tenant. No act or
thing done by Landlord or Landlord’s agents during the Term shall be deemed an
acceptance of a surrender of the Premises, and no agreement to accept a
surrender shall be valid unless in writing and signed by Landlord.

14.3. LATE PAYMENTS. Any Rent due under this Lease that is not paid to Landlord
within 5 days of the date when due shall bear interest at the maximum rate
permitted by law from the date due until fully paid and if any Rent due from
Tenant shall not be received by Landlord or Landlord’s designee within 5 days
after the date due, then Tenant shall pay to Landlord, in addition to the
interest, a late charge for each delinquent payment equal to the greater of
(i) 5% of that delinquent payment or (ii) $100.00.

14.4. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in default in the
performance of any obligation under this Lease unless and until it has failed to
perform the obligation within 30 days after written notice by Tenant to Landlord
specifying in reasonable detail the nature and extent of the failure; provided,
however, that if the nature of Landlord’s obligation is such that more than 30
days are required for its performance, then Landlord shall not be deemed to be
in default if it commences performance within the 30 day period and thereafter
diligently pursues the cure to completion.

14.5. EXPENSES AND LEGAL FEES. Should either Landlord or Tenant bring any action
in connection with this Lease, the prevailing party shall be entitled to recover
as a part of the action its reasonable attorneys’ fees, and all other reasonable
costs. The prevailing party for the purpose of this paragraph shall be
determined by the trier of the facts.

14.6. WAIVER OF JURY TRIAL/JUDICIAL REFERENCE.

(a) LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF AND HAS HAD THE
ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHT TO TRIAL BY JURY, AND
EACH PARTY DOES HEREBY EXPRESSLY AND KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER
PARTY HERETO AGAINST THE OTHER (AND/OR AGAINST ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, OR SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY MATTERS
WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, TENANT’S USE
OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE.

(b) In the event that the jury waiver provisions of Section 14.6(a) are not
enforceable under California law, then, unless otherwise agreed to by the
parties, the provisions of this Section 14.6(b) shall apply. Landlord and Tenant
agree that any disputes arising in connection with this Lease (including but not
limited to a determination of any and all of the issues in such dispute, whether
of fact or of law) shall be resolved (and a decision shall be rendered) by way
of a general reference as provided for in Part 2, Title 8, Chapter 6 (§§ 638 et.
seq.) of the California Code of Civil Procedure, or any successor California
statute governing resolution of disputes by a court appointed referee. Nothing
within this Section 14.6 shall apply to an unlawful detainer action.

14.7. SATISFACTION OF JUDGMENT. The obligations of Landlord do not constitute
the personal obligations of the individual partners, trustees, directors,
officers, members or shareholders of Landlord or its constituent partners or
members. Should Tenant recover a money judgment against Landlord, such judgment
shall be satisfied only from the interest of Landlord in the Project and out of
the rent or other income from such property receivable by Landlord, and no
action for any deficiency may be sought or obtained by Tenant.

ARTICLE 15. END OF TERM

15.1. HOLDING OVER. If Tenant holds over for any period after the Expiration
Date (or earlier termination of the Term), such tenancy shall constitute a
tenancy at sufferance only and possession shall be subject to all of the terms
of this Lease, except that the monthly rental shall be 150% of the total monthly
rental for the month immediately preceding the date of termination. The
acceptance by Landlord of monthly hold-over rental in a lesser amount shall not
constitute a waiver of Landlord’s right to recover the full amount due unless
otherwise agreed in writing by Landlord. If Tenant fails to surrender the
Premises upon the expiration of this Lease despite demand to do so by Landlord,
Tenant shall indemnify and hold Landlord harmless from all loss or liability,
including without limitation, any claims made by any succeeding tenant relating
to such failure to surrender. The foregoing provisions of this Section 15.1 are
in addition to and do not affect Landlord’s right of re-entry or any other
rights of Landlord under this Lease or at law.

        15.2. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Upon the Expiration
Date or upon any earlier termination of this Lease, Tenant shall quit and
surrender possession of the Premises to Landlord in as good order, condition and
repair as when received or as hereafter may be improved by Landlord or Tenant,
reasonable wear and tear and repairs which are Landlord’s obligation excepted,
and shall remove or fund to Landlord the cost of removing all wallpapering,
voice and/or data transmission cabling installed by or for Tenant and Required
Removables, together with all personal property and debris, and shall perform
all work required under Section 7.3 of this Lease. If Tenant shall fail to
comply with the provisions of this Section 15.2, Landlord may effect the removal
and/or make any repairs, and the cost to Landlord shall be additional rent
payable by Tenant upon demand.

ARTICLE 16. PAYMENTS AND NOTICES

All sums payable by Tenant to Landlord shall be paid, without deduction or
offset, in lawful money of the United States to Landlord at its address set
forth in Item 12 of the Basic Lease Provisions, or at any other place as
Landlord may designate in writing. Unless this Lease expressly provides
otherwise, all payments shall be due and payable within 5 business days after
written demand. All payments requiring proration shall be prorated on the basis
of the number of days in the pertinent calendar month or year, as applicable.
Any notice, election, demand, consent or approval to be given or other document
to be delivered by either party to the other may be delivered to the other
party, at the address set forth in Item 12 of the Basic Lease Provisions, by
personal service or by any courier or “overnight” express mailing service.
Either party may, by written notice to the other, served in the manner provided
in this Article, designate a

 

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different address. The refusal to accept delivery of a notice, or the inability
to deliver the notice (whether due to a change of address for which notice was
not duly given or other good reason), shall be deemed delivery and receipt of
the notice as of the date of attempted delivery.

ARTICLE 17. RULES AND REGULATIONS

Tenant agrees to comply with the Rules and Regulations attached as Exhibit E,
and any reasonable and nondiscriminatory amendments, modifications and/or
additions as may be adopted by Landlord from time to time.

ARTICLE 18. BROKER’S COMMISSION

The parties recognize as the broker(s) who negotiated this Lease the firm(s)
whose name(s) is (are) stated in Item 10 of the Basic Lease Provisions, and
agree that Landlord shall be responsible for the payment of brokerage
commissions to those broker(s) unless otherwise provided in this Lease. Tenant
agrees to indemnify and hold Landlord harmless from any cost, expense or
liability (including reasonable attorneys’ fees) for any compensation,
commissions or charges claimed by any other real estate broker or agent employed
or claiming to represent or to have been employed by Tenant in connection with
the negotiation of this Lease.

ARTICLE 19. TRANSFER OF LANDLORD’S INTEREST

Landlord shall have the right to transfer and assign, in whole or in part, all
of its ownership interest, rights and obligations in the Building, Project or
Lease, including the Security Deposit, and upon transfer Landlord shall be
released from any further obligations hereunder, and Tenant agrees to look
solely to the successor in interest of Landlord for the performance of such
obligations and the return of any Security Deposit.

ARTICLE 20. INTERPRETATION

20.1. NUMBER. Whenever the context of this Lease requires, the words “Landlord”
and “Tenant” shall include the plural as well as the singular.

20.2. JOINT AND SEVERAL LIABILITY. If more than one person or entity is named as
Tenant, the obligations imposed upon each shall be joint and several and the act
of or notice from, or notice or refund to, or the signature of, any one or more
of them shall be binding on all of them with respect to the tenancy of this
Lease, including, but not limited to, any renewal, extension, termination or
modification of this Lease.

20.3. SUCCESSORS. The expiration of the Term, whether by lapse of time,
termination or otherwise, shall not relieve either party of any obligations
which accrued prior to or which may continue to accrue after the expiration or
termination of this Lease.

20.4. TIME OF ESSENCE. Time is of the essence with respect to the performance of
every provision of this Lease in which time of performance is a factor.

20.5. CONTROLLING LAW/VENUE. This Lease shall be governed by and interpreted in
accordance with the laws of the State of California.

20.6. SEVERABILITY. If any term or provision of this Lease, the deletion of
which would not adversely affect the receipt of any material benefit by either
party or the deletion of which is consented to by the party adversely affected,
shall be held invalid or unenforceable to any extent, the remainder of this
Lease shall not be affected and each term and provision of this Lease shall be
valid and enforceable to the fullest extent permitted by law.

20.7. WAIVER. One or more waivers by Landlord or Tenant of any breach of any
term, covenant or condition contained in this Lease shall not be a waiver of any
subsequent breach of the same or any other term, covenant or condition. Consent
to any act by one of the parties shall not be deemed to render unnecessary the
obtaining of that party’s consent to any subsequent act. No breach of this Lease
shall be deemed to have been waived unless the waiver is in a writing signed by
the waiving party.

        20.8. INABILITY TO PERFORM. In the event that either party shall be
delayed or hindered in or prevented from the performance of any work or in
performing any act required under this Lease by reason of any cause beyond the
reasonable control of that party, then the performance of the work or the doing
of the act shall be excused for the period of the delay and the time for
performance shall be extended for a period equivalent to the period of the
delay. The provisions of this Section 20.8 shall not operate to excuse Tenant
from the prompt payment of Rent.

20.9. ENTIRE AGREEMENT. This Lease constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings related to the
Premises. This Lease may be modified only by a written agreement signed by
Landlord and Tenant.

20.10. QUIET ENJOYMENT. Upon the observance and performance of all the
covenants, terms and conditions on Tenant’s part to be observed and performed,
and subject to the other provisions of this Lease, Tenant shall have the right
of quiet enjoyment and use of the Premises for the Term without hindrance or
interruption by Landlord or any other person claiming by or through Landlord.

20.11. SURVIVAL. All covenants of Landlord or Tenant which reasonably would be
intended to survive the expiration or sooner termination of this Lease,
including without limitation any warranty or indemnity hereunder, shall so
survive and continue to be binding upon and inure to the benefit of the
respective parties and their successors and assigns.

 

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ARTICLE 21. EXECUTION

21.1. COUNTERPARTS; DIGITAL SIGNATURES. This Lease may be executed in one or
more counterparts, each of which shall constitute an original and all of which
shall be one and the same agreement. The parties agree to accept a digital image
(including but not limited to an image in the form of a PDF, JPEG, GIF file, or
other e-signature) of this Lease, if applicable, reflecting the execution of one
or both of the parties, as a true and correct original.

21.2. CORPORATE AND PARTNERSHIP AUTHORITY. Tenant represents and warrants to
Landlord, and agrees, that each individual executing this Lease on behalf of
Tenant is authorized to do so on behalf of Tenant.

21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of this Lease to
Tenant shall be for examination purposes only, and shall not constitute an offer
to or option for Tenant to lease the Premises unless and until Landlord has
executed and delivered this Lease to Tenant.

21.4. BROKER DISCLOSURE. By the execution of this Lease, each of Landlord and
Tenant hereby acknowledge and confirm (a) receipt of a copy of a Disclosure
Regarding Real Estate Agency Relationship conforming to the requirements of
California Civil Code 2079.16, and (b) the agency relationships specified in
Section 10 of the Basic Lease Provisions, which acknowledgement and confirmation
is expressly made for the benefit of Tenant’s Broker identified in Section 10 of
the Basic Lease Provisions. If there is no Tenant’s Broker so identified in
Section 10 of the Basic Lease Provisions, then such acknowledgement and
confirmation is expressly made for the benefit of Landlord’s Broker. By the
execution of this Lease, Landlord and Tenant are executing the confirmation of
the agency relationships set forth in Section 10 of the Basic Lease Provisions.

ARTICLE 22. MISCELLANEOUS

22.1. MORTGAGEE PROTECTION. No act or failure to act on the part of Landlord
which would otherwise entitle Tenant to be relieved of its obligations hereunder
or to terminate this Lease shall result in such a release or termination unless
(a) Tenant has given notice by registered or certified mail to any Mortgagee of
a Mortgage covering the Building whose address has been furnished to Tenant and
(b) such Mortgagee is afforded a reasonable opportunity to cure the default by
Landlord. Tenant shall comply with any written directions by any Mortgagee to
pay Rent due hereunder directly to such Mortgagee without determining whether a
default exists under such Mortgagee’s Mortgage.

22.2. SDN LIST. Tenant hereby represents and warrants that neither Tenant nor
any officer, director, employee, partner, member or other principal of Tenant
(collectively, “Tenant Parties”) is listed as a Specially Designated National
and Blocked Person (“SDN”) on the list of such persons and entities issued by
the U.S. Treasury Office of Foreign Assets Control (OFAC). In the event Tenant
or any Tenant Party is or becomes listed as an SDN, Tenant shall be deemed in
breach of this Lease and Landlord shall have the right to terminate this Lease
immediately upon written notice to Tenant.

 

LANDLORD:    TENANT: LJ GATEWAY OFFICE LLC,    ZAFGEN, INC., a Delaware limited
liability company    a Delaware corporation By   

    /s/ Steven M. Case

   By   

    /s/ Thomas Hughes

   Steven M. case       Thomas Hughes    EVP       CEO    Office Properties   
   By   

    /s/ Pamela Van Nort

   By   

    /s/ Patricia Allen

  

Pamela Van Nort

Vice President, Operations

Office Properties

     

Patricia Allen

CFO

 

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EXHIBIT A

DESCRIPTION OF PREMISES

9191 Towne Centre Drive

Suite L103

 

LOGO [g138931imgb1.jpg]

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EXHIBIT B

Operating Expenses and Taxes

(Base Year)

(a) Tenant shall pay Landlord, as additional rent, for Tenant’s Share of the
amount, if any, by which “ Project Costs” (defined below) for each Expense
Recovery Period during the Term exceed Project Costs for the Project Cost Base
and the amount, if any, by which “Property Taxes” (defined below) for each
Expense Recovery Period during the Term exceed Property Taxes for the Property
Tax Base. Property Taxes and Project Costs are mutually exclusive and may be
billed separately or in combination as determined by Landlord. “Tenant’s Share”
shall mean that portion of any Operating Expenses determined by multiplying the
cost of such item by a fraction, the numerator of which is the Floor Area and
the denominator of which is the total rentable square footage, as determined
from time to time by Landlord, of (i) the Floor Area of the Building as defined
in Item 8 of the Basic Lease Provisions, for expenses determined by Landlord to
benefit or relate substantially to the Building rather than the entire Project,
or (ii) all or some of the buildings in the Project, for expenses determined by
Landlord to benefit or relate substantially to all or some of the buildings in
the Project rather than any specific building. Tenant acknowledges Landlord’s
rights to make changes or additions to the Building and/or Project from time to
time, in which event the total rentable square footage within the Building
and/or Project may be adjusted. For convenience of reference, Property Taxes and
Project Costs may sometimes be collectively referred to as “Operating Expenses.”
Notwithstanding the foregoing, Landlord hereby agrees that Tenant shall not be
responsible for Tenant’s Share of Operating Expense excess accruing during the
12 month period commencing as of the Commencement Date.

(b) Commencing prior to the start of the first full “Expense Recovery Period” of
the Lease (as defined in Item 7 of the Basic Lease Provisions) following the
Base Year, and prior to the start of each full or partial Expense Recovery
Period thereafter, Landlord shall give Tenant a written estimate of the amount
of Tenant’s Share of Project Costs and Property Taxes for the Expense Recovery
Period or portion thereof. Tenant shall pay the estimated amounts to Landlord in
equal monthly installments, in advance, with Basic Rent. Landlord may from time
to time change the Expense Recovery Period to reflect a calendar year or a new
fiscal year of Landlord, as applicable, in which event Tenant’s share of
Operating Expenses shall be equitably prorated for any partial year. From time
to time during an Expense Recovery Period, Landlord may revise the estimate
based on increases in any of the Operating Expenses.

(c) Within 180 days after the end of each Expense Recovery Period, Landlord
shall furnish to Tenant a statement setting forth the actual or prorated
Property Taxes and Project Costs attributable to that period, and the parties
shall within 30 days thereafter make any payment or allowance necessary to
adjust Tenant’s estimated payments, if any, to Tenant’s actual Tenant’s Share as
shown by the annual statement. If actual Property Taxes or Project Costs
allocable to Tenant during any Expense Recovery Period are less than the
Property Tax Base or the Project Cost Base, respectively, Landlord shall not be
required to pay that differential to Tenant, although Landlord shall refund any
applicable estimated payments collected from Tenant. Should Tenant fail to
object in writing to Landlord’s determination of actual Operating Expenses
within 60 days following delivery of Landlord’s expense statement, Landlord’s
determination of actual Operating Expenses for the applicable Expense Recovery
Period shall be conclusive and binding on Tenant.

(d) Even though the Lease has terminated and the Tenant has vacated the
Premises, when the final determination is made of Tenant’s share of Property
Taxes and Project Costs for the Expense Recovery Period in which the Lease
terminates, Tenant shall upon notice pay the entire increase due over the
estimated expenses paid; conversely, any overpayment made in the event expenses
decrease shall be rebated by Landlord to Tenant.

                (e) The term “Project Costs” shall include all charges and
expenses pertaining to the operation, management, maintenance and repair of the
Building and the Project, together with all appurtenant Common Areas (as defined
in Section 6.2), and shall include the following charges by way of illustration
but not limitation: water and sewer charges; insurance premiums and deductibles
and/or reasonable premium equivalents and deductible equivalents should Landlord
elect to self-insure any risk that Landlord is authorized to insure hereunder;
license, permit, and inspection fees; heat; light; power; janitorial services;
the cost of equipping, staffing and operating an on-site and/or off-site
management office for the Building and Project; all labor and labor-related
costs for personnel applicable to the Building and Project, including both
Landlord’s personnel and outside personnel; a commercially reasonable Landlord
overhead/management fee; reasonable fees for consulting services; access
control/security costs, inclusive of the reasonable cost of improvements made to
enhance access control systems and procedures; repairs; air conditioning;
supplies; materials; equipment; tools; tenant services; programs instituted to
comply with transportation management requirements; any expense incurred
pursuant to Sections 6.1, 6.2, 7.2, and Exhibits C and F below; costs incurred
(capital or otherwise) on a regular recurring basis every 3 or more years for
normal maintenance projects (e.g., parking lot slurry coat or replacement of
lobby, corridor and elevator cab carpets and coverings); and the amortized cost
of capital improvements (as distinguished from replacement parts or components
installed in the ordinary course of business) which are intended to reduce other
operating costs or increases thereof, or upgrade Building and/or Project
security, or which are required to bring the Building and/or Project into
compliance with applicable laws and building codes. Landlord shall amortize the
cost of capital improvements on a straight-line basis over the lesser of the
Payback Period (as defined below) or the useful life of the capital improvement
as reasonably determined by Landlord. Any amortized Project Costs item may
include, at Landlord’s option, an actual or imputed interest rate that Landlord
would reasonably be required to pay to finance the cost of the item, applied on
the unamortized balance. “Payback Period” shall mean the reasonably estimated
period of time that it takes for the cost savings, if any, resulting from a
capital improvement item to equal the total cost of the capital improvement. It
is understood that Project Costs shall include competitive charges for direct
services provided by any subsidiary or division of Landlord. If any Project
Costs are applicable to one or more buildings or properties in addition to the
Building, then that cost shall be equitably prorated and apportioned among the
Building and such other buildings or properties. The term “Property Taxes” as
used herein shall include the following: (i) all real estate taxes or personal
property taxes, as such property taxes may be increased from time to time due to
a reassessment or otherwise; and (ii) other taxes, charges and assessments which
are levied with respect to this Lease or to the Building and/or the Project, and
any improvements, fixtures and equipment and other property of Landlord located
in the Building and/or the Project, except that general net income and franchise
taxes imposed against Landlord shall be excluded; and (iii) any tax, surcharge
or assessment which shall be levied in addition to or in lieu of real estate or
personal property taxes; and (iv) costs and expenses incurred in contesting the
amount or validity of any Property Tax by appropriate proceedings. A copy of
Landlord’s unaudited statement of expenses shall be made available to Tenant
upon request. The Project Costs, inclusive of those for the Base Year, shall be
extrapolated by Landlord to reflect at least 95% occupancy of the rentable area
of the Building.

 

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(f) Notwithstanding the foregoing, Operating Expenses shall exclude the
following: (1) Any ground lease rental;

(2) Costs incurred by Landlord with respect to goods and services (including
utilities sold and supplied to tenants and occupants of the Building) to the
extent that Landlord is reimbursed for such costs other than through the
Operating Expense pass-through provisions of such tenants’ lease;

(3) Costs incurred by Landlord for repairs, replacements and/or restoration to
or of the Building to the extent that Landlord is reimbursed by insurance or
condemnation proceeds or by tenants (other than through Operating Expense
pass-throughs), warrantors or other third persons;

(4) Costs, including permit, license and inspection costs, incurred with respect
to the installation of tenant improvements made for other tenants in the
Building or incurred in renovating or otherwise improving, decorating, painting
or redecorating vacant space for tenants or other occupants of the Building;

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

(6) Attorneys’ fees and other costs and expenses incurred in connection with
negotiations or disputes with present or prospective tenants or other occupants
of the Building, except those attorneys’ fees and other costs and expenses
incurred in connection with negotiations, disputes or claims relating to items
of Operating Expenses, enforcement of rules and regulations of the Building and
such other matters relating to the maintenance of standards required of Landlord
under this Lease;

(7) Capital expenditures as determined in accordance with generally accepted
accounting principles, consistently applied, and as generally practiced in the
real estate industry (“GAAP”), except as otherwise provided above;

(8) Brokers commissions, finders’ fees, attorneys’ fees, entertainment and
travel expenses and other costs incurred by Landlord in leasing or attempting to
lease space in the Building;

(9) Expenses in connection with services or other benefits which are not offered
to Tenant or for which Tenant is charged for directly but which are provided to
another tenant or occupant of the Building;

(10) Costs incurred by Landlord due to the violation by Landlord of any law,
code, regulation, or ordinance;

(11) Overhead and profit increments paid to subsidiaries or affiliates of
Landlord for services provided to the Building to the extent the same exceeds
the costs that would generally be charged for such services if rendered on a
competitive basis (based upon a standard of similar office buildings in the
general market area of the Premises) by unaffiliated third parties capable of
providing such service;

(12) Interest on debt or amortization on any mortgage or mortgages encumbering
the Building;

(13) Landlord’s general corporate overhead, except as it relates to the specific
management, operation, repair, replacement and maintenance of the Building or
Project;

(14) Costs of installing the initial landscaping and the initial sculpture,
paintings and objects of art for the Building and Project;

(15) Advertising expenditures;

(16) Any bad debt loss, rent loss, or reserves for bad debts or rent loss;

(17) Costs associated with the operation of the business of the partnership or
entity which constitutes the Landlord, as the same are distinguished from the
costs of the operation, management, repair, replacement and maintenance of the
Project, including partnership accounting and legal matters, costs of defending
any lawsuits with any mortgagee (except as the actions of Tenant may be in
issue), costs of selling, syndicating, financing, mortgaging or hypothecating
any of Landlord’s interest in the Project, and costs incurred in connection with
any disputes between Landlord and its employees, between Landlord and Project
management, or between Landlord and other tenants or occupants;

(18) The wages and benefits of any employee who does not devote substantially
all of his or her employed time to the Project unless such wages and benefits
are prorated to reflect time spent on operating and managing the Project
vis-à-vis time spent on matters unrelated to operating and managing the Project;
provided that in no event shall Project Costs include wages and/or benefits
attributable to personnel above the level of portfolio property manager or chief
engineer;

(19) Costs incurred by Landlord for improvements or replacements (including
structural additions), repairs, equipment and tools which are of a “capital”
nature and/or which are considered “capital” improvements or replacements under
GAAP, except to the extent included in Project Costs pursuant to the definition
above or by other express terms of this Lease; and

(20) Legal fees and costs, settlements, judgments or awards paid or incurred
because of disputes between Landlord and other tenants or prospective occupants
or prospective tenants/occupants or providers of goods and services to the
Project.

 

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EXHIBIT C

UTILITIES AND SERVICES

The following standards for utilities and services shall be in effect at the
Building. Landlord reserves the right to adopt nondiscriminatory modifications
and additions to these standards. In the case of any conflict between these
standards and the Lease, the Lease shall be controlling. Subject to all of the
provisions of the Lease, the following shall apply:

1. Landlord shall make available to the Premises during the hours of 8:00 a.m.
to 6:00 p.m., Monday through Friday, and from 9:00 a.m. to 1:00 p.m. on Saturday
(“Building Hours”), generally recognized national holidays excepted, reasonable
HVAC services. Subject to the provisions set forth below, Landlord shall also
furnish the Building with elevator service (if applicable), reasonable amounts
of electric current for normal lighting by Landlord’s standard overhead
fluorescent and incandescent fixtures and for the operation of office equipment
consistent in type and quantity with that utilized by typical office tenants of
the Building and Project, and water for lavatory purposes. Tenant will not,
without the prior written consent of Landlord, connect any apparatus, machine or
device with water pipes or electric current (except through existing electrical
outlets in the Premises) for the purpose of using electric current or water.

2. Upon written request from Tenant delivered to Landlord prior to the period
for which service is requested, but during normal business hours, Landlord will
provide any of the foregoing building services to Tenant at such times when such
services are not otherwise available. Tenant agrees to pay Landlord for those
after-hour services at rates that Landlord may establish from time to time. If
Tenant requires electric current in excess of that which Landlord is obligated
to furnish under this Exhibit C, Tenant shall first obtain the consent of
Landlord, and Landlord may cause an electric current meter to be installed in
the Premises to measure the amount of electric current consumed. The cost of
installation, maintenance and repair of the meter shall be paid for by Tenant,
and Tenant shall reimburse Landlord promptly upon demand for all electric
current consumed for any special power use as shown by the meter.

3. Landlord shall furnish water for drinking, personal hygiene and lavatory
purposes only.

4. In the event that any utility service to the Premises is separately metered
or billed to Tenant, Tenant shall pay all charges for that utility service to
the Premises and the cost of furnishing the utility to tenant suites shall be
excluded from the Operating Expenses as to which reimbursement from Tenant is
required in the Lease.

5. Landlord shall provide janitorial services 5 days per week, equivalent to
that furnished in comparable buildings, and window washing as reasonably
required; provided, however, that Tenant shall pay for any additional or unusual
janitorial services.

6. Tenant shall have access to the Building 24 hours per day, 7 days per week,
52 weeks per year; provided that Landlord may install access control systems as
it deems advisable for the Building. Landlord may impose a reasonable charge for
access control cards and/or keys issued to Tenant.

7. The costs of operating, maintaining and repairing any supplemental air
conditioning unit serving only the Premises shall be borne solely by Tenant.
Such installation shall be subject to Landlord’s prior written approval, at
Tenant’s sole expense and shall include installation of a separate meter for the
operation of the unit. Landlord may require Tenant to remove at Lease expiration
any such unit installed by or for Tenant and to repair any resulting damage to
the Premises or Building.

 

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EXHIBIT D

TENANT’S INSURANCE

The following requirements for Tenant’s insurance shall be in effect during the
Term, and Tenant shall also cause any subtenant to comply with the requirements.
Landlord reserves the right to adopt reasonable nondiscriminatory modifications
and additions to these requirements.

1. Tenant shall maintain, at its sole cost and expense, during the entire Term:
(i) commercial general liability insurance with respect to the Premises and the
operations of Tenant in, on or about the Premises, on a policy form that is at
least as broad as Insurance Service Office (ISO) CGL 00 01 (if alcoholic
beverages are sold on the Premises, liquor liability shall be explicitly
covered), which policy(ies) shall be written on an “occurrence” basis and for
not less than $2,000,000 combined single limit per occurrence for bodily injury,
death, and property damage liability; (ii) workers’ compensation insurance
coverage as required by law, together with employers’ liability insurance
coverage of at least $1,000,000 each accident and each disease; (iii) with
respect to Alterations constructed by Tenant under this Lease, builder’s risk
insurance, in an amount equal to the replacement cost of the work; and
(iv) insurance against fire, vandalism, malicious mischief and such other
additional perils as may be included in a standard “special form” policy,
insuring all Alterations, trade fixtures, furnishings, equipment and items of
personal property in the Premises, in an amount equal to not less than 90% of
their replacement cost (with replacement cost endorsement), which policy shall
also include business interruption coverage in an amount sufficient to cover 1
year of loss. In no event shall the limits of any policy be considered as
limiting the liability of Tenant under this Lease.

2. All policies of insurance required to be carried by Tenant pursuant to this
Exhibit D shall be written by insurance companies authorized to do business in
the State of California and with a general policyholder rating of not less than
“A -” and financial rating of not less than “VIII” in the most current Best’s
Insurance Report. The deductible or other retained limit under any policy
carried by Tenant shall be commercially reasonable, and Tenant shall be
responsible for payment of such deductible or retained limit with waiver of
subrogation in favor of Landlord. Any insurance required of Tenant may be
furnished by Tenant under any blanket policy carried by it or under a separate
policy. A certificate of insurance, certifying that the policy has been issued,
provides the coverage required by this Exhibit and contains the required
provisions, together with endorsements acceptable to Landlord evidencing the
waiver of subrogation and additional insured provisions required below, shall be
delivered to Landlord prior to the date Tenant is given the right of possession
of the Premises. Proper evidence of the renewal of any insurance coverage shall
also be delivered to Landlord not less than thirty (30) days prior to the
expiration of the coverage. In the event of a loss covered by any policy under
which Landlord is an additional insured, Landlord shall be entitled to review a
copy of such policy.

3. Tenant’s commercial general liability insurance shall contain a provision
that the policy shall be primary to and noncontributory with any policies
carried by Landlord, together with a provision including Landlord and any other
parties in interest designated by Landlord as additional insureds. Tenant’s
policies described in Subsections 1 (ii), (iii) and (iv) above shall each
contain a waiver by the insurer of any right to subrogation against Landlord,
its agents, employees, contractors and representatives. Tenant also waives its
right of recovery for any deductible or retained limit under same policies
enumerated above. Tenant will not cancel or change the coverage provided by the
policy without first giving Landlord 30 days prior written notice. Tenant shall
also name Landlord as an additional insured on any excess or umbrella liability
insurance policy carried by Tenant.

NOTICE TO TENANT: IN ACCORDANCE WITH THE TERMS OF THIS LEASE, TENANT MUST
PROVIDE EVIDENCE OF THE REQUIRED INSURANCE TO LANDLORD’S MANAGEMENT AGENT PRIOR
TO BEING AFFORDED ACCESS TO THE PREMISES.

 

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EXHIBIT E

RULES AND REGULATIONS

The following Rules and Regulations shall be in effect at the Building. Landlord
reserves the right to adopt reasonable nondiscriminatory modifications and
additions at any time. In the case of any conflict between these regulations and
the Lease, the Lease shall be controlling.

1. The sidewalks, halls, passages, elevators, stairways, and other common areas
shall not be obstructed by Tenant or used by it for storage, for depositing
items, or for any purpose other than for ingress to and egress from the
Premises. Should Tenant have access to any balcony or patio area, Tenant shall
not place any furniture other personal property in such area without the prior
written approval of Landlord.

2. Neither Tenant nor any employee or contractor of Tenant shall go upon the
roof of the Building without the prior written consent of Landlord.

3. Tenant shall, at its expense, be required to utilize the third party
contractor designated by Landlord for the Building to provide any telephone
wiring services from the minimum point of entry of the telephone cable in the
Building to the Premises.

4. No antenna or satellite dish shall be installed by Tenant without the prior
written agreement of Landlord.

5. The sashes, sash doors, windows, glass lights, solar film and/or screen, 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. If Landlord, by a
notice in writing to Tenant, shall object to any curtain, blind, tinting, shade
or screen attached to, or hung in, or used in connection with, any window or
door of the Premises, the use of that curtain, blind, tinting, shade or screen
shall be immediately discontinued and removed by Tenant. No awnings shall be
permitted on any part of the Premises.

6. The installation and location of any unusually heavy equipment in the
Premises, including without limitation file storage units, safes and electronic
data processing equipment, shall require the prior written approval of Landlord.
The moving of large or heavy objects shall occur only between those hours as may
be designated by, and only upon previous notice to, Landlord. No freight,
furniture or bulky matter of any description shall be received into or moved out
of the lobby of the Building or carried in any elevator other than the freight
elevator (if available) designated by Landlord unless approved in writing by
Landlord.

7. Any pipes or tubing used by Tenant to transmit water to an appliance or
device in the Premises must be made of copper or stainless steel, and in no
event shall plastic tubing be used for that purpose.

8. Tenant shall not place any lock(s) on any door in the Premises or Building
without Landlord’s prior written consent, which consent shall not be
unreasonably withheld. Upon the termination of its tenancy, Tenant shall deliver
to Landlord all the keys to offices, rooms and toilet rooms and all access cards
which shall have been furnished to Tenant or which Tenant shall have had made.

9. Tenant shall not install equipment requiring electrical or air conditioning
service in excess of that to be provided by Landlord under the Lease without
prior written approval from Landlord.

10. Tenant shall not use space heaters within the Premises.

11. Tenant shall not do or permit anything to be done in the Premises, or bring
or keep anything in the Premises, which shall in any way increase the insurance
on the Building, or on the property kept in the Building, or interfere with the
rights of other tenants, or conflict with any government rule or regulation.

12. Tenant shall not use or keep any foul or noxious gas or substance in the
Premises.

13. Tenant shall not permit 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 with other tenants.

14. Tenant shall not permit any pets or animals in or about the Building. Bona
fide service animals are permitted provided such service animals are
pre-approved by Landlord, remain under the direct control of the individual they
serve at all times, and do not disturb or threaten others.

15. Neither Tenant nor its employees, agents, contractors, invitees or licensees
shall bring any firearm, whether loaded or unloaded, into the Project at any
time.

16. Smoking, including via personal vaporizers or other electronic cigarettes,
anywhere within the Premises or Building is strictly prohibited, and Landlord
may enforce such prohibition pursuant to Landlord’s leasehold remedies. Smoking
is permitted outside the Building and within the project only in areas
designated by Landlord.

17. Tenant shall not install an aquarium of any size in the Premises unless
otherwise approved by Landlord.

18. Tenant shall not utilize any name selected by Landlord from time to time for
the Building and/or the Project as any part of Tenant’s corporate or trade name.
Landlord shall have the right to change the name, number or designation of the
Building or Project without liability to Tenant. Tenant shall not use any
picture of the Building in its advertising, stationery or in any other manner.

19. Tenant shall, upon request by Landlord, supply Landlord with the names and
telephone numbers of personnel designated by Tenant to be contacted on an
after-hours basis should circumstances warrant.

20. Landlord may from time to time grant tenants individual and temporary
variances from these Rules, provided that any variance does not have a material
adverse effect on the use and enjoyment of the Premises by Tenant.

21. Fitness Center Rules. Tenant shall cause its employees (whether members or
prospective members of the Fitness Center) to comply with the following Fitness
Center rules and regulations (subject to change from time to time as Landlord
may solely determine):

 

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(a) Membership in the Fitness Center is open to the tenants of Landlord or its
affiliates only. No guests will be permitted to use the Fitness Center without
the prior written approval of Landlord or Landlord’s representative.

(b) Fitness Center users are not allowed to be in the Fitness Center other than
the hours designated by Landlord from time to time. Landlord shall have the
right to alter the hours of use of the Fitness Center, at Landlord’s sole
discretion.

(c) All Fitness Center users must execute Landlord’s Waiver of Liability prior
to use of the Fitness Center and agree to all terms and conditions outlined
therein.

(d) Individual membership and guest keycards to the Fitness Center shall not be
shared and shall only be used by the individual to whom such keycard was issued.
Failure to abide by this rule may result in immediate termination of such
Fitness Center user’s right to use the Fitness Center.

(e) All Fitness Center users and approved guests must have a pre-authorized
keycard to enter the Fitness Center. A pre-authorized keycard shall not be
issued to a prospective Fitness Center user until receipt by Landlord of
Landlord’s initial fee, if any, for use of the Fitness Center by such Fitness
Center user(s).

(f) Use of the Fitness Center is a privilege and not a right. Failure to follow
gym rules or to act inappropriately while using the facilities shall result in
termination of Tenant’s Fitness Center privileges.

 

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EXHIBIT F

PARKING

The following parking regulations shall be in effect at the Building In the case
of any conflict between these regulations and the Lease, the Lease shall be
controlling.

1. Landlord agrees to maintain, or cause to be maintained, an automobile parking
area (“Parking Area”) in reasonable proximity to the Building for the benefit
and use of the visitors and patrons and, except as otherwise provided, employees
of Tenant, and other tenants and occupants of the Building. Landlord shall have
the right to determine the nature and extent of the automobile Parking Area, and
of making such changes to the Parking Area from time to time which in its
opinion are desirable. Landlord shall not be liable for any damage to motor
vehicles of visitors or employees, for any loss of property from within those
motor vehicles, or for any injury to Tenant, its visitors or employees, unless
ultimately determined to be caused by the sole active negligence or willful
misconduct of Landlord. Landlord shall also have the right to establish, and
from time to time amend, and to enforce against all users of the Parking Area
all reasonable rules and regulations (including the designation of areas for
employee parking) as Landlord may deem necessary and advisable for the proper
and efficient operation and maintenance of the Parking Area.

2. Landlord may, if it deems advisable in its sole discretion, charge for
parking and may establish for the Parking Area a system or systems of permit
parking for Tenant, its employees and its visitors. In no event shall Tenant or
its employees park in reserved stalls leased to other tenants or in stalls
within designated visitor parking zones, nor shall Tenant or its employees
utilize more than the number of Parking Passes (defined below) allotted in this
Lease to Tenant. Tenant shall, upon request of Landlord from time to time,
furnish Landlord with a list of its employees’ names and of Tenant’s and its
employees’ vehicle license numbers. Parking access devices, if applicable, shall
not be transferable. Landlord shall provide the initial 20 access devices at no
charge, provided that Landlord may impose a reasonable fee for additional access
devices and a replacement charge for devices which are lost or stolen. Each
access device shall be returned to Landlord promptly following the Expiration
Date or sooner termination of this Lease.

3. Washing, waxing, cleaning or servicing of vehicles, or the parking of any
vehicle on an overnight basis, in the Parking Area (other than emergency
services) by any parker or his or her agents or employees is prohibited unless
otherwise authorized by Landlord.

4. It is understood that the employees of Tenant and the other tenants of
Landlord within the Building and Project shall not be permitted to park their
automobiles in the portions of the Parking Area which may from time to time be
designated for patrons of the Building and/or Project. Tenant shall be obligated
to purchase from Landlord for the Term of this Lease, minimum number of parking
passes but no more than the maximum parking passes set forth in Item 11 of the
Basic Lease Provisions (the “Parking Passes”) for unreserved parking, at the
rate of $54.00 per month, per unreserved parking pass utilized. Tenant shall be
entitled to increase or decrease the amount of Parking Passes with 30 days prior
written notice to Landlord so long as the number of Parking Passes utilized are
not below the minimum or exceed the maximum allotted. Any additional parking in
excess of the maximum amount of Parking Passes shall be subject to availability
and shall be at Landlord’s then visitor rates. Should any monthly parking charge
not be paid within 5 days following the date due, then a late charge shall be
payable by Tenant equal to the greater of (i) 5% of the delinquent installment
or (ii) $100.00, which late charge shall be separate and in addition to any late
charge that may be assessed pursuant to Section 14.3 of the Lease for other than
delinquent monthly parking charges.

5. Landlord shall be entitled to pass on to Tenant its proportionate share of
any charges or parking surcharge or transportation management costs levied by
any governmental agency and Tenant shall cooperate in any voluntary or mandated
transportation management programs.

6. Tenant shall not assign or sublet any of the Parking Passes, either
voluntarily or by operation of law, without the prior written consent of
Landlord, except in connection with an authorized assignment of this Lease or
subletting of the Premises.

 

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EXHIBIT G

ADDITIONAL PROVISIONS

 

1. RIGHT TO EXTEND. Provided that Tenant is not in Default under any provision
of this Lease at the time of exercise of the extension right granted herein, and
provided further that Tenant is occupying the entire Premises and has not
assigned or sublet any of its interest in this Lease (except in connection with
a Permitted Transfer of this Lease to an Affiliate as described in Section 9.2
hereof), Tenant may extend the Term of this Lease for one period of 60 months.
Tenant shall exercise its right to extend the Term by and only by delivering to
Landlord, not less than 9 months nor more than 12 months prior to the expiration
date of the Term, Tenant’s written notice of its irrevocable commitment to
extend (the “Commitment Notice”). Should Tenant fail timely to deliver the
Commitment Notice, then this extension right shall thereupon lapse and be of no
further force or effect.

The Basic Rent payable under the Lease during the extension of the Term shall be
at the prevailing market rental rate (including periodic adjustments) for
comparable and similarly improved Class A office space in the University Towne
Centre submarket of San Diego as of the commencement of the extension period, as
determined by Landlord, based on a reasonable extrapolation of Landlord’s
then-current leasing rates. In no event shall the monthly Basic Rent payable for
the extension period be less than the Basic Rent payable during the month
immediately preceding the commencement of such extension period.

Promptly following receipt of the Commitment Notice, Landlord shall prepare an
appropriate amendment to the Lease memorializing the extension of the Term in
accordance with the foregoing, and Tenant shall duly execute and return same to
Landlord within 15 days. If Tenant fails timely to do so, then Landlord, at its
sole discretion, may either enforce its rights under this Section or, upon
written notice to Tenant, elect to cause Tenant’s right to extend to be
extinguished, in which event this Lease shall terminate as of the originally
scheduled date of expiration. Should Landlord elect the latter, then this Lease
shall terminate upon the scheduled date of expiration and Tenant’s rights under
this paragraph shall be of no further force or effect.

Any attempt to assign or transfer any right or interest created by this
paragraph to other than an Affiliate shall be void from its inception. Tenant
shall have no other right to extend the Term beyond the single 60 month
extension created by this paragraph. Unless agreed to in a writing signed by
Landlord and Tenant, any extension of the Term, whether created by an amendment
to this Lease or by a holdover of the Premises by Tenant, or otherwise, shall be
deemed a part of, and not in addition to, any duly exercised extension period
permitted by this Section. Tenant’s Right to Extend is subject and subordinate
to the expansion rights (whether such rights are designated as a right of first
offer, right of first refusal, expansion option or otherwise) of any tenant of
the Building existing on the date hereof. Time is specifically made of the
essence of this Section.

 

2. FITNESS CENTER AND SHOWER FACILITY. Subject to the provisions of this
Section, so long as Tenant is not in Default under this Lease, and provided
Tenant’s employees execute Landlord’s standard waiver of liability form and pay
the applicable one time or monthly fee, if any, then Tenant’s employees (the
“Fitness Center Users”) shall be entitled to use the fitness center (the
“Fitness Center”) and the shower facility (the “Shower Facility”) located at the
Project. No separate charges shall be assessed to Fitness Center Users for the
use of the Fitness Center (with the exception of towel/laundry fees, if any)
during the initial Term of this Lease, provided, however, that the costs of
operating, maintaining and repairing the Fitness Center shall be included as
part of Operating Expenses. The use of the Fitness Center and Shower Facility
shall be subject to the reasonable rules and regulations (including rules
regarding hours of use) established from time to time by Landlord. Landlord and
Tenant acknowledge that the use of the Fitness Center by the Fitness Center
Users shall be at their own risk and that the terms and provisions of
Section 10.2 of this Lease shall apply to Tenant and the Fitness Center User’s
use of the Fitness Center. Tenant acknowledges that the provisions of this
Section shall not be deemed to be a representation by Landlord that Landlord
shall continuously maintain the Fitness Center (or any other fitness facility)
and Shower Facility throughout the Term of this Lease, and Landlord shall have
the right, at Landlord’s sole discretion, to expand, contract, eliminate or
otherwise modify the Fitness Center. No expansion, contraction, elimination or
modification of the Fitness Center, and no termination of Tenant’s or the
Fitness Center Users’ rights to the Fitness Center shall entitle Tenant to an
abatement or reduction in Basic Rent constitute a constructive eviction, or
result in an event of default by Landlord under this Lease. Tenant hereby
voluntarily releases, discharges, waives and relinquishes any and all actions or
causes of action for personal injury or property damage occurring to Tenant or
its employees or agents arising as a result of the use of the Fitness Center and
Shower Facility, or any activities incidental thereto, wherever or however the
same may occur, and further agrees that Tenant will not prosecute any claim for
personal injury or property damage against Landlord or any of its officers,
agents, servants or employees for any said causes of action. It is the intention
of Tenant with respect to the Fitness Center and Shower Facility to exempt and
relieve Landlord from liability for personal injury or property damage caused by
negligence.

 

3. BALCONIES. Tenant acknowledges and agrees that (i) Tenant has access to
certain balconies located on the Premises; (ii) Tenant is responsible for
supervising and controlling access to the balconies by Tenant’s employees,
officers, directors, shareholders, agents, representatives, contractors and/or
invitees; (iii) Landlord is not responsible for supervising and controlling
access to the balconies, and (iv) Tenant assumes the risk for any loss, claim,
damage or liability arising out of the use or misuse of the balconies by
Tenant’s employees, officers, directors, shareholders, agents, representatives,
contractors and/or invitees, and Tenant releases and discharges Landlord from
and against any such loss, claim, damage or liability. Tenant further agrees to
indemnify, defend and hold Landlord harmless from and against any and all losses
and claims relating to or arising out of the use or misuse of the balconies by
Tenant or Tenant’s employees, officers, shareholders, directors, agents,
representatives, contractors and/or invitees. Tenant shall have not have the
right to install and use outdoor furniture and planters on the balconies. Tenant
furthermore agrees (a) not to store or place any personal property or other
items upon said balconies without the prior consent of Landlord, which may be
withheld in Landlord’s sole discretion, (b) to use and keep the appearance of
the balconies in a manner consistent with a first-class office building, (c) not
to use the balcony as an area for people to congregate or as a smoking area or
for other similar purposes, and (d) not to keep the balcony door(s) ajar.

 

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EXHIBIT X

WORK LETTER

BUILD TO SUIT

Landlord, at its sole cost and expense except as provided herein, shall cause
its contractor to construct the tenant improvements (the “Tenant Improvements”)
for the Premises as shown in the space plan (the “Plan”) prepared by Gensler and
dated July 29, 2015 which plan shall include (i) a conference room to
accommodate a 10 person table (with room to seat up to 6 additional persons for
a total of 16 persons), and a 4-plex outlet in the floor, (ii) one additional
standard approx 10’ x 11’ sized office with similar doors and glass as the other
offices in the suite, and (iii) two 4-plex outlets in floor for 8 cubicles (2
clusters of 4 cubes) and enough electrical outlets in perimeter floor container
to accommodate additional cubes if needed. Any additional cost resulting from
changes requested by Tenant shall be borne solely by Tenant and paid to Landlord
prior to the commencement of construction. Unless otherwise specified in the
Plan or hereafter agreed in writing by Landlord, all materials and finishes
utilized in constructing the Tenant Improvements shall be Landlord’s building
standard. Should Landlord submit any additional plans, equipment specification
sheets, or other matters to Tenant for approval or completion, Tenant shall
respond in writing, as appropriate, within 5 business days unless a shorter
period is provided herein. Tenant shall not unreasonably withhold its approval
of any matter, and any disapproval shall be limited to items not previously
approved by Tenant in the Plan or otherwise.

In the event that Tenant requests in writing a revision in the Plan or in any
other plans hereafter approved by Tenant, then provided such change request is
acceptable to Landlord, Landlord shall advise Tenant by written change order of
any additional cost and/or Tenant Delay (as defined below) such change would
cause. Tenant shall approve or disapprove such change order in writing within 2
business days following its receipt. Tenant’s approval of a change order shall
not be effective unless accompanied by payment in full of the additional cost of
the tenant improvement work resulting from the change order. It is understood
that Landlord shall have no obligation to interrupt or modify the tenant
improvement work pending Tenant’s approval of a change order.

Notwithstanding any provision in the Lease to the contrary, if Tenant fails to
comply with any of the time periods specified in this Work Letter, requests any
changes to the work, fails to make timely payment of any sum due hereunder,
furnishes inaccurate or erroneous specifications or other information, or
otherwise delays in any manner the completion of the Tenant Improvements or the
issuance of an occupancy certificate (any of the foregoing being referred to in
this Lease as a “Tenant Delay”), then Tenant shall bear any resulting additional
construction cost or other expenses and the Commencement Date shall be deemed to
have occurred for all purposes, including Tenant’s obligation to pay Rent, as of
the date Landlord reasonably determines that it would have been able to deliver
the Premises to Tenant but for the collective Tenant Delays.

Landlord shall permit Tenant and its agents to enter the Premises up to 3 weeks
prior to the Commencement Date of the Lease in order that Tenant may install its
furniture, fixtures and equipment and data cabling, subject to Landlord’s prior
written approval, and in a manner and upon terms and conditions and at times
satisfactory to Landlord’s representative. The foregoing license to enter the
Premises prior to the Commencement Date is, however, conditioned upon Tenant’s
contractors and their subcontractors and employees working in harmony and not
interfering with the work being performed by Landlord. If at any time that entry
shall cause disharmony or interfere with the work being performed by Landlord,
this license may be withdrawn by Landlord upon 24 hours written notice to
Tenant. That license is further conditioned upon the compliance by Tenant’s
contractors with all requirements imposed by Landlord on third party
contractors, including without limitation the maintenance by Tenant and its
contractors and subcontractors of workers’ compensation and public liability and
property damage insurance in amounts and with companies and on forms
satisfactory to Landlord, with certificates of such insurance being furnished to
Landlord prior to proceeding with any such entry. The entry shall be deemed to
be under all of the provisions of the Lease except as to the covenants to pay
Rent unless Tenant commences business activities within the Premises. Landlord
shall not be liable in any way for any injury, loss or damage which may occur to
any such work being performed by Tenant, the same being solely at Tenant’s risk.
In no event shall the failure of Tenant’s contractors to complete any work in
the Premises extend the Commencement Date of this Lease.

Tenant hereby designates Kevin Dushney, Telephone No. (617) 830-7740, as its
representative, agent and attorney-in-fact for the purpose of receiving notices,
approving submittals and issuing requests for changes, and Landlord shall be
entitled to rely upon authorizations and directives of such person(s) as if
given by Tenant. Tenant may amend the designation of its construction
representative(s) at any time upon delivery of written notice to Landlord.

 

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