Exhibit 10.1


 


SUBLEASE AGREEMENT


 


This
Sublease Agreement (“Sublease”) dated as of February 10, 2010, is made
between Poniard Pharmaceuticals, Inc., a Washington Corporation, with
registered address at 300 Elliott Avenue West, Suite 500, Seattle,
Washington 98119 (“Sublandlord”), and Veracyte, Inc., a Delaware
Corporation, with registered address at 7000 Shoreline Court, Suite 250,
South San Francisco, California 94080 (“Subtenant”).


 


RECITALS


 


A.                                   Pursuant to the
Lease Agreement dated July 10, 2006 between ARE-San Francisco No. 17,
LLC, a Delaware limited liability company (“Landlord”) and Sublandlord as
lessee (together with all modifications, amendments, riders and exhibits
thereto, the “Master Lease”), a copy of which is attached hereto as Exhibit A, Landlord leased to Sublandlord approximately
17,045 rentable square feet of space located on the second floor of 7000
Shoreline Court, South San Francisco, California (the “Premises”).


 


B.                                     Sublandlord
wishes to sublease to Subtenant, and Subtenant wishes to sublease from
Sublandlord, the Premises on the terms and conditions that are set forth in
this Sublease.


 


C.                                     Concurrently
herewith, Subtenant is entering into a direct lease with Landlord for the
Premises commencing immediately upon termination of this Sublease (the “Direct
Lease”).


 


NOW,
THEREFORE, in consideration of the mutual covenants contained in this Sublease,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by the parties, Sublandlord and Subtenant agree as
follows:


 


AGREEMENT


 


1.                                       Sublease


 


Sublandlord
hereby subleases to Subtenant, and Subtenant hereby subleases from Sublandlord,
for the Term, at the rental, and upon all of the conditions set forth herein,
the Premises, together with the right to use, in common with others entitled
thereto, the hallways, stairways and elevators necessary for access to the
Premises.


 


2.                                       Term and
Possession


 


2.1  Term


 


The
Term of this Sublease (“Term”) shall commence on March 1, 2010 (“Commencement
Date”), and the Term shall expire on July 10, 2011 (“Expiration Date”), at
which time Subtenant’s sublease estate shall terminate and expire.  Subtenant shall have a license to use and
occupy the Premises until the expiration of the Master Lease on the same terms
that are set forth in this Sublease except that there shall be no leasehold
estate.


 

















 


2.2             Delivery of Premises


 


Phase
I:  On the Commencement Date,
Sublandlord shall deliver to Subtenant possession of approximately 11,000
square feet of the Premises as shown on Exhibit B-1
(“Phase I Premises”).  From the
Commencement Date until the Phase II Delivery Date, the term “Premises” as used
in this Sublease shall mean the Phase I Premises.  Until the Phase II Delivery Date (as that
term is defined below) Sublandlord expressly reserves (i) exclusive
possession of the remaining approximately 6,045 square feet of the Premises as
shown on Exhibit B-2 (“Phase II Premises”),
and (ii) the use in common with Subtenant of the server room shown on Exhibit B-1 and the corridor to the server room and
stairwell shown on Exhibit B-1.  The parties acknowledge that the Phase I
Premises will not be completely demised where the corridor to be used in common
joins with the Phase II Premises.  The
parties will cooperate in good faith as is necessary in order to provide to the
other reasonable access to the portion of the Premises occupied by the other
party, and in order to provide privacy and protect the security measures of the
other consistent with reasonable business practices.  Except as set forth above, neither party
shall have access to the portion of the Premises occupied by the other without
the prior written consent of the other. 
Without limiting the generality of the foregoing, Subtenant shall not
have any right to use Sublandlord’s main entrance.


 


Subtenant
acknowledges that the server room is critical to the functioning of Sublandlord’s
systems during the period prior to delivery of the Phase II Premises.  Subtenant shall not take any actions that
would cause any interruption in either power or HVAC service to the server
room, or make any changes to the electrical lines or HVAC system that serve the
server room, without Sublandlord’s prior written consent.  Each entry by Subtenant into the server room
shall be monitored and logged by the Building security system.  Subtenant consents to Sublandlord receiving
from Landlord all information provided by the Building security system
concerning entry into the server room by Subtenant, its officers, directors,
agents, employees, contractors and subcontractors prior to delivery of the
Phase II Premises.


 


Phase
II:  On September 1, 2010,
Sublandlord shall deliver the Phase II Premises to Subtenant, and relinquish
all rights to possession of any portion of the Premises, so that, effective September 1,
2010, Subtenant shall have possession of the entire 17,045 square feet of the
Premises.  The later of September 1,
2010 and the date on which the Phase II Premises are delivered to Subtenant in
the condition described below shall be the “Phase II Delivery Date.”  From and after the Phase II Delivery Date,
the term “Premises” as used in this Sublease shall mean the entire
Premises.  If the Phase II Delivery Date
has not occurred by September 15, 2010, then for each day after September 15,
2010 that elapses before the Phase II Delivery Date Base Rent due from
Subtenant under this Sublease shall be reduced by the sum of $340.00.


 


Sublandlord
shall deliver possession of the Phase I Premises and the Phase II Premises
vacant (except for Sublandlord’s Property and Landlord’s Property) and in broom
clean condition, with all building systems in good working order and condition
to the extent Sublandlord has control over them.  The Phase II Premises shall be delivered in
substantially the condition they are in on the date of this Sublease, normal
wear and tear and damage from fire and other casualty and from condemnation
excepted.


 

















 


2.3                                 Subtenant’s
Early Access Rights


 


Effective
upon (i) full execution and delivery of this Sublease and the Consent
Agreement described in Section 17 below, (ii) delivery to Sublandlord of
the Security Deposit as that term is defined in Section 6 below and (iii) delivery
to Sublandlord of evidence of Subtenant’s insurance as required by this
Sublease, Subtenant shall have the right to enter onto the Phase I Premises to
construct such improvements as may be approved in writing by Landlord and
Sublandlord pursuant to the terms of the Master Lease and this Sublease.  Subtenant’s early access to the Phase I
Premises shall be on all of the terms of this Sublease except for the
obligation to pay Base Rent and Additional Rent.


 


3.                                       Rent


 


Rent
to be paid under this Sublease shall include Base Rent and Additional Rent as
described in this Section 3, and shall include all other sums that may be
owing from Subtenant to Sublandlord under this terms of this Sublease.  All Rent payments shall be made in United
States Dollars, without deduction or offset, except as otherwise expressly
provided in this Sublease, and shall be delivered to Sublandlord at the address
set forth in Section 14 of this Sublease, or to such other entity and/or
at such other address as Sublandlord may designate in writing from time to
time.  Base Rent and Additional Rent for
any partial month of the Sublease Term shall be prorated in proportion to the
number of days in that month.  If and to
the extent that Base Rent under the Master Lease is reduced or abated due to
casualty, condemnation or otherwise, then Base Rent under this Sublease shall
be reduced or abated by the same percentage and for the same period of time.


 


3.1  Base Rent


 


Commencing
on the Commencement Date, Subtenant shall pay to Sublandlord Base Rent in the
amounts set forth in this Section 3.1. 
Base Rent shall be paid on or before the first day of each calendar month
during the Term.


 


	
  Period

  	
   

  	
  Rentable Sq. Feet

  	
   

  	
  Rent per Month

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commencement - Phase II Delivery Date

  	
   

  	
  11,000

  	
   

  	
  $

  	
  17,600.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Phase II Delivery Date to Expiration Date

  	
   

  	
  17,045

  	
   

  	
  $

  	
  28,124.25

  	
   

  



 


3.2  Operating Expenses


 


Subtenant
agrees to pay as Additional Rent all Operating Expenses and other costs and
expenses (other than Base Rent and TI Base Rent) that are attributable to the
Premises and due to Landlord under the terms of the Master Lease, including all
increases in said expenses under the terms of the Master Lease; provided,
however, that Subtenant shall have no liability for costs or expenses incurred
under the Master Lease during the term of this Sublease that are attributable


 

















 


solely
to the acts or omissions of Sublandlord. 
For the avoidance of doubt, the parties agree that Subtenant shall not
be required to pay Operating Expenses (a) attributable proportionately to
the Phase II Premises until the Phase II Phase II Delivery Date, or (b) during
such times as, and to the extent that, Operating Expenses abate under the
Master Lease with respect to the Premises. 
Subtenant shall pay Operating Expenses monthly pursuant to the terms of
the Master Lease without previous demand, invoice or notice for payment, and
shall pay all other sums due under the terms of the Master Lease upon
demand.  If Operating Expenses due under
the Master Lease are adjusted so as to provide a credit with respect to a
period during which Subtenant pays Operating Expenses under this Sublease, then
Subtenant shall be entitled to its fair share of any credit given by Landlord
with respect to that period.


 


4.                                       Tenant
Improvements — Personal Property


 


Subtenant
may only make modifications or alterations (“Improvements”) to the Premises
with the written consent of Landlord and Sublandlord as provided in the Master
Lease and this Sublease.  Subject to
Landlord’s consent, Sublandlord approves construction of Subtenant’s initial
improvements described on Schedule I
to this Sublease (“Subtenant’s Initial Improvements”) according to the
construction schedule attached as Schedule II
to this Sublease (“Subtenant’s Construction Schedule”) and approves use of BN
Builders as contractor for the work. 
Subtenant shall construct its Improvements at its sole cost and expense
in accordance with all terms and conditions of the Master Lease and this
Sublease.  Subtenant will deliver to
Sublandlord copies of all drawings, materials, documents and submissions at the
same time as Subtenant delivers such items to Landlord in connection with the design
and construction of the Improvements.


 


Sublandlord
acknowledges that construction of Subtenant’s Initial Improvements (as that
term is defined in Section 4 below) may or will occur in the Phase I
Premises, with its attendant noise and vibration, while Sublandlord still
occupies the Phase II Premises.  In
constructing Subtenant’s Initial Improvements, Subtenant shall avoid
interrupting utility and other services to the Phase II Premises except as may
be strictly necessary in connection with construction.  Without limiting the generality of the
foregoing, there shall be no interruption of any utilities or other services to
the Phase II Premises except with Sublandlord’s prior written consent and in no
event during normal business hours. 
Subtenant shall take reasonable and prudent steps to minimize the
adverse effects of construction on Sublandlord’s business operations in the
Phase II Premises, and shall consult with Sublandlord regularly during the
construction period to that end. 
Provided the construction activities in the Phase I Premises are
conducted consistent with the foregoing, and take place in a manner that is
consistent with industry practices, Sublandlord shall not have any claim
against Subtenant for business interruption relating to the construction of
Subtenant’s Initial Improvements.  In
addition, certain of Subtenant’s Initial Improvements will be constructed by
Landlord and are described in the Consent Agreement as Landlord’s Work.  Sublandlord shall have no claim against
Subtenant for any damages, costs, expenses or liabilities (collectively, “Damages”)
resulting from Landlord’s breach of its obligations under the Consent Agreement
except to the extent that Subtenant contributes to the Damages by its own act(s) or
omission(s).


 

















 


Subtenant
shall construct its Improvements in accordance with all laws, orders,
judgments, ordinances, regulations, codes, directives, permits, licenses,
covenants and restrictions now or hereafter applicable to the Premises and to
the use and occupancy of the Premises. 
Subtenant does hereby release, indemnify and hold Sublandlord harmless
from any claims, costs, expenses or liabilities whatsoever (except as may be
expressly provided in this Sublease with respect to Tenant’s Initial
Improvements) arising out of or relating to the Improvements.


 


Subtenant
acknowledges that certain furniture located in the Premises is the property of
Landlord (“Landlord’s Property”). 
Landlord’s Property is described on Exhibit C
attached to this Sublease.  Subtenant
shall comply in all respects with the requirements of the Master Lease with
respect to Landlord’s Property, and shall return Landlord’s Property to
Landlord upon expiration of the Sublease Term in the condition required by the
Master Lease; provided, however, that so long as no additional liability on
Sublandlord’s part and no additional obligation to be performed by Sublandlord
is or are created, if the Direct Lease permits Subtenant to retain Landlord’s
Property following expiration of the Lease, then Subtenant shall fulfill its
obligation under this Sublease if Subtenant complies fully with its obligations
to Landlord with respect to Landlord’s Property under the terms of the Direct
Lease.  With respect to lab benches,
casework, fume hoods, and laminar flow hoods that are located on the Phase I
Premises as a part of the laboratory and are the property of Sublandlord (“Sublandlord’s
Property”), Subtenant shall have the right to use and/or dispose of Sublandlord’s
Property during the Sublease Term.  At
the expiration of the Sublease Term, if Subtenant has not already done so,
Subtenant shall remove from the Premises all of Sublandlord’s Property that is
required to be removed under the terms of the Master Lease; provided, however,
that so long as no additional liability on Sublandlord’s part and no additional
obligation to be performed by Sublandlord is or are created, if the Direct
Lease permits Subtenant to keep Sublandlord’s Property on the Premises
following expiration of the Lease, then Subtenant shall fulfill its obligation
under this Sublease if Subtenant complies fully with its obligations to
Landlord with respect to surrender of the Premises under the terms of the
Direct Lease.  Commencing on the
Commencement Date, Subtenant shall have the right to use certain furniture that
is owned by Sublandlord and that is described on Exhibit D
attached to this Sublease (“Loaned Furniture”). 
Subtenant shall relinquish the Loaned Furniture to Sublandlord at the
expiration of the term of this Sublease, in the same condition as received,
ordinary wear and tear excepted.


 


As
a material part of the consideration for this Sublease, Subtenant shall fully
comply with the requirements of the Master Lease (as may be amended by
agreement between Landlord and Subtenant as a part of the Direct Lease or the
Consent Agreement, as that term is defined in Section 17 below) with
respect to removal of the property of the tenant thereunder at the end of the
term of the Master Lease and with respect to restoration of the Premises, so
that Subtenant, and not Sublandlord, shall have responsibility for such
removal, repair and restoration.  Without
limiting any other obligation of Subtenant under this Sublease, Subtenant shall
indemnify, defend and hold Sublandlord harmless from and against all claims, actions,
liabilities, damages, costs, penalties, forfeitures, losses or expense of any
kind whatsoever including, without limitation, reasonable attorneys’ fees,
arising out of Subtenant’s breach of the foregoing covenant.  The parties acknowledge that the Consent
Agreement releases Sublandlord from certain obligations under the Master
Lease.  Except to the extent that
Sublandlord is released from liability under the Master Lease under the terms
of the Consent Agreement, no agreement


 

















 


between
Landlord and Subtenant shall alter or avoid Subtenant’s obligation under this
Sublease to indemnify, defend and hold harmless Sublandlord from any obligation
with respect to removal, repair and restoration under the terms of the
Lease.  All of the above notwithstanding,
nothing in this Sublease shall relieve Sublandlord from liability for, or
require Subtenant to indemnify Sublandlord with respect to, Sublandlord’s
obligations under the terms of the Master Lease with respect to Hazardous
Materials (as that term is defined in the Master Lease) except to the extent
specifically assumed by Subtenant pursuant to Section 9 of this Sublease.


 


5.                                       Parking


 


Over
the Term of this Sublease, Subtenant shall have the right to the non-exclusive
parking as is set forth in the Master Lease. 
Prior to the Phase II Delivery Date, parking spaces available under the
Master Lease shall be shared proportionately between Sublandlord and Subtenant
based upon the portion of the Premises occupied by each of them.


 


6.                                       Security
Deposit


 


Contemporaneously
with the execution hereof, Subtenant shall deposit with Sublandlord, the sum of
Twenty-eight Thousand One Hundred Twenty-four Dollars and 25/00 ($28,124.25) (“Security
Deposit”) as security for Subtenant’s faithful performance hereunder.  If Subtenant fails to pay rent or other
charges when due under this Sublease, or fails to perform any of its
obligations hereunder, in each case after the expiration of applicable notice
and cure periods (if any), Sublandlord may use or apply all or any portion of the
Security Deposit for the payment of any rent or other amount then due hereunder
and unpaid, for the payment of any other sum for which Sublandlord may become
obligated by reason of Subtenant’s default or breach, or for any loss or damage
sustained by Sublandlord as a result of Subtenant’s default or breach.  If Sublandlord debits the Security Deposit as
a result of Subtenant’s default, Sublandlord shall notify Subtenant of the
occurrence and amount of the debit, and Subtenant shall promptly pay to Sublandlord
the amount necessary to restore the Security Deposit to the sum of
$28,124.25.  If Subtenant performs each
of its obligations under this Sublease, then the remaining Security Deposit
shall be applied against the Base Rent due under this Sublease for the last
month of the Sublease Term.


 


At
Subtenant’s election, and in lieu of cash, the Security Deposit may be in the
form of a standby irrevocable letter of credit in the amount of the Security
Deposit issued to Sublandlord as beneficiary and in form and substance
satisfactory to Sublandlord (“Letter of Credit”).  The Letter of Credit shall be issued by a
financial institution having a credit rating acceptable to Sublandlord, and
shall provide that it will be honored by facsimile presentation or at sight at
an office of the issuer upon a certificate signed by Sublandlord or its agent
stating that an event of default has occurred under this Sublease and is
continuing that entitles Sublandlord to draw on the Letter of Credit, or that a
replacement letter of credit in the form required by this Sublease has not been
delivered to Sublandlord at least 30 days before expiration of the existing
Letter of Credit.  The Letter of Credit
shall be in a form that requires the issuer to honor Sublandlord’s certificate
without inquiry as to the accuracy of the statements made in the certificate
and regardless of whether Subtenant disputes the content of such
statements.  In the event of a default
under this Sublease that entitles Sublandlord to draw under the Letter of Credit,
then if


 

















 


Sublandlord
elects to draw under the Letter of Credit (i) Sublandlord shall draw the
full amount of the Letter of Credit and apply those funds to cure the default, (ii) any
sum remaining shall be held as a cash Security Deposit according to terms of
this Section 6, (iii) Subtenant shall promptly pay to Sublandlord the
amount necessary to restore the Security Deposit to the sum of $28,124.25, and (iv)
Subtenant shall have no further right to provide a Letter of Credit in lieu of
cash for the Security Deposit required by this Sublease.


 


7.                                       Use of
Premises; Building Services


 


The
Premises shall be used and occupied only for research and development
laboratories, related office and other related uses, and otherwise in
compliance with the provisions of the Master Lease.


 


Notwithstanding
anything to the contrary in this Sublease, Subtenant acknowledges that
Sublandlord does not have control of the Building or the Building systems, and
that Sublandlord will not provide utilities, maintenance, repair or restoration
work or other Building services (including, without limitation, those services
and obligations to be performed by Landlord under Paragraph 11 of the
Master Lease).  Subtenant will look
solely to Landlord for performance of the services to which Sublandlord is
entitled under Paragraph 11 of the Prime Lease.  Without limiting the generality of the
foregoing, Sublandlord shall have no liability for any interruption or stoppage of
services, and no such interruption or stoppage of services shall relieve
Subtenant from any obligation that it may have under this Sublease, including
without limitation, the obligation to pay Base Rent and Additional Rent except
as may be otherwise expressly provided in this Sublease.  Sublandlord, upon receipt of written notice
from Subtenant, shall make demand upon Landlord to take all appropriate action
for the correction of any defect, inadequacy or insufficiency in Landlord’s
performance under the Master Lease that interferes with Subtenant’s use of the
Premises.  In addition to all other
obligations that Subtenant may have with respect to the Building and the
Premises, but subject to all other provisions of this Sublease and the Consent
Agreement, Subtenant shall be liable to Landlord for any damage to elements of
the Building or Premises that are maintained by Landlord under the Master Lease
that is caused by or resulting from any act, omission or negligence of
Subtenant or Subtenant’s employees, agents, licensees or invitees, or that is
caused by or results from Subtenant’s default.


 


8.                                       Assignment and
Sublease


 


Subtenant
shall not assign this Sublease or further sublet all or any part of the
Premises except in compliance with the terms of this Sublease and the Master
Lease.  Notwithstanding the foregoing,
subject to approval by Landlord, Subtenant shall have the right without
Sublandlord’s consent to assign its rights under this Sublease, or sub-sublet
all or any portion of the Premises, to (a) an entity controlling,
controlled by or under common control with Subtenant (where the terms “controlling,”
“controlled by” and “control” means possession of the power to direct or cause
the direction of the management and policies of an entity, either through
ownership of voting securities, by contract or otherwise), (b) an entity
with which Subtenant merges or which results as a matter of law from the
consolidation or reorganization of Subtenant, or (c) a purchaser of
substantially all of Subtenant’s assets, in each case so long as the transferee
assumes and agrees to perform all of Subtenant’s obligations under this
Sublease.  Notwithstanding


 
















 


anything
herein to the contrary, Sublandlord will not exercise any right to recapture
the Premises as a consequence of a request by Subtenant for approval of an
assignment or sublease unless Landlord exercises its right to recapture, and
Sublandlord will not withhold its consent to any assignment or sublease that
has been approved by Landlord.


 


9.                                       Incorporation
by Reference


 


9.1  Subject to Master Lease


 


This
Sublease is subject and subordinate to the Master Lease and to all of Landlord’s
rights under the terms of the Master Lease. 
Subtenant has no authority, and shall not attempt, to exercise any of
Sublandlord’s options to extend or terminate the Master Lease or to add space
to, or remove space from, the Premises. 
Sublandlord agrees that it shall not exercise any extension right under
the Master Lease.


 


9.2             Interpretation; Master Lease
Provisions Applicable


 


In
addition to the payment of rent, Subtenant agrees, for the benefit of
Sublandlord and Landlord, that during the Sublease Term Subtenant shall perform
each and every one of the obligations of the tenant under the Master Lease that
is incorporated into this Sublease. The following terms, covenants and
conditions of the Master Lease are incorporated into this Sublease with the
same force and effect as if Sublandlord were the landlord under the Master
Lease and Subtenant were the tenant under the Master Lease, except that, except
as may be otherwise expressly provided, each reference in such incorporated
provisions to “Lease” shall be deemed a reference to this “Sublease”:  Master Lease Sections 7, 8 (as modified
by Section 16 of this Sublease), the fourth and fifth sentences of 9, 12
(except that Sublandlord shall not charge any fee for oversight of Alterations,
but Subtenant shall pay any fee imposed by Landlord), 14, 15, the second and
third sentences of 16, 17 (except for the first paragraph concerning Landlord’s
insurance and except that the levels of insurance required of Subtenant shall
be the levels of insurance required by Landlord), 18 (except for the first
paragraph concerning Landlord’s obligations), 20, 21, 22 (as modified by Section 8
of this Sublease), 23, 24, 26, 27, 28 (as modified by Section 4 of this
Sublease), 29, 30, the first paragraph of 31, 32, 33, 34, 36 (except (B) and
except (C)), 37, 38 and 40. 
Notwithstanding anything to the contrary in the foregoing, Subtenant
shall obtain the insurance required of the Tenant by Paragraph 17 of the Master
Lease and shall name Landlord and Sublandlord as additional insureds or named
insureds thereunder if and to the extent required by Paragraph 17 of the
Master Lease.  In the event of a conflict
between the express provisions of the Sublease and the provisions of the Master
Lease incorporated herein, as between Sublandlord and Subtenant, the express
provisions of this Sublease shall prevail.


 


9.3                                 Sublandlord’s
Additional Covenants


 


Sublandlord
shall fully perform its obligations under the Master Lease to the extent
Subtenant is not obligated to perform such obligations under this
Sublease.  Sublandlord shall not
terminate the Master Lease, amend or waive any provisions under the Master
Lease, or make


 

















 


any
elections, exercise any right or remedy or give any consent or approval under
the Master Lease without, in each instance, Subtenant’s prior written consent.


 


9.4                                 Sublandlord’s
Representations


 


Sublandlord
represents to Subtenant as follows:


 


(i) the
copy of the Master Lease attached to this Sublease as Exhibit A
is true, correct and complete,


(ii) the
Master Lease is in full force and effect,


(iii) there
exists under the Master Lease no event of default by Sublandlord, nor has there
occurred any event which, with the giving of notice or passage of time or both,
would constitute such an event of default;


(iv) to
the best of Sublandlord’s knowledge, there exists under the Master Lease no
event of default by Landlord , nor has there occurred any event which, with the
giving of notice or passage of time or both, would constitute such an event of
default;


(v) to
the best of Sublandlord’s knowledge, as of the date of this Sublease there are
no Hazardous Materials (as that term is defined in the Master Lease) on the
Premises in violation of the terms of the Master Lease or in violation of law;
and


(vi) upon
delivery of the Phase I Premises and the Phase II Premises, all Hazardous
Materials used, stored, handled or released by Sublandlord shall have been
removed therefrom except for Hazardous Materials normally used or occurring in
an office environment or except as may be otherwise agreed by the parties.


 


10.                                 Subtenant to
Comply with Master Lease


 


Subtenant
shall neither do nor permit anything to be done that would cause the Master
Lease to be terminated or forfeited by reason of any right of termination or
forfeiture or default reserved or vested in Landlord under the Master Lease and
Subtenant shall indemnify, defend and hold Sublandlord harmless from and
against all claims, actions, liabilities, damages, costs, penalties,
forfeitures, losses or expense of any kind whatsoever including, without
limitation, reasonable attorneys’ fees, arising out of Subtenant’s breach of
the foregoing covenant.  For purposes of
this Section 10, Subtenant shall have no responsibility for the acts and
omissions of Sublandlord during the term of this Sublease.


 


11.                                 Notices from
Landlord or Governmental Authority


 


Subtenant
agrees to forward to Sublandlord, promptly upon receipt thereof, copies of any
notices relating to Subtenant’s occupancy or use of the Premises received by
Subtenant from Landlord or from any governmental authority.  Sublandlord will forward to Subtenant,
promptly upon receipt thereof, copies of any notices relating to the Premises
or this Sublease from Landlord or from any governmental authority.


 

















 


12.                                 Release and
Waiver of Subrogation


 


Notwithstanding anything to
the contrary in this Sublease, neither Sublandlord nor Subtenant shall be
liable to the other or to any insurance company (by way of subrogation or
otherwise) insuring the other party for any loss or damage to any building,
structure or tangible personal property of the other or of any third party
occurring in or about the Premises or the Building, even though such loss or
damage might have been occasioned by the negligence of such party, its agents
or employees, if such loss or damage would fall within the scope of a fire and
extended coverage (broad form) policy of insurance, whether or not the party
suffering the loss actually maintained such insurance.  Each party shall obtain from its respective
insurer under each insurance policy it maintains a waiver of all rights of
subrogation that the insurer of one party may have against the other party.


 


13.                                 Indemnification


 


13.1  Subtenant’s Indemnification


 


Subject
to Section 12 above, Subtenant shall indemnify, defend and hold harmless
Sublandlord from and against all losses, costs, damages, expenses and
liabilities including, without limitation, reasonable attorney’s fees and
disbursements, which Sublandlord may incur or pay out (including, without
limitation, to Landlord) by reason of (a) any accidents, damages or
injuries to persons or property occurring in, on or about the Premises (except
to the extent caused by Sublandlord’s negligence or wrongful act or the
negligence or wrongful act of Landlord), (b) any breach or default by
Subtenant or its representatives under this Sublease or Master Lease (c) the
successful enforcement of Sublandlord’s rights under this Section or any
other Section of this Sublease, (d) any work done after the date
hereof in or to the Premises except if done by Sublandlord or Landlord, or (e) any
act, omission or negligence on the part of Subtenant and/or its officers,
partners, employees, agents, customers and/or invitees, or any person claiming
through or under Subtenant.


 


13.2  Sublandlord’s Indemnification


 


Subject
to Section 12 above, Sublandlord shall indemnify, defend and hold harmless
Subtenant from and against all losses, damages, expenses and liabilities
including, without limitation, reasonable attorney’s fees and disbursements,
which Subtenant may incur or pay out (including, without limitation, to
Landlord) by reason of (a) any breach or default hereunder or under the
Master Lease on Sublandlord’s part, (b) the successful enforcement of
Subtenant’s rights under this Section or any other Section of this
Sublease, or (c) any act, omission or negligence on the part of
Sublandlord and/or its officers, partners, employees, agents, customers and/or
invitees, or any person claiming through or under Sublandlord.


 


14.                                 Notices


 


All
notices and demands that may or are to be required or permitted are to be given
by either party on the other hereunder shall be in writing.  All notices and demands shall be personally
delivered or sent by a nationally recognized private carrier of overnight mail
(e.g. Fed


 

















 


Ex)
or by United States certified mail, return receipt requested and postage
prepaid, to the parties at the addresses listed below or at such other
addresses as the parties may designate by notice from time to time.


 


	
  To
  Sublandlord:

  	
  VP
  Legal

  
	
   

  	
  Poniard
  Pharmaceuticals, Inc.

  
	
   

  	
  300
  Elliott Avenue West

  
	
   

  	
  Suite 500

  
	
   

  	
  Seattle,
  WA 98119

  
	
   

  	
   

  
	
  To
  Subtenant:

  	
  Veracyte, Inc.

  
	
   

  	
  7000
  Shoreline Court

  
	
   

  	
  South
  San Francisco, CA 94080

  
	
   

  	
  Attn:
  Chief Executive Officer

  



 


15.                                 Acceptance of
Premises AS IS


 


Subtenant
confirms that by taking possession of the Premises, Subtenant accepts the
Premises in their “AS IS” condition. 
Sublandlord makes no warranty of any kind concerning the Premises, the
Building or the project of which they are a part, and Sublandlord expressly
disclaims any warranty concerning latent defects, any warranty of fitness for
use, and any other express or implied warranty (including any warranty of
MERCHANTABILITY).


 


16.                                 Holding Over


 


The
parties acknowledge that pursuant to the Consent Agreement, there shall be no
holding over under the Master Lease if Subtenant occupies the Premises pursuant
to the Direct Lease.  Except as otherwise
provided in the Consent Agreement, if Subtenant remains in possession of the
Premises after expiration of the Sublease Term without the written agreement of
Landlord, Sublandlord may be treated by Landlord as being in breach of the
Master Lease. Sublandlord may be obligated to pay damages to Landlord,
including consequential damages that are presently difficult or impossible to
calculate.  Subtenant agrees to
indemnify, defend and hold harmless Sublandlord from any and all actions,
liabilities, damages, costs, penalties, losses or expenses that may arise out
of or be in any way connected with any holding over by Subtenant following the
expiration or earlier termination of the Sublease Term.


 


17.                                 Condition
Precedent


 


This
Sublease is expressly conditioned on each of Sublandlord, Subtenant and
Landlord executing and delivering to each other a consent agreement in the form
attached as Exhibit E (“Consent Agreement”).


 


18.                                 Damage or
Destruction


 


Notwithstanding
anything to the contrary contained in this Sublease, in the event any fire or
other casualty renders the whole or any material part of the Premises or the
Building


 

















 


untenantable,
then in such event (i) if the Master Lease terminates according to its
terms or because either Landlord or Sublandlord exercises a right under the
Master Lease to terminate the Master Lease, then this Sublease shall terminate
upon termination of the Master Lease, and (ii) if the Master Lease does
not terminate according to its terms, and if neither Landlord nor Sublandlord
exercises a right to terminate the Master Lease, then this Sublease shall
remain in full force and effect, and for so long as any portion of the Premises
are untenantable Base Rent shall abate pro rata based upon the area of the
Premises that is untenantable as compared to the total area of the
Premises.  Notwithstanding the foregoing,
in the event of a casualty that entitles Sublandlord to terminate the Lease, upon
request timely made by Subtenant Sublandlord shall exercise its right to
terminate the Lease so long as exercise of that right would not result in the
creation of any additional liability on Sublandlord’s part, or any additional
obligation to be performed by Sublandlord. 
The provisions of this Section 18 are Subtenant’s sole and
exclusive rights and remedies in the event of a casualty.  To the extent permitted by law, Subtenant
waives the benefit of any law that provides to Subtenant any abatement or termination
right by virtue of a casualty.


 


In
the event of a casualty where Subtenant is obligated to rebuild all or a
portion of the improvements that constitute the Premises, Sublandlord and
Subtenant shall cooperate in good faith to determine whether any portion of any
insurance proceeds that may be made available to Sublandlord are properly
attributable to improvements that Subtenant is required to rebuild.  If so, Sublandlord will make that portion of
the insurance proceeds available to Subtenant on terms that are acceptable to
Sublandlord’s insurer and otherwise on a commercially reasonable basis.


 


19.                                 Eminent Domain


 


In
the event that all or a portion of the Leased Premises is taken for any public
or quasi-public use under any governmental law, ordinance or regulation, or by
right of eminent domain or private purchase in lieu of eminent domain (each, a “Taking”),
then whether or not the whole or any material part of the Premises is taken, (i) if
the Master Lease terminates according to its terms or because either Landlord
or Sublandlord exercises a right to terminate the Master Lease, then this
Sublease shall terminate upon termination of the Master Lease, and (ii) if
the Master Lease does not terminate according to its terms and neither Landlord
nor Sublandlord exercises a right to terminate the Master Lease, then this
Sublease shall remain in full force and effect. 
Notwithstanding the foregoing, in the event of any exercise of eminent
domain that entitles Sublandlord to terminate the Lease, upon request timely
made by Subtenant Sublandlord shall exercise its right to terminate the Lease
so long as exercise of that right would not result in the creation of any
additional liability on Sublandlord’s part, or any additional obligation to be
performed by Sublandlord.  If a portion
of the Premises is taken and this Sublease does not terminate, then Base Rent
shall be adjusted as may be fair and reasonable under all of the circumstances.


 


Subtenant
waives and assigns to Sublandlord any interest it may have in any damage, award
or payment resulting from or paid on account of any Taking, provided that
Subtenant shall have the right to recover from any condemning authority any
compensation that may be separately recoverable for damages to or condemnation
of Subtenant’s movable trade fixtures and equipment and for moving
expenses.  Subtenant shall not have any
right to receive any award for its interest in this Sublease or for loss of
leasehold.  The provisions of this Section 19


 

















 


are
Subtenant’s sole and exclusive rights and remedies in the event of a
Taking.  To the extent permitted by law,
Subtenant waives the benefits of any law that provides Subtenant any abatement
or termination rights or any right to receive any payment or award by virtue of
a Taking.


 


20.                                 No Recording


 


Neither
party shall record this Sublease or any memorandum of this Sublease.


 


21.                                 Quiet Enjoyment


 


Provided
that Subtenant is not in default of any term or provision of the Master Lease
or this Sublease, Subtenant shall have peaceful and quiet enjoyment of the
Premises without interference from Sublandlord.


 


22.                                 Attorney’s Fees


 


If
Sublandlord or Subtenant shall commence an action against the other arising out
of or in connection with this Sublease, the prevailing party shall be entitled
to recover its costs of suit and reasonable attorney’s fees.


 


23.                                 Real Estate
Commission  [This section left blank in executed document]


 


On
the first business day after the Commencement Date, Sublandlord shall pay
$                                              
to satisfy commissions that are due to GVA Kidder Mathews and
                                  for
services rendered in relation to successfully completing this Sublease.  It shall be paid in the following manner:


$                                  
to GVA Kidder Mathews


$                                  
to


 


24.                                 Entire
Agreement


 


This
Sublease, the Exhibits attached hereto, and the Master Lease, which is
incorporated herein by reference and made a part hereof, constitute the entire
agreement between Sublandlord and Subtenant with respect to the Premises and
may not be amended or altered except by written agreement by both parties, and
subject to Landlord’s written consent.


 


25.                                 Binding on
Successors


 


This
Sublease shall bind the parties and their heirs, successors, representatives
and permitted assigns.


 


26.                                 Approvals and
Discretion


 


Whenever
this Sublease requires an approval, consent, designation, determination,
selection or judgment by either Sublandlord or Subtenant, then unless a
different standard is otherwise expressly provided such approval, consent,
designation, determination, selection or


 

















 


judgment
and any condition imposed thereby shall be reasonable and shall not be
unreasonably withheld or delayed.


 


27.                                 Exhibits and
Schedule


 


The
following Exhibits and Schedule attached to this Sublease are incorporated into
it by this reference as though fully set forth above:


 


	
  Exhibit A

  	
  Master
  Lease

  
	
  Exhibit B-I

  	
  Phase
  I Premises

  
	
  Exhibit B-II

  	
  Phase
  II Premises

  
	
  Exhibit C

  	
  Landlord’s
  Property

  
	
  Exhibit D

  	
  Loaned
  Furniture

  
	
  Exhibit E

  	
  Consent
  Agreement

  
	
  Schedule I

  	
  Subtenant’s
  Initial Improvements

  
	
  Schedule II

  	
  Subtenant’s
  Construction Schedule

  



 


IN
WITNESS WHEREOF, the parties hereto hereby execute this Sublease as of the day
and year first above written.


 


 


	
  Sublandlord:

  	
   

  	
  Subtenant:

  
	
  Poniard
  Pharmaceuticals, Inc.

  	
   

  	
  Veracyte, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Gregory Weaver

  	
   

  	
  By:
  

  	
  /s/
  Bonnie Anderson

  
	
  Name:
  Greg Weaver

  	
   

  	
  Name:
  Bonnie Anderson

  
	
  Title:
  CFO

  	
   

  	
  Title:
  CEO

  
					



 

















 


Exhibit A to Sublease — Master Lease


 
















 


LEASE AGREEMENT


 


THIS LEASE AGREEMENT (this “Lease”) is made this 10th day of July, 2006, between ARE-SAN FRANCISCO NO. 17, LLC, a Delaware
limited liability company (“Landlord”),
and PONIARD PHARMACEUTICALS, INC., a
Washington corporation (“Tenant”).


 


Building:                                            7000 Shoreline
Court, South San Francisco, California


 


Premises:                                        That portion of
the Project, containing approximately 17,045 rentable square feet, consisting
of (i) approximately 14,083 rentable square feet (“Initial Premises), and (ii) approximately
2,962 rentable square feet (“Additional
Premises”), as determined by Landlord and both as more particularly
shown on Exhibit A.


 


Project:                                                     The real
property on which the Building in which the Premises are located, together with
all improvements thereon and appurtenances thereto as described on Exhibit B.


 


Base Rent:                                    $2.65 per
rentable square foot per month, subject to adjustment as provided for in Sections
3 and 4 hereof.


 


Rentable Area of Premises: 17,045  sq. ft.


 


Rentable Area of Project:  136,691 sq. ft.


 


Tenant’s Share of Operating Expenses:   12.47%


 


Security Deposit: 
$135,507.75


 


Target Commencement Date:   July 1, 2006;
provided, however, that if Landlord is required by the City of South San
Francisco to construct the fire rate corridor shown on Exhibit G prior to Landlord being
permitted to deliver the Initial Premises to Tenant for its use and occupancy,
the Target Commencement Date shall be October 2, 2006.


 


Rent Adjustment Percentage:   Greater of 3% or the CPI Adjustment
Percentage not to exceed 5%


 


Base Term:                                Beginning on
the Commencement Date and ending 60 months from the first day of the first full
month of the Term (as defined in Section 2 hereof).


 


Permitted
Use:                                                             Research and
development laboratories, related office and other related uses and otherwise
in compliance with the provisions of Section 7 hereof.


 


	
  Address for Rent Payment:

  	
  Landlord’s Notice Address:

  
	
  385
  E. Colorado Boulevard, Suite 299

  Pasadena,
  CA 91101

  Attention:
  Accounts Receivable

  	
  385
  E. Colorado Boulevard, Suite 299

  Pasadena,
  CA 91101

  Attention:
  Corporate Secretary

  
	
   

  	
   

  
	
  Tenant’s Notice Address:

  	
   

  
	
  750
  Battery Street, Suite 600

  San
  Francisco, CA 94111

  Attention:
  Chief Financial Officer

  	
   

  



 


The following Exhibits and Addenda are attached hereto and incorporated
herein by this reference:


 


	
  x  EXHIBIT A — PREMISES DESCRIPTION

  	
  x  EXHIBIT B — DESCRIPTION OF PROJECT

  
	
  x  EXHIBIT C — WORK LETTER

  	
  x  EXHIBIT D — COMMENCEMENT DATE

  
	
  x  EXHIBIT E — RULES AND REGULATIONS

  	
  x  EXHIBIT F — TENANT’S PROPERTY

  



 

















 


	
  x  EXHIBIT G — LANDLORD’S WORK

  	
  x  EXHIBIT H — LANDLORD’S PROPERTY

  



 


1.                                       Lease of Premises. 
Upon and subject to all of the terms and conditions hereof, Landlord
hereby leases the Premises to Tenant and Tenant hereby leases the Premises from
Landlord.  The portions of the Project
which are for the non-exclusive use of tenants of the Project are collectively
referred to herein as the “Common Areas.”  Landlord reserves the right to modify Common
Areas, provided that such modifications do not materially adversely affect
Tenant’s access to or use of the Premises for the Permitted Use or materially
adversely affect Tenant’s access to or use of parking at the Project.


 


2.                                       Delivery; Acceptance of Premises;
Commencement Date.  Landlord shall use reasonable efforts to
deliver the Initial Premises to Tenant on or before the Target Commencement
Date (“Delivery” or “Deliver”).  Subject to Landlord’s right to enter the
Initial Premises to complete the Landlord’s Work (as defined below), Tenant may
commence Tenant’s Work with respect to Initial Premises upon Landlord’s Delivery
of the Initial Premises.  If Landlord
fails to timely Deliver the Initial Premises, Landlord shall not be liable to
Tenant for any loss or damage resulting therefrom, and this Lease shall not be
void or voidable except as provided herein. 
If Landlord does not Deliver the Initial Premises within 10 business
days of the Target Commencement Date for any reason other than Force Majeure
delays, this Lease may be terminated by Tenant by written notice given to
Landlord, and if so terminated by Tenant: 
(a) the Security Deposit, or any balance thereof (i.e., after
deducting therefrom all amounts to which Landlord is entitled under the
provisions of this Lease), shall be returned to Tenant, and (b) neither
Landlord nor Tenant shall have any further rights, duties or obligations under
this Lease, except with respect to provisions which expressly survive
termination of this Lease.  As used
herein, the term “Tenant’s Work”  shall have the meaning set forth for such terms in the “Work Letter” attached to this Lease as Exhibit C.  If Tenant does not elect to void this Lease
within 5 business days of the lapse of such 10 business day period, such right
to void this Lease shall be waived and this Lease shall remain in full force
and effect.


 


The “Commencement
Date” shall be the date Landlord Delivers the Initial Premises to
Tenant.  Upon request of Landlord, Tenant shall execute and
deliver a written acknowledgment of the Commencement Date and the expiration
date of the Term when such are established in the form of the “Acknowledgement
of Commencement Date” attached to this Lease as Exhibit D;
provided, however, Tenant’s failure to execute and deliver such
acknowledgment shall not affect Landlord’s or Tenant’s rights hereunder.  The “Term” of this
Lease shall be the Base Term, as defined above on the first page of this
Lease, and any Extension Term which Tenant may elect pursuant to Section 39
hereof.


 


Landlord and Tenant
acknowledge and agree that the Additional Premises are currently subject to a
lease agreement between Landlord and another tenant (“Existing
Tenant”).  Landlord shall
deliver the Additional Premises to Tenant promptly after the expiration of the
term of such other lease and the surrender of the Additional Premises by the
Existing Tenant.  The parties project the
date for delivery of the Additional Premises to be December 31, 2006 (the “Additional Premises Delivery Date”).  Until Landlord delivers the Additional
Premises to Tenant, the provisions of this Lease shall only apply to the
Initial Premises.  Thereafter, the
provisions of this Lease shall apply to both the Initial Premises and the
Additional Premises.  Upon the request of
Landlord, Tenant shall execute a written acknowledgment of the date of the delivery of the
Additional Premises to Tenant provided, however, Tenant’s failure
to execute and deliver such acknowledgment shall not affect Landlord’s rights
hereunder.


 


If Landlord fails to deliver the Additional Premises
to Tenant with Landlord’s Work substantially completed on or before the
Additional Premises Delivery Date, Landlord shall not be liable to Tenant for
any loss or damage resulting therefrom, and this Lease shall not be void or
voidable except as provided herein.  If
Landlord does not Deliver the Additional Premises to Tenant with Landlord’s
Work substantially completed on or before February 1, 2007, or, if there
are Force Majeure delays, on or before April 2, 2007, this Lease may be
terminated by Tenant by written notice given to Landlord, and if so terminated
by Tenant:  (a) the Security Deposit,
or any balance thereof (i.e., after deducting therefrom all amounts to which
Landlord is entitled under the provisions of this Lease), shall be returned to
Tenant, and (b) neither


 


2

















 


Landlord nor Tenant shall
have any further rights, duties or obligations under this Lease, except with
respect to provisions which expressly survive termination of this Lease.  If Tenant does not elect to void this Lease within 7 days
after Tenant has the right to do so pursuant to the second sentence of this
paragraph, Tenant’s right to void this Lease shall be waived and this Lease
shall remain in full force and effect


 


The Premises shall contain the previously used
furniture described on Exhibit H
(collectively, “Landlord’s Property”) for Tenant’s
use at no additional cost. Tenant shall not remove any of Landlord’s Property
from the Premises and shall return the same to Landlord at the expiration or
earlier termination of the Term in the same condition as received except for
normal wear and tear.


 


Landlord shall endeavor to cause Landlord’s Work with
respect to the Initial Premises to be constructed in the Premises within 6
months following the Commencement Date, and shall cause Landlord’s Work with
respect to the Additional Premises to be substantially completed no later than
the date of delivery of the Additional Premises to Tenant.  Tenant acknowledges that completion of
Landlord’s Work may be delayed depending on when the terms of the Existing
Tenant’s lease expires and the Existing Tenant vacates the Additional
Premises.  As used herein, the term “Landlord’s Work”  shall mean
substantial completion of the improvements described on Exhibit G
attached hereto. Landlord and its contractors and agents shall have the right
to enter the Premises to perform Landlord’s Work and Tenant shall cooperate
with Landlord in connection with the same. Landlord shall cooperate with Tenant
during the construction of Landlord’s Work to comply with Tenant’s reasonable
security requirements. Tenant acknowledges that Landlord’s Work may adversely
affect Tenant’s use and occupancy of the Premises.  Landlord shall complete Landlord’s Work
(including any punch list items) in a good and workmanlike manner. Tenant shall
have no right to abate, reduce or set-off any Rent in connection with Landlord’s
Work.


 


Except as set forth in this Lease:  (i) Tenant shall accept the Premises in
their condition as of the Commencement Date, subject to all applicable Legal
Requirements (as defined in Section 7 hereof); (ii) Landlord
shall have no obligation for any defects in the Premises, and (iii) Tenant’s
taking possession of the Premises shall be conclusive evidence that Tenant
accepts the Premises and that the Premises were in good condition at the time
possession was taken.


 


Tenant agrees and acknowledges that neither Landlord
nor any agent of Landlord has made any representation or warranty with respect
to the condition of all or any portion of the Premises or the Project, and/or
the suitability of the Premises or the Project for the conduct of Tenant’s
business, and Tenant waives any implied warranty that the Premises or the
Project are suitable for the Permitted Use. 
This Lease constitutes the complete agreement of Landlord and Tenant
with respect to the subject matter hereof and supersedes any and all prior
representations, inducements, promises, agreements, understandings and
negotiations which are not contained herein. 
Landlord in executing this Lease does so in reliance upon Tenant’s
representations, warranties, acknowledgments and agreements contained herein.


 


3.                                       Rent.


 


(a)                                  Base Rent. 
The Base Rent due for the first month that Tenant is required to pay
Base Rent under this Lease and the Security Deposit shall be due and payable on
delivery of an executed copy of this Lease to Landlord.  Tenant shall pay to Landlord in advance,
without demand, abatement, deduction or set-off, monthly installments of Base
Rent on or before the first day of each calendar month during the Term hereof,
in lawful money of the United States of America, at the office of Landlord for
payment of Rent set forth above, or to such other person or at such other place
as Landlord may from time to time designate in writing.  Payments of Base Rent for any fractional
calendar month shall be prorated.  The
obligation of Tenant to pay Base Rent and other sums to Landlord and the
obligations of Landlord under this Lease are independent obligations.  Tenant shall have no right at any time to
abate, reduce, or set-off any Rent (as defined in Section 5) due
hereunder except for any abatement as may be expressly provided in this Lease.


 


3

















 


Notwithstanding the
amount set forth as Base Rent on page 1 of this Lease, Base Rent shall be
due and payable as follows: (a) for
months 1 through 4 of the Base Term, the amount of $14,700.00 per month, (b) commencing
with month 5, the amount of $29,574.30 per month, and (c) commencing 120
days after the delivery of the Additional Premises with Landlord’s Work substantially
completed to Tenant, in the amount set forth on the first page of this
Lease.


 


(b)                                 Additional Rent.  In addition to Base Rent, Tenant agrees to pay to
Landlord as additional rent (“Additional Rent”):  (i) Tenant’s Share of “Operating
Expenses” (as defined in Section 5), and (ii) any and all
other amounts Tenant assumes or agrees to pay under the provisions of this
Lease, including, without limitation, any and all other sums that may become
due by reason of any default of Tenant or failure to comply with the
agreements, terms, covenants and conditions of this Lease to be performed by
Tenant, after any applicable notice and cure period.


 


4.                                       Base Rent Adjustments.


 


(a)                                  Adjustments for Tenant
Improvements.   For
each of the following incremental levels of the TI Allowance (as defined in the
Work Letter) disbursed to Tenant, Base Rent shall increase by the amount (per
rentable square foot per annum) for such increment of TI Allowance on the
schedule set forth below:


 




	
  TI Allowance

  (per rentable square foot)

  	
   

  	
  Incremental
  Increase in Base Rent (per rentable

  square foot per month)

  
	
  $0.00-$15.00

  	
   

  	
  $

  	
  0.021

  
	
  $15.01-$25.00

  	
   

  	
  $

  	
  0.025

  






 


For example, if the
entire TI Allowance was disbursed by Landlord, the initial Base Rent would be
increased to $3.215 per rentable square foot per month.  The TI Allowance shall only be available for
use by Tenant as part of the construction of the initial Tenant Improvements
and Tenant shall have no right thereafter to use any undisbursed portion thereof.  Following each disbursement of the TI
Allowance, Landlord shall provide Tenant with written notice of the amount of
the TI Allowance disbursed by Landlord and the amount of the increase to Base
Rent as a result thereof.


 


(b)                                 Annual Adjustments. 
Base Rent (exclusive, however, of any increase in Base Rent attributable
to the TI Allowance) shall be increased on each annual anniversary of the
Commencement Date during the Term of this Lease (each an “Adjustment
Date”) by multiplying the relevant portion of the Base Rent payable
immediately before such Adjustment Date by the Rent Adjustment Percentage and
adding the resulting amount to the Base Rent payable immediately before such
Adjustment Date.  Base Rent, as so
adjusted, shall thereafter be due as provided herein.  Base Rent adjustments for any fractional
calendar month shall be prorated.  “CPI Adjustment
Percentage” means (i) a
fraction, stated as a percentage, the numerator of which shall be the Index for
the calendar month 3 months before the month in which the Adjustment Date
occurs, and the denominator of which shall be the Index for the calendar month
3 months before the last Adjustment Date or, if no prior Base Rent adjustment
has been made, 3 months before the first day of the first full month during the
Term of this Lease, less (ii) 1.00. 
“Index” means the “Consumer
Price Index-All Urban Consumers-San Francisco Metropolitan Area, All Items”
compiled by the U.S. Department of Labor, Bureau of Labor Statistics, (1982-84
= 100). If a substantial change is made in the Index, the revised Index shall
be used, subject to such adjustments as Landlord may reasonably deem
appropriate in order to make the revised Index comparable to the prior
Index.  If the Bureau of Labor Statistics
ceases to publish the Index, then (a) the substitute Index published by
the Bureau of Labor Statistics shall be used, or (b) in the event the
Bureau of Labor Statistics does not publish a substitute Index, the successor
or most nearly comparable index, as reasonably determined by Landlord, shall be
used, subject to such adjustments as Landlord may reasonably deem appropriate
in order to make the new index comparable to the Index.  Landlord shall give Tenant written notice
indicating the Base Rent, as adjusted pursuant to this Section, and the method


 


4

















 


of computation and Tenant shall pay to Landlord an
amount equal to any underpayment of Base Rent by Tenant within 30 days of
Landlord’s notice to Tenant.  Failure to
deliver such notice shall not reduce, abate, waive or diminish Tenant’s
obligation to pay the adjusted Base Rent.


 


5.                                       Operating Expense Payments. Landlord shall deliver to Tenant a
written estimate of Operating Expenses for each calendar year during the Term
(the “Annual Estimate”), which may be revised
by Landlord from time to time during such calendar year.  Commencing on the Commencement Date and
thereafter on the first day of each month of the Term, Tenant shall pay
Landlord an amount equal to 1/12th of Tenant’s Share of the Annual Estimate.  Payments for any fractional calendar month
shall be prorated.


 


Notwithstanding anything
to the contrary contained herein, Tenant’s Share of Operating Expenses shall be
(i) 5.12% during months 1 through 4 of the Base Term, (ii) commencing
with month 5 of the Base Term, 10.30%, and (iii) commencing 120 days after delivery of the Additional Premises with Landlord’s Work substantially completed
to Tenant, in the amount set forth on the first page of this Lease.


 


The term “Operating Expenses”
means all costs and expenses of any kind or description whatsoever incurred or
accrued each calendar year by Landlord with respect to the Project (including,
without duplication, Taxes (as defined in Section 9), capital
repairs and improvements amortized over the lesser of 7 years and the useful
life of such capital items, and the costs of Landlord’s third party property
manager (not to exceed 3% of Base Rent) or, if there is no third party property
manager, administration rent in the amount of 3.0% of Base Rent), excluding
only:


 


(a)                                  the original construction costs of the
Project and renovation prior to the date of the Lease and costs of correcting
defects in such original construction or renovation;


 


(b)                                 capital expenditures for expansion of the
Project or capital expenditures for the addition of amenities (such as, for
example, expansion of the health club) not provided for tenants of the Building
as of the date of this Lease;


 


(c)                                  interest, principal payments of Mortgage
(as defined in Section 27) debts of Landlord, financing costs and
amortization of funds borrowed by Landlord, whether secured or unsecured and
all payments of base rent (but not taxes or operating expenses) under any
ground lease or other underlying lease of all or any portion of the Project;


 


(d)                                 depreciation of the Project (except for
capital improvements that are includable in Operating Expenses);


 


(e)                                  advertising, legal and space planning
expenses and leasing commissions and other costs and expenses incurred in
procuring and leasing space to tenants for the Project, including any leasing
office maintained in the Project, free rent and construction allowances for
tenants;


 


(f)                                    legal and other expenses incurred in the
negotiation or enforcement of leases;


 


(g)                                 completing, fixturing, improving,
renovating, painting, redecorating or other work, which Landlord pays for or
performs for other tenants within their premises, and costs of correcting
defects in such work;


 


(h)                                 costs of utilities outside normal
business hours sold to tenants of the Project;


 


(i)                                     costs to be reimbursed by other tenants
of the Project or Taxes to be paid directly by Tenant or other tenants of the
Project, whether or not actually paid;


 


(j)                                     salaries, wages, benefits and other
compensation paid to officers and employees of Landlord who are not assigned in
whole or in part to the operation, management, maintenance or repair


 


5

















 


of the Project, and to
the extent such persons perform services not in connection with the management,
operation, repair or maintenance of the Project;


 


(k)                                  general organizational, administrative
and overhead costs relating to maintaining Landlord’s existence, either as a
corporation, partnership, or other entity, including general corporate, legal
and accounting expenses;


 


(l)                                     costs (including attorneys’ fees and
costs of settlement, judgments and payments in lieu thereof) incurred in
connection with disputes with tenants, other occupants, or prospective tenants,
and costs and expenses, including legal fees, incurred in connection with negotiations
or disputes with employees, consultants, management agents, leasing agents,
purchasers or mortgagees of the Building;


 


(m)                               costs incurred by Landlord due to the
violation by Landlord, its employees, agents or contractors or any tenant of
the terms and conditions of any lease of space in the Project or any Legal
Requirement (as defined in Section 7);


 


(n)                                 penalties, fines or interest incurred as
a result of Landlord’s inability or failure to make payment of Taxes and/or to
file any tax or informational returns when due, or from Landlord«‘s failure to
make any payment of Taxes required to be made by Landlord hereunder before
delinquency;


 


(o)                                 overhead and profit increment paid to
Landlord or to subsidiaries or affiliates of Landlord for goods and/or services
in or to the Project to the extent the same exceeds the costs of such goods
and/or services rendered by unaffiliated third parties on a competitive basis;


 


(p)                                 costs of Landlord’s charitable or
political contributions, or of fine art maintained at the Project;


 


(q)                                 costs in connection with services
(including electricity), items or other benefits of a type which are not
standard for the Project and which are not available to Tenant without specific
charges therefor, but which are provided to another tenant or occupant of the
Project, whether or not such other tenant or occupant is specifically charged
therefor by Landlord;


 


(r)                                    costs incurred in the sale or refinancing
of the Project;


 


(s)                                  net income taxes of Landlord or the owner
of any interest in the Project, franchise, capital stock, gift, estate or
inheritance taxes or any federal, state or local documentary taxes imposed
against the Project or any portion thereof or interest therein;


 


(t)                                    any expenses otherwise includable within
Operating Expenses to the extent actually reimbursed by persons other than
tenants of the Project under leases for space in the Project;


 


(u)                                 any insurance deductibles to the extent
that they exceed $150,000, provided, however, that in the event that Tenant’s
Share of insurance deductibles exceed $50,000, Tenant shall have the right to
elect to fully amortize (with annualized interest on the unamortized amount at
the lesser of 15% or the maximum rate permitted by law in connection with this
Lease) Tenant’s Share of such insurance deductibles over the then remaining
number of months in the Term of the Lease and such payments shall be due on the
first day of each month;  and


 


(v)                                 the cost of
repairs or other work occasioned by fire, windstorm, earthquake, flood or other
casualty for which there would have been insurance proceeds if the applicable
coverage limit being maintained by Landlord with respect to such loss were
higher than the amount which Landlord elected to maintain (or for which
insurance proceeds would have been available had Landlord maintained the
insurance required to be maintained by Landlord pursuant to this Lease);
provided, however, that with respect to any repairs or other work occasioned by
a casualty (i) to the extent that any of such repairs or other work is
capital in nature, the cost of the same shall be excluded from Operating
Expenses and, (ii)


 


6

















 


in
no event shall Tenant’s Share of the cost of such repairs and other work (not
paid for by insurance proceeds) exceed $150,000 and if Tenant’s Share exceeds $50,000, Tenant
shall have the right to elect to fully amortize (with annualized interest on
the unamortized amount at the lesser of 15% or the maximum rate permitted by
law in connection with this Lease) Tenant’s Share over the then remaining
number of months in the Term of the Lease and such payments shall be due on the
first day of each month.


 


Within 90 days after the
end of each calendar year (or such longer period as may be reasonably
required), Landlord shall furnish to Tenant a statement (an “Annual Statement”) showing in reasonable detail:  (a) the total and Tenant’s Share of
actual Operating Expenses for the previous calendar year, and (b) the
total of Tenant’s payments in respect of Operating Expenses for such year.  If Tenant’s Share of actual Operating
Expenses for such year exceeds Tenant’s payments of Operating Expenses for such
year, the excess shall be due and payable by Tenant as Rent within 30 days
after delivery of such Annual Statement to Tenant.  If Tenant’s payments of Operating Expenses
for such year exceed Tenant’s Share of actual Operating Expenses for such year
Landlord shall pay the excess to Tenant within 30 days after delivery of such
Annual Statement, except that after the expiration, or earlier termination of
the Term or if Tenant is delinquent in its obligation to pay Rent, Landlord
shall pay the excess to Tenant after deducting all other amounts due
Landlord.  Landlord shall have the right
to amend the Annual Statement from time to time; provided, however, that
Landlord shall have no right, after the date which is 12 months after Landlord’s
delivery of the Annual Statement to Tenant, to amend the Annual Statement with
respect to (x) association fees if Landlord actually received a bill for
those fees prior to the expiration of such 12 month period and did not amend
the Annual Statement to reflect the same within such 12 month period, and (y) costs
for services (such as landscaping) where Landlord has entered into a direct contractual
relationship with the vendor providing the service and the timing of bills from
such vendor is within Landlord’s reasonable control.  The parties acknowledge that the preceding
limitation shall not apply to costs such as Taxes, Utilities or other matters
outside of Landlord’s reasonable control and shall not apply to any newly
billed association fees.


 


The Annual Statement shall be final and binding upon
Tenant unless Tenant, within 45 days after Tenant’s receipt thereof, shall
contest any item therein by giving written notice to Landlord, specifying each
item contested and the reason therefor.   If, during such 45 day period, Tenant
reasonably and in good faith questions or contests the accuracy of Landlord’s
statement of Tenant’s Share of Operating Expenses, Landlord will provide Tenant
with access to Landlord’s books and records relating to the operation of the
Project and such information as Landlord reasonably determines to be responsive
to Tenant’s questions (the “Expense Information”).  If after Tenant’s review of such Expense
Information, Landlord and Tenant cannot agree upon the amount of Tenant’s Share
of Operating Expenses, then Tenant shall have the right to have an independent
regionally recognized public accounting firm selected by Tenant, working
pursuant to a fee arrangement other than a contingent fee (at Tenant’s sole
cost and expense) and approved by Landlord (which approval shall not be
unreasonably withheld or delayed), audit and/or review the Expense Information
for the year in question (the “Independent Review”).  The results of any such Independent Review
shall be binding on Landlord and Tenant. 
If the Independent Review shows that the payments actually made by
Tenant with respect to Operating Expenses for the calendar year in question
exceeded Tenant’s Share of Operating Expenses for such calendar year, Landlord
shall at Landlord’s option either (i) credit the excess amount to the next
succeeding installments of estimated Operating Expenses or (ii) pay the
excess to Tenant within 30 days after delivery of such statement, except that
after the expiration or earlier termination of this Lease or if Tenant is
delinquent in its obligation to pay Rent, Landlord shall pay the excess to
Tenant after deducting all other amounts due Landlord.  If the Independent Review shows that Tenant’s
payments with respect to Operating Expenses for such calendar year were less
than Tenant’s Share of Operating Expenses for the calendar year, Tenant shall
pay the deficiency to Landlord within 30 days after delivery of such
statement.  If the Independent Review
shows that Tenant has overpaid with respect to Operating Expenses by more than
5% then Landlord shall reimburse Tenant for all costs incurred by Tenant for
the Independent Review.  Operating
Expenses for the calendar years in which Tenant’s obligation to share therein
begins and ends shall be prorated. 
Notwithstanding anything set forth herein to the contrary, if the
Building is not at least 95% occupied on average during any year of the Term,
Tenant’s Share of Operating Expenses for such year shall be computed as though
the Building had been 95% occupied on average during such year.


 


7

















 


“Tenant’s
Share” shall be the percentage set forth on the first page of
this Lease as Tenant’s Share as reasonably adjusted by Landlord for actual
changes in the physical size of the Premises or the Project occurring
thereafter; provided, however that Tenant’s Share shall not increase if
Landlord voluntarily takes any space in the Building “off line”. Landlord may
equitably increase Tenant’s Share for any item of expense or cost reimbursable
by Tenant that relates to a repair, replacement, or service that benefits only
the Premises or only a portion of the Project that includes the Premises or
that varies with occupancy or use provided Landlord makes such adjustments
equitably for all tenants of the Building. 
Base Rent, Tenant’s Share of Operating Expenses and all other amounts
payable by Tenant to Landlord hereunder are collectively referred to herein as “Rent.”


 


6.                                       Security
Deposit. Tenant shall deposit with Landlord, upon delivery of an executed copy
of this Lease to Landlord, a security deposit (the “Security
Deposit”) for the performance of all of Tenant’s obligations hereunder
in the amount set forth on page 1 of this Lease, which Security Deposit
shall be in the form of an unconditional and irrevocable letter of credit (the “Letter of Credit”):  (i) in
form and substance satisfactory to Landlord, (ii) naming Landlord as
beneficiary, (iii) expressly allowing Landlord to draw upon it at any time
from time to time by delivering to the issuer notice that Landlord is entitled
to draw thereunder, (iv) issued by an FDIC-insured financial institution
satisfactory to Landlord, and (v) redeemable by presentation of a sight
draft in the state of Landlord’s choice. 
If Tenant does not provide Landlord with a substitute Letter of Credit
complying with all of the requirements hereof at least 10 days before the
stated expiration date of any then current Letter of Credit, Landlord shall
have the right to draw the full amount of the current Letter of Credit and hold
the funds drawn in cash without obligation for interest thereon as the Security
Deposit.  The Security Deposit shall be
held by Landlord as security for the performance of Tenant’s obligations under
this Lease.  The Security Deposit is not
an advance rental deposit or a measure of Landlord’s damages in case of Tenant’s
default.  Upon each occurrence of a
Default (as defined in Section 20), Landlord may use all or any
part of the Security Deposit to pay delinquent payments due under this Lease,
and the cost of any damage, injury, expense or liability caused by such
Default, without prejudice to any other remedy provided herein or provided by
law.  Upon any such use of all or any
portion of the Security Deposit, if applied by making a draw on the Letter of
Credit, Tenant shall restore the Letter of Credit on demand to the full amount
of the Security Deposit, and if applied by expending the amounts held in cash
as a Security Deposit, Tenant shall pay Landlord on demand the amount that will
restore the Security Deposit to the amount set forth on Page 1 of this
Lease.  Tenant hereby waives the
provisions of any law, now or hereafter in force, including, but not limited
to, California Civil Code Section 1951.7,which provide that Landlord may
claim from a security deposit only those sums reasonably necessary to remedy
defaults in the payment of Rent, to repair damage caused by Tenant or to clean
the Premises, it being agreed that Landlord may, in addition, claim those sums
reasonably necessary to compensate Landlord for any other loss or damage,
foreseeable or unforeseeable, caused by the act or omission of Tenant or any
officer, employee, agent or invitee of Tenant. 
Upon bankruptcy or other debtor-creditor proceedings against Tenant, the
Security Deposit shall be deemed to be applied first to the payment of Rent and
other charges due Landlord for periods prior to the filing of such proceedings.  Upon any such use of all or any portion of
the Security Deposit, Tenant shall, within 5 days after demand from Landlord,
restore the Security Deposit to its original amount.  If Tenant shall fully perform every provision
of this Lease to be performed by Tenant, the Security Deposit, or any balance
thereof (i.e., after deducting therefrom all amounts to which Landlord is
entitled under the provisions of this Lease), shall be returned to Tenant (or,
at Landlord’s option, to the last assignee of Tenant’s interest hereunder)
within 90 days after the expiration or earlier termination of this Lease.


 


If
Landlord transfers its interest in the Project or this Lease, Landlord shall
either (a) transfer any Security Deposit then held by Landlord to a person
or entity assuming Landlord’s obligations under this Section 6, or (b) return
to Tenant any Security Deposit then held by Landlord and remaining after the
deductions permitted herein.  Upon such
transfer to such transferee or the return of the Security Deposit to Tenant,
Landlord shall have no further obligation with respect to the Security Deposit,
and Tenant’s right to the return of the Security Deposit shall apply solely
against Landlord’s transferee.  The
Security Deposit is not an advance rental deposit or a measure of Landlord’s
damages in case of Tenant’s default. 
Landlord’s obligation respecting the Security Deposit is that of a
debtor, not a trustee, and no interest shall accrue thereon.


 


8

















 


7.                                       Use. 
The Premises shall be used solely for the Permitted Use set forth in the
basic lease provisions on page 1 of this Lease, and in compliance with all
laws, orders, judgments, ordinances, regulations, codes, directives, permits,
licenses, covenants and restrictions now or hereafter applicable to the
Premises, and to the use and occupancy thereof, including, without limitation,
the Americans With Disabilities Act, 42 U.S.C. § 12101, et seq. (together with
the regulations promulgated pursuant thereto, “ADA”)
(collectively, “Legal Requirements” and each, a “Legal Requirement”).  Tenant shall, upon 5 days’ written notice
from Landlord, discontinue any use of the Premises which is declared by any
Governmental Authority (as defined in Section 9) having
jurisdiction to be a violation of a Legal Requirement.  Tenant will not use or permit the Premises to
be used for any purpose or in any manner that would void Tenant’s or Landlord’s
insurance, increase the insurance risk, or cause the disallowance of any
sprinkler or other credits.  The
provisions of the preceding sentence are intended to apply in the event that
Tenant’s use of the Premises changes from the use that Tenant has disclosed to
Landlord that Tenant will be making of the Premises as of the Commencement
Date. Landlord acknowledges that Landlord does not object to the use which
Tenant has disclosed to Landlord that it shall be making of the Premises as of
the Commencement Date and Tenant may continue to make such use of the Premises
during the Term of the Lease.  Tenant
shall not permit any part of the Premises to be used as a “place of public
accommodation”, as defined in the ADA or any similar legal requirement. Tenant
shall reimburse Landlord promptly upon demand for any additional premium
charged for any such insurance policy by reason of Tenant’s failure to comply
with the provisions of this Section or otherwise caused by Tenant’s use
and/or occupancy of the Premises.  Tenant
will use the Premises in a careful, safe and proper manner and will not commit
or permit waste, overload the floor or structure of the Premises, subject the
Premises to use that would damage the Premises or obstruct or interfere with
the rights of Landlord or other tenants or occupants of the Project, including
conducting or giving notice of any auction, liquidation, or going out of
business sale on the Premises, or using or allowing the Premises to be used for
any unlawful purpose.  Tenant shall cause
any equipment or machinery to be installed in the Premises so as to reasonably
prevent sounds or vibrations from the Premises from extending into Common
Areas, or other space in the Project. 
Tenant shall not place any machinery or equipment weighing 500 pounds or
more in or upon the Premises or transport or move such items through the Common
Areas of the Project or in the Project elevators without the prior written
consent of Landlord which consent shall not be unreasonably withheld.  Except as may be provided under the Work
Letter and/or consented to by Landlord in connection with any Alterations,
Tenant shall not, without the prior written consent of Landlord, use the
Premises in any manner which will require ventilation, air exchange, heating,
gas, steam, electricity or water beyond the existing capacity of the Project as
proportionately allocated to the Premises based upon Tenant’s Share as usually
furnished for the Permitted Use.


 


Tenant, at its sole expense, shall make any
alterations or modifications to the interior or the exterior of the Premises or
the Project that are required by Legal Requirements (including, without
limitation, compliance of the Premises with the ADA) related to Tenant’s use or
occupancy of the Premises. 
Notwithstanding any other provision herein to the contrary, Tenant shall
be responsible for any and all demands, claims, liabilities, losses, costs,
expenses, actions, causes of action, damages or judgments, and all reasonable
expenses incurred in investigating or resisting the same (including, without
limitation, reasonable attorneys’ fees, charges and disbursements and costs of
suit) (collectively, “Claims”)
arising out of or in connection with Legal Requirements solely related to
Tenant’s use or occupancy of the Premises, provided that if alterations or
modifications to the Building or Project (that are not improvements made for
the exclusive benefit of another tenant) are required as a result of the
occupancy of the Building by one or more tenants, and not as a result solely of
Tenant’s occupancy, the cost of the alterations or modifications shall be paid
by Landlord as an Operating Expense. Tenant shall indemnify, defend, hold and
save Landlord harmless from and against any and all Claims arising out of or in
connection with any failure of the Premises to comply with any Legal
Requirement.


 


8.                                       Holding Over. 
If, with Landlord’s express written consent, Tenant retains possession
of the Premises after the termination of the Term, (i) unless otherwise
agreed in such written consent, such possession shall be subject to immediate
termination by Landlord at any time, (ii) all of the other terms and
provisions of this Lease (including, without limitation, the adjustment of Base
Rent pursuant to Section 4 hereof) shall remain in full force and
effect (excluding any expansion or renewal option or other similar right or
option) during such holdover period, (iii) Tenant shall continue to pay
Base Rent in the


 


9

















 


amount payable upon the
date of the expiration or earlier termination of this Lease or such other
amount as Landlord may indicate, in Landlord’s sole and absolute discretion, in
such written consent, and (iv) all other payments shall continue under the
terms of this Lease.  If Tenant remains
in possession of the Premises after the expiration or earlier termination of
the Term without the express written consent of Landlord, (A) Tenant shall
become a tenant at sufferance upon the terms of this Lease except that the
monthly rental shall be equal to 150% of Rent in effect during the last 30 days
of the Term, and (B) Tenant shall be responsible for all damages suffered
by Landlord resulting from or occasioned by Tenant’s holding over, including
consequential damages.  No holding over
by Tenant, whether with or without consent of Landlord, shall operate to extend
this Lease except as otherwise expressly provided, and this Section 8
shall not be construed as consent for Tenant to retain possession of the
Premises.  Acceptance by Landlord of Rent
after the expiration of the Term or earlier termination of this Lease shall not
result in a renewal or reinstatement of this Lease.


 


9.                                       Taxes. 
Landlord shall pay, as part of Operating Expenses, all taxes, levies,
assessments and governmental charges of any kind (collectively referred to as “Taxes”) imposed by any federal, state, regional, municipal,
local or other governmental authority or agency, including, without limitation,
quasi-public agencies (collectively, “Governmental Authority”)
during the Term, including, without limitation, all Taxes:  (i) imposed on or measured by or based,
in whole or in part, on rent payable to Landlord under this Lease and/or from
the rental by Landlord of the Project or any portion thereof, or (ii) based
on the square footage, assessed value or other measure or evaluation of any
kind of the Premises or the Project, or (iii) assessed or imposed by or on
the operation or maintenance of any portion of the Premises or the Project,
including parking, or (iv) assessed or imposed by, or at the direction of,
or resulting from statutes or regulations, or interpretations thereof,
promulgated by, any Governmental Authority, or (v) imposed as a license or
other fee on Landlord’s business of leasing space in the Project.  Landlord may contest by appropriate legal
proceedings the amount, validity, or application of any Taxes or liens securing
Taxes.  Taxes shall not include any net
income taxes imposed on Landlord unless such net income taxes are in
substitution for any Taxes payable hereunder. 
If any such Tax is levied or assessed directly against Tenant, then
Tenant shall be responsible for and shall pay the same at such times and in
such manner as the taxing authority shall require.  Tenant shall pay, prior to delinquency, any
and all Taxes levied or assessed against any personal property or trade
fixtures placed by Tenant in the Premises, whether levied or assessed against
Landlord or Tenant.  If any Taxes on
Tenant’s personal property or trade fixtures are levied against Landlord or
Landlord’s property, or if the assessed valuation of the Project is increased
by a value attributable to improvements in or alterations to the Premises,
whether owned by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, higher than the base valuation on
which Landlord from time-to-time allocates Taxes to all tenants in the Project,
Landlord shall have the right, but not the obligation, to pay such Taxes.  Landlord’s determination of any excess
assessed valuation shall be binding and conclusive, absent manifest error.  The amount of any such payment by Landlord
shall constitute Additional Rent due from Tenant to Landlord within 30 days of
Landlord’s demand.


 


10.                                 Parking. 
Subject to all matters of record, Force Majeure, a Taking (as defined in
Section 19 below) and the exercise by Landlord of its rights hereunder,
Tenant shall have the right, in common with other tenants of the Project pro
rata in accordance with the rentable area of the Premises and the rentable
areas of the Project occupied by such other tenants, to park in those areas
designated for non-reserved parking, subject in each case to Landlord’s rules and
regulations.  Landlord may allocate
parking spaces among Tenant and other tenants in the Project pro rata as
described above if Landlord determines that such parking facilities are
becoming crowded.  Landlord shall not be
responsible for enforcing Tenant’s parking rights against any third parties,
including other tenants of the Project. 
If Landlord elects to enforce parking rights, Landlord shall not do so
in a discriminatory manner.


 


11.                                 Utilities, Services.


 


Landlord shall provide, subject to the terms of this Section 11,
water, electricity, heat, light, power, telephone, sewer, and other utilities
(including gas and fire sprinklers to the extent the Project is plumbed for
such services), refuse and trash collection and janitorial services
(collectively, “Utilities”).  Except for any separately metered Utilities
to the Premises, Landlord shall pay, as Operating Expenses or subject to


 


10
















 


Tenant’s reimbursement
obligation, for all Utilities used on the Premises, all maintenance charges for
Utilities, and any storm sewer charges or other similar charges for Utilities
imposed by any Governmental Authority or Utility provider, and any taxes, penalties,
surcharges or similar charges thereon. 
Landlord may cause, at Tenant’s expense, any Utilities to be separately
metered or charged directly to Tenant by the provider.  Tenant shall pay directly to the Utility
provider, prior to delinquency, any separately metered Utilities and services
which may be furnished to Tenant or the Premises during the Term.  Tenant shall pay, as part of Operating
Expenses, its share of all charges for jointly metered Utilities based upon
consumption, as reasonably determined by Landlord.  No interruption or failure of Utilities, from
any cause whatsoever other than Landlord’s willful misconduct, shall result in
eviction or constructive eviction of Tenant, termination of this Lease or the
abatement of Rent.  Tenant agrees to
limit use of water and sewer with respect to Common Areas to normal restroom
use.


 


Notwithstanding anything in this Lease to the
contrary, if any interruption or failure of Utilities or services is due to the
gross negligence or willful misconduct of Landlord, its employees, agents or
contractors, and such interruption renders a substantial portion of the
Premises untenantable for their intended purposes for more than 5 continuous
business days, and if the Premises remain untenantable for a period longer than
is covered by Tenant’s business interruption insurance, then, as Tenant’s sole
and exclusive remedy for such failure, Tenant’s obligation to pay Base Rent
shall, to the extent that Landlord is entitled to receive insurance proceeds in
connection with the abatement in question, abate for the period commencing with
the expiration of coverage under Tenant’s business interruption insurance and
for so long as the Premises remains substantially untenantable.


 


12.                               Alterations and Tenant’s Property. 
Any alterations, additions, or improvements made to the Premises by or
on behalf of Tenant, including additional locks or bolts of any kind or nature
upon any doors or windows in the Premises, but excluding installation, removal
or realignment of furniture systems (other than removal of furniture systems
owned or paid for by Landlord) not involving any modifications to the structure
or connections (other then by ordinary plugs or jacks) to Building Systems (as
defined in Section 13) (“Alterations”)
shall be subject to Landlord’s prior written consent, which may be given or
withheld in Landlord’s sole discretion if any such Alteration affects the
structure and shall otherwise not be unreasonably withheld.  It shall be reasonable for Landlord to
withhold its consent to any Alteration which affects Building Systems if such
Alteration will require ventilation, air exchange, heating, gas, steam,
electricity or water beyond the existing capacity of the Project as
proportionately allocated to the Premises based upon Tenant’s Share as usually
furnished for the Permitted Use and/or in the event that Landlord determines
that a Building System upgrade is required unless Tenant pays 100% of the cost
incurred by Landlord in connection with modifying or upgrading the applicable Building
System.   If Landlord approves any
Alterations, Landlord may impose such conditions on Tenant in connection with
the commencement, performance and completion of such Alterations as Landlord
may deem reasonably appropriate.  Any
request for approval shall be in writing, delivered not less than 15 business
days in advance of any proposed construction, and accompanied by plans,
specifications, bid proposals, work contracts and such other information
concerning the nature and cost of the alterations as may be reasonably
requested by Landlord, including the identities and mailing addresses of all
persons performing work or supplying materials. 
Landlord’s right to review plans and specifications and to monitor
construction shall be solely for its own benefit, and Landlord shall have no
duty to ensure that such plans and specifications or construction comply with
applicable Legal Requirements.  Tenant
shall cause, at its sole cost and expense, all Alterations to comply with
insurance requirements and with Legal Requirements and shall implement at its
sole cost and expense any alteration or modification required by Legal
Requirements as a result of any Alterations. 
Tenant shall pay to Landlord, as Additional Rent, on demand an amount
equal to 3% of all charges incurred by Tenant or its contractors or agents in
connection with any Alteration to cover Landlord’s overhead and expenses for
plan review, coordination, scheduling and supervision.  Before Tenant begins any Alteration, Landlord
may post on and about the Premises notices of non-responsibility pursuant to
applicable law.  Tenant shall reimburse
Landlord for, and indemnify and hold Landlord harmless from, any expense
incurred by Landlord by reason of faulty work done by Tenant or its contractors
or inadequate cleanup.


 


Tenant shall furnish security or make other
arrangements satisfactory to Landlord to assure payment for the completion of
all Alterations work free and clear of liens, and shall provide (and cause 


 


11

















 


each contractor or
subcontractor to provide) certificates of insurance for workers’ compensation
and other coverage in amounts and from an insurance company satisfactory to
Landlord protecting Landlord against liability for personal injury or property
damage during construction.  Upon
completion of any Alterations, Tenant shall deliver to Landlord:  (i) sworn statements setting forth the
names of all contractors and subcontractors who did the work and final lien
waivers from all such contractors and subcontractors; and (ii) “as built”
plans for any such Alteration.


 


Except
for Removable Installations (as hereinafter defined), all Installations (as
hereinafter defined) shall be and shall remain the property of Landlord during
the Term and following the expiration or earlier termination of the Term, shall
not be removed by Tenant at any time during the Term, and shall remain upon and
be surrendered with the Premises as a part thereof.  Notwithstanding the foregoing, Landlord may,
at the time its approval of any such Installation is requested, notify Tenant
that Landlord requires that Tenant remove such Installation upon the expiration
or earlier termination of the Term, in which event Tenant shall remove such
Installation in accordance with the immediately succeeding sentence.  Upon the expiration or earlier termination of
the Term, Tenant shall remove (i) all wires, cables or similar equipment
which Tenant has installed in the Premises or in the risers or plenums of the
Building, (ii) any Installations for which Landlord has given Tenant
notice of removal in accordance with the immediately preceding sentence, and (iii) all
of Tenant’s Property (as hereinafter defined), and Tenant shall restore and
repair any damage caused by or occasioned as a result of such removal,
including, without limitation, capping off all such connections behind the
walls of the Premises and repairing any holes. 
During any restoration period beyond the expiration or earlier
termination of the Term, Tenant shall pay Rent to Landlord as provided herein
as if said space were otherwise occupied by Tenant.  If Landlord is requested by Tenant or any
lender, lessor or other person or entity claiming an interest in any of Tenant’
Property to waive any lien Landlord may have against any of Tenant’s Property,
and Landlord consents to such waiver, then Landlord shall be entitled to be
paid as administrative rent a fee of $1,000 per occurrence for its time and
effort in preparing and negotiating such a waiver of lien.


 


For purposes of this Lease, (w)  “Removable Installations”
means any items listed on Exhibit F
attached hereto and any items agreed by Landlord in writing to be included on Exhibit F in the future, (x) “Tenant’s Property” means Removable Installations and, other
than Installations, any personal
property or equipment of Tenant that may be removed without material damage to
the Premises, and (z) “Installations”
means all property of any kind paid for with the TI Fund, all Alterations, all
fixtures, and all partitions, hardware, built-in machinery, built-in casework
and cabinets and other similar additions, equipment, property and improvements
built into the Premises so as to become an integral part of the Premises,
including, without limitation, fume hoods which penetrate the roof or plenum
area, built-in cold rooms, built-in warm rooms, walk-in cold rooms, walk-in
warm rooms, deionized water systems, glass washing equipment, autoclaves,
chillers, built-in plumbing, electrical and mechanical equipment and systems,
and any power generator and transfer switch.


 


13.                               Landlord’s Repairs. 
Landlord, as an Operating Expense, shall maintain all of the structural,
exterior, parking and other Common Areas of the Project, including HVAC,
plumbing, fire sprinklers, elevators and all other building systems serving the
Premises and other portions of the Project (“Building
Systems”), in good repair, reasonable wear and tear and uninsured
losses and damages caused by Tenant, or by any of Tenant’s agents, servants,
employees, invitees and contractors (collectively, “Tenant
Parties”) excluded.  Losses
and damages caused by Tenant or any Tenant Party shall be repaired by Landlord,
to the extent not covered by insurance, at Tenant’s sole cost and expense.  Landlord reserves the right to stop Building
Systems services when necessary (i) by reason of accident or emergency, or
(ii) for planned repairs, alterations or improvements, which are, in the
judgment of Landlord, desirable or necessary to be made, until said repairs,
alterations or improvements shall have been completed.  Landlord shall have no responsibility or
liability for failure to supply Building Systems services during any such
period of interruption; provided, however, that Landlord shall,
except in case of emergency, make a commercially reasonable effort to give
Tenant 24 hours advance notice of any planned stoppage of Building Systems
services for routine maintenance, repairs, alterations or improvements.  Tenant shall promptly give Landlord written
notice of any repair required by Landlord pursuant to this Section, after which
Landlord shall make a commercially reasonable effort to effect such
repair.  Landlord shall not be liable for
any failure to make any repairs or to perform any maintenance 


 


12

















 


unless such failure shall
persist for an unreasonable time after Tenant’s written notice of the need for
such repairs or maintenance.  Tenant
waives its rights under any state or local law to terminate this Lease or to
make such repairs at Landlord’s expense and agrees that the parties’ respective
rights with respect to such matters shall be solely as set forth herein.  Repairs required as the result of fire,
earthquake, flood, vandalism, war, or similar cause of damage or destruction
shall be controlled by Section 18.


 


14.                               Tenant’s Repairs. 
Subject to Section 13 hereof, Tenant, at its expense, shall
repair, replace and maintain in good condition all portions of the Premises,
including, without limitation, entries, doors, ceilings, interior windows, interior
walls, and the interior side of demising walls. 
Such repair and replacement may include capital expenditures and repairs
whose benefit may extend beyond the Term. 
Should Tenant fail to make any such repair or replacement or fail to
maintain the Premises, Landlord shall give Tenant notice of such failure.  If Tenant fails to commence cure of such
failure within 10 days of Landlord’s notice, and thereafter diligently
prosecute such cure to completion, Landlord may perform such work and shall be
reimbursed by Tenant within 10 days after demand therefor; provided, however,
that if such failure by Tenant creates or could create an emergency, Landlord
may immediately commence cure of such failure and shall thereafter be entitled
to recover the costs of such cure from Tenant. 
Subject to Sections 17 and 18, Tenant shall bear the full
uninsured cost of any repair or replacement to any part of the Project that
results from damage caused by Tenant or any Tenant Party and any repair that
benefits only the Premises.


 


15.                               Mechanic’s Liens. 
Tenant shall discharge, by bond or otherwise, any mechanic’s lien filed
against the Premises or against the Project for work claimed to have been done
for, or materials claimed to have been furnished to, Tenant within 10 days
after the filing thereof, at Tenant’s sole cost and shall otherwise keep the
Premises and the Project free from any liens arising out of work performed,
materials furnished or obligations incurred by Tenant.  Should Tenant fail to discharge any lien
described herein, Landlord shall have the right, but not the obligation, to pay
such claim or post a bond or otherwise provide security to eliminate the lien
as a claim against title to the Project and the cost thereof shall be
immediately due from Tenant as Additional Rent. 
If Tenant shall lease or finance the acquisition of office equipment,
furnishings, or other personal property of a removable nature utilized by
Tenant in the operation of Tenant’s business, Tenant warrants that any Uniform
Commercial Code Financing Statement filed as a matter of public record by any
lessor or creditor of Tenant will upon its face or by exhibit thereto indicate
that such Financing Statement is applicable only to removable personal property
of Tenant located within the Premises. 
In no event shall the address of the Project be furnished on the
statement without qualifying language as to applicability of the lien only to
removable personal property, located in an identified suite held by Tenant.


 


16.                               Indemnification. 
Tenant hereby indemnifies and agrees to defend, save and hold Landlord
harmless from and against any and all Claims for injury or death to persons or
damage to property occurring within or about the Premises, arising directly or
indirectly out of use or occupancy of the Premises or a breach or default by
Tenant in the performance of any of its obligations hereunder, unless caused
solely by the willful misconduct or gross negligence of Landlord or Landlord’s
officers, directors, employees or agents. 
Landlord shall not be liable to Tenant for, and Tenant assumes all risk
of damage to, personal property (including, without limitation, loss of records
kept within the Premises).  Tenant
further waives any and all Claims for injury to Tenant’s business or loss of
income relating to any such damage or destruction of personal property
(including, without limitation, any loss of records).  Landlord shall not be liable for any damages
arising from any act, omission or neglect of any tenant in the Project or of
any other third party.


 


17.                               Insurance. 
Landlord shall maintain all risk property and, if applicable, sprinkler
damage insurance covering the full replacement cost of the Project or such
lesser coverage amount as Landlord may elect provided such coverage
amount is not less than 90% of such full replacement cost.  Landlord shall further procure and maintain
commercial general liability insurance with a single loss limit of not less
than $2,000,000 for bodily injury and property damage with respect to the
Project.  Landlord may, but is not
obligated to, maintain such other insurance and additional coverages as it may
deem necessary, including, but not limited to, flood, environmental hazard and
earthquake, loss or failure of building equipment, errors and omissions, rental
loss during the period of repair or rebuilding, workers’ 


 


13

















 


compensation insurance
and fidelity bonds for employees employed to perform services and insurance for
any improvements installed by Tenant or which are in addition to the standard
improvements customarily furnished by Landlord without regard to whether or not
such are made a part of the Project.  All
such insurance shall be included as part of the Operating Expenses.  The Project may be included in a blanket
policy (in which case the cost of such insurance allocable to the Project will
be determined by Landlord based upon the insurer’s cost calculations).  Tenant
shall also reimburse Landlord for any increased premiums or additional
insurance which Landlord reasonably deems necessary as a result of Tenant’s use
of the Premises.  The use which
Tenant has disclosed to Landlord that it shall be making of the Premises as of
the Commencement Date shall not, as of the Commencement Date, result in an
increase in Landlord’s insurance premium or require additional insurance.


 


Tenant, at its sole cost and expense, shall maintain
during the Term:  all risk property
insurance with business interruption and extra expense coverage, covering the
full replacement cost of all property and improvements installed or placed in
the Premises by Tenant at Tenant’s expense; workers’ compensation insurance
with no less than the minimum limits required by law; employer’s liability
insurance with such limits as required by law; and commercial general liability
insurance, with a minimum limit of not less than $2,000,000 per occurrence for
bodily injury and property damage with respect to the Premises.  The
commercial general liability insurance policy shall name Landlord, its officers,
directors, employees, managers, agents, invitees and contractors (collectively,
“Landlord Parties”), as additional
insureds; shall insure on an occurrence and not a claims-made basis; shall be
issued by insurance companies which have a rating of not less than policyholder
rating of A and financial category rating of at least Class X in “Best’s
Insurance Guide”; shall not be cancelable for nonpayment of premium unless 30
days prior written notice shall have been given to Landlord from the insurer;
contain a hostile fire endorsement and a contractual liability endorsement; and
provide primary coverage to Landlord (any policy issued to Landlord providing
duplicate or similar coverage shall be deemed excess over Tenant’s policies).  Copies of such policies (if requested by
Landlord), or certificates of insurance showing the limits of coverage required
hereunder and showing Landlord as an additional insured, along with reasonable
evidence of the payment of premiums for the applicable period, shall be
delivered to Landlord by Tenant upon commencement of the Term and upon each
renewal of said insurance.  Tenant’s
policy may be a “blanket policy” with an aggregate per location endorsement
which specifically provides that the amount of insurance shall not be prejudiced
by other losses covered by the policy. 
Tenant shall, at least 5 days prior to the expiration of such policies,
furnish Landlord with renewal certificates.


 


In each instance where insurance is to name Landlord
as an additional insured, Tenant shall upon written request of Landlord also
designate and furnish certificates so evidencing Landlord as additional insured
to:  (i) any lender of Landlord
holding a security interest in the Project or any portion thereof, (ii) the
landlord under any lease wherein Landlord is tenant of the real property on
which the Project is located, if the interest of Landlord is or shall become
that of a tenant under a ground or other underlying lease rather than that of a
fee owner, and/or (iii) any management company retained by Landlord to
manage the Project.


 


The property insurance obtained by Landlord and Tenant
shall include a waiver of subrogation by the insurers and all rights based upon
an assignment from its insured, against Landlord or Tenant, and their
respective officers, directors, employees, managers, agents, invitees and
contractors (“Related Parties”), in connection
with any loss or damage thereby insured against.  Neither party nor its respective Related
Parties shall be liable to the other for loss or damage caused by any risk
insured against under property insurance required to be maintained hereunder
including loss or damage to any building, structure, or tangible personal
property of Landlord, Tenant or their respective Related Parties, and each
party waives any claims against the other party, and its respective Related
Parties, for such loss or damage even though such loss or damage might have
been occasioned by the negligence of Landlord, Tenant or their respective
Related Parties, if such loss or damage would fall within the scope of an all
risk policy of insurance.  The failure of
a party to insure its property shall not void this waiver.  Landlord and its respective Related Parties
shall not be liable for, and Tenant hereby waives all claims against such parties
for, business interruption and losses occasioned thereby sustained by Tenant or
any person claiming through Tenant resulting from any accident or occurrence in
or upon the Premises or the Project from any cause whatsoever.  If the foregoing waivers shall contravene any
law with respect to exculpatory 


 


14

















 


agreements, the liability
of Landlord or Tenant shall be deemed not released but shall be secondary to
the other’s insurer.


 


Landlord may require insurance policy limits to be
raised to conform with requirements of Landlord’s lender and/or to bring
coverage limits to levels then being generally required of new tenants within
the Project; provided, however, that the increased amount of coverage is consistent
with coverage amounts then being required by institutional owners of similar
projects with tenants occupying similar size premises in the geographical area
in which the Project is located.


 


18.                               Restoration. If, at any time during the Term, the
Project or the Premises are damaged or destroyed by a fire or other insured
casualty, Landlord shall notify Tenant within 60 days after discovery of such
damage as to the amount of time Landlord reasonably estimates it will take to
restore the Project or the Premises, as applicable (the “Restoration
Period”).  If the Restoration
Period is estimated to exceed 12 months (the “Maximum
Restoration Period”), Landlord may, in such notice, elect to
terminate this Lease as of the date that is 75 days after the date of discovery
of such damage or destruction; provided, however, that notwithstanding
Landlord’s election to restore, Tenant may elect to terminate this Lease by
written notice to Landlord delivered within 5 business days of receipt of a
notice from Landlord estimating a Restoration Period for the Premises longer
than the Maximum Restoration Period. 
Unless either Landlord or Tenant so elect to terminate this Lease,
Landlord shall, subject to receipt of sufficient insurance proceeds (with any
deductible to be treated as a current Operating Expense), promptly restore the
Premises (excluding the improvements installed by Tenant or by Landlord and
paid for by Tenant), subject to delays arising from the collection of insurance
proceeds, from Force Majeure events or as needed to obtain any license,
clearance or other authorization of any kind required to enter into and restore
the Premises issued by any Governmental Authority having jurisdiction over the
use, storage, handling, treatment, generation, release, disposal, removal or
remediation of Hazardous Materials (as defined in Section 30) in,
on or about the Premises (collectively referred to herein as “Hazardous Materials Clearances”); provided, however,
that if repair or restoration of the Premises is not substantially complete as
of the end of the Maximum Restoration Period or, if longer, the Restoration
Period, Landlord may, in its sole and absolute discretion, elect not to proceed
with such repair and restoration, or Tenant may by written notice to Landlord
delivered within 5 business days of the expiration of the Maximum Restoration
Period or, if longer, the Restoration Period, elect to terminate this Lease, in
which event Landlord shall be relieved of its obligation to make such repairs
or restoration and this Lease shall terminate as of the date that is 75 days
after the later of:  (i) discovery
of such damage or destruction, or (ii) the date all required Hazardous
Materials Clearances are obtained, but Landlord shall retain any Rent paid and
the right to any Rent payable by Tenant prior to such election by Landlord or
Tenant.


 


Tenant, at its expense, shall promptly perform,
subject to delays arising from the collection of insurance proceeds, from Force
Majeure (as defined in Section 34) events or to obtain Hazardous
Material Clearances, all repairs or restoration not required to be done by
Landlord and shall promptly re-enter the Premises and commence doing business
in accordance with this Lease. 
Notwithstanding the foregoing, Landlord may terminate this Lease if the
Premises are damaged during the last 1 year of the Term and Landlord reasonably
estimates that it will take more than 2 months to repair such damage, or if
insurance proceeds are not available for such restoration.  Rent shall be abated from the date all
required Hazardous Material Clearances are obtained until the Premises are
repaired and restored, in the proportion which the area of the Premises, if
any, which is not usable by Tenant bears to the total area of the Premises,
unless Landlord provides Tenant with other space during the period of repair
that is suitable for the temporary conduct of Tenant’s business.  Such abatement shall be the sole remedy of
Tenant, and except as provided in this Section 18, Tenant waives
any right to terminate the Lease by reason of damage or casualty loss.


 


The provisions of this Lease, including this Section 18,
constitute an express agreement between Landlord and Tenant with respect to any
and all damage to, or destruction of, all or any part of the Premises, or any other
portion of the Project, and any statute or regulation which is now or may
hereafter be in effect shall have no application to this Lease or any damage or
destruction to all or any part of the 


 


15

















 


Premises or any other
portion of the Project, the parties hereto expressly agreeing that this Section 18
sets forth their entire understanding and agreement with respect to such
matters.


 


19.                               Condemnation. 
If the whole or any material part of the Premises or the Project is
taken for any public or quasi-public use under governmental law, ordinance, or
regulation, or by right of eminent domain, or by private purchase in lieu
thereof (a “Taking” or “Taken”),
and the Taking would in Landlord’s reasonable judgment either prevent or
materially interfere with Tenant’s use of the Premises or materially interfere
with or impair Landlord’s ownership or operation of the Project, then upon
written notice by Landlord this Lease shall terminate and Rent shall be
apportioned as of said date.  If part of
the Premises shall be Taken, and this Lease is not terminated as provided
above, Landlord shall promptly restore the Premises and the Project as nearly
as is commercially reasonable under the circumstances to their condition prior
to such partial Taking and the rentable square footage of the Building, the
rentable square footage of the Premises, Tenant’s Share of Operating Expenses
and the Rent payable hereunder during the unexpired Term shall be reduced to
such extent as may be fair and reasonable under the circumstances.  Upon any such Taking, Landlord shall be
entitled to receive the entire price or award from any such Taking without any
payment to Tenant, and Tenant hereby assigns to Landlord Tenant’s interest, if
any, in such award.  Tenant shall have
the right, to the extent that same shall not diminish Landlord’s award, to make
a separate claim against the condemning authority (but not Landlord) for such
compensation as may be separately awarded or recoverable by Tenant for moving
expenses and damage to Tenant’s trade fixtures, if a separate award for such
items is made to Tenant.  Tenant hereby
waives any and all rights it might otherwise have pursuant to any provision of
state law to terminate this Lease upon a partial Taking of the Premises or the
Project.


 


20.                               Events of Default. 
Each of the following events shall be a default (“Default”)
by Tenant under this Lease:


 


(a)                                 Payment Defaults. 
Tenant shall fail to pay any installment of Rent or any other payment
hereunder when due; provided, however, that Landlord will give Tenant notice
and an opportunity to cure any failure to pay Rent within 3 days of any such
notice not more than once in any 12 month period and Tenant agrees that such
notice shall be in lieu of and not in addition to, or shall be deemed to be,
any notice required by law.


 


(b)                                 Insurance. 
Any insurance required to be maintained by Tenant pursuant to this Lease
shall be canceled or terminated or shall expire or shall be reduced or
materially changed, or Landlord shall receive a notice of nonrenewal of any
such insurance and Tenant shall fail to obtain replacement insurance at least
20 days before the expiration of the current coverage.


 


(c)                                  Abandonment. 
Tenant shall abandon the Premises. Tenant shall not be deemed to have
abandoned the Premises if (i) Tenant provides Landlord with reasonable
advance notice prior to vacating and, at the time of vacating the Premises,
Tenant completes Tenant’s obligations with respect to the Surrender Plan in
compliance with Section 28, (ii) Tenant has made reasonable
arrangements with Landlord for the security of the Premises for the balance of
the Term, and (iii) Tenant continues during the balance of the Term to
satisfy all of its obligations under the Lease as they come due.


 


(d)                                 Improper Transfer. 
Tenant shall assign, sublease or otherwise transfer or attempt to
transfer all or any portion of Tenant’s interest in this Lease or the Premises
except as expressly permitted herein, or Tenant’s interest in this Lease shall
be attached, executed upon, or otherwise judicially seized and such action is
not released within 90 days of the action.


 


(e)                                  Liens. 
Tenant shall fail to discharge or otherwise obtain the release of any
lien placed upon the Premises in violation of this Lease within 10 days after
any such lien is filed against the Premises.


 


(f)                                   Insolvency Events. 
Tenant or any guarantor or surety of Tenant’s obligations hereunder
shall:  (A) make a general
assignment for the benefit of creditors; (B) commence any case, proceeding
or 


 


16

















 


other action seeking to
have an order for relief entered on its behalf as a debtor or to adjudicate it
a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or of any substantial part of its property (collectively a “Proceeding for Relief”); (C) become the subject of any
Proceeding for Relief which is not dismissed within 90 days of its filing or
entry; or (D) die or suffer a legal disability (if Tenant, guarantor, or
surety is an individual) or be dissolved or otherwise fail to maintain its
legal existence (if Tenant, guarantor or surety is a corporation, partnership
or other entity).


 


(g)                                  Estoppel Certificate or
Subordination Agreement.  Tenant fails to execute any
document required from Tenant under Sections 23 or 27 within 5
days after a second notice requesting such document.


 


(h)                                 Other Defaults. 
Tenant shall fail to comply with any provision of this Lease other than
those specifically referred to in this Section 20, and, except as
otherwise expressly provided herein, such failure shall continue for a period
of 20 days after written notice thereof from Landlord to Tenant.


 


Any notice given under Section 20(h) hereof
shall:  (i) specify the alleged
default, (ii) demand that Tenant cure such default, (iii) be in lieu
of, and not in addition to, or shall be deemed to be, any notice required under
any provision of applicable law, and (iv) not be deemed a forfeiture or a
termination of this Lease unless Landlord elects otherwise in such notice; provided
that if the nature of Tenant’s default pursuant to Section 20(h) is
such that it cannot be cured by the payment of money and reasonably requires
more than 20 days to cure, then Tenant shall not be deemed to be in default if
Tenant commences such cure within said 20 day period and thereafter diligently
prosecutes the same to completion; provided, however, that such
cure shall be completed no later than 75 days from the date of Landlord’s
notice except where such cure requires construction to be done by Tenant and a
permit is required in which case such cure shall be completed no later than 120
days from the date of Landlord’s notice.


 


21.                               Landlord’s Remedies.


 


(a)                                 Payment By Landlord; Interest. 
Upon a Default by Tenant hereunder, Landlord may, without waiving or
releasing any obligation of Tenant hereunder, make such payment or perform such
act.  All sums so paid or incurred by
Landlord, together with interest thereon, from the date such sums were paid or
incurred, at the annual rate equal to 12% per annum or the highest rate
permitted by law (the “Default Rate”),
whichever is less, shall be payable to Landlord on demand as Additional
Rent.  Nothing herein shall be construed
to create or impose a duty on Landlord to mitigate any damages resulting from
Tenant’s Default hereunder.


 


(b)                                 Late Payment Rent. 
Late payment by Tenant to Landlord of Rent and other sums due will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of
which will be extremely difficult and impracticable to ascertain.  Such costs include, but are not limited to,
processing and accounting charges and late charges which may be imposed on
Landlord under any Mortgage covering the Premises.  Therefore, if any installment of Rent due
from Tenant is not received by Landlord within 5 days after the date such
payment is due, Tenant shall pay to Landlord an additional sum equal to 6% of
the overdue Rent as a late charge.  The
parties agree that this late charge represents a fair and reasonable estimate
of the costs Landlord will incur by reason of late payment by Tenant.  In addition to the late charge, Rent not paid
when due shall bear interest at the Default Rate from the 5th day after the
date due until paid.


 


(c)                                  Remedies. 
Upon the occurrence of a Default, Landlord, at its option, without
further notice or demand to Tenant, shall have in addition to all other rights
and remedies provided in this Lease, at law or in equity, the option to pursue
any one or more of the following remedies, each and all of which shall be
cumulative and nonexclusive, without any notice or demand whatsoever.


 


17

















 


(i)                                     Terminate this Lease, or at Landlord’s
option, Tenant’s right to possession only, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the
Premises and expel or remove Tenant and any other person who may be occupying
the Premises or any part thereof, without being liable for prosecution or any
claim or damages therefor;


 


(ii)                                  Upon any termination of this Lease,
whether pursuant to the foregoing Section 21(c)(i) or
otherwise, Landlord may recover from Tenant the following:


 


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


 


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


 


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


 


(D)                               Any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant’s failure to
perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, specifically including, but not
limited to, brokerage commissions and advertising expenses incurred, expenses
of remodeling the Premises or any portion thereof for a new tenant, whether for
the same or a different use, and any special concessions made to obtain a new
tenant; and


 


(E)                                At Landlord’s election, such other
amounts in addition to or in lieu of the foregoing as may be permitted from
time to time by applicable law.


 


The term “rent” as used in this Section 21 shall be deemed
to be and to mean all sums of every nature required to be paid by Tenant
pursuant to the terms of this Lease, whether to Landlord or to others.  As used in Sections 21(c)(ii) (A) and
(B), above, the “worth at the time of award”
shall be computed by allowing interest at the Default Rate.  As used in Section 21(c)(ii)(C) above,
the “worth at the time of award” shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus 1%.


 


(iii)                               Landlord may continue this Lease in effect after
Tenant’s Default and recover rent as it becomes due (Landlord and Tenant hereby
agreeing that Tenant has the right to sublet or assign hereunder, subject only
to reasonable limitations).  Accordingly,
if Landlord does not elect to terminate this Lease following a Default by
Tenant, Landlord may, from time to time, without terminating this Lease,
enforce all of its rights and remedies hereunder, including the right to
recover all Rent as it becomes due.


 


(iv)                              Whether or not Landlord elects to
terminate this Lease following a Default by Tenant, Landlord shall have the
right to terminate any and all subleases, licenses, concessions or other
consensual arrangements for possession entered into by Tenant and affecting the
Premises or may, in Landlord’s sole discretion, succeed to Tenant’s interest in
such subleases, licenses, concessions or arrangements.  Upon Landlord’s election to succeed to
Tenant’s interest in any such subleases, licenses, concessions or arrangements,
Tenant shall, as of the date of notice by Landlord of such election, have no
further right to or interest in the rent or other consideration receivable
thereunder.


 


18

















 


(v)                                 Independent of the exercise of any other
remedy of Landlord hereunder or under applicable law, Landlord may conduct an
environmental test of the Premises as generally described in Section 30(d) hereof,
at Tenant’s expense.


 


(d)                                 Effect of Exercise. 
Exercise by Landlord of any remedies hereunder or otherwise available
shall not be deemed to be an acceptance of surrender of the Premises and/or a
termination of this Lease by Landlord, it being understood that such surrender
and/or termination can be effected only by the express written agreement of
Landlord and Tenant.  Any law, usage, or
custom to the contrary notwithstanding, Landlord shall have the right at all
times to enforce the provisions of this Lease in strict accordance with the
terms hereof; and the failure of Landlord at any time to enforce its rights
under this Lease strictly in accordance with same shall not be construed as
having created a custom in any way or manner contrary to the specific terms,
provisions, and covenants of this Lease or as having modified the same and
shall not be deemed a waiver of Landlord’s right to enforce one or more of its
rights in connection with any subsequent default.  A receipt by Landlord of Rent or other
payment with knowledge of the breach of any covenant hereof shall not be deemed
a waiver of such breach, and no waiver by Landlord of any provision of this
Lease shall be deemed to have been made unless expressed in writing and signed
by Landlord.  To the greatest extent
permitted by law, Tenant waives the service of notice of Landlord’s intention
to re-enter, re-take or otherwise obtain possession of the Premises as provided
in any statute, or to institute legal proceedings to that end, and also waives
all right of redemption in case Tenant shall be dispossessed by a judgment or
by warrant of any court or judge.  Any
reletting of the Premises or any portion thereof shall be on such terms and
conditions as Landlord in its sole discretion may determine.  Landlord shall not be liable for, nor shall
Tenant’s obligations hereunder be diminished because of, Landlord’s failure to
relet the Premises or collect rent due in respect of such reletting or
otherwise to mitigate any damages arising by reason of Tenant’s Default.


 


22.                               Assignment and
Subletting.


 


(a)                                 General Prohibition. 
Without Landlord’s prior written consent subject to and on the
conditions described in this Section 22, Tenant shall not, directly
or indirectly, voluntarily or by operation of law, assign this Lease or
sublease the Premises or any part thereof or mortgage, pledge, or hypothecate
its leasehold interest or grant any concession or license within the Premises,
and any attempt to do any of the foregoing shall be void and of no effect.  If Tenant is a corporation, partnership or
limited liability company, the shares or other ownership interests thereof
which are not actively traded upon a stock exchange or in the over-the-counter
market, a transfer or series of transfers whereby 25% or more of the issued and
outstanding shares or other ownership interests of such corporation are, or
voting control is, transferred (but excepting transfers upon deaths of
individual owners) from a person or persons or entity or entities which were
owners thereof at time of execution of this Lease to persons or entities who
were not owners of shares or other ownership interests of the corporation,
partnership or limited liability company at time of execution of this Lease,
shall be deemed an assignment of this Lease requiring the consent of Landlord
as provided in this Section 22. 
The provisions of the preceding sentence shall not apply to Tenant while
Tenant is a publicly traded company.


 


(b)                                 Permitted Transfers. 
If Tenant desires to assign, sublease, hypothecate or otherwise transfer
this Lease or sublet the Premises other than pursuant to a Permitted Assignment
(as defined below), then at least 15 business days, but not more than 45
business days, before the date Tenant desires the assignment or sublease to be
effective (the “Assignment Date”), Tenant shall
give Landlord a notice (the “Assignment Notice”)
containing such information about the proposed assignee or sublessee, including
the proposed use of the Premises and any Hazardous Materials proposed to be
used, stored handled, treated, generated in or released or disposed of from the
Premises, the Assignment Date, any relationship between Tenant and the proposed
assignee or sublessee, and all material terms and conditions of the proposed
assignment or sublease, including a copy of any proposed assignment or sublease
in its final form, and such other information as Landlord may deem reasonably
necessary or appropriate to its consideration whether to grant its
consent.  Landlord may, by giving written
notice to Tenant within 15 business days after receipt of the Assignment
Notice:  (i) grant such consent, (ii) refuse
such consent, in its reasonable discretion, (iii) refuse such consent, in
its reasonable discretion, if the proposed subletting concerns (together with
all other then effective subleases) 50% or 


 


19

















 


less of the Premises
(provided that Landlord shall further have the right to review and approve or
disapprove the proposed form of sublease prior to the effective date of any
such subletting), or (iv) terminate this Lease with respect to the space
described in the Assignment Notice as of the Assignment Date (an “Assignment Termination”). 
If Landlord delivers notice of its election to exercise an Assignment
Termination, Tenant shall have the right to withdraw such Assignment Notice by
written notice to Landlord of such election within 5 business days after
Landlord’s notice electing to exercise the Assignment Termination.  If Tenant withdraws such Assignment Notice,
this Lease shall continue in full force and effect.  If Tenant does not withdraw such Assignment
Notice, this Lease, and the term and estate herein granted, shall terminate as
of the Assignment Date with respect to the space described in such Assignment
Notice.  No failure of Landlord to
exercise any such option to terminate this Lease, or to deliver a timely notice
in response to the Assignment Notice, shall be deemed to be Landlord’s consent
to the proposed assignment, sublease or other transfer.  Tenant shall reimburse Landlord for all of
Landlord’s reasonable out-of-pocket expenses in connection with its consideration
of any Assignment Notice; provided, however, that the reimbursement amount
shall be based on actual costs. 
Notwithstanding the foregoing, Landlord’s consent to an assignment of
this Lease or a subletting of any portion of the Premises to any entity
controlling, controlled by or under common control with Tenant (a “Permitted Assignment”) shall not be required, provided that
Landlord shall have the right to reasonably approve the form of any such
sublease or assignment.  Tenant
acknowledges and agrees that, among other things, it shall be reasonable for
Landlord to withhold its consent to any assignment or subletting to an assignee
or subtenant whose business or financial reputation is objectionable in
Landlord’s reasonable judgment, or that is engaged in areas of scientific
research or other business concerns that are controversial, in Landlord’s
reasonable judgment, or that would require the removal of, or result in any
changes, to Landlord’s Work or to the Tenant Improvements.


 


(c)                                  Additional Conditions. 
As a condition to any such assignment or subletting, whether or not
Landlord’s consent is required, Landlord may require:


 


(i)                                     that any assignee or subtenant agree, in
writing at the time of such assignment or subletting, that if Landlord gives such
party notice that Tenant is in default under this Lease, such party shall
thereafter make all payments otherwise due Tenant directly to Landlord, which
payments will be received by Landlord without any liability except to credit
such payment against those due under the Lease, and any such third party shall
agree to attorn to Landlord or its successors and assigns should this Lease be
terminated for any reason; provided, however, in no event shall
Landlord or its successors or assigns be obligated to accept such attornment;
and


 


(ii)                                  A list of Hazardous Materials, certified
by the proposed assignee or sublessee to be true and correct, which the
proposed assignee or sublessee intends to use, store, handle, treat, generate
in or release or dispose of from the Premises, together with copies of all
documents relating to such use, storage, handling, treatment, generation,
release or disposal of Hazardous Materials by the proposed assignee or
subtenant in the Premises or on the Project, prior to the proposed assignment
or subletting, including, without limitation: 
permits; approvals; reports and correspondence; storage and management
plans; plans relating to the installation of any storage tanks (excluding
mobile storage tanks commonly used in biology or chemistry laboratories) to be
installed in or under the Project (provided, said installation of tanks (other
than mobile tanks commonly used in biology or chemistry laboratories) shall
only be permitted after Landlord has given its written consent to do so, which
consent may be withheld in Landlord’s sole and absolute discretion); and all
closure plans or any other documents required by any and all federal, state and
local Governmental Authorities for any storage tanks installed in, on or under
the Project for the closure of any such tanks. 
Neither Tenant nor any such proposed assignee or subtenant is required,
however, to provide Landlord with any portion(s) of the such documents
containing information of a proprietary nature which, in and of themselves, do
not contain a reference to any Hazardous Materials or hazardous
activities.  Landlord acknowledges that
Tenant shall be deemed to have satisfied its obligation to provide the list of
each type of Hazardous Material if Tenant provides Landlord with the list of each
type of Hazardous Material which Tenant is required to deliver to the fire
department or other applicable governmental


 


20
















 


authority in connection with the Tenant’s Hazardous Materials
Management Plan for its operations at the Premises.


 


(d)                                 No Release of Tenant, Sharing of
Excess Rents.  Notwithstanding any assignment or subletting,
Tenant and any guarantor or surety of Tenant’s obligations under this Lease
shall at all times remain fully and primarily responsible and liable for the
payment of Rent and for compliance with all of Tenant’s other obligations under
this Lease.  If the Rent due and payable
by a sublessee or assignee (or a combination of the rental payable under such
sublease or assignment plus any bonus or other consideration therefor or
incident thereto in any form) exceeds  the sum of
the rental payable under this Lease, (excluding however, any Rent payable under
this Section) and actual and reasonable brokerage fees, legal costs and any
design or construction fees directly related to and required pursuant to the
terms of any such sublease or assignment (“Excess Rent”),
then Tenant shall be bound and obligated to pay Landlord as Additional Rent
hereunder 50% of such Excess Rent within 10 days following receipt thereof by
Tenant.  If Tenant shall sublet the
Premises or any part thereof, Tenant hereby immediately and irrevocably assigns
to Landlord, as security for Tenant’s obligations under this Lease, all rent
from any such subletting, and Landlord as assignee and as attorney-in-fact for
Tenant, or a receiver for Tenant appointed on Landlord’s application, may
collect such rent and apply it toward Tenant’s obligations under this Lease;
except that, until the occurrence of a Default, Tenant shall have the right to
collect such rent.


 


(e)                                  No Waiver. 
The consent by Landlord to an assignment or subletting shall not relieve
Tenant or any assignees of this Lease or any sublessees of the Premises from
obtaining the consent of Landlord to any further assignment or subletting nor
shall it release Tenant or any assignee or sublessee of Tenant from full and
primary liability under the Lease.  The
acceptance of Rent hereunder, or the acceptance of performance of any other
term, covenant, or condition thereof, from any other person or entity shall not
be deemed to be a waiver of any of the provisions of this Lease or a consent to
any subletting, assignment or other transfer of the Premises.


 


(f)                                   Prior
Conduct of Proposed Transferee.  Notwithstanding
any other provision of this Section 22, if (i) the proposed
assignee or sublessee of Tenant has been required by any prior landlord, lender
or Governmental Authority to take remedial action in connection with Hazardous
Materials contaminating a property, where the contamination resulted from such
party’s action or use of the property in question, (ii) the proposed
assignee or sublessee is subject to an enforcement order issued by any Governmental
Authority in connection with the use, storage, handling, treatment, generation,
release or disposal of Hazardous Materials (including, without limitation, any
order related to the failure to make a required reporting to any Governmental
Authority), or (iii) because of the existence of a pre-existing
environmental condition in the vicinity of or underlying the Project, the risk
that Landlord would be targeted as a responsible party in connection with the
remediation of such pre-existing environmental condition would be materially
increased or exacerbated by the proposed use of Hazardous Materials by such
proposed assignee or sublessee, Landlord shall have the absolute right to
refuse to consent to any assignment or subletting to any such party.


 


23.                               Estoppel Certificate. 
Tenant shall, within 10 business days of written notice from Landlord,
execute, acknowledge and deliver a statement in writing in any form reasonably
requested by a proposed lender or purchaser, (i) certifying that this
Lease is unmodified and in full force and effect (or, if modified, stating the
nature of such modification and certifying that this Lease as so modified is in
full force and effect) and the dates to which the rental and other charges are
paid in advance, if any, (ii) acknowledging that there are not any uncured
defaults on the part of Landlord hereunder, or specifying such defaults if any
are claimed, and (iii) setting forth such further information with respect
to the status of this Lease or the Premises as may be requested thereon.  Any such statement may be relied upon by any
prospective purchaser or encumbrancer of all or any portion of the real
property of which the Premises are a part. 
Tenant’s failure to deliver such statement within such time shall be
conclusive upon Tenant that the Lease is in full force and effect and without
modification except as may be represented by Landlord in any certificate
prepared by Landlord and delivered to Tenant for execution.


 


24.                               Quiet Enjoyment. 
So long as Tenant shall perform all of the covenants and agreements
herein required to be performed by Tenant, Tenant shall, subject to the terms
of this Lease, at all times 


 


21

















 


during the Term, have
peaceful and quiet enjoyment of the Premises against any person claiming by,
through or under Landlord.


 


25.                               Prorations. 
All prorations required or permitted to be made hereunder shall be made
on the basis of a 365 day year and the actual number of days in the relevant
months.


 


26.                               Rules and Regulations. 
Tenant shall, at all times during the Term and any extension thereof,
comply with all reasonable rules and regulations at any time or from time
to time established by Landlord covering use of the Premises and the
Project.  The current rules and
regulations are attached hereto as Exhibit J.  If there is any conflict between said rules and
regulations and other provisions of this Lease, the terms and provisions of
this Lease shall control.  Landlord shall
not have any liability or obligation for the breach of any rules or
regulations by other tenants in the Project and shall not enforce such rules and
regulations in a discriminatory manner.


 


27.                               Subordination. 
This Lease and Tenant’s interest and rights hereunder are hereby made
and shall be subject and subordinate at all times to the lien of any Mortgage
now existing or hereafter created on or against the Project or the Premises,
and all amendments, restatements, renewals, modifications, consolidations,
refinancing, assignments and extensions thereof, without the necessity of any
further instrument or act on the part of Tenant; provided, however
that so long as there is no Default hereunder, Tenant’s right to possession of
the Premises shall not be disturbed by the Holder of any such Mortgage.  Tenant agrees, at the election of the Holder
of any such Mortgage, to attorn to any such Holder.  Tenant agrees upon demand to execute,
acknowledge and deliver such instruments, confirming such subordination, and
such instruments of attornment as shall be requested by any such Holder,
provided any such instruments contain appropriate non-disturbance provisions
assuring Tenant’s quiet enjoyment of the Premises as set forth in Section 24
hereof.  Notwithstanding the foregoing,
any such Holder may at any time subordinate its Mortgage to this Lease, without
Tenant’s consent, by notice in writing to Tenant, and thereupon this Lease
shall be deemed prior to such Mortgage without regard to their respective dates
of execution, delivery or recording and in that event such Holder shall have
the same rights with respect to this Lease as though this Lease had been
executed prior to the execution, delivery and recording of such Mortgage and
had been assigned to such Holder.  The term
“Mortgage” whenever used in this Lease
shall be deemed to include deeds of trust, security assignments and any other
encumbrances, and any reference to the “Holder” of a
Mortgage shall be deemed to include the beneficiary under a deed of trust.


 


28.                               Surrender. 
Upon the expiration of the Term or earlier termination of Tenant’s right
of possession, Tenant shall surrender the Premises to Landlord in the same
condition as received, subject to any Alterations or Installations permitted by
Landlord to remain in the Premises (and subject to Tenant’s right under the
Lease to remove Tenant’s Property), free of Hazardous Materials brought upon,
kept, used, stored, handled, treated, generated in, or released or disposed of
from, the Premises by any person other than a Landlord Party (collectively, “Tenant HazMat Operations”) and released of all Hazardous
Materials Clearances, broom clean, ordinary wear and tear and casualty loss and
condemnation.  At least 3 months prior to
the surrender of the Premises, Tenant shall deliver to Landlord a narrative
description of the actions proposed (or required by any Governmental Authority)
to be taken by Tenant in order to surrender the Premises (including any
Installations permitted by Landlord to remain in the Premises) at the
expiration or earlier termination of the Term, free from any residual impact
from the Tenant HazMat Operations and otherwise released for unrestricted use
and occupancy (the “Surrender Plan”).  Such Surrender Plan shall be accompanied by a
current listing of (i) all Hazardous Materials licenses and permits held
by or on behalf of any Tenant Party with respect to the Premises, and (ii) all
Hazardous Materials used, stored, handled, treated, generated, released or
disposed of from the Premises, and shall be subject to the review and approval
of Landlord’s environmental consultant. 
In connection with the review and approval of the Surrender Plan, upon
the request of Landlord, Tenant shall deliver to Landlord or its consultant
such additional non-proprietary information concerning Tenant HazMat Operations
as Landlord shall request.  On or before
such surrender, Tenant shall deliver to Landlord evidence that the approved
Surrender Plan shall have been satisfactorily completed and Landlord shall have
the right, subject to reimbursement at Tenant’s expense as set forth below, to
cause Landlord’s environmental consultant to inspect the Premises and perform
such additional procedures as 


 


22

















 


may be deemed reasonably
necessary to confirm that the Premises are, as of the effective date of such
surrender or early termination of the Lease, free from any residual impact from
Tenant HazMat Operations.  Tenant shall
reimburse Landlord, as Additional Rent, for the actual out-of pocket expense
incurred by Landlord for Landlord’s environmental consultant to review and
approve the Surrender Plan and to visit the Premises and verify satisfactory
completion of the same, which cost shall not exceed $2,500.  Landlord shall have the unrestricted right to
deliver such Surrender Plan and any report by Landlord’s environmental
consultant with respect to the surrender of the Premises to third parties.


 


If Tenant shall fail to prepare or submit a Surrender
Plan approved by Landlord, or if Tenant shall fail to complete the approved
Surrender Plan, or if such Surrender Plan, whether or not approved by Landlord,
shall fail to adequately address any residual effect of Tenant HazMat
Operations in, on or about the Premises, Landlord shall have the right to take
such actions as Landlord may deem reasonable or appropriate to assure that the
Premises and the Project are surrendered free from any residual impact from
Tenant HazMat Operations, the cost of which actions shall be reimbursed by
Tenant as Additional Rent, without regard to the limitation set forth in the
first paragraph of this Section 28.


 


Tenant shall immediately return to Landlord all keys
and/or access cards to parking, the Project, restrooms or all or any portion of
the Premises furnished to or otherwise procured by Tenant.  If any such access card or key is lost,
Tenant shall pay to Landlord, at Landlord’s election, either the cost of
replacing such lost access card or key or the cost of reprogramming the access
security system in which such access card was used or changing the lock or
locks opened by such lost key.  Any
Tenant’s Property, Alterations and property not so removed by Tenant as
permitted or required herein shall be deemed abandoned and may be stored,
removed, and disposed of by Landlord at Tenant’s expense, and Tenant waives all
claims against Landlord for any damages resulting from Landlord’s retention
and/or disposition of such property.  All
obligations of Tenant hereunder not fully performed as of the termination of
the Term, including the obligations of Tenant under Section 30
hereof, shall survive the expiration or earlier termination of the Term,
including, without limitation, indemnity obligations, payment obligations with
respect to Rent and obligations concerning the condition and repair of the
Premises.


 


29.                               Waiver of Jury Trial. 
TO THE EXTENT PERMITTED BY LAW, TENANT AND LANDLORD WAIVE ANY RIGHT TO
TRIAL BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING
OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.


 


30.                               Environmental
Requirements.


 


(a)                                 Prohibition/Compliance/Indemnity. 
Tenant shall not cause or permit any Hazardous Materials (as hereinafter
defined) to be brought upon, kept, used, stored, handled, treated, generated in
or about, or released or disposed of from, the Premises or the Project in
violation of applicable Environmental Requirements (as hereinafter defined) by
Tenant or any Tenant Party.  If Tenant
breaches the obligation stated in the preceding sentence, or if the presence of
Hazardous Materials in the Premises during the Term or any holding over results
in contamination of the Premises, the Project or any adjacent property or if
contamination of the Premises, the Project or any adjacent property by
Hazardous Materials brought into, kept, used, stored, handled, treated,
generated in or about, or released or disposed of from, the Premises by anyone other
than Landlord and Landlord’s employees, agents and contractors otherwise occurs
during the Term or any holding over, Tenant hereby indemnifies and shall defend
and hold Landlord, its officers, directors, employees, agents and contractors
harmless from any and all actions (including, without limitation, remedial or
enforcement actions of any kind, administrative or judicial proceedings, and
orders or judgments arising out of or resulting therefrom), costs, claims,
damages (including, without limitation, punitive damages and damages based upon
diminution in value of the Premises or the Project, or the loss of, or
restriction on, use of the Premises or any portion of the Project), expenses
(including, without limitation, attorneys’, consultants’ and experts’ fees,
court costs and amounts paid in settlement of any claims or actions), fines,
forfeitures or other civil, administrative or criminal penalties, injunctive or
other relief (whether or not based upon personal injury, property damage, 


 


23

















 


or contamination of, or
adverse effects upon, the environment, water tables or natural resources),
liabilities or losses (collectively, “Environmental Claims”)
which arise during or after the Term as a result of such contamination.  This indemnification of Landlord by Tenant
includes, without limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, treatment, remedial, removal,
or restoration work required by any federal, state or local Governmental
Authority because of Hazardous Materials present in the air, soil or ground
water above, on, or under the Premises. 
Without limiting the foregoing, if the presence of any Hazardous
Materials on the Premises, the Project or any adjacent property caused or
permitted by Tenant or any Tenant Party results in any contamination of the
Premises, the Project or any adjacent property, Tenant shall promptly take all
actions at its sole expense and in accordance with applicable Environmental Requirements
as are necessary to return the Premises, the Project or any adjacent property
to the condition existing prior to the time of such contamination, provided
that Landlord’s approval of such action shall first be obtained, which approval
shall not unreasonably be withheld so long as such actions would not
potentially have any material adverse long-term or short-term effect on the
Premises or the Project.


 


(b)                                 Business. 
Landlord acknowledges that it is not the intent of this Section 30
to prohibit Tenant from using the Premises for the Permitted Use.  Tenant may operate its business according to
prudent industry practices so long as the use or presence of Hazardous
Materials is strictly and properly monitored according to all then applicable
Environmental Requirements.  As a
material inducement to Landlord to allow Tenant to use Hazardous Materials in
connection with its business, Tenant agrees to deliver to Landlord prior to the
Commencement Date a list identifying each type of Hazardous Materials to be
brought upon, kept, used, stored, handled, treated, generated on, or released
or disposed of from, the Premises and setting forth any and all governmental
approvals or permits required in connection with the presence, use, storage,
handling, treatment, generation, release or disposal of such Hazardous
Materials on or from the Premises (“Hazardous Materials List”).  Landlord acknowledges that Tenant shall be
deemed to have satisfied its obligation to provide the list of each type of
Hazardous Material if Tenant provides Landlord with the list of each type of
Hazardous Material which Tenant is required to deliver to the fire department
or other applicable governmental authority in connection with the Tenant’s
Hazardous Materials Management Plan for its operations at the Premises.  Tenant shall, however, deliver to Landlord an
updated Hazardous Materials List at least once a year and shall also deliver an
updated list before any new Hazardous Material is brought onto, kept, used,
stored, handled, treated, generated on, or released or disposed of from, the
Premises.  Tenant shall deliver to
Landlord true and correct copies of the following documents (the “Haz Mat Documents”) relating to the use, storage, handling,
treatment, generation, release or disposal of Hazardous Materials prior to the
Commencement Date, or if unavailable at that time, concurrent with the receipt
from or submission to a Governmental Authority: 
permits; approvals; reports and correspondence; storage and management
plans, notice of violations of any Legal Requirements; plans relating to the
installation of any storage tanks to be installed in or under the Project
(provided, with the exception of mobile tanks commonly used in biology or
chemistry laboratories, for which Landlord’s consent shall not be required,
said installation of tanks shall only be permitted after Landlord has given
Tenant its written consent to do so, which consent may be withheld in
Landlord’s sole and absolute discretion); all closure plans or any other
documents required by any and all federal, state and local Governmental
Authorities for any storage tanks installed in, on or under the Project for the
closure of any such tanks; and a Surrender Plan (to the extent surrender in
accordance with Section 28 cannot be accomplished in 3
months).  Tenant is not required,
however, to provide Landlord with any portion(s) of the Haz Mat Documents
containing information of a proprietary nature which, in and of themselves, do
not contain a reference to any Hazardous Materials or hazardous
activities.  It is not the intent of this
Section to provide Landlord with information which could be detrimental to
Tenant’s business should such information become possessed by Tenant’s
competitors.


 


(c)                                  Tenant Representation and
Warranty.  Tenant hereby represents and warrants to
Landlord that (i) neither Tenant nor any of its legal predecessors has
been required by any prior landlord, lender or Governmental Authority to take
remedial action in connection with Hazardous Materials contaminating a property
which contamination was permitted by Tenant of such predecessor or resulted
from Tenant’s or such predecessor’s action or use of the property in question
except for actions which have been completed to the satisfaction of the
Governmental Authorities having jurisdiction, and (ii) Tenant is not
subject to any enforcement order issued by any Governmental Authority in
connection with 


 


24

















 


the use, storage,
handling, treatment, generation, release or disposal of Hazardous Materials
(including, without limitation, any order related to the failure to make a
required reporting to any Governmental Authority).  If Landlord determines that this
representation and warranty was not true as of the date of this lease, Landlord
shall have the right to terminate this Lease in Landlord’s sole and absolute
discretion.


 


(d)                                 Testing. 
Landlord shall have the right to conduct annual tests of the Premises to
determine whether any contamination of the Premises or the Project has occurred
as a result of Tenant’s use.  Tenant
shall be required to pay the cost of such annual test of the Premises if Tenant
is determined to be in violation of any provisions of this Lease.  If Tenant so elects, Tenant may, at Tenant’s
sole cost and expense, conducts its own tests of the Premises using third party
contractors and test procedures acceptable to Landlord which tests are
certified to Landlord.  Landlord shall
accept such tests in lieu of the annual tests to be performed by Landlord.
Prior to the expiration or earlier termination of the Term, Landlord shall have
the right to conduct appropriate tests of the Premises and the Project to
determine if contamination has occurred as a result of Tenant’s use of the
Premises.  In connection with such testing,
upon the request of Landlord, Tenant shall deliver to Landlord or its
consultant such non-proprietary information concerning the use of Hazardous
Materials in or about the Premises by Tenant or any Tenant Party.  If contamination has occurred for which
Tenant is liable under this Section 30, Tenant shall pay all costs
to conduct such tests.  If no such
contamination is found, Landlord shall pay the costs of such tests (which shall
not constitute an Operating Expense). 
Landlord shall provide Tenant with a copy of all third party,
non-confidential reports and tests of the Premises made by or on behalf of
Landlord during the Term without representation or warranty and subject to a
confidentiality agreement.  Tenant shall,
at its sole cost and expense, promptly and satisfactorily remediate any
environmental conditions identified by such testing which are the
responsibility of Tenant under this Lease in accordance with all Environmental
Requirements.  Landlord’s receipt of or
satisfaction with any environmental assessment in no way waives any rights
which Landlord may have against Tenant.


 


(e)                                  Underground Tanks. 
If underground or other storage tanks storing Hazardous Materials
located on the Premises or the Project are used by Tenant or are hereafter placed
on the Premises or the Project by Tenant, Tenant shall install, use, monitor,
operate, maintain, upgrade and manage such storage tanks, maintain appropriate
records, obtain and maintain appropriate insurance, implement reporting
procedures, properly close any underground storage tanks, and take or cause to
be taken all other actions necessary or required under applicable state and
federal Legal Requirements, as such now exists or may hereafter be adopted or
amended in connection with the installation, use, maintenance, management,
operation, upgrading and closure of such storage tanks.


 


(f)                                   Tenant’s Obligations. 
Tenant’s obligations under this Section 30 shall survive the
expiration or earlier termination of the Lease. 
During any period of time after the expiration or earlier termination of
this Lease required by Tenant or Landlord to complete the removal from the
Premises of any Hazardous Materials (including, without limitation, the release
and termination of any licenses or permits restricting the use of the Premises
and the completion of the approved Surrender Plan), Tenant shall continue to
pay the full Rent in accordance with this Lease for any portion of the Premises
not relet by Landlord in Landlord’s sole discretion, which Rent shall be
prorated daily.


 


(g)                                  Definitions.  As
used herein, the term “Environmental Requirements”
means all applicable present and future statutes, regulations, ordinances,
rules, codes, judgments, orders or other similar enactments of any Governmental
Authority regulating or relating to health, safety, or environmental conditions
on, under, or about the Premises or the Project, or the environment, including
without limitation, the following:  the
Comprehensive Environmental Response, Compensation and Liability Act; the Resource
Conservation and Recovery Act; and all state and local counterparts thereto,
and any regulations or policies promulgated or issued thereunder.  As used herein, the term “Hazardous Materials” means and includes any substance,
material, waste, pollutant, or contaminant listed or defined as hazardous or
toxic, or regulated by reason of its impact or potential impact on humans,
animals and/or the environment under any Environmental Requirements, asbestos
and petroleum, including crude oil or any fraction thereof, natural gas
liquids, liquefied natural gas, or synthetic gas usable for fuel (or mixtures
of natural gas and such synthetic gas). 
As defined in Environmental Requirements, Tenant is and shall be deemed
to be the “operator” of Tenant’s “facility” and the “owner” of all
Hazardous Materials brought 


 


25

















 


on the Premises by Tenant
or any Tenant Party, and the wastes, by-products, or residues generated,
resulting, or produced therefrom.


 


31.                               Tenant’s Remedies/Limitation of
Liability.  Landlord shall not be in default hereunder
unless Landlord fails to perform any of its obligations hereunder within 30
days after written notice from Tenant specifying such failure (unless such
performance will, due to the nature of the obligation, require a period of time
in excess of 30 days, then after such period of time as is reasonably
necessary).  Upon any default by
Landlord, Tenant shall give notice by registered or certified mail to any
Holder of a Mortgage covering the Premises and to any landlord of any lease of
property in or on which the Premises are located and Tenant shall offer such
Holder and/or landlord a reasonable opportunity to cure the default, including
time to obtain possession of the Project by power of sale or a judicial action
if such should prove necessary to effect a cure; provided Landlord shall
have furnished to Tenant in writing the names and addresses of all such persons
who are to receive such notices.  All
obligations of Landlord hereunder shall be construed as covenants, not
conditions; and, except as may be otherwise expressly provided in this Lease,
Tenant may not terminate this Lease for breach of Landlord’s obligations
hereunder.


 


Subject to assumption of Landlord’s obligations as
described in the last sentence of this paragraph, all obligations of Landlord
under this Lease will be binding upon Landlord only during the period of its
ownership of the Premises and not thereafter. 
The term “Landlord” in this Lease shall mean
only the owner for the time being of the Premises.  Upon the transfer by such owner of its
interest in the Premises and the assumption by the new owner of the obligations
of Landlord arising from and after the date of such transfer, such owner shall
thereupon be released and discharged from all obligations of Landlord
thereafter accruing, but such obligations shall be binding during the Term upon
each new owner for the duration of such owner’s ownership.


 


32.                               Inspection and Access. 
At reasonable times and on reasonable prior notice (except in cases of
an emergency), Landlord and its agents, representatives, and contractors may
enter the Premises to inspect the Premises, to make such repairs as may be
required or permitted pursuant to this Lease, during the last 9 months of the
Term, to show the Premises to prospective tenants, and for any other business
purpose.  Except in case of an emergency,
Landlord and Landlord’s representatives shall at all times be accompanied by a
representative of Tenant, and shall comply with Tenant’s security and
confidentiality protocols and procedures so long as a copy of such protocols
and procedures shall have been provided to Landlord.  Landlord may grant easements, make public
dedications, designate Common Areas and create restrictions on or about the
Premises, provided that no such easement, dedication, designation or
restriction materially, adversely affects Tenant’s use or occupancy of the
Premises for the Permitted Use.  At
Landlord’s request, Tenant shall execute such instruments as may be necessary
for such easements, dedications or restrictions


 


33.                               Security. 
Tenant acknowledges and agrees that security devices and services, if
any, while intended to deter crime may not in given instances prevent theft or
other criminal acts and that Landlord is not providing any security services
with respect to the Premises.  Tenant
agrees that Landlord shall not be liable to Tenant for, and Tenant waives any
claim against Landlord with respect to, any loss by theft or any other damage
suffered or incurred by Tenant in connection with any unauthorized entry into
the Premises or any other breach of security with respect to the Premises.  Tenant shall be solely responsible for the
personal safety of Tenant’s officers, employees, agents, contractors, guests
and invitees while any such person is in, on or about the Premises and/or the
Project.  Tenant shall at Tenant’s cost
obtain insurance coverage to the extent Tenant desires protection against such
criminal acts.


 


34.                               Force Majeure. 
Landlord shall not responsible or liable for delays in the performance
of its obligations hereunder when caused by, related to, or arising out of acts
of God, strikes, lockouts, or other labor disputes, embargoes, quarantines,
weather, national, regional, or local disasters, calamities, or catastrophes,
inability to obtain labor or materials (or reasonable substitutes therefor) at
reasonable costs or failure of, or inability to obtain, utilities necessary for
performance, governmental restrictions, orders, limitations, regulations, or
controls, national emergencies, delay in issuance or revocation of permits,
enemy or hostile governmental action, terrorism, insurrection, riots, civil
disturbance or 


 


26

















 


commotion, fire or other
casualty, and other causes or events beyond the reasonable control of Landlord
(“Force Majeure”).


 


35.                               Brokers, Entire Agreement,
Amendment.  Landlord and Tenant each represents and
warrants that it has not dealt with any broker, agent or other person (collectively,
“Broker”)  in
connection with this transaction and that no Broker brought about this
transaction, other than CB Richard
Ellis.  Landlord and Tenant each
hereby agree to indemnify and hold the other harmless from and against any
claims by any Broker, other than the broker, if any named in this Section 35,
claiming a commission or other form of compensation by virtue of having dealt
with Tenant or Landlord, as applicable, with regard to this leasing
transaction.


 


36.                               Limitation on Landlord’s
Liability.  NOTWITHSTANDING ANYTHING SET FORTH HEREIN OR
IN ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT TO THE CONTRARY:  (A) LANDLORD SHALL NOT BE LIABLE TO
TENANT OR ANY OTHER PERSON FOR (AND TENANT AND EACH SUCH OTHER PERSON ASSUME
ALL RISK OF) LOSS, DAMAGE OR INJURY, WHETHER ACTUAL OR CONSEQUENTIAL TO:  TENANT’S PERSONAL PROPERTY OF EVERY KIND AND
DESCRIPTION, INCLUDING, WITHOUT LIMITATION TRADE FIXTURES, EQUIPMENT,
INVENTORY, SCIENTIFIC RESEARCH, SCIENTIFIC EXPERIMENTS, LABORATORY ANIMALS,
PRODUCT, SPECIMENS, SAMPLES, AND/OR SCIENTIFIC, BUSINESS, ACCOUNTING AND OTHER
RECORDS OF EVERY KIND AND DESCRIPTION KEPT AT THE PREMISES AND ANY AND ALL
INCOME DERIVED OR DERIVABLE THEREFROM; (B) THERE SHALL BE NO PERSONAL
RECOURSE TO LANDLORD FOR ANY ACT OR OCCURRENCE IN, ON OR ABOUT THE PREMISES OR
ARISING IN ANY WAY UNDER THIS LEASE OR ANY OTHER AGREEMENT BETWEEN LANDLORD AND
TENANT WITH RESPECT TO THE SUBJECT MATTER HEREOF AND ANY LIABILITY OF LANDLORD
HEREUNDER SHALL BE STRICTLY LIMITED SOLELY TO LANDLORD’S INTEREST IN THE
PROJECT OR ANY PROCEEDS FROM SALE OR CONDEMNATION THEREOF AND ANY INSURANCE
PROCEEDS PAYABLE IN RESPECT OF LANDLORD’S INTEREST IN THE PROJECT OR IN
CONNECTION WITH ANY SUCH LOSS; AND (C) IN NO EVENT SHALL ANY PERSONAL
LIABILITY BE ASSERTED AGAINST LANDLORD IN CONNECTION WITH THIS LEASE NOR SHALL
ANY RECOURSE BE HAD TO ANY OTHER PROPERTY OR ASSETS OF LANDLORD OR ANY OF
LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS.  UNDER NO CIRCUMSTANCES SHALL LANDLORD OR ANY
OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS BE LIABLE
FOR INJURY TO TENANT’S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM.


 


37.                               Severability. 
If any clause or provision of this Lease is illegal, invalid or
unenforceable under present or future laws, then and in that event, it is the
intention of the parties hereto that the remainder of this Lease shall not be
affected thereby.  It is also the
intention of the parties to this Lease that in lieu of each clause or provision
of this Lease that is illegal, invalid or unenforceable, there be added, as a
part of this Lease, a clause or provision as similar in effect to such illegal,
invalid or unenforceable clause or provision as shall be legal, valid and
enforceable.


 


38.                               Signs; Exterior Appearance. 
Tenant shall not, without the prior written consent of Landlord, which
may be granted or withheld in Landlord’s sole discretion:  (i) attach any awnings, exterior lights,
decorations, balloons, flags, pennants, banners, painting or other projection
to any outside wall of the Project, (ii) use any curtains, blinds, shades
or screens other than Landlord’s standard window coverings, (iii) coat or
otherwise sunscreen the interior or exterior of any windows, (iv) place
any bottles, parcels, or other articles on the window sills, (v) place any
equipment, furniture or other items of personal property on any exterior
balcony, or (vi) paint, affix or exhibit on any part of the Premises or
the Project any signs, notices, window or door lettering, placards,
decorations, or advertising media of any type which can be viewed from the
exterior of the Premises.  Interior signs
on doors and the directory tablet shall be inscribed, painted or affixed for
Tenant by Landlord at the sole cost and expense of Tenant, and shall be of a
size, color and type acceptable to Landlord. 
Nothing may be placed on the exterior of corridor walls or corridor
doors other than Landlord’s standard lettering.


 


27

















 


39.                               Right to Extend Term.  Tenant shall have the right to extend the Term of the
Lease upon the following terms and conditions:


 


(a)                                 Extension
Right.  Tenant shall have the right (“Extension Right”) to extend the term of this Lease for 3
years (“Extension Term”) on the same terms and
conditions as this Lease (other than Base Rent) by giving Landlord written
notice of its election to exercise the Extension Right at least 9 months prior
to the expiration of the Base Term of the Lease.


 


Upon
the commencement of the Extension Term, Base Rent shall be payable at the
Market Rate (as defined below).  Base
Rent shall thereafter be adjusted on each annual anniversary of the
commencement of the Extension Term by a percentage as determined by Landlord
and agreed to by Tenant at the time the Market Rate is determined.  As used herein, “Market Rate”
shall mean the annual amount per square foot that a willing tenant would pay
and a willing landlord would accept, in an arms-length lease extension for
comparable space (exclusive, however, of Alterations paid for by Tenant) for a
comparable period of time, giving consideration to the nature and character and
use of the Building, the Permitted Use, the approximate amount of operating
expenses to be paid by the tenant, the number of parking spaces available for
use by Tenant, the amenities and services provided and all other applicable
conditions of the tenancy; provided, however, that in no event shall the Market
Rate be less than the Base Rent payable as of the date immediately preceding
the commencement of such Extension Term increased by the Rent Adjustment
Percentage multiplied by such Base Rent.


 


If, on or before the date
which is 180 days prior to the expiration of the Base Term of this Lease,
Tenant has not agreed with Landlord’s determination of the Market Rate and the
rent escalations during the Extension Term after negotiating in good faith,
Tenant shall be deemed to have elected arbitration as described in Section 39(b).  Tenant acknowledges and agrees that, if
Tenant has elected to exercise the Extension Right by delivering notice to
Landlord as required in this Section 39(a), Tenant shall have no
right thereafter to rescind or elect not to extend the term of the Lease for
the Extension Term.


 


(b)                                 Arbitration.


 


(i)                                     Within 10 days
of Tenant’s notice to Landlord of its election or the deemed election to
arbitrate Market Rate and escalations, each party shall deliver to the other a
proposal containing the Market Rate and escalations that the submitting party
believes to be correct (“Extension Proposal”).  If either party fails to timely submit an
Extension Proposal, the other party’s submitted proposal shall determine the
Base Rent and escalations for the Extension Term.  If both parties submit Extension Proposals,
then Landlord and Tenant shall meet within 7 days after delivery of the last
Extension Proposal and make a good faith attempt to mutually appoint a single
Arbitrator (and defined below) to determine the Market Rate and
escalations.  If Landlord and Tenant are
unable to agree upon a single Arbitrator, then each shall, by written notice
delivered to the other within 10 days after the meeting, select an
Arbitrator.  If either party fails to
timely give notice of its selection for an Arbitrator, the other party’s submitted
proposal shall determine the Base Rent for the Extension Term.  The 2 Arbitrators so appointed shall, within
10 business days after their appointment, appoint a third Arbitrator.  If the 2 Arbitrators so selected cannot agree
on the selection of the third Arbitrator within the time above specified, then
either party, on behalf of both parties, may request such appointment of such
third Arbitrator by application to any state court of general jurisdiction in
the jurisdiction in which the Premises are located, upon 10 days prior written
notice to the other party of such intent.


 


(ii)                                  The decision
of the Arbitrator(s) shall be made within 30 days after the appointment of
a single Arbitrator or the third Arbitrator, as applicable.  The decision of the single Arbitrator shall
be final and binding upon the parties. 
The average of the two closest Arbitrators in a three Arbitrator panel
shall be final and binding upon the parties. 
Each party shall pay the fees and expenses of the Arbitrator appointed
by or on behalf of such party and the fees and expenses of the third Arbitrator
shall be borne equally by both parties. 
If the Market Rate and escalations are not determined by the first day
of the Extension Term, then Tenant shall pay Landlord Base Rent in an amount
equal to the Base Rent in effect immediately prior to the 


 


28

















 


Extension Term and increased by the Rent
Adjustment Percentage until such determination is made.  After the determination of the Market Rate
and escalations, the parties shall make any necessary adjustments to such
payments made by Tenant.  Landlord and
Tenant shall then execute an amendment recognizing the Market Rate and
escalations for the Extension Term.


 


(iii)                               An “Arbitrator”
shall be any person appointed by or on behalf of either party or appointed
pursuant to the provisions hereof and:  (i) shall
be (A) a member of the American Institute of Real Estate Appraisers with
not less than 10 years of experience in the appraisal of improved office and
high tech industrial real estate in the greater North Peninsula area, or (B) a
licensed commercial real estate broker with not less than 15 years experience
representing landlords and/or tenants in the leasing of high tech or life
sciences space in the greater North Peninsula area, (ii) devoting
substantially all of their time to professional appraisal or brokerage work, as
applicable, at the time of appointment and (iii) be in all respects
impartial and disinterested.


 


(c)                                  Rights Personal. 
The Extension Right is personal to Tenant and is not assignable without
Landlord’s consent, which may be granted or withheld in Landlord’s sole
discretion separate and apart from any consent by Landlord to an assignment of
Tenant’s interest in the Lease, except that they may be assigned in connection
with any Permitted Assignment of this Lease.


 


(d)                                 Exceptions. 
Notwithstanding anything set forth above to the contrary, the Extension
Right shall not be in effect and Tenant may not exercise the Extension Right:


 


(i)                                     during any period of time that Tenant is in
Default under any provision of this Lease; or


 


(ii)                                  if Tenant has been in Default under any
provision of this Lease 3 or more times, whether or not the Defaults are cured,
during the 12 month period immediately prior to the date that Tenant intends to
exercise the Extension Right, whether or not the Defaults are cured.


 


(e)                                  No Extensions. 
The period of time within which the Extension Right may be exercised
shall not be extended or enlarged by reason of Tenant’s inability to exercise
the Extension Right.


 


(f)                                   Termination. 
The Extension Right shall terminate and be of no further force or effect
even after Tenant’s due and timely exercise of the Extension Right, if, after
such exercise, but prior to the commencement date of the Extension Term, (i) Tenant
fails to timely cure any default by Tenant under this Lease; or (ii) Tenant
has Defaulted 3 or more times during the period from the date of the exercise
of the Extension Right to the date of the commencement of the Extension Term,
whether or not such Defaults are cured.


 


40.                               Intentionally Omitted.


 


41.                               Miscellaneous.


 


(a)                                 Notices. 
All notices or other communications between the parties shall be in
writing and shall be deemed duly given upon delivery or refusal to accept
delivery by the addressee thereof if delivered in person, or upon actual
receipt if delivered by reputable overnight guaranty courier, addressed and
sent to the parties at their addresses set forth above.  Landlord and Tenant may from time to time by
written notice to the other designate another address for receipt of future
notices.


 


(b)                                 Joint and Several Liability. 
If and when included within the term “Tenant,”
as used in this instrument, there is more than one person or entity, each shall
be jointly and severally liable for the obligations of Tenant.


 


29

















 


(c)                                  Financial
Information.  Tenant
shall furnish Landlord with true and complete copies of (i) Tenant’s most
recent audited annual financial statements within 45 days of the end of each of
Tenant’s fiscal years during the Term, (ii) Tenant’s most recent unaudited
quarterly financial statements within 90 days of the end of each of Tenant’s
first three fiscal quarters of each of Tenant’s fiscal years during the Term, (iii) at
Landlord’s request from time to time, updated business plans, including cash
flow projections and/or pro forma balance sheets and income statements, all of
which shall be treated by Landlord as confidential information belonging to
Tenant, (iv) corporate brochures and/or profiles prepared by Tenant for
prospective investors, and (v) any other financial information or
summaries that Tenant typically provides to its lenders or shareholders.  The provisions of this Section 41(c) shall
not apply to Tenant while Tenant is a publicly traded company.


 


(d)                                 Recordation. 
Neither this Lease nor a memorandum of lease shall be filed by or on
behalf of Tenant in any public record. 
Landlord may prepare and file, and upon request by Landlord Tenant will
execute, a memorandum of lease.


 


(e)                                  Interpretation. 
The normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Lease or any exhibits or amendments hereto.  Words of any gender used in this Lease shall
be held and construed to include any other gender, and words in the singular
number shall be held to include the plural, unless the context otherwise
requires.  The captions inserted in this
Lease are for convenience only and in no way define, limit or otherwise
describe the scope or intent of this Lease, or any provision hereof, or in any
way affect the interpretation of this Lease.


 


(f)                                   Not Binding Until Executed. 
The submission by Landlord to Tenant of this Lease shall have no binding
force or effect, shall not constitute an option for the leasing of the
Premises, nor confer any right or impose any obligations upon either party
until execution of this Lease by both parties.


 


(g)                                  Limitations on Interest. 
It is expressly the intent of Landlord and Tenant at all times to comply
with applicable law governing the maximum rate or amount of any interest
payable on or in connection with this Lease. 
If applicable law is ever judicially interpreted so as to render
usurious any interest called for under this Lease, or contracted for, charged,
taken, reserved, or received with respect to this Lease, then it is Landlord’s
and Tenant’s express intent that all excess amounts theretofore collected by
Landlord be credited on the applicable obligation (or, if the obligation has
been or would thereby be paid in full, refunded to Tenant), and the provisions
of this Lease immediately shall be deemed reformed and the amounts thereafter
collectible hereunder reduced, without the necessity of the execution of any
new document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder.


 


(h)                                 Choice of Law. 
Construction and interpretation of this Lease shall be governed by the
internal laws of the state in which the Premises are located, excluding any
principles of conflicts of laws.


 


(i)                                     Time. 
Time is of the essence as to the performance of Tenant’s obligations
under this Lease.


 


(j)                                    Incorporation by Reference. 
All exhibits and addenda attached hereto are hereby incorporated into
this Lease and made a part hereof.  If
there is any conflict between such exhibits or addenda and the terms of this
Lease, such exhibits or addenda shall control.


 


(k)                                 Hazardous Activities. 
Notwithstanding any other provision of this Lease, Landlord, for itself
and its employees, agents and contractors, reserves the right to refuse to
perform any repairs or services in any portion of the Premises which, pursuant
to Tenant’s routine safety guidelines, practices or custom or prudent industry
practices, require any form of protective clothing or equipment other than
safety glasses.  In any such case, Tenant
shall contract with parties who are acceptable to Landlord, in Landlord’s reasonable
discretion, for all such repairs and services, and Landlord shall, to the
extent


 


30
















 


required,
equitably adjust Tenant’s Share of Operating Expenses in respect of such
repairs or services to reflect that Landlord is not providing such repairs or
services to Tenant.


 


(l)                                     Project Specific
Requirements.  Tenant acknowledges that the use and operation
of the Project are governed by, among other things, CC&Rs and Environmental
CC&Rs, and Tenant acknowledges having reviewed copies of the same.  Tenant agrees to comply with all of the terms
of the CC&Rs and Environmental CC&Rs which are applicable to tenants of
the Project including, without limitation, maintaining the insurance required
under the Environmental CC&Rs.  As
used herein, (i) “CC&Rs”
mean that certain Amended and Restated Declaration of Covenants, Conditions and
Restrictions for Sierra Point recorded in the Official Records of San Mateo
County on October 23, 1998, as amended, and (ii) “Environmental CC&Rs” mean that certain
First Amended and Restated Declaration of Covenants, Conditions and
Environmental Restrictions Relating to Environmental Compliance for Sierra
Point, recorded in the Official Records of San Mateo County on October 20,
1999 as Instrument No. 1999-176058.


 


31

















 


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


 


	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  PONIARD PHARMACEUTICALS, INC.,

  
	
   

  	
  a
  Washington corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Gerald
  McMahon

  
	
   

  	
  Name:  Gerald McMahon

  
	
   

  	
  Title:  Chairman, CEO & President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  ARE-SAN FRANCISCO NO. 17, LLC,

  
	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  ALEXANDRIA
  REAL ESTATE EQUITIES, L.P.,

  
	
   

  	
   

  	
  a
  Delaware limited partnership,

  
	
   

  	
   

  	
  managing
  member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ARE-QRS
  CORP.,

  
	
   

  	
   

  	
   

  	
  a
  Maryland corporation,

  
	
   

  	
   

  	
   

  	
  general
  partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/Jennnifer Pappas

  
	
   

  	
   

  	
   

  	
  Name: 
  Jennifer Pappas

  
	
   

  	
   

  	
   

  	
  Title: 
  VP & Assistant Secretary

  
						



 


32

















 


EXHIBIT
A TO LEASE


 


DESCRIPTION
OF INITIAL AND ADDITIONAL PREMISES


 


[Graphic of
floor plan]


 


1

















 


EXHIBIT
B TO LEASE


 


DESCRIPTION
OF PROJECT


 


CITY
OF SOUTH SAN FRANCISCO


 


PARCEL
1:


 


PARCEL
C, AS SHOWN ON THAT CERTAIN MAP ENTITLED, “PARCEL MAP 98-044 LANDS OF SIERRA
POINT, LLC, CITY OF SOUTH SAN FRANCISCO”, FILED IN THE OFFICE OF THE COUNTY
RECORDER OF SAN MATEO COUNTY, STATE OF CALIFORNIA, ON AUGUST 6, 1999, IN
BOOK 71 OF PARCEL MAPS, AT PAGE(S) 71 AND 72.


 


PARCEL
2:


 


THOSE
CERTAIN ACCESS EASEMENTS AS DESCRIBED IN THE FIRST AMENDMENT TO AMENDED AND
RESTATED DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS FOR SIERRA POINT
RECORDED AUGUST 6, 1999, AS DOCUMENT NO. 1999-134787, AND RERECORDED
OCTOBER 20, 1999, AS DOCUMENT NO. 1999-176057.


 


	
  ASSESSOR’S
  PARCEL NO. 015-010-570

  	
   

  	
  JOINT PLANT NO. 015-001-010-02.04A

  



 


1

















 


EXHIBIT
C TO LEASE


 


WORK
LETTER


 


THIS WORK LETTER (this “Work Letter”)
is incorporated into that certain Lease (the “Lease”)
dated as of June 26, 2006 by and between ARE SAN
FRANCISCO NO. 17, LLC, a Delaware limited liability company (“Landlord”), and PONIARD PHARMACEUTICALS,
INC., a Washington corporation (“Tenant”).  Any initially capitalized terms used but not
defined herein shall have the meanings given them in the Lease.


 


1.                                      General Requirements.


 


(a)                                 Tenant’s Authorized Representative. 
Tenant designates Caroline Loewy and Anna Wight (either such individual
acting alone, “Tenant’s Representative”) as the
only persons authorized to act for Tenant pursuant to this Work Letter.  Landlord shall not be obligated to respond to
or act upon any request, approval, inquiry or other communication (“Communication”) from or on behalf of Tenant in connection
with this Work Letter unless such Communication is in writing from Tenant’s
Representative.  Tenant may change either
Tenant’s Representative at any time upon not less than 5 business days advance
written notice to Landlord.


 


(b)                                 Landlord’s Authorized
Representative.  Landlord designates Caroline Loewy and Anna
Wight (either such individual acting alone, “Landlord’s
Representative”) as the only persons authorized to act for Landlord
pursuant to this Work Letter.  Tenant
shall not be obligated to respond to or act upon any request, approval, inquiry
or other Communication from or on behalf of Landlord in connection with this
Work Letter unless such Communication is in writing from Landlord’s
Representative.  Landlord may change
either Landlord’s Representative at any time upon not less than 5 business days
advance written notice to Tenant.


 


(c)                                  Architects, Consultants and
Contractors.  Landlord and Tenant hereby acknowledge and
agree that the architect (the “TI Architect”)
for the Tenant Improvements (as defined in Section 2(a) below), the
general contractor and any subcontractors for the Tenant Improvements shall be
selected by Tenant, subject to Landlord’s approval, which approval shall not be
unreasonably withheld, conditioned or delayed. 
Landlord shall be named a third party beneficiary of any contract
entered into by Tenant with the TI Architect, any consultant, any contractor or
any subcontractor, and of any warranty made by any contractor or any
subcontractor.


 


2.                                      Tenant Improvements.


 


(a)                                 Tenant Improvements Defined. 
As used herein, “Tenant Improvements”
shall mean all improvements to the Premises desired by Tenant of a fixed and permanent
nature.  Other than funding the TI
Allowance (as defined below) as provided herein, Landlord shall not have any
obligation whatsoever with respect to the finishing of the Premises for
Tenant’s use and occupancy.


 


(b)                                 Tenant’s Space Plans. 
Tenant shall deliver to Landlord schematic drawings and outline
specifications (the “TI Design Drawings”)
detailing Tenant’s requirements for the Tenant Improvements no later than January 15,
2007.  Not more than 10 days thereafter,
Landlord shall deliver to Tenant the written objections, questions or comments
of Landlord and the TI Architect with regard to the TI Design Drawings.  Tenant shall cause the TI Design Drawings to
be revised to address such written comments and shall resubmit said drawings to
Landlord for approval within 10 days thereafter.  Such process shall continue until Landlord
has approved the TI Design Drawings.


 


(c)                                  Working Drawings. 
Not later than 15 business days following the approval of the TI Design
Drawings by Landlord, Tenant shall cause the TI Architect to prepare and
deliver to Landlord for review and comment construction plans, specifications
and drawings for the Tenant Improvements (“TI 


 


1

















 


Construction
Drawings”), which
TI Construction Drawings shall be prepared substantially in accordance with the
TI Design Drawings.  Tenant shall be
solely responsible for ensuring that the TI Construction Drawings reflect
Tenant’s requirements for the Tenant Improvements.  Landlord shall deliver its written comments
on the TI Construction Drawings to Tenant not later than 10 business days after
Landlord’s receipt of the same; provided, however, that Landlord may not
disapprove any matter that is consistent with the TI Design Drawings.  Tenant and the TI Architect shall consider
all such comments in good faith and shall, within 10 business days after
receipt, notify Landlord how Tenant proposes to respond to such comments.  Any disputes in connection with such comments
shall be resolved in accordance with Section 2(d) hereof.  Provided that the design reflected in the TI
Construction Drawings is consistent with the TI Design Drawings, Landlord shall
approve the TI Construction Drawings submitted by Tenant.  Once approved by Landlord, subject to the provisions
of Section 4 below, Tenant shall not materially modify the TI Construction
Drawings except as may be reasonably required in connection with the issuance
of the TI Permit (as defined in Section 3(a) below).


 


(d)                                 Approval and Completion. 
If any dispute regarding the design of the Tenant Improvements is not
settled within 10 business days after notice of such dispute is delivered by
one party to the other, Tenant may make the final decision regarding the design
of the Tenant Improvements, provided (i) Tenant acts reasonably and such
final decision is either consistent with or a compromise between Landlord’s and
Tenant’s positions with respect to such dispute, (ii) that all costs and
expenses resulting from any such decision by Tenant shall be payable out of the
TI Fund (as defined in Section 5(d) below), and (iii) Tenant’s
decision will not affect the base Building, structural components of the
Building or any Building systems (in which case Landlord shall make the final
decision).  Any changes to the TI
Construction Drawings following Landlord’s and Tenant’s approval of same
requested by Tenant shall be processed as provided in Section 4 hereof.


 


3.                                      Performance of the Tenant
Improvements.


 


(a)                                 Commencement and Permitting of
the Tenant Improvements.  Tenant shall commence
construction of the Tenant Improvements upon obtaining and delivering to
Landlord a building permit (the “TI Permit”)
authorizing the construction of the Tenant Improvements consistent with the TI
Construction Drawings approved by Landlord. 
The cost of obtaining the TI Permit shall be payable from the TI
Fund.  Landlord shall assist Tenant in
obtaining the TI Permit.  Prior to the
commencement of the Tenant Improvements, Tenant shall deliver to Landlord a
copy of any contract with Tenant’s contractors (including the TI Architect),
and certificates of insurance from any contractor performing any part of the
Tenant Improvement evidencing industry standard commercial general liability,
automotive liability, “builder’s risk”, and workers’ compensation
insurance.  Tenant shall cause the
general contractor to provide a certificate of insurance naming Landlord,
Alexandria Real Estate Equities, Inc., and Landlord’s lender (if any) as
additional insureds for the general contractor’s liability coverages required
above.


 


(b)                                 Selection of Materials, Etc. 
Where more than one type of material or structure is indicated on the TI
Construction Drawings approved by Tenant and Landlord, the option will be
within Tenant’s reasonable discretion if the matter concerns the Tenant
Improvements, and within Landlord’s sole and absolute subjective discretion if
the matter concerns the structural components of the Building or any Building
system.


 


(c)                                  Tenant Liability. 
Tenant shall be responsible for correcting any deficiencies or defects
in the Tenant Improvements.


 


(d)                                 Substantial Completion. 
Tenant shall substantially complete or cause to be substantially
completed the Tenant Improvements in a good and workmanlike manner, in
accordance with the TI Permit subject, in each case, to Minor Variations and
normal “punch list” items of a non-material nature which do not interfere with
the use of the Premises (“Substantial Completion”
or “Substantially Complete”).  Upon Substantial Completion of the Tenant
Improvements, Tenant shall require the TI Architect and the general contractor
to execute and deliver, for the benefit of Tenant and Landlord, a 


 


2

















 


Certificate of
Substantial Completion in the form of the American Institute of Architects (“AIA”) document G704. 
For purposes of this Work Letter, “Minor Variations”
shall mean any modifications reasonably required:  (i) to comply with all applicable Legal
Requirements and/or to obtain or to comply with any required permit (including
the TI Permit); (ii) to comport with good design, engineering, and
construction practices which are not material; or (iii) to make reasonable
adjustments for field deviations or conditions encountered during the
construction of the Tenant Improvements.


 


4.                                      Changes. 
Any changes requested by Tenant to the Tenant Improvements after the
delivery and approval by Landlord of the TI Design Drawings, shall be requested
and instituted in accordance with the provisions of this Section 4 and
shall be subject to the written approval of Landlord, which approval shall not
be unreasonably withheld, conditioned or delayed.


 


(a)                                 Tenant’s Right to Request Changes. 
If Tenant shall request changes (“Changes”),
Tenant shall request such Changes by notifying Landlord in writing in
substantially the same form as the AIA standard change order form (a “Change Request”), which Change Request shall detail the
nature and extent of any such Change. 
Such Change Request must be signed by Tenant’s Representative.  Landlord shall review and approve or
disapprove such Change Request within 10 business days thereafter, provided
that Landlord’s approval shall not be unreasonably withheld, conditioned or
delayed.


 


(b)                                 Implementation of Changes. 
If Landlord approves such Change and Tenant deposits with Landlord any
Excess TI Costs (as defined in Section 5(d) below) required in
connection with such Change, Tenant may cause the approved Change to be
instituted.  If any TI Permit
modification or change is required as a result of such Change, Tenant shall
promptly provide Landlord with a copy of such TI Permit modification or change.


 


5.                                      Costs.


 


(a)                                 Budget For Tenant Improvements. 
Before the commencement of construction of the Tenant Improvements,
Tenant shall obtain a detailed breakdown, by trade, of the costs incurred or
that will be incurred, in connection with the design and construction of The
Tenant Improvements (the “Budget”), and
deliver a copy of the Budget to Landlord for Landlord’s approval, which shall
not be unreasonably withheld or delayed. 
The Budget shall be based upon the TI Construction Drawings approved by
Landlord and shall include a payment to Landlord of administrative rent (“Administrative Rent”) equal to 2% of the TI Costs (as
hereinafter defined) for monitoring and inspecting the construction of the
Tenant Improvements, which sum shall be payable from the TI Fund.  Such Administrative Rent shall include,
without limitation, all out-of-pocket costs, expenses and fees incurred by or
on behalf of Landlord arising from, out of, or in connection with, such
monitoring of the construction of the Tenant Improvements, and shall be payable
out of the TI Fund.  If the Budget is
greater than the TI Allowance, Tenant shall deposit with Landlord the
difference, in cash, prior to the commencement of construction of the Tenant
Improvements, for disbursement by Landlord as described in Section 5(d).


 


(b)                                 Landlord shall provide to Tenant a tenant
improvement allowance (the “TI Allowance”)
in the maximum amount of $25.00 per rentable square foot in the Premises, or
$426,125.00 in the aggregate, which shall, to the extent used, result in
adjustments to the Base Rent as set forth in the Lease.   Within 5 business days after Tenant’s
delivery of the Budget to Landlord, Tenant shall notify Landlord how much TI
Allowance Tenant has elected to receive from Landlord.  Such election shall be final and binding on
Tenant, and may not thereafter be modified without Landlord’s consent, which
may be granted or withheld in Landlord’s sole and absolute subjective
discretion The TI Allowance shall be disbursed in accordance with this Work
Letter.


 


Tenant shall have no
right to the use or benefit (including any reduction to Base Rent) of any
portion of the TI Allowance not required for the construction of (i) the
Tenant Improvements described in the TI Construction Drawings approved pursuant
to Section 2(d) or (ii) any Changes pursuant to Section 4.  


 


3

















 


Tenant shall have no
right to any portion of the TI Allowance that is not disbursed within 6 months
after the delivery of the Additional Premises to Tenant.


 


(c)                                  Costs Includable in TI Fund. 
The TI Fund shall be used solely for the payment of design, permits and
construction costs in connection with the construction of the Tenant
Improvements, including, without limitation, the cost of electrical power and
other utilities used in connection with the construction of the Tenant
Improvements, the cost of preparing the TI Design Drawings and the TI
Construction Drawings, all costs set forth in the Budget, including Landlord’s
Administrative Rent, and the cost of Changes (collectively, “TI Costs”). 
Notwithstanding anything to the contrary contained herein, the TI Fund
shall not be used to purchase any furniture, personal property or other
non-Building system materials or equipment, including, but not be limited to,
Tenant’s voice or data cabling, non-ducted biological safety cabinets and other
scientific equipment not incorporated into the Tenant Improvements.


 


(d)                                 Excess TI Costs. 
Landlord shall have no obligation to bear any portion of the cost of any
of the Tenant Improvements except to the extent of the TI Allowance.  If at any time and from time-to-time, the
remaining TI Costs under the Budget exceed the remaining unexpended TI
Allowance, Tenant shall deposit with Landlord, as a condition precedent to
Landlord’s obligation to complete the Tenant Improvements, 100% of the then
current TI Cost in excess of the remaining TI Allowance (“Excess TI
Costs”).  If Tenant fails to
deposit, or is late in depositing any Excess TI Costs with Landlord, Landlord
shall have all of the rights and remedies set forth in the Lease for nonpayment
of Rent (including, but not limited to, the right to interest at the Default
Rate and the right to assess a late charge). 
For purposes of any litigation instituted with regard to such amounts,
those amounts will be deemed Rent under the Lease.  The TI Allowance and Excess TI Costs is
herein referred to as the “TI Fund.” 
Funds deposited by Tenant shall be the first thereafter disbursed to pay
TI Costs.  Notwithstanding anything to
the contrary set forth in this Section 5(d), Tenant shall be fully and
solely liable for TI Costs and the cost of Minor Variations in excess of the TI
Allowance.  If upon Substantial
Completion of the Tenant Improvements and the payment of all sums due in
connection therewith there remains any undisbursed portion of the TI Fund,
Tenant shall be entitled to such undisbursed TI Fund solely to the extent of
any Excess TI Costs deposit Tenant has actually made with Landlord.


 


(e)                                  Payment for TI Costs. 
During the course of design and construction of the Tenant Improvements,
Landlord shall pay TI Costs once a month against a draw request in Landlord’s
standard form, containing such certifications, lien waivers (including a
conditional lien release for each progress payment and unconditional lien
releases for the prior month’s progress payments), inspection reports and other
matters as Landlord customarily obtains, to the extent of Landlord’s approval
thereof for payment, no later than 30 days following receipt of such draw
request.  Upon completion of the Tenant
Improvements (and prior to any final disbursement of the TI Fund), Tenant shall
deliver to Landlord:  (i) sworn statements
setting forth the names of all contractors and first tier subcontractors who
did the work and final, unconditional lien waivers from all such contractors
and first tier subcontractors; (ii) as-built plans (one copy in print
format and two copies in electronic CAD format) for such Tenant Improvements; (iii) a
certification of substantial completion in Form AIA G704, (iv) a
certificate of occupancy for the Premises; and (v) copies of all operation
and maintenance manuals and warranties affecting the Premises.


 


6.                                      Miscellaneous.


 


(a)                                 Consents. 
Whenever consent or approval of either party is required under this Work
Letter, that party shall not unreasonably withhold, condition or delay such
consent or approval, except as may be expressly set forth herein to the
contrary.


 


(b)                                 Modification. 
No modification, waiver or amendment of this Work Letter or of any of
its conditions or provisions shall be binding upon Landlord or Tenant unless in
writing signed by Landlord and Tenant.


 


4

















 


IN WITNESS WHEREOF, Landlord and Tenant have executed this
Work Letter to be effective on the date first above written.


 


 


	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  PONIARD PHARMACEUTICALS, INC.,

  
	
   

  	
  a
  Washington corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Gerald McMahon

  
	
   

  	
  Name:
  Gerald McMahon

  
	
   

  	
  Title:  Chairman, CEO & President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  ARE-SAN FRANCISCO NO. 17, LLC,

  
	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  ALEXANDRIA
  REAL ESTATE EQUITIES, L.P.,

  
	
   

  	
   

  	
  a
  Delaware limited partnership,

  
	
   

  	
   

  	
  managing
  member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ARE-QRS
  CORP.,

  
	
   

  	
   

  	
   

  	
  a
  Maryland corporation,

  
	
   

  	
   

  	
   

  	
  general
  partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Jennifer Pappas

  
	
   

  	
   

  	
   

  	
  Name: 
  Jennifer Pappas

  
	
   

  	
   

  	
   

  	
  Title: 
  VP & Assistant Secretary

  
						



 


5

















 


EXHIBIT D TO LEASE


 


ACKNOWLEDGEMENT OF
COMMENCEMENT DATE


 


This ACKNOWLEDGMENT OF
COMMENCEMENT DATE is made this 10th day of July, 2006, between ARE-SAN FRANCISCO NO. 17, LLC, a Delaware
limited liability company (“Landlord”), and
PONIARD PHARMACEUTICALS, INC., a
Washington corporation (“Tenant”), and
is attached to and made a part of the Lease dated July 10, 2006 (the “Lease”), by and between Landlord and Tenant.  Any initially capitalized terms used but not
defined herein shall have the meanings given them in the Lease.


 


Landlord and Tenant hereby acknowledge and agree, for
all purposes of the Lease, that the Commencement Date of the Base Term of the
Lease is July 12, 2006, and the termination date of the Base Term of the
Lease shall be midnight on July 11, 2001.


 


IN WITNESS WHEREOF, Landlord and Tenant have executed
this ACKNOWLEDGMENT OF COMMENCEMENT DATE to be effective on the date first
above written.


 


	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  PONIARD PHARMACEUTICALS, INC.,

  
	
   

  	
  a
  Washington corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Gerald McMahon

  
	
   

  	
  Name:
  Gerald McMahon

  
	
   

  	
  Title:  Chariman, CEO & President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  ARE-SAN FRANCISCO NO. 17, LLC,

  
	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  ALEXANDRIA
  REAL ESTATE EQUITIES, L.P.,

  
	
   

  	
   

  	
  a
  Delaware limited partnership,

  
	
   

  	
   

  	
  managing
  member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ARE-QRS
  CORP.,

  
	
   

  	
   

  	
   

  	
  a
  Maryland corporation,

  
	
   

  	
   

  	
   

  	
  general
  partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Jennifer Pappas

  
	
   

  	
   

  	
   

  	
  Name: 
  Jennifer Pappas

  
	
   

  	
   

  	
   

  	
  Title: 
  VP & Assistant Secretary

  
						



 


1

















 


EXHIBIT E TO LEASE


 


RULES AND REGULATIONS


 


1.                                      The sidewalk, entries, and driveways of
the Project shall not be obstructed by Tenant, or any Tenant Party, or used by
them for any purpose other than ingress and egress to and from the Premises.


 


2.                                      Tenant shall not place any objects,
including antennas, outdoor furniture, etc., in the parking areas, landscaped
areas or other areas outside of its Premises, or on the roof of the Project.


 


3.                                      Except for animals assisting the
disabled, no animals shall be allowed in the offices, halls, or corridors in
the Project.


 


4.                                      Tenant shall not disturb the occupants of
the Project or adjoining buildings by the use of any radio or musical
instrument or by the making of loud or improper noises.


 


5.                                      If Tenant desires telegraphic, telephonic
or other electric connections in the Premises, Landlord or its agent will
direct the electrician as to where and how the wires may be introduced; and,
without such direction, no boring or cutting of wires will be permitted.  Any such installation or connection shall be
made at Tenant’s expense.


 


6.                                      Tenant shall not install or operate any
steam or gas engine or boiler, or other mechanical apparatus in the Premises,
except as specifically approved in the Lease. 
The use of oil, gas or inflammable liquids for heating, lighting or any
other purpose is expressly prohibited. 
Explosives or other articles deemed extra hazardous shall not be brought
into the Project.


 


7.                                      Parking any type of recreational vehicles
is specifically prohibited on or about the Project.  Except for the overnight parking of operative
vehicles, no vehicle of any type shall be stored in the parking areas at any
time.  In the event that a vehicle is
disabled, it shall be removed within 48 hours. 
There shall be no “For Sale” or other advertising signs on or about any
parked vehicle.  All vehicles shall be
parked in the designated parking areas in conformity with all signs and other
markings.  All parking will be open
parking, and no reserved parking, numbering or lettering of individual spaces
will be permitted except as specified by Landlord.


 


8.                                      Tenant shall maintain the Premises free
from rodents, insects and other pests.


 


9.                                      Landlord reserves the right to exclude or
expel from the Project any person who, in the judgment of Landlord, is
intoxicated or under the influence of liquor or drugs or who shall in any
manner do any act in violation of the Rules and Regulations of the
Project.


 


10.                               Tenant shall not cause any unnecessary
labor by reason of Tenant’s carelessness or indifference in the preservation of
good order and cleanliness.  Landlord
shall not be responsible to Tenant for any loss of property on the Premises,
however occurring, or for any damage done to the effects of Tenant by the
janitors or any other employee or person.


 


11.                               Tenant shall give Landlord prompt notice
of any defects in the water, lawn sprinkler, sewage, gas pipes, electrical
lights and fixtures, heating apparatus, or any other service equipment
affecting the Premises.


 


12.                               Tenant shall not permit storage outside
the Premises, including without limitation, outside storage of trucks and other
vehicles, or dumping of waste or refuse or permit any harmful materials to be
placed in any drainage system or sanitary system in or about the Premises.


 


1

















 


13.                               All moveable trash receptacles provided
by the trash disposal firm for the Premises must be kept in the trash enclosure
areas, if any, provided for that purpose.


 


14.                               No auction, public or private, will be
permitted on the Premises or the Project.


 


15.                               No awnings shall be placed over the
windows in the Premises except with the prior written consent of Landlord.


 


16.                               The Premises shall not be used for
lodging, sleeping or cooking or for any immoral or illegal purposes or for any
purpose other than that specified in the Lease. 
No gaming devices shall be operated in the Premises.


 


17.                               Tenant shall ascertain from Landlord the
maximum amount of electrical current which can safely be used in the Premises,
taking into account the capacity of the electrical wiring in the Project and the
Premises and the needs of other tenants, and shall not use more than such safe
capacity.  Landlord’s consent to the
installation of electric equipment shall not relieve Tenant from the obligation
not to use more electricity than such safe capacity.


 


18.                               Tenant assumes full responsibility for
protecting the Premises from theft, robbery and pilferage.


 


19.                               Tenant shall
not install or operate on the Premises any machinery or mechanical devices of a
nature not directly related to Tenant’s ordinary use of the Premises and shall
keep all such machinery free of vibration, noise and air waves which may be
transmitted beyond the Premises.


 


2
















 


EXHIBIT F TO LEASE


 


TENANT’S PROPERTY


 


None except as set forth below:


 


The following to the extent installed below the ceiling grid:


 


Casework
and cabinets


Mill
work


Lab
benches


Fume
and tissue culture hoods


Glass
wash equipment


Equipment
racks


Bio-safety
cabinets


Environmental
rooms


Refrigerators,
freezers and ice machines


Hyrogenation
Parr


Autoclaves


Specialized
equipment that can be removed without damage to building structure or systems


 


1

















 


EXHIBIT G TO LEASE


 


LANDLORD’S WORK


 


Initial
Premises


 


·                  Construct a fire-rated corridor and related
card readers and doors in order to secure the Premises from the adjacent suite.


 


Additional
Premises


 


·                  Construct a demising wall between glasswash
areas room 223 and 224, and between Biology Lab 217 and Equipment room.


 


·                  Install set of double doors between Biology
Lab 217 and vestibule outside of glasswash area.


 


1

















 


EXHIBIT H TO LEASE


 


LANDLORD’S
PROPERTY


 


Inventory
of Existing Furniture in the Premises


 


Main
Conference Room:


· Conference
room table


·  9 conference room chairs


· 1 credenza


 


Patio:


· 3 round metal
tables


· 9 metal chairs


 


Plug
and Play Office Cubes:


· 19 assembled


· Approximately
8 additional unassembled (we are unable to guarantee that all parts are
available)


 


Private
Office Furniture:


· 6 office desks
with return desk, under desk file cabinet and upper storage


· 2 oval tables


· 1 unassembled
office desk


· 2 return desks


·  1 partial desk with file cabinet


 


Future
Chemistry Lab (upon expansion of square footage to 16,586 sf):


· 3, eight-foot
chemical fume hoods.


 


1

















 


FIRST
AMENDMENT TO LEASE


 


THIS FIRST AMENDMENT TO LEASE
(this “First Amendment”) is made as of December 3,
2007, by and between ARE-SAN FRANCISCO NO. 17,
LLC, a Delaware limited liability company (“Landlord”),
and PONIARD PHARMACEUTICALS, INC., a
Washington corporation (“Tenant”).


 


RECITALS


 


A.            Landlord and Tenant entered into that certain Lease
Agreement dated as of July 10, 2006 (the “Lease”).  Pursuant to the Lease, Tenant leases certain
premises consisting of approximately 17,045 rentable square feet (“Premises”) in a building located at 7000 Shoreline Court,
South San Francisco, California.  The
Premises are more particularly described in the Lease.  Capitalized terms used herein without
definition shall have the meanings defined for such terms in the Lease.


 


B.            Pursuant to the terms of the Lease, Tenant had the right
to a TI Allowance in the maximum amount of $426,125.00.


 


C.            Tenant has elected to use only a portion of the TI
Allowance in the amount of $255,675.00 (“Applied TI Allowance”).


 


D.            Landlord and Tenant desire, subject to the terms and
conditions set forth below, to amend the Lease to, among other things, account
for the adjustment in Base Rent prescribed by Section 4(a) of the
Lease based upon the amount of the Applied TI Allowance.


 


NOW, THEREFORE, in
consideration of the foregoing Recitals, which are incorporated herein by this
reference, the mutual promises and conditions contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Landlord and Tenant hereby agree as follows:


 


1.                                       Annual
Base Rent Adjustment.  Landlord
and Tenant acknowledge and agree that, pursuant to Section 4(b) of
the Lease, Base Rent was increased on July 12, 2007, which was the first
annual anniversary of the Commencement Date, to $2.73745 per rentable square
foot per month.  Base Rent shall increase
on July 12 of each year during the Term as provided for in Section 4(b) of
the Lease.


 


2.                                       Adjustment
to Base Rent for Applied TI Allowance.  Based on the Applied TI Allowance,
pursuant to the terms of Section 4(a) of the Lease, commencing
on December 1, 2007, Base Rent payable during the Base Term shall further
be increased by $0.315 per rentable square foot per month.


 


3.                                       TI
Allowance.  Tenant
hereby acknowledges and agrees that Tenant has no further right to use any
portion of the TI Allowance in excess of the Applied TI Allowance.


 


4.             Miscellaneous.


 


a.       This First Amendment is
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior and contemporaneous oral and written agreements
and discussions.  This First Amendment
may be amended only by an agreement in writing, signed by the parties hereto.


 


2

















 


b.         This
First Amendment is binding upon and shall inure to the benefit of the parties hereto,
their respective agents, employees, representatives, officers, directors,
divisions, subsidiaries, affiliates, assigns, heirs, successors in interest and
shareholders.


 


c.         The
First Amendment may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which when taken together shall
constitute one and the same instrument. 
The signature page of any counterpart may be detached therefrom
without impairing the legal effect of the signature(s) thereon provided
such signatures page is attached to any other counterpart identical
thereto except having additional signature pages executed by other parties
to this First Amendment attached thereto.


 


d.         Except
as amended and/or modified by this First Amendment, the Lease is hereby ratified
and confirmed and all other terms of the Lease shall remain in full force and
effect, unaltered and unchanged by this First Amendment.  In the event of any conflicted between the
provisions of this First Amendment and the provisions of the Lease, the provisions
of this First Amendment shall prevail. 
Whether or not specifically amended by this First Amendment, all of the
terms and provisions of the Lease are hereby amended to the extent necessary to
give effect to the purpose and intent of this First Amendment.


 


[Signatures are on the next page.]


 


3

















 


IN WITNESS WHEREOF, parties hereto
have executed this First Amendment as of the day and year first above written.


 


	
  LANDLORD:

  	
  ARE-SAN
  FRANCISCO NO. 17, LLC,

  
	
   

  	
  a
  Delaware limited liability company.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  ALEXANDRIA REAL ESTATE
  EQUITIES, L.P., 

  
	
   

  	
   

  	
  a Delaware limited
  partnership, managing member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ARE-QRS
  CORP.,

  
	
   

  	
   

  	
   

  	
  a
  Maryland Corporation,

  
	
   

  	
   

  	
   

  	
  general
  partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Illegible

  
	
   

  	
   

  	
   

  	
  Its:

  	
  SVP-RE General Counsel

  
	
   

  	
   

  	
   

  	
   

  
	
  TENANT:

  	
  PONIARD
  PHARMACEUTICALS, INC.,

  
	
   

  	
  a
  Washington corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Anna Wight

  
	
   

  	
  Its:

  	
  VP
  Legal

  



 


4

















 


Exhibit B-1 to Sublease — Phase I Premises


 


[Diagram of Premises]


 

















 


Exhibit B-2 to Sublease — Phase II Premises


 


[Diagram of Premises]


 

















 


Exhibit C to Sublease — Landlord’s Property


 


[Inventory of Existing Furniture in the Premises]


 

















 


Exhibit D to Sublease — Loaned Furniture


 


[List of Office Furniture]


 

















 


Exhibit E to Sublease


 


Landlord’s Consent to Sublease


 


[Filed Separately]


 

















 


Schedule I to Sublease


 


Subtenant’s Initial Improvements


 


[Diagram of Improvements to Premises]


 

















 


Schedule II to Sublease


 


Subtenant’s Construction Schedule


 


[Construction Calendar ]