Exhibit
10.47


COMMERCIAL
SUBLEASE AGREEMENT


This Sublease Agreement (“Sublease”)
is entered as of December   , 2006 by and between                               
a Delaware limited partnership (“Sublandlord”) and Sunesis Pharmaceuticals,
Inc., a Delaware corporation (“Subtenant”). 
Sublandlord and Subtenant may individually be referred to as a “Party”
or collectively as the “Parties.”


RECITALS


WHEREAS, Sublandlord
entered into a lease agreement dated June 1, 2003 and subsequently amended on
December 15, 2004 and March 1, 2005, between the Sublandlord and                               
(“Master Landlord”) for space located at 395 Oyster Point Blvd., South San
Francisco, CA (the “Master Premises) and for a term ending on February 28, 2014
(the “Master Lease Agreement”); and


WHEREAS, Subject
to the Master Landlord’s consent, Sublandlord and Subtenant wish to enter into
this Sublease for a portion of the Master Premises.


NOW, THEREFORE, the
Parties agree as follows:


1.             RECITALS:
The Recitals are incorporated herein in their entirety.


2.             PREMISES:
Sublandlord hereby subleases to Subtenant the Premises located at: 395 Oyster
Point Marina Plaza, 395 Oyster Point Blvd., South San Francisco, California
94080.  The subleased premises consist of
those 15,378 rentable square feet of the Master Premises located on the 4th floor (Suites 400, 401 and 402) as shown on
the floor plan attached hereto as Exhibit A (collectively, the “Premises”).
Subtenant hereby subleases the Premises from Sublandlord for the term and
rental and upon the other terms and conditions hereinafter set forth, to be
used and occupied by Subtenant solely for the purpose of office space and for
no other purpose.


3.             SUBLEASE TERM:
The term of the Sublease will be for a period of seventy four (74) months, beginning on February 1, 2007 (begin date)
and ending on March 31, 2013 (end date) (the “Sublease Term”).


4.             OPTION TO
RENEW:  Subtenant shall have
one (1) option to renew this Sublease on the Sublease Premises for the balance
of the Master Lease term expiring February 28, 2014.  Subtenant must exercise this option by
providing written notice to Sublandlord at lease 9 (nine) months prior to the
end of the Sublease Term.  The Base Rent
for the option period shall be fixed at $2.25 per square foot.


5.             SUBLEASE COMMENCEMENT:  The Sublease Commencement Date shall be
February 1, 2007.  Possession of the
Premises shall be delivered to Subtenant no later than December
     , 2006, in order for Subtenant to complete its
planned improvements (the “Early Occupancy”). 
Subtenant occupancy shall occur no earlier than January 15, 2007.  Subtenant shall be subject to all of the
terms of this Sublease during the Early Occupancy, except for the













obligation to pay Base Rent.  In the event that the possession of the
Premises is not delivered to Subtenant on or before December
     , 2006, Subtenant’s obligation to pay Base Rent
as of the Sublease Commencement Date shall be abated one day for each day such
delay continues past December      , 2006.


6.             LEASE PAYMENT AMOUNTS: Subtenant agrees to pay to
Sublandlord as rent for the Premises the amounts shown on the following rent
schedule:




	
  Months

  	
   

  	
  Base Rent/Square Foot/Month
  (Fully Serviced)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1 — 3

  	
   

  	
  Base Rent Abated

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4 — 12

  	
   

  	
  $

  	
  1.95 FS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13 — 24

  	
   

  	
  $

  	
  2.00 FS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  25 — 36

  	
   

  	
  $

  	
  2.05 FS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  37 — 48

  	
   

  	
  $

  	
  2.10 FS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  49 — 60

  	
   

  	
  $

  	
  2.15 FS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  61 — 74

  	
   

  	
  $

  	
  2.20 FS

  	
   

  






 


7.             PAYMENT:
 Upon Sublease execution,
Subtenant will provide Sublandlord with the fourth month’s payable base rent,
evidence of required insurance coverage and a security deposit as described in
Section 13.   Thereafter, Subtenant agrees
to pay Sublandlord each month in advance on the first day of each month at: 395
Oyster Point Blvd. Suite _____, South San Francisco, CA 94080 (address for rent payment), or at any other address
designated by Sublandlord.   All
payments due from Subtenant to Sublandlord hereunder shall be made to
Sublandlord without deduction or offset whatsoever, in lawful money of the
United States of America at the address for payment set forth in the Basic
Lease Information, or to such other person or at such other place as
Sublandlord may from time to time designate by notice to Subtenant.


Sublandlord hereby acknowledges that Sublandlord’s
failure to pay the rent and other sums owing by Sublandlord to Master Landlord
under the Master Lease Agreement will cause Subtenant to incur damages, costs
and expenses not contemplated by this Sublease, especially in those cases where
Subtenant has paid sums to Sublandlord hereunder which correspond in whole or
in part to the amounts owing by Sublandlord to Master Landlord under the Master
Lease Agreement.  Accordingly, Subtenant shall have the right to pay all
rent and other sums owing by



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Subtenant to Sublandlord hereunder for those items
which also are owed by Sublandlord to Master Landlord under the Master Lease
Agreement directly to Master Landlord on the following terms and conditions:


(a)           Either (i) Subtenant reasonably
believes that Sublandlord has failed to make any payment required to be made by
Sublandlord to Master Landlord under the Master Lease Agreement and Sublandlord
fails to provide adequate proof of payment within two (2) business days
after Subtenant’s written demand requesting such proof; or (ii) Subtenant
reasonably believes that Sublandlord shall fail to make any payment required to
be made by Sublandlord to Master Landlord under the Master Lease Agreement and
Sublandlord fails to provide assurance of future performance in form reasonably
satisfactory to Subtenant within two (2) business days after Subtenant’s
written demand requesting such assurance.


(b)           Subtenant shall not prepay any
amounts owing by Sublandlord without the consent of Sublandlord.


(c)           Subtenant shall provide to
Sublandlord concurrently with any payment to Master Landlord reasonable
evidence of such payment.


(d)           If Sublandlord notifies Subtenant
that it disputes any amount demanded by Master Landlord, Subtenant shall not
make any such payment to Master Landlord unless Master Landlord has provided a
three-day notice to pay such amount or forfeit the Master Lease Agreement.


Any sums paid directly by Subtenant to Master
Landlord in accordance with this Section 7 shall be credited toward the amounts
payable by Subtenant to Sublandlord under this Sublease.  In the event
Subtenant tenders payment directly to Master Landlord in accordance with this
Section 7 and Master Landlord refuses to accept such payment, Subtenant shall
have the right to deposit such funds in an account with a national bank for the
benefit of Master Landlord and Subtenant, and the deposit of said funds in such
account shall discharge Subtenant’s obligation under this Sublease to make the
payment in question.


8.             LATE FEE:  Subtenant hereby acknowledges that
late payment by Subtenant to Sublandlord of rent and other amounts due
hereunder will cause Sublandlord to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain.  Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed on
Sublandlord by the terms of the Master Lease Agreement.  Accordingly, if any installment of rent or
any other sums due from Subtenant shall not be received by Sublandlord within
ten (10) days following the date due, Subtenant shall pay to Sublandlord a late
charge equal to one percent (1%) of such overdue amount.  The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Sublandlord will
incur by reason of late payment by Subtenant. 
Acceptance of  such late charge by
Sublandlord shall in no event constitute a waiver of Subtenant’s default with
respect to such overdue amount, nor prevent Sublandlord from exercising any of
the other rights and remedies granted hereunder.



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9.             INSUFFICIENT FUNDS: Subtenant agrees to pay the charge of
$150 for each check that is returned for lack of sufficient funds.


10.          OPERATING EXPENSES AND PROPERTY TAXES:  The Sublease shall be full service in
nature.  Subtenant shall be responsible
for its Pro-Rata Share of building operating expenses without mark-up,
including real estate taxes and real estate tax increases over and above the
2007 Base Year, but only to the extent such expenses apply to the term of the
Sublease, are chargeable to Subtenant and the Premises pursuant to Section 4.2
of the Master Lease Agreement, as incorporated herein, and are equitably
allocable to Subtenant (excluding, by way of example, charges caused solely by
Sublandlord or its employees).  Prior to
Sublease execution, Sublandlord will provide Subtenant with the last three
years’ Operating Expenses and with the 2006 projected operating expenses.  For purposes of this Sublease, “Operating
Expenses” shall have the same meaning as that described in the Master Lease
Agreement.  For purposes of this
Sublease, Pro-Rata Share shall mean
          %.


11.          SUBTENANT IMPROVEMENTS: 
In lieu of providing Subtenant with a subtenant
improvement allowance, Sublandlord has agreed to abate the first three
installments of monthly base rent due hereunder.


12.          BUSINESS TAXES:  Subtenant
shall pay all business and other taxes (unrelated to Sublandlord’s or Master
Landlord’s income or revenue), if any, in respect of the business carried on in
or upon the Premises.


13.          SECURITY DEPOSIT: At the signing of this Sublease, Subtenant shall deposit
with Sublandlord, in trust, a security deposit of $59,974.20 as security for
the performance by Subtenant of the terms under this Sublease and for any
damages caused by Subtenant, its employees, agents or visitors to the Premises
during the Sublease Term.  However,
Subtenant’s liability under this Sublease shall not be limited to the balance
of the security deposit.  Subtenant shall
not apply or deduct any portion of any security deposit from the last or any
month’s rent.  Subtenant shall not use or
apply any such security deposit at any time in lieu of payment of rent.  In the event of a default by Subtenant,
Sublandlord may use or apply, as is reasonably necessary, all or any portion of
the security deposit to cure such default of Subtenant.  In such event, Subtenant shall restore the
security deposit to its original amount, or one-half of its original amount, as
applicable, within 10 business days of Landlord’s written notice to do the
same.


Provided  Subtenant is not then in default of any of
its obligations under the Sublease beyond applicable notice and cure periods,
at the end of the 36th month of the Sublease Term, 1⁄2  (one-half) of the security deposit in the
amount of $29,987.10 shall be applied to Subtenant’s payment of its rental
obligation for the 37th month of the Sublease.


After the termination of
the Sublease or any earlier termination of the Sublease, any remaining portion
of the security deposit (including any interest) shall be returned to Subtenant
in accordance with the provisions of § 1950.7 of the California Civil Code.



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14.          NON-DISTURBANCE; QUIET ENJOYMENT:
Sublandlord agrees not to amend or modify the Master Lease Agreement in any way
which increases Subtenant’s obligations or adversely affects Subtenant’s
rights.


Subtenant shall be entitled to quiet enjoyment of the Premises during
the Sublease Term, and neither Sublandlord nor Master Landlord will interfere
with that right, as long as Subtenant pays the rent in a timely manner and
performs all other obligations under this Sublease.  In the event, however, that Sublandlord
defaults in the performance or observance of any of Sublandlord’s remaining
obligations under the Master Lease Agreement or fails to perform Sublandlord’s
stated obligations under this Sublease, then Subtenant shall give Sublandlord
notice specifying in what manner Sublandlord has defaulted, and if such default
shall not be cured by Sublandlord within thirty (30) days thereafter (except
that if such default cannot be cured within said thirty (30) day period, this
period shall be extended for an additional reasonable time, provided that
Sublandlord commences to cure such default within such thirty (30) day period
and proceeds diligently thereafter to effect such cure as quickly as possible),
then Subtenant shall be entitled to cure such default and promptly collect from
Sublandlord Subtenant’s reasonable expenses in so doing (including, without
limitation, reasonable attorneys’ fees and court costs), or, at Subtenant’s
option, to offset such reasonable expenses against all future payments of rent
due under this Sublease.  Subtenant shall
not be required, however, to wait the entire cure period described herein if
earlier action is required to comply with the Master Lease Agreement or with
any applicable governmental law, regulation or order.  Sublandlord shall promptly send to Subtenant
copies of all notices and other communications it shall send to and receive
from Master Landlord.


15.          USE:
Subtenant
shall use the Premises only for professional and administrative general office
use and as described in the Master Lease Agreement.


16.          POSSESSION AND SURRENDER OF PREMISES: Subtenant
shall be entitled to possession of the Premises on December      ,
2006, conditioned upon Subtenant meeting the insurance requirements outlined in
Section 18 below and prior approval from the Master Landlord.  At the expiration of the Sublease, Subtenant
shall peaceably surrender the Premises to Sublandlord or Sublandlord’s agent in
the same condition it was in as of the Commencement Date, reasonable wear and
tear, condemnation, casualty, and Hazardous Materials not released by Subtenant
and items listed on Exhibit C, excepted.


17.          CONDITION OF PREMISES:
Sublandlord shall disclose actual knowledge of the existence of any underground
storage tanks, sumps, piping and any other factor indicating the possible
presence of Hazardous Materials in, on or around the Master Premises; any
adverse present or contemplated use restrictions of the Premises; material
physical defects; and any other material matter affecting its condition or
value (collectively, the “Disclosure List”). 
A copy of the Disclosure List is attached hereto as Exhibit C.


Subtenant or Subtenant’s agent has inspected the Premises, the
fixtures, the grounds, building and improvements (limited to the electrical,
HVAC and fire sprinkler systems, security and environmental aspects) and
acknowledges that the Premises are in good and acceptable condition and
suitable for Subtenant’s intended use. If at any time during the term of this
Sublease, in



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Subtenant’s opinion, the conditions change, Subtenant shall promptly
provide reasonable notice to Sublandlord.


Sublandlord shall
indemnify Subtenant for all previously existing and non-Subtenant introduced
Hazardous Materials on-site or within the structure.  Additionally, Subtenant shall not be liable
for any charges incurred, damage to the Premises, or any other fees or losses
relating to any period prior to the Commencement Date. As used herein, “Hazardous
Material” shall mean any material which is now or hereafter regulated by any
governmental authority or which poses a hazard to the environment or human
life.


18.          OBLIGATIONS
UNDER MASTER LEASE AGREEMENT: Sublandlord represents and
warrants that:  (i) the Master Lease
Agreement is in full force and effect, (ii) Sublandlord is not in default under
the Master Lease Agreement and, to Sublandlord’s knowledge, Master Landlord is
not in default thereunder, (iii) Sublandlord has previously furnished to
Subtenant a true, accurate and complete copy of the Master Lease Agreement and
all amendments thereto,  and (iv) as of
the date of this Sublease, the Sublandlord’s leasehold estate is not encumbered
by any deed of trust or mortgage financing.


Sublandlord shall fully perform all of its obligations under the Master
Lease Agreement not assumed by Subtenant hereunder, including, without
limitation, the prompt payment to Master Landlord paid by Subtenant to
Sublandlord hereunder.


Sublandlord shall do either of the following with respect to the
obligations of the Master Landlord under the Master Lease Agreement:  (i) perform all such obligations, or (ii) use
Sublandlord’s diligent good faith efforts to cause Master Landlord to perform
such obligations for the benefit of Subtenant. 
Such diligent good faith efforts shall include, without limitation:  (a) upon Subtenant’s written request,
immediately notifying Master Landlord of its nonperformance under the Master
Lease Agreement and requesting that Master Landlord perform its obligations
under the Master Lease Agreement, and (b) permitting Subtenant to commence a
lawsuit or other action in Subtenant’s name to obtain the performance required
from Master Landlord under the Master Lease Agreement; provided, however, that
if Subtenant commences a lawsuit or other action, Subtenant shall pay all costs
and expenses incurred in connection therewith, and Subtenant shall indemnify
Sublandlord against, and hold Sublandlord harmless from, all reasonable costs
and expenses incurred by Subtenant in connection therewith.  Following a casualty, if this Sublease is not
terminated, Sublandlord shall restore any improvements it installed in the
Premises and the Sublandlord’s property to the extent such restoration is not
the responsibility of Master Landlord under the Master Lease Agreement.  To the extent Sublandlord is required to
insure any improvements to the Premises pursuant to the Master Lease Agreement,
Sublandlord shall continue to insure such improvements as a requirement under
this Sublease.


This Sublease and all rights of Subtenant hereunder
and with respect to the Premises are subject to the terms, conditions and
provisions of the Master Lease Agreement, except as otherwise provided
herein.  Except as otherwise specifically
provided in this Sublease, Subtenant shall be entitled during the Sublease Term
to receive all services, utilities, repairs and facilities which Master
Landlord is required to provide pursuant to the terms of the Master Lease
Agreement insofar as such services, utilities, repairs and facilities pertain
to the Premises. Subtenant hereby



 6
 









assumes and agrees to perform faithfully and be bound
by, with respect to the Premises, all of Sublandlord’s obligations, covenants,
agreements and liabilities under the Master Lease Agreement except for the
covenant of the Sublandlord to pay Master Landlord the Rent pursuant to Paragraph
1.6 of the Master Lease Agreement, and except as such terms, covenants,
conditions and agreements are modified hereby, are not incorporated herein, or
are inconsistent with the terms of this Sublease.


Without limitation of the foregoing:


(i) Subtenant shall not make any
changes, alterations or additions in or to the Premises except           as otherwise expressly provided
herein;


(ii) If Subtenant desires to take
any other action and the Master Lease Agreement would require that Sublandlord
obtain the consent of Landlord before undertaking any action of the same kind,
Subtenant shall not undertake the same without the prior written consent of
Sublandlord. Sublandlord may condition its consent on the consent of Master
Landlord being obtained;


(iii) All rights given to Master
Landlord and its agents and representatives by the Master Lease Agreement to
enter the premises covered by the Master Lease Agreement shall inure to the
benefit of Sublandlord and their respective agents and representatives with
respect to the Premises; provided that such right of entry shall also be
subject to all applicable restrictions found in the Master Lease Agreement, as
incorporated herein;


(iv) Sublandlord shall also have
all other rights, and all privileges, options, reservations and remedies,
granted or allowed to, or held by, Master Landlord under the Master Lease
Agreement, except as provided herein;


(v) Subtenant shall maintain
insurance of the kinds and in the amounts required to be maintained by
Sublandlord under the Master Lease Agreement. 
All policies of liability insurance shall name as additional insureds
the Master Landlord and Sublandlord and their respective officers, directors or
partners, as the case may be, and the respective agents and employees of each
of them; and


(vi) Neither Sublandlord nor
Subtenant shall do anything or suffer or permit anything to be done which could
result in a default under the Master Lease Agreement or permit the Master Lease
Agreement to be cancelled or terminated. 
Furthermore, each party will comply with the terms therein and will
avoid actions or inactions that would constitute a breach or default of
Sublandlord’s obligations in the Master Lease Agreement.


Except as set forth below, the terms and conditions
of this Sublease shall include all of the terms of the Master Lease Agreement
and such terms are incorporated into this Sublease as if fully set forth
herein, except that: (a) each reference in such incorporated sections to “Lease”
shall be deemed a reference to “Sublease”; (b) each reference to “Landlord” and
“Tenant” shall be
deemed a reference to “Sublandlord” and “Subtenant”, respectively, except as
otherwise expressly set forth herein; (c) the following provisions shall
not be included: Sections 1.1-1.4,



 7
 









1.5.1, 1.6.2, 1.6.3, 3.2 (last sentence only),
3.2(i), 3.2(ii), 3.2.2, 3.2.3, 5.1 (but not including 5.1.1-5.1.3), 21.1 (first
sentence only), 21.2 (first sentence only), 23.1, 24, 28.1(l), 28.23, 28.26, Exhibit
B-1, Exhibit E, Exhibit F, the First Addendum to Lease, and
the Second Addendum to Lease; (d) references in the following provisions to “Landlord”
shall mean “Master Landlord”: Sections 1.7, 4.2(f)-(h), 4.2.1, 4.6-4.9, 8.2,
8.6.4, 9.9, 15.1-15.4, 16.1-16.4, 18.1, 18.2, 22, 25, and Exhibit D; and
(e) wherever there is a requirement to pay the costs and expenses of “Landlord,”
Subtenant shall only be obligated to pay Master Landlord’s costs and expenses
and not both Sublandlord’s and Master Landlord’s costs and expenses.  In the event of a conflict between the
provisions of this Sublease and the Master Lease Agreement, as between
Sublandlord and Subtenant, the provisions of this Sublease shall control.


To the extent that the Master Lease Agreement gives Sublandlord any
right to terminate the Master Lease Agreement, Sublandlord shall not cancel or
terminate the Master Lease Agreement, nor shall Sublandlord or Master Landlord
amend or modify the Master Lease Agreement in any way which materially affects
Subtenant’s rights, without the prior written consent of Subtenant, which may
be withheld in Subtenant’s sole discretion.


If Master Landlord seeks to terminate the Master Lease Agreement
because of default or alleged default by Sublandlord under the Master Lease
Agreement, Sublandlord shall use its reasonable good faith efforts to maintain
the Master Lease Agreement in full force and effect for the benefit of
Subtenant and Sublandlord, and Sublandlord shall take all action required to
reinstate the Master Lease Agreement and/or to claim and pursue any right of
redemption or relief from forfeiture of the Master Lease Agreement (and as a
consequence thereof any forfeiture of this Sublease) to which Sublandlord may
be entitled at law or in equity (including, without limitation, any such rights
under California Code of Civil Procedure Sections 1174 and 1179).


19.          BOARD OF DIRECTORS’ CONTINGENCY:  : The final business terms and conditions between Subtenant
and Sublandlord are subject to the approval of the Subtenant’s and Sublandlord’s
respective Boards of Directors.


20.          MASTER LANDLORD CONSENT:
This Sublease shall be of no force or effect unless and until Sublandlord shall
have obtained Master Landlord’s written consent to this Sublease.  Sublandlord shall not be obligated to take
any action to obtain such consent other than to request such consent from
Master Landlord in writing in the form attached hereto as Exhibit D (it
being acknowledged that in no event shall Sublandlord be obligated to commence
an action or proceeding to secure such consent).  Sublandlord and Subtenant agree to (a) reasonably
cooperate with the other party and Master Landlord in connection with the
obtaining of such consent (including, without limitation, the furnishing of any
information reasonably requested by Sublandlord or Master Landlord), and (b)
execute any additional documents as reasonably requested by Master
Landlord.  Sublandlord shall pay any
charges imposed by Master Landlord in connection with the furnishing of its
consent hereto.  If the Sublandlord has
not obtained the written consent of Master Landlord in the form of Exhibit D,
or some other mutually acceptable form, on or before the date of the Early
Occupancy, then in addition to Subtenant’s other rights or remedies, Subtenant
may terminate this Sublease by written notice to Sublandlord, whereupon any monies
previously paid by Subtenant to Sublandlord shall be reimbursed to Subtenant,
or, at Subtenant’s election, the date Subtenant is otherwise obliged to
commence payment of rent shall



 8
 









be delayed by one
(1) day after the Commencement Date for each day that the Master Landlord’s
consent is not obtained past the date of the Early Occupancy.


21.          PARKING; ACCESS; SIGNAGE: Subtenant shall
have access to unreserved parking spaces equal to the prorata share of the
Premises to Master Premises.  The parking
ratio provided for in the Master Lease Agreement is approximately
3.4/1,000.  Subtenant shall have access
to the Premises 24 hours a day/7 days a week. Subtenant shall have the right to
utilize the existing controlled access system (card key) to secure the Premises.
Subtenant shall be responsible for building standard lobby and suite entry
signage.


22.          SUBLEASE ASSIGNMENT: Subtenant shall be
permitted to assign or sublease any portion of the Premises, subject to Master
Landlord and Sublandlord’s approval, not to be unreasonably withheld.  Subtenant and Sublandlord will share 50%/50%
in all profits associated with either a sublease or an assignment to an
unrelated entity, with said profits to be net of Subtenant’s reasonable
marketing expenses including but not limited to attorney fees, leasing
commissions, allowances, incentives and rent credits.


23.          WAIVER
OF CLAIMS AND INDEMNITY:


(a) Subtenant hereby releases and waives any and all
claims against Master Landlord and Sublandlord and each of their respective
officers, directors, partners, agents and employees for injury or damage to
person, property or business sustained in or about the Building, the Premises
subject to the Master Lease Agreement, or the Premises by Subtenant other than
by reason of negligence or willful misconduct on the part of Master Landlord or
Sublandlord and except in any case which would render this release and waiver
void under law.


(b) Subtenant agrees to
indemnify, defend and hold harmless Master Landlord and its beneficiaries,
Sublandlord and the managing agent of the Building and each of their respective
officers, directors, partners, agents and employees, from and against any and
all claims, demands, costs and expenses of every kind and nature, including
attorneys’ fees and litigation expenses, arising from Subtenant’s occupancy of
the Premises, Subtenant’s construction of any leasehold improvements in the
Premises or from any breach or default on the part of Subtenant in the
performance of any agreement or covenant of Subtenant to be performed or
performed under this Sublease or pursuant to the terms of this Sublease, or
from any act or neglect of Subtenant or its agents, officers, employees,
guests, servants, invitees or customers in or about the Premises.  In case any such proceeding is brought
against any of said indemnified parties, Subtenant covenants, if requested by
Sublandlord, to defend such proceeding at its sole cost and expense by legal
counsel reasonably satisfactory to Sublandlord.


(c)  Sublandlord agrees to indemnify, defend and
hold harmless Subtenant and its beneficiaries, and each of their respective
officers, directors, partners, agents and employees, from and against any and
all claims, demands, costs and expenses of every kind and nature, including
attorneys’ fees and litigation expenses, arising from Sublandlord’s prior
occupancy of the Premises or from any breach or default on the part of
Sublandlord in the performance of any agreement or covenant of Sublandlord to
be performed or performed under this Sublease or pursuant to the terms of this
Sublease, or from any act or neglect of Sublandlord or its agents,



 9
 









officers, employees, guests, servants, invitees or
customers in or about the Premises.  In
case any such proceeding is brought against any of said indemnified parties,
Sublandlord covenants, if requested by Subtenant, to defend such proceeding at
its sole cost and expense by legal counsel reasonably satisfactory to
Subtenant.


24.          WAIVER
OF SUBROGATION:


Notwithstanding anything
in this Sublease to the contrary, Sublandlord and Subtenant hereby release each
other and their respective agents, employees, successors, assignees and
sublessees from all liability for injury to any person or damage to any
property that is caused by or results from a risk which is actually insured
against, which is required to be insured against under the Master Lease or this
Sublease, or which would normally be covered by “all risk” property insurance,
without regard to the negligence or willful misconduct of the person or entity
so released.  All of Sublandlord’s and
Subtenant’s repair and indemnity obligations under this Sublease shall be
subject to the waiver and release contained in this paragraph.  Each Party shall cause each insurance policy
it obtains to provide that the insurer thereunder waives all recovery by way of
subrogation as required herein in connection with any injury or damage covered
by such policy.


25.          DEFAULT
BY SUBTENANT:


(a) Upon the happening of any of the following:


(i) Subtenant fails to pay Rent
within ten (10) days after the due date;


(ii) Subtenant fails to pay any
other amount due by the applicable due date from Subtenant hereunder and such
failure continues for five (5) days after notice thereof from Sublandlord to
Subtenant;


(iii) Subtenant fails to perform
or observe any other covenant or agreement set forth in this Sublease and such
failure continues for seven (7) days after notice thereof from Sublandlord to
Subtenant; or if such failure to perform or observe is not curable within seven
(7) days, if Subtenant fails to commence such cure within such seven (7) day
period and diligently pursue such cure to completion.


(iv) any other event occurs which
involves Subtenant or the Premises and which would constitute a default under
the Master Lease if it involved Sublandlord or the premises covered by the
Master Lease;


If after receiving a notice of a defect Subtenant has
failed to timely cure such defect, Subtenant shall be deemed to be in default
hereunder, and Sublandlord may exercise, without limitation of any other rights
and remedies available to it hereunder or at law or in equity, any and all
rights and remedies of Landlord set forth in the Master Lease, as incorporated
herein.


(b) In the event Subtenant fails or refuses to make
any payment or perform any covenant or agreement to be performed hereunder by
Subtenant, Sublandlord may make such payment or



 10
 









undertake to perform such covenant or agreement (but
shall not have any obligation to Subtenant to do so).  In such event, amounts so paid and amounts
expended in undertaking such performance, together with all costs, expenses and
attorneys’ fees incurred by Sublandlord in connection therewith, shall be
additional rent hereunder.


26.          BROKERAGE
FEE:                    
represents the Subtenant and                    
represents the Sublandlord in this transaction. 
Upon completion of a transaction between both parties, Sublandlord shall
pay                    
a full-market leasing commission based on a separate written agreement.  Except as set forth herein, each party hereby
represents and warrants to the other that it has had no dealings with any real
estate broker or agent in connection with this Sublease, and that it knows of
no other real estate broker or agent who is or might be entitled to a
commission in connection with this Sublease. 
Each party agrees to protect, defend, indemnify and hold the other
harmless from and against any and all claims inconsistent with the foregoing
representations and warranties for any brokerage, finder’s or similar fee or
commission in connection with this Sublease, if such claims are based on or
relate to any act of the indemnifying party which is contrary to the foregoing
representations and warranties.


27.          SEVERABILITY: If any part or parts of this Sublease
shall be held unenforceable for any reason, the remainder of this Sublease
shall continue in full force and effect. If any provision of this Sublease is
deemed invalid or unenforceable by any court of competent jurisdiction, and if
limiting such provision would make the provision valid, then such provision
shall be deemed to be construed as so limited.


28.          BINDING EFFECT: The covenants and conditions
contained in the Sublease shall apply to and bind the Parties and the heirs,
legal representatives, successors and permitted assigns of the Parties.


29.          ENTIRE AGREEMENT: This Sublease,
including the Exhibits, constitutes the entire agreement between the Parties
and supersedes any prior understanding or representation of any kind preceding
the date of this Sublease.  There are no
other promises, conditions, understandings or other agreements, whether oral or
written, relating to the subject matter of this Sublease.  This Sublease may be modified in writing and
must be signed by both Parties.


30.          GOVERNING LAW: This Sublease shall be governed
by and construed in accordance with the laws of the State of California.


31.          NOTICE: Any notice
required or otherwise given pursuant to this Sublease shall be in writing and
mailed certified return receipt requested, postage prepaid, or delivered by
overnight delivery service, if to Subtenant, at 341 Oyster Point Boulevard,
South San Francisco, CA  94080,
Attention:  Legal Department, and if to
Sublandlord, to                        .
Either party may change such addresses from time to time by providing notice as
set forth above.


32.          WAIVER; AMENDMENT: The failure of either Party to enforce any
provisions of this Sublease shall not be deemed a waiver or limitation of that
Party’s right to subsequently enforce and compel strict compliance with every provision
of this Sublease. The acceptance of rent by



 11
 









Sublandlord or Master Landlord does not waive Sublandlord’s right to
enforce any provisions of this Sublease.


This Sublease may not be
amended or terminated, in whole or in part, nor may any of the provisions be
waived, except by a written instrument executed by the Party against whom
enforcement of such amendment, termination or waiver is sought and unless the
same is permitted under the terms and provisions of the Master Lease Agreement.


33.          LEGAL
FEES: In the
event of any legal action by the Parties arising out of this Sublease, the
losing Party shall pay the prevailing Party reasonable attorneys’ fees and
costs in addition to all other relief.


34.          AUTHORITY:  Sublandlord and Subtenant each hereby represents
and warrants that it has full right, power and authority to enter into this
Sublease and that the person executing this Sublease on behalf of Sublandlord
and Subtenant, respectively, is duly authorized to do so.



 12
 









IN WITNESS WHEREOF, the
Parties have caused this Sublease to be executed the day and year first above
written.


	
  SUBLANDLORD:

  	
   

  	
  SUBTENANT:

  
	
   

  	
   

  	
   

  	
  SUNESIS PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
  (Name)

  
	
   

  	
   

  	
   

  
	
  (Position)

  	
   

  	
  (Position)

  



 


 



 13














 


EXHIBIT A


FLOOR
PLANS


 
















O Y S T E R   P O I N T  
M A R I N A   P L A Z A


Office
Lease


of


SUITES        
& 400


to


 


a
Delaware limited partnership


 


 


 


 


 


 


395 Oyster Point
Boulevard


South San
Francisco, CA  94080













O Y S T E
R   P O I N T   M A R I N A   P L A Z A


Office
Lease


THIS OFFICE LEASE (the “Lease”)
is entered into as of June 1, 2003, by and between                          ,
a California corporation (“Landlord”) and                                      ,
a Delaware limited partnership (“Tenant”).


1       BASIC LEASE TERMS


1.1    LEASE
OF PREMISES.  Landlord
leases to Tenant, and Tenant rents and hires from Landlord, the premises
described in § 1.4 below, in the building known by the street address 395
Oyster Point Boulevard (the “Building”) in the City of
South San Francisco, County of San Mateo, State of California, on the
property described in § 1.7 below, in the business park commonly known as
Oyster Point Marina Plaza (the “Complex”), for the term stated in § 1.5
below, for the rents hereinafter reserved, and upon and subject to the terms,
conditions (including limitations, restrictions, and reservations), and
covenants hereinafter provided.  The
Building and the Complex are more particularly described and depicted in
Exhibit A which is attached hereto. 
Each party hereby expressly covenants and agrees to observe and perform
all of the conditions and covenants herein contained on its part to be observed
and performed.


1.2    Existing Tenancy  Acknowledged
and Amended. 
Landlord and Tenant acknowledge that Tenant currently occupies approximately
           rentable square
feet of space on the fourth (4th) floor of the Building and approximately             
rentable square feet of space on the          
floor of the Building (collectively the “Existing Premises”) under the terms of
that certain lease dated as of May 2, 1996, between Landlord and Tenant
(the “Existing Lease”) as the same has been heretofore modified and
amended.  In the absence of the parties’
execution and delivery of this Lease, the Existing Lease would have expired on
its terms on March 31, 2005. 
Notwithstanding anything to the contrary in the Existing Lease, Landlord
and Tenant agree that the terms, conditions, and covenants of this Lease shall
supersede those of the Existing Lease for all purposes from and after the Commencement
Date hereof, that the Existing Lease shall terminate for all purposes on the
Commencement Date of this Lease with the same effect as if the Term of the
Existing Lease had expired on the Commencement Date hereof, and that Tenant’s
occupancy of the Premises shall be governed solely by the terms, covenants, and
conditions of this Lease from and after the Commencement Date.  The Existing Lease is hereby amended to
reflect the provisions of this § 1.2 et seq.



 2
 









1.2.1 Translation of Premises.  Subject to the terms and conditions of the
Work Letter Agreement attached hereto as Exhibit F, Tenant shall have the
right during the performance of Landlord’s Work in Suite 500 to install
Tenant’s telephone and data lines in Suite 500 as soon as the walls are
roughed out in anticipation of Tenant’s move into Suite 500 on or after
the Commencement Date.  Tenant agrees to
vacate the Existing Premises and to complete its move into Suite 500 on or
before the date which is one (1) month (including four (4) weekends) after the
Commencement Date (as defined in § 1.5 below) of this Lease (the “Existing
Premises Termination Date”).


1.2.2 Existing Lease Base Rent Abatement.  Notwithstanding anything to the contrary in
the Existing Lease, commencing with retroactive effect on April 1,
2003, and continuing through and including the Commencement Date of
this Lease (the “Existing Lease Abatement Period”), Tenant’s
Monthly Installment of Base Rent with respect to the Existing Premises under
the Existing Lease shall be reduced from its current level to Eight-Four Thousand Four Hundred Thirty-Five Dollars and Seventy-Five
Cents ($84,435.75) per month, prorated as appropriate; provided
that, if Tenant shall not have executed and delivered this Lease to Landlord on
or before the close of business on August 9, 2003, the commencement of the
Existing Lease Abatement Period shall be delayed by one (1) day for each day of
the interval between August 9, 2003, and the date upon which Tenant shall
actually execute and deliver this Lease to Landlord.  For example, if Tenant executes and delivers
this Lease to Landlord on August 19, 2003, the Base Rent for the period
August 9, 2003, through August 19, 2003, will be $52,883.30
($158,650/30 days x 10 days) rather than $28,145.25 ($84,435.75/30 days x 10
days).  If Tenant shall materially
default under the Existing Lease at any time prior to its termination as
provided in § 1.2 above and fail to cure within the time permitted for
cure thereunder, while the Existing Lease Abatement Period is still in effect,
the Existing Lease Abatement Period shall thereupon terminate, all amounts
theretofore abated shall become immediately due and payable to Landlord, and
Tenant shall commence paying the Base Rent under the Existing Lease as
specified thereunder.  In addition, if
Tenant shall default under this Lease at any time and fail to cure within the
time permitted for cure hereunder, Tenant shall upon demand pay Landlord the
amount of Existing Lease Base Rent theretofore abated under the Existing Lease
as amended pursuant to the terms of this § 1.2.2 during the Existing Lease
Abatement Period, multiplied by a fraction, the numerator of which is the
number of months then remaining in the initial Term of this Lease at the time
of the default, and the denominator of which is the total number of months in
the initial Term of this Lease (without limiting Landlord’s other remedies).


1.3    SUMMARY
TABLE.  The parties
agree that the following table (the “Table”) sets forth in summary form the
basic terms of this Lease, including the specific space comprising the Premises
and, with respect to such space, the Term of the Lease, the usable and rentable
square footage, the Base Rent, Base Year, and Tenant’s Share, as all of such
terms are defined below:



 3
 









 


	
  PERIOD

  	
   

  	
  SUITE

  NO.

  	
   

  	
  RSF

  	
   

  	
  MONTHLY

  BASE

  RENT

  	
   

  	
  T’S

  SHARE

  BLDG

  	
   

  	
  T’S

  SHARE

  COMPLEX

  	
   

  	
  BASE

  YEAR

  	
   

  
	
  Commencement Date to

  January 31, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Suite 400 Commencement Date to

  January 31, 2005

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  $

  	
  14,784.00

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  February 1, 2005 to 

  January 31, 2006

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  $

  	
  15,206.40

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  February 1, 2006 to 

  January 31, 2007

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  $

  	
  15,628.80

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  February 1, 2007 to 

  January 31, 2008

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  $

  	
  16,051.20

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  February 1, 2008 to 

  January 31, 2009

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  $

  	
  16,473.60

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  February 1, 2009 to 

  January 31, 2010

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  $

  	
  16,896.00

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  February 1, 2010 to 

  January 31, 2011

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  $

  	
  17,318.40

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  February 1, 2011 to 

  January 31, 2012

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  $

  	
  17,740.80

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  February 1, 2012 to 

  January 31, 2013

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  $

  	
  18,163.20

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  February 1, 2013 to 

  January 31, 2014

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  $

  	
  18,585.60

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  TOTALS:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


In the event of any
conflict between the terms contained in the Table and the terms contained in
subsequent sections of the Lease, the terms of the Table shall control, except
that any dates stated in the Table are subject to adjustment as appropriate to
the extent any other provisions of the Lease provide for adjustments to the
Commencement Date and/or the Expiration Date and subject to the rental
abatement provided in § 1.6.3 below.


1.4    PREMISES.  The premises leased to Tenant (the “Premises”)
are (i) the entire      floor and (ii) a portion
of the fourth (4th) floor of the Building and are commonly known as Suites      and 400, as shown on the floor plans annexed hereto as Exhibit B.  The
Premises also include all fixtures and equipment which are attached thereto,
except items not deemed to be included therein and which are removable by
Tenant as provided in Article 10 below. 
Landlord and Tenant agree that the usable and rentable area of the
Premises, and the respective rentable areas of the Property (as defined in
§ 1.7 below) and Complex, for all purposes under this Lease, are as
follows and as specified in the Table:


Property’s Rentable Area:


Complex’s Rentable Area:


Tenant acknowledges that
it has caused its architect to verify the numbers stated in the Table and
herein relating to the measurements of such spaces prior to the Commencement
Date of this Lease or has had an opportunity to do so.



 4
 









1.4.1 Expansion Rights. 
In consideration for Tenant’s execution and delivery of this Lease,
provided no material Event of Default remains outstanding and uncured beyond
all applicable notice and cure periods on the date Tenant exercises its rights
under this § 1.4.1 et seq.,
Landlord hereby grants to Tenant the following rights of first refusal with
respect to the following spaces (collectively the “RFR Space”):


(i)    a first right of refusal for any space on Floors 4 and    
in the Building for a period of five years from August 1, 2005, through July
31, 2010 (the “4th-      RFR Space”), subject to
(a) the right of any existing tenant to exercise any option in effect
prior to the Commencement Date and (b) the right of Landlord to negotiate
a lease renewal with any existing tenant. 
Tenant acknowledges that Coremark International currently leases
approximately          rentable square
feet of space on the fourth floor under a lease expiring on June 30, 2007,
and containing a five-year renewal option; and


(ii)   a first right of refusal for the following spaces (the “Specific
RFR Spaces”) in the Building for a period of four years from August 1, 2005,
through July 31, 2009:


·                  Suite          
currently occupied by                     under
a lease expiring on October 31, 2003;


·                  Suite          
currently occupied by Tenant;


·                  Suite          
currently occupied by the              
with a lease expiration date of April 30, 2007, with a five-year lease
extension option;


·                  Suite         
currently occupied by the             with
a lease expiration date of April 30, 2007, with a five-year lease
extension option;


·                  Suite         
currently vacant but adjacent to Suite 225.


(a)      Notice
of Bona Fide Offer.   Landlord shall notify Tenant regarding the
availability of the RFR Space prior to putting the RFR Space on the market for
lease.  In addition, if at any time
during the periods specified in § 1.4.1 above Landlord receives a bona fide offer, agreement, or proposal (“Lease Proposal”)
which is acceptable to Landlord from any third party to lease any portion of
the RFR Space; or if Landlord makes a bona fide
offer, agreement, or proposal to a third party which the third party is willing
to accept, Landlord shall send Tenant a summary (the “RFR Summary”) of the
economic terms and conditions of the Lease Proposal, including a description of
the subject space, proposed term, and basic business terms and shall notify
Tenant of Landlord’s intention to conclude a lease on the terms of the Lease
Proposal.  Tenant shall have the right
for a period of five (5) full working days (concluding on 5:00 p.m.) following
Tenant’s receipt of the RFR Summary in which to exercise its right to lease the
space described in the RFR Summary (the “RFR Space”) on the terms and
conditions set forth in this § 1.4.1 et seq. by
giving Landlord written notice of such exercise.  If Tenant fails to notify Landlord of the exercise
of its rights hereunder within such five-business-day period, Landlord may then
lease the RFR Space to the third party tenant named as the tenant in the RFR
Summary or an affiliate of such third party tenant, provided that the lease
entered into pursuant to the Lease Proposal is (i) on the same terms and
conditions as set forth in the RFR Summary or (ii) on substantially the same
terms and conditions as set forth in the RFR Summary and Landlord is not
required to re-offer such First Refusal Space to Tenant pursuant to
§ 1.4.1(d) below.



 5
 









(b)      Commencement
and Duration.  If
Tenant exercises its right of first refusal, Landlord shall make the RFR Space
available for purposes of construction of improvements within ninety (90) days
following Tenant’s exercise of this right of first refusal (the “RFR Space
Delivery Date”); the lease for the RFR Space shall commence as provided herein
and shall continue for the duration of the Term of the Lease and expire
coterminously therewith.  The RFR Space
shall be provided “as is” for purposes of construction, with all existing
tenant improvements in place.  The
parties agree that Landlord shall improve the RFR Space within ninety (90) days
of the RFR Space Delivery Date, whether or not the RFR Space has been
previously improved, in accordance with the terms of the Work Letter Agreement,
with appropriate changes being made only to the Plans and Specifications,
Construction Schedule and the amount of the Improvement Allowance, which amount
shall be determined as provided below. 
Tenant shall deliver to Landlord for approval (which shall not to be
unreasonably withheld, conditioned, or delayed) Tenant’s proposed plans and
specifications no later than ninety (90) days following Tenant’s exercise of
this right of first refusal.  Landlord
shall, following selection of a contractor mutually agreed upon by Landlord and
Tenant (“Contractor”) and approval of construction costs by Tenant, construct
within the RFR Space the improvements specified in the final approved plans and
specifications for such construction. 
The commencement date of the lease of such RFR Space (upon which Base
Rent and Additional Rent shall begin to accrue, and Tenant’s Pro Rata Share
shall be adjusted to take into account the RFR Space) shall be the earlier of
(i) the date upon which Landlord’s construction of the improvements within the
RFR Space satisfies the Delivery Requirements (hereinafter defined) with
respect to the RFR Space or (ii) the date upon which Tenant occupies the RFR
Space (or any portion thereof) and commences conducting Tenant’s business
operations therein; provided, however, that in the event of any Tenant Delay
(hereinafter defined), Tenant’s obligation to pay Base Rent and Additional Rent
with regard to such RFR Space shall be advanced by one (1) day for each such
day substantial completion of such improvements was delayed by a Tenant
Delay.  Following Landlord’s delivery of
the RFR Space in compliance with all Delivery Requirements, the RFR Space shall
be deemed to be a part of the Premises and shall be leased by Tenant upon and
subject to all of the terms, covenants, and conditions of this Lease.


(c)      Terms
and Conditions.  If
Tenant exercises its right of first refusal as to the RFR Space, all terms and
conditions for the lease of any such space shall be the same as those then in
effect under the Lease, except for the rental, tenant inducements, rent
abatements, and improvement allowances (“Third-Party Economics”).  Tenant shall have the right to a lease of the
RFR Space upon such Third-Party Economics as were contained in the Lease
Proposal in the same proportion as the number of months remaining in the Term
(including the term of any extension option then having been exercised) bears
to the number of months in the lease term contained in the RFR Summary.


(d)      Continuing Right, Re-Offer, and Priority.  If Tenant shall not timely exercise the right
of first refusal contained herein upon notification by Landlord, Tenant shall
again have the same rights as to such space each time Landlord receives or
makes a bona fide offer, from or to a third
party, which both Landlord and the third party are willing to accept, to lease
such space, whether or not Tenant has previously exercised or refused to
exercise the rights herein contained with respect to such space or other
space.  If Tenant rejects or is deemed to
have rejected a bona fide offer of which Tenant
is notified, and if (i) such third-party bona fide
offer is not consummated within five (5) months; (ii) the effective rental rate
to be paid pursuant to the bona fide offer
changes in any respect so as to become more than five percent (5%) more
favorable to the prospective tenant; (iii) there is any change in the
term, expansion rights, extension rights, or renewal rights proposed in the
Lease Proposal; or (iv) there is any other material change in the
nonmonetary terms of the bona fide
offer, then the RFR Space shall again become subject to the terms of this
§ 1.4.1 et seq. and shall again be
offered to Tenant as provided above.  As
used in the previous sentence, the term effective rental rate




 6
 









means an amount determined by taking the total base
rental and deducting all abatements, allowances, cost of non-monetary
tenant inducements (e.g., health
club memberships, etc.), tenant improvement costs in excess of Building-standard,
and any other monetary inducements. 
Landlord represents and warrants that the rights of first refusal
granted to Tenant herein are and shall be paramount in interest to the rights
of Landlord to use the First Refusal Space for its own purposes and that no
other tenant of the Building has a right of first refusal or other expansion
right prior to or superior to the rights granted to Tenant herein.  The foregoing right of first refusal shall be
subject to the existing tenants’ or occupants’ of the First Refusal Space
renewing their existing leases pursuant to options to extend or renew which are
in existence in their written lease agreements as of the date of this Lease.


(e)      Confirmatory
Documentation.  After
Tenant validly exercises the right of first refusal provided herein, the
parties shall execute an amendment to the Lease adding the First Refusal Space,
or such other documentation as Landlord shall reasonably require, promptly
after Landlord shall prepare the same, in order to confirm the leasing of such
First Refusal Space to Tenant; but an otherwise valid exercise of the rights of
first refusal contained herein shall be fully effective, whether or not such
confirmatory documentation is executed.


(f)       Failure
to Exercise.  If Tenant
shall fail to exercise its right of first refusal after notice by Landlord of
the receipt of a bona fide third-party offer
to lease the RFR Space within the time specified herein, such right shall be
deemed to have lapsed and expired with respect to that particular RFR Summary,
and Landlord may, for a period of five (5) months, enter into a lease pursuant
to the terms of the RFR Summary with the prospective tenant named therein.


(g)      Default
and Termination. 
Tenant’s exercise of such right of first refusal hereunder shall not
operate to cure any default by Tenant of any of the terms or provisions in the
Lease, nor to extinguish or impair any rights or remedies of Landlord arising
by virtue of such default.  The exercises
of the right of first refusal herein shall, at Landlord’s election, be null and
void if Tenant has committed a material Event of Default which remains
outstanding and uncured beyond all applicable notice and cure periods on the
date Tenant exercises its rights hereunder. 
Tenant agrees that time is of the essence of rights of first refusal
specified herein.


(h)      Effect
of Transfer.  If Tenant
subleases or assigns any portion of the Premises at any time during the Term of
this Lease except for a Transfer pursuant to § 17.12 below, the rights of
first refusal hereunder with respect to the Specific RFR Spaces shall be
suspended with immediate effect until such time as Tenant reoccupied the
entirety of the Premises.


1.4.2 Generator License. 
Landlord hereby grants to Tenant, for the Term of the Lease and any
extension thereof, the right to maintain, and operate an above-ground,
emergency, diesel-powered electrical generator (the “Generator”) and an
associated above ground diesel storage tank (the “Tank”) on the terms and
conditions specified herein.  Landlord
and Tenant acknowledge that the Generator was installed by Tenant prior to the
Commencement Date of this Lease pursuant to the terms of the Fourth Amendment,
dated as of July 5, 2001, to the Existing Lease.


(a)      Scope
of Right.  Tenant’s right
hereunder to maintain and operate the Generator and Tank is granted solely for
the purpose of providing emergency electrical supply to the Premises, limited
to the duration of any failure in the electrical power supplied to the Building
and for routine testing, and for no other purpose.  Tenant shall not permit the Generator and
Tank to be utilized, directly or indirectly, by any person or entity other than
Tenant and its agents.


(b)      Term
of License.  The term
of the right granted hereunder to maintain and operate the Generator shall be
coëxtensive with the Term of the Lease. 
Tenant may terminate the right 



 7
 









conferred hereunder at any time upon not less than
thirty (30) days’ written notice to Landlord, provided that upon any such
termination Tenant shall have no further right thereafter to operate the
Generator or utilize the Generator Area, and Tenant shall upon such termination
comply with the provisions of § 1.4.2(h) below.


(c)      Location
of Generator and Tank. 
The Generator and Tank shall occupy an area measuring approximately
twelve (12) feet by seventeen (17) feet (the “Generator Area”) in the parking
area of the Building where the Generator Area was located on the Commencement
Date of this Lease.  The Generator Area
shall be deemed a part of the Premises so long as the right to operate the
Generator granted herein remains in effect, and its use and operation shall be
subject to all the terms and conditions applicable to Tenant’s use of the
Premises under the Lease, except to extent specified to the contrary herein.


(d)      Enclosure
and Concealment.  The
Generator Area shall be entirely surrounded by a wall, tall enough to conceal
the Generator and Tank from view, constructed of either cinder block or poured-in-place
concrete, similar in appearance to the exterior of the Building.  In addition, so long as the operation of the
Generator is not adversely affected thereby, Tenant shall place a raised wooden
trellis, in appearance reasonably satisfactory to Landlord, over the Generator
Area so as to conceal the Generator and Tank from the view of occupants of the
Building looking down on the Generator Area from above.


(e)      Landscaping.  Tenant agrees to install (a) a planter
on the south side of the Generator Area which is designed to match the existing
planter on the north side of the Generator Area and (b) a planter or
planter strip approximately eighteen inches (18”) wide across the front of the
Generator area.  All planters will be
planted with agapanthus as a foundation planting and a climbing vine of a variety
appropriate for this application, as reasonably directed by Landlord, for the
enclosure itself.


(f)       Cost
of Operation.  Tenant
shall bear all costs associated with the construction, installation,
maintenance, repair, and operation of the Generator and Tank and associated
systems, and Landlord shall have no obligation under any circumstances to pay
any costs in connection with such activities.


(g)      Electrical
Connection and Consumption. 
Except as may be necessary to repair or replace the electrical conduit
running between the Generator and the Premises, no trenching or boring of the
parking area of any other area of the Property shall be permitted.  Tenant shall bear all costs, as reasonably
estimated by Landlord, for electricity consumed in the lighting and maintenance
of the Generator and Generator Area; provided that Tenant shall have the right
to install an electrical submeter at its own expense at the Generator, in which
case Tenant’s obligation to reimburse Landlord for the cost of electricity
consumed at the Generator Area shall be based upon Tenant’s actual consumption
as shown on such submeter. 
Notwithstanding any other provision of the Lease to the contrary, except
to the extent caused by Landlord’s negligence or intentional acts, Tenant shall
be fully liable for all costs incurred in connection with damage to the
Building or the Building’s electrical system by virtue of Tenant’s operation of
the Generator, and Tenant agrees to take all appropriate precautions, as
directed by a licensed electrician approved by Landlord, to prevent any such
damage.  Tenant agrees to pay to Landlord
promptly upon invoicing the costs of repairing any such damage.


(h)      Removal
and Restoration.  If
directed by Landlord by written notice given at least twelve (12) months prior
to the Expiration Date as the same may be extended hereunder, Tenant shall
remove the Generator, Tank, Generator Area, and all associated structures and
systems upon 



 8
 









the expiration or earlier termination of the Lease and
shall restore the Generator Area to its prior condition before installation of
the Generator under the Fourth Amendment to the Existing Lease; provided that
Landlord may give contemporaneous notice in the event the Lease terminates
prior to the Expiration Date as the same may be extended hereunder.


(i)       Insurance
and Indemnification. 
Tenant agrees to cover the location, maintenance, and operation of the
Generator and Tank under Tenant’s CGL insurance coverages under the Lease.  Notwithstanding anything to the contrary in
the Lease, Tenant shall indemnify, defend, protect, and hold Landlord harmless
from and against (a) any and all Claims relating to injury or damage
occurring in, on, or about any of the Common Areas, the Property, or the
Complex, when such injury or damage is caused in whole or in part by Tenant’s
installation, maintenance, or operation of the Generator or Tank and
(b) all costs, attorneys’ fees, expenses, and liabilities incurred in
connection with any such Claim or any action or proceeding brought thereon,
except to the extent any claim is due to the negligence or intentional acts of
Landlord.  In case any action or
proceeding be brought against Landlord by reason of any such Claim, Tenant,
upon notice from Landlord, shall defend the same at Tenant’s expense by counsel
reasonably satisfactory to Landlord.


(j)       Hazardous
Waste.  All the terms
and provisions of the Lease regarding hazardous waste and hazardous materials
shall apply to Tenant’s use of the Generator and Generator Area hereunder.


(k)     Condition
of Generator Area and Surrounding Area.  Tenant shall keep the Generator Area and any
items as Tenant may have at the Generator Area in a neat and clean
condition.  No boxes, back-up stock, vent
pipes or personal items shall be visible at any time.  Tenant shall keep the area around the
Generator Area free of any refuse or other items originating from the Generator
Area or arising out of Tenant’s activities thereat.  Without limitation, Tenant shall not allow
any substance on the floor area at or around the Generator Area which may cause
the floor to be slippery or otherwise hazardous to persons walking on the
floor.  Tenant shall promptly repair any
damage to the Generator Area or the surrounding area caused by Tenant or
arising out of Tenant’s activities.


(l)       Work
at Generator Area. 
Except for any work under subsection (e) above, any type of work
Tenant shall wish to perform at the Generator Area, including any type of
construction work or painting, shall be subject to Landlord’s advance approval
and shall be performed only at such times as agreed upon by Landlord.  No such work shall be performed during
business hours (as defined in § 8.1.1 below), unless otherwise approved by
Landlord.


(m)     Noises,
Odors and Other Matters. 
Other than as may be due to normal operation and maintenance of the
Generator, Tenant shall not permit any noises, music, odors, or other matters
to occur at or about the Generator Area so as to unreasonably interfere with
other Building occupants’ use and enjoyment of their respective premises.


1.4.3 Roof and Antenna License.  Tenant shall have the right during the Term
of this Lease, subject to Landlord’s reasonable approval, to place up to a
maximum of three (3) antennae on the roof of the Building for Tenant’s own
communications purposes.  Any such
antennae shall not exceed eighteen inches (18”) in height or diameter.  Tenant agrees to execute a separate roof
license agreement substantially on Landlord’s Building-standard form in
connection with any such utilization of the Building roof space for placement
of communications antennae.  In addition,
Landlord hereby grants Tenant a license for roof access for the purpose of
maintaining its roof antennae and for maintaining Tenant’s Supplemental HVAC
System, as required under § 8.1 below.



 9















1.5    TERM.  The term (the “Term”) for which the Premises
are hereby leased shall commence on the “Commencement Date,” which shall be the
earlier to occur of (i) the day on which Suite        
is ready for occupancy (as defined in Article 3) or (ii) the day on
which Tenant or anyone claiming under or through Tenant first occupies
Suite       for business, and shall end at noon
on the “Expiration Date,” which shall be the last day of the calendar month in
which occurs the day preceding the tenth (10th) anniversary of the Commencement
Date (notwithstanding anything to the contrary in the Table) or any earlier
date upon which the Term may expire or be cancelled or terminated pursuant to
any of the conditions or covenants of this Lease or pursuant to law.  Promptly following the Commencement Date the
parties hereto shall, if required by Landlord, enter into a supplementary
agreement fixing the dates of the Commencement Date and the Expiration Date in
the form which is attached hereto as Exhibit E
and incorporated herein by reference. 
The Term with respect to Suite 400 only shall commence shall on the
earlier to occur of (i) the day on which Suite 400 is ready for
occupancy (as defined in Article 3) or (ii) the day on which Tenant
or anyone claiming under or through Tenant first occupies Suite 400 for
business (the “Suite 400 Commencement Date”).


1.5.1 Extension Option. 
Tenant is hereby granted one (1) option to extend (the “Extension Option”)
the Term of the Lease for an additional period of five (5) consecutive Lease
Years (the “Extension Period”).  The
Extension Period term shall begin the first day following the Expiration Date
of the Lease and shall take effect on the same terms and conditions in effect
under the Lease immediately prior to the Extension Period, except that
(i) Tenant shall have no further right to extend and (ii) monthly
Base Rent shall be the rate which is ninety-eight percent (98%) of Fair Market
Value (as defined below).  The Fair
Market Value shall be the effective rent (face rate less free rent) being
charged for comparable space in comparable buildings in the vicinity of the
Complex leased on comparable terms, including annual escalations and such other
terms.


(a)     Exercise of Option. 
The Extension Option may be exercised only by (i) delivering
written notice of Tenant’s irrevocable election to exercise to Landlord in
accordance with Article 23 below no earlier than January 1,
2013, and no later than April 1, 2013.  Tenant’s exercise of its Extension Option
shall not be effective or valid if there is any deviation in the timing or
manner of exercise prescribed herein.


(b)     Failure to Exercise. 
If Tenant shall fail validly and timely to exercise the option herein
granted, the Extension Option shall terminate and shall be null and void and of
no further force and effect.


(c)     Fair Market Value. 
Provided that Tenant has validly exercised its option when and as
required hereunder, Landlord shall, on or before May 1,
2013, provide written notice to Tenant of its determination of the
Fair Market Value.  Within ten (10) days
after receiving such determination (and in no event later than June 1, 2013) (“Tenant’s Review Period”), Tenant shall
irrevocably elect, in writing, to do one of the following: (i) accept Landlord’s
determination; or (ii) object to Landlord’s determination and with such
objection set forth in writing Tenant’s determination of the Fair Market
Value.  If Tenant so objects, Landlord
and Tenant shall attempt in good faith to agree upon such Fair Market Value
using their best good-faith efforts. 
If Landlord and Tenant fail to reach agreement within fifteen (15) days
following Tenant’s Review Period (the “Outside Agreement Date”), then Landlord
and Tenant shall submit each party’s determination to arbitration in accordance
with the then-current rules and procedures of the American Arbitration
Association.  If Tenant objects to
Landlord’s determination of Fair Market Value, Tenant shall continue to pay
Base Rent as set forth in § 1.3 until the matter is resolved by binding
arbitration as provided below, subject to retroactive adjustment after the
matter is so resolved.  If Tenant fails
so to accept or object to Landlord’s 



 10
 









determination of Fair Market Value in writing within Tenant’s
Review Period, Tenant shall conclusively be deemed to have approved of the Fair
Market Value as determined by Landlord.


(d)     Appointment of Arbitrators. 
Not later than fifteen (15) days following the Outside Agreement Date,
Landlord and Tenant shall each appoint one arbitrator who shall by profession
be a real estate broker who shall have been active over at least the ten-year
period ending on the date of such appointment in the leasing of commercial
properties within northern San Mateo County. 
The determination of the arbitrators shall be limited solely to the issue
of whether Landlord’s or Tenant’s submitted Fair Market Value for the Premises
is the more accurate as determined by the arbitrators, taking into account the
requirements of this § 1.5.1 et seq.


(e)     Appointment of Third Arbitrator. 
The two (2) arbitrators so appointed shall within fifteen (15) days of
the date of the appointment of the last-appointed arbitrator agree upon
and appoint a third arbitrator, who shall be qualified under the same criteria
as set forth hereinabove for qualification of the initial two arbitrators.


(f)     Arbitrators’ Decision. 
The three (3) arbitrators shall, within thirty (30) days of the
appointment of the third arbitrator, reach a decision as to whether the parties
shall use Landlord’s or Tenant’s submitted Fair Market Value, and shall notify
Landlord and Tenant thereof.  The
decision of the majority of the three (3) arbitrators shall be binding upon
Landlord and Tenant.  The arbitrators
shall not be permitted to set Fair Market Value to any level other than either
Landlord’s or Tenant’s submitted Fair Market Value.


(g)    Failure to Appoint. 
If either Landlord or Tenant fails to appoint an arbitrator within
fifteen (15) days after the Outside Agreement Date, the arbitrator timely
appointed by one of the parties shall reach a decision, notify Landlord and
Tenant thereof, and such arbitrator’s decision shall be binding upon Landlord
and Tenant.  If the two (2) arbitrators
fail to agree upon and appoint a third arbitrator, both arbitrators shall be
dismissed and the matter to be decided shall be forthwith submitted to
arbitration under the Commercial Arbitration Rules of the American Arbitration
Association then in effect, but subject to the instructions set forth in this
§ 1.5.1 et seq..


(h)    Cost of Arbitration. 
The cost of arbitration shall be paid by Landlord and Tenant equally.


(i)     Default.  Tenant’s exercise of
the Extension Option shall, at Landlord’s election, be null and void if Tenant
is in material default of its obligations under this Lease beyond all applicable notice and cure periods
on the date of exercise or at any time thereafter and prior to commencement of
the Extension Period.  Tenant’s exercise
of the Extension Option shall not operate to cure any Default by Tenant nor to
extinguish or impair any rights or remedies of Landlord arising by virtue of
such Default.  If the Lease or Tenant’s
right to possession of the Premises shall terminate before Tenant shall have
exercised the Extension Option, then immediately upon such termination the
Extension Option shall simultaneously terminate and become null and void.


(j)     Time.  Time is of the
essence of this Extension Option.


1.5.2 Suite 400 Termination Right. 
Notwithstanding anything to the contrary herein, Tenant shall have the
right to terminate the Lease with respect to Suite 400 only effective on
either September 30, 2008, or September 30, 2010, upon written notice given to
Landlord not less than six (6) months and not more than nine (9) months prior
to either such termination date that may be selected by Tenant.  If Tenant exercises such termination right,
Tenant shall pay to Landlord a termination fee on the 



 11
 









termination date of either Ninety-Six
Thousand Three Hundred Seven Dollars and Twenty Cents ($96,307.20),
if Tenant exercises its right to terminate the Lease with respect to
Suite 400 on September 30, 2008, or Sixty-Nine
Thousand Two Hundred Seventy-Three Dollars and Sixty Cents ($69,273.60),
if Tenant exercises its right to terminate the Lease with respect to
Suite 400 on September 30, 2010.


1.6    RENT.  The “Rent” reserved under this Lease, for the
Term thereof, shall consist of the following:


(a)                      “Base Rent”
of as set forth in the Table in § 1.3 for the various spaces and periods
described therein per month, which shall be payable in advance on the first day
of each and every calendar month during the Term of this Lease; and


(b)                     “Additional
Rent” consisting of any and all other sums of money as shall become payable by
Tenant to Landlord hereunder; and Landlord shall have the same remedies for
default in the payment of Additional Rent as for a default in payment of Base
Rent.


1.6.1 Payment of Rent.  Tenant shall pay the
Base Rent and Additional Rent promptly when due, without demand therefor and
without any abatement, deduction, or setoff whatsoever, except as may be
expressly provided in this Lease.  Tenant
shall pay the Rent to Landlord, in lawful money of the United States of
America, at Landlord’s office at the Complex or at such other place, or to such
agent and at such place, as Landlord may designate by notice to Tenant.  If the Commencement Date or Expiration Date
occurs on a day other than the first or last day of a calendar month
respectively, the Base Rent for such calendar month shall be prorated based on
a 30-day month, and the balance of the first or last month’s Base Rent
theretofore paid shall be credited against the next monthly installment of Base
Rent or refunded to Tenant within thirty (30) days following the Expiration
Date.


1.6.2 Interest and Late Charges. 
Tenant acknowledges that the late payment of any monthly Rent will cause
Landlord to lose the use of that money and incur costs and expenses not
contemplated under this Lease, including administrative and collection costs
and processing and account expenses, the exact amount of which it is difficult
to ascertain.  Therefore, if any such
installment is not received by Landlord within five (5) days from the date
it is due, Tenant shall pay Landlord a late charge equal to five
percent (5%) of such installment. 
Landlord and Tenant agree that this late charge represents a reasonable
estimate of such costs and expenses and is fair compensation to Landlord for
the loss suffered from such nonpayment by Tenant.  In addition, any check returned by the bank
for any reason will be considered late and will be subject to all late charges
plus an additional returned check fee of Twenty Dollars ($20.00).  After two such occasions upon which checks
have been returned in any twelve-month period, Landlord will have the
right to require payment by a cashier’s check or money order.  Acceptance of any late charge shall not
constitute a waiver of Tenant’s default with respect to such nonpayment by
Tenant nor prevent Landlord from exercising any other rights or remedies
available to Landlord under this Lease or at law or in equity, unless the
payment of such late charges is accompanied by all rentals then due and owning
(notwithstanding anything to the contrary in § 20.2.1 below).


1.6.3 Suite 400 Base Rent Abatement. 
Notwithstanding anything to the contrary in this § 1.6 or
§ 1.3 above, beginning with the Commencement Date for Suite       
(targeted for February 1, 2004), Tenant’s
Monthly Installment of Base Rent with respect to Suite 400 only shall be
abated for a period of eighteen (18) months after the Existing Premises
Termination Date (the “Abatement Period”). 
If Tenant shall materially default under the Lease and fail to cure
within the time permitted for cure thereunder, while the Abatement Period is
still in effect, the Abatement Period shall thereupon 



 12
 









terminate, and Tenant shall commence paying the Base Rent
under the Lease as specified in the Table.


1.7    PROPERTY. 
For the purposes of this Lease, the “Property” shall mean the Building
and any common or public areas or facilities, easements, corridors, lobbies, sidewalks,
loading areas, driveways, landscaped areas, skywalk, parking garages and lots,
and any and all other structures or facilities operated or maintained in
connection with or for the benefit of the Building, and all parcels or tracts
of land on which all or any portion of the Building or any of the other
foregoing items are located, and any fixtures, machinery, equipment, apparatus,
Systems and Equipment (as defined in § 1.7.5 below), furniture and other
personal property located thereon or therein and used in connection therewith,
whether title is held by Landlord or its affiliates.  The Property shall also be deemed to include
such other of the Complex’s buildings or structures (and related facilities and
parcels on which the same are located) as Landlord shall have incorporated by
reference to the total square footage of the Building stated in § 1.4
above.


1.7.1 Common Areas.  Tenant and its
agents, employees, and invitees shall have the non-exclusive right with
others designated by Landlord to the free use of the common areas in the
Property and the Complex for the common areas’ intended and normal
purpose.  The term common areas
shall include (without limitation) elevators, sidewalks, parking areas,
driveways, hallways, stairways, public restrooms, common entrances, lobbies,
and other similar public areas and access ways.


1.7.2 Athletic Facility. 
Notwithstanding the foregoing, the common areas do not include the
Building’s athletic facility (the “Athletic Facility”), which is an
unsupervised and unattended weight and exercise room and shower facility.  Tenant acknowledges that Landlord presently
makes available (but is not obligated under this Lease to make available) the
Athletic Facility for the general use of all tenants and their officers and
employees, subject to such rules and regulations as Landlord may impose from
time to time in its sole and absolute discretion regarding the use
thereof.  Tenant shall cause each of its
officers and employees using the Athletic Facility to sign and deliver to Landlord
an “Athletic Facility Use Agreement” substantially in the form attached hereto
as Exhibit D.  Tenant understands and agrees that no
individual shall be permitted use of or access to the Athletic Facility unless
and until such individual shall have first signed and delivered the Athletic
Facility Use Agreement to Landlord. 
Landlord shall have the right to limit the use of the Athletic Facility
in any manner it may reasonably deem necessary, or to discontinue the Athletic
Facility altogether, at any time, in its sole and absolute discretion, and
neither Tenant nor its officers or employees shall be entitled to any
compensation, credit, allowance, or offset of expenses or Rent as a result of
any such limitation or discontinuance, so long as at least one (1) similar
athletic facility of no less than 3,000 square feet remains available for
Tenant’s use in the Complex.  If Landlord
elects to discontinue the Athletic Facility and does not provide a similar
facility for Tenant’s use in the Complex as provided in the foregoing sentence,
(i) Landlord shall give Tenant a credit of Two Thousand Five Hundred
Dollars ($2,500.00) per month against the Base Rent due hereunder for so long
as no such facility is available for Tenant’s use in the Complex and (ii)
Landlord shall permit Tenant upon request (and subject to the provisions of
Article 9) to construct a facility similar to the Athletic Facility in
Tenant’s Premises, at Tenant’s sole cost and expense.


1.7.3 Reservation to Landlord. 
Notwithstanding anything to the contrary herein, possession of areas
necessary for utilities, services, safety, and operation of the Property,
including the Systems and Equipment, telephone closets (whether located in the
common areas or in the Premises), fire exits and stairways, perimeter walls,
space between the finished ceiling of the Premises and the slab of the floor or
roof of the Property thereabove, and the use thereof, together with the right
to install, maintain, operate, repair, and replace any part of the Systems and
Equipment in, through, under, or above the Premises in locations that will not
materially interfere with Tenant’s use of the Premises, 



 13
 









are hereby excepted from both the Premises and the common
areas and are reserved by Landlord and not demised to Tenant.  Tenant’s access to the telephone closets on
each floor and the Building’s main telephone room shall be subject to the Rules
(as defined in § 13.1 below) and shall be permitted only with Landlord’s
written consent and under the supervision of Landlord’s Building Engineer on
each occasion that such access is sought.


1.7.4 Changes and Alterations of the Property. 
Landlord reserves the right to and shall make repairs, alterations,
additions, or improvements, structural or otherwise, in or to the Property or
Complex as deemed or are necessary or desirable in Landlord’s reasonable
discretion, so long as such repairs or alterations do not materially and
unreasonably interfere with Tenant’s access to or beneficial use of the
Premises for their intended purposes. 
Notwithstanding anything to the contrary herein, Landlord agrees that it
will not do or permit any core drilling in the Building without at least one
(1) floor’s separation from any affected portion of the Premises at any time
during the business week (i.e., Monday
through Friday excluding Holidays) between the hours of 5:30 a.m. and 6:30
p.m.  Landlord reserves the right
hereunder to do the following: (i) install, use, maintain, repair, and
replace pipes, ducts, conduits, wires, and appurtenant meters and equipment for
service to the various parts of the Property above the ceiling surfaces, below
the floor surfaces, within the walls, and in the central core areas;
(ii) to relocate any pipes, ducts, conduits, wires, and appurtenant meters
and equipment which are located in the Premises or located elsewhere outside
the Premises; (iii) expand the Building or the Complex; (iv) make
changes to the Property or the Complex, including changes, expansions, and
reductions in the location, size, shape, and number of driveways, entrances,
loading and unloading areas, ingress, egress, direction of traffic, landscaped
areas, walkways, parking spaces, and parking areas; (v) close any of the
common areas, so long as reasonable access to the Premises remains available;
(vi) use the common areas while engaged in making additional improvements,
repairs, or alterations to the Property, Complex, or any portion thereof; and
(vii) do and perform such other acts and make such other changes in, to,
or with respect to the Property, Complex, common areas, and Building as
Landlord may deem appropriate.  The
exercise of any of the foregoing rights shall not subject Landlord to claims
for constructive eviction, abatement of Rent, damages, or other claims of any
kind, except as otherwise expressly provided in this Lease.  If Landlord enters the Premises to exercise
any of the foregoing rights, Landlord shall provide at least two (2) business
days’ advance written notice to Tenant’s on-site manager, except
(x) in cases of emergency and (y) for purposes of access to the
Building roof for Landlord, its agents, and authorized licensees in cases where
use of the stairs is either not possible or not reasonably practicable.


1.7.5 Systems and Equipment. 
As used in this Lease, “Systems and Equipment” means collectively any
existing plant, machinery, transformers, duct work, intrabuilding network
cables and wires that transmit voice, data, and other telecommunications
signals (“INC”), and other equipment, facilities, and systems designed to
supply water, heat, ventilation, air conditioning and humidity or any other
services or utilities, or comprising or serving as any component or portion of
the electrical, gas, steam, plumbing, sprinkler, communications, alarm,
security, or fire/life/safety systems or equipment, or any other mechanical,
electrical, electronic, computer or other systems or equipment for the
Property.


2       USE


2.1    USE AND ENJOYMENT OF PREMISES.  Tenant shall use and occupy the Premises for
executive and general offices and for no other purpose.  Notwithstanding anything contained herein to
the contrary, Tenant may use portions of the Premises as shown on the approved
Plans for the preparation and reheating of food and beverages, including the
use of refrigerators, ice makers, coffee machines, hot 



 14
 









plates, microwave ovens, or similar heating devices (but not
for the actual cooking of food) for service only to Tenant’s employees and
business invitees.


2.1.1 Suitability.  Tenant acknowledges
that neither Landlord nor any agent of Landlord has made any representation or
warranty with respect to the Premises, the Property, or the Complex, or with
respect to the suitability of same for the conduct of Tenant’s business, except
as expressly provided in this Lease. 
Landlord makes no representation to Tenant regarding the installation,
ownership, location, or suitability for Tenant’s purposes of the INC in the
Building.


2.1.2 Insurance Rates.  Tenant shall not do
or suffer anything to be done in or about the Premises, nor shall Tenant bring
or allow anything to be brought into the Premises, which will in any way
increase the rate of any fire insurance or other insurance upon the Property or
its contents, cause a cancellation of said insurance, or otherwise affect said
insurance in any manner.


2.1.3 Use to Comply with Laws. 
Tenant shall use the Premises in conformity with all applicable Laws, as
specified in Article 6 below.


2.1.4 Floor Loading.  Subject to and
except as may be shown on Tenant’s Plans, Tenant shall not place or permit to
be placed on any floor a load exceeding eighty (80) pounds per square foot
or such lower floor load as such floor was designed to carry.


2.2    NUISANCE AND WASTE. 
Tenant also shall not do or suffer anything to be done in or about the
Premises which will in any way unreasonably obstruct or interfere with the
rights of other tenants or occupants of the Property or injure said tenants or
occupants, nor shall Tenant use or suffer the Premises to be used for any
unlawful purposes.  In no event shall
Tenant cause or permit any nuisance in or about the Premises, and no
loudspeakers or similar devices shall be used without the prior written
approval of Landlord, which approval may be withheld in Landlord’s reasonable
discretion.  Tenant shall not commit or
suffer to be committed any waste in or upon the Premises.  The provisions of this section are for the
benefit of Landlord only and shall not be construed to be for the benefit of
any tenant or occupant of the Building. 
If any governmental license or permit, other than a Certificate of Occupancy,
shall be required for the proper and lawful conduct of Tenant’s business in the
Premises, or any part thereof, and if failure to secure such license or permit
would in any way affect Landlord, Tenant, at its sole expense, shall procure
and thereafter maintain such license or permit and submit the same for
inspection by Landlord.  Tenant shall at
all times comply with the terms and conditions of each such license or permit.


2.3    COMPLIANCE WITH CERTIFICATE OF
OCCUPANCY   Tenant shall not at any time use or occupy
the Premises, or suffer or permit anyone to use or occupy, the Premises, or do
or permit anything to be done in the Premises, in violation of the Certificate
of Occupancy for the Premises or for the Building.


3       PREPARATION
OF THE PREMISES


3.1    CONDITION OF PREMISES. 
Except as otherwise expressly provided in § 3.2 below and the “Work
Letter Agreement” which shall be executed by Landlord and Tenant concurrently
with their execution of this Lease substantially in the form attached hereto as
Exhibit F, Tenant shall accept the
Premises, any existing Improvements in the Premises (as defined in § 10.1
below), and the Systems and Equipment serving the same in an “as is”
condition on the date the Term commences, and Landlord shall have no obligation
to improve, alter, remodel, or otherwise modify the Premises prior to Tenant’s
occupancy.



 15
 









3.2    LANDLORD’S PREPARATION. 
Landlord shall use reasonable diligence in completing and preparing the
Premises for Tenant’s occupancy in the manner and subject to the terms,
conditions, and covenants set forth in the Work Letter Agreement.  The facilities, materials, and work to be
furnished, installed, and performed in the Premises by Landlord pursuant to the
Work Letter Agreement are referred to as the “Work.”  Such other installations, materials, and work
which may be undertaken by or for the account of Tenant to prepare, equip,
decorate, and furnish the Premises for Tenant’s occupancy are referred to as
the “Tenant’s Work.”  Landlord and Tenant
agree that Landlord’s Work specified in the Work Letter Agreement shall include
the following items:


(i)      Moving Allowance. 
In addition to the Improvement Allowance specified in the Work Letter
Agreement, Landlord shall pay to Tenant a moving allowance of            
to be applied to the cost of relocating and installing Tenant’s furniture,
cubicles, network, and telephone equipment, which moving allowance Landlord
shall pay to Tenant within thirty (30) days following Tenant’s submittal of
paid receipts, vouchers, and such other documentation as Landlord may
reasonably request; and


(ii)    Supplemental HVAC. 
Landlord at its sole cost and expense shall hire a mechanical engineer
to design in cooperation with Tenant’s architects and consultants the HVAC
system proposed for Tenant to address the western exposure of Tenant’s office
space.  Landlord shall install a
supplemental HVAC system in accordance with the Work Letter Agreement to cover
one (1) entire wing of the three (3) wings of the fifth floor space to
accommodate Tenant’s extended hours business (the “Southeast Wing HVAC”) and a
portion of a second wing to accommodate after-hours operation of Tenant’s
data/server rooms (the “Data Rooms HVAC”) (collectively the “Supplemental HVAC
System”).  Landlord agrees that CalAir
shall be an approved vendor for Tenant’s Supplemental HVAC System construction
and one of the approved bidders for the overall HVAC work to be completed as
part of Landlord’s Work.  Pricing, cost
allocation, and scope of the 5th floor Supplemental
HVAC System are addressed in the Work Letter Agreement.


3.2.2 Readiness for Occupancy. 
The Premises shall be deemed ready for occupancy on the earliest date on
which all of the following conditions (the “Occupancy Conditions”) have first
been met:


(a)          Substantial Completion
of Work.  The Work has been
substantially completed; and it shall be so deemed notwithstanding the fact
that minor or insubstantial details of construction, mechanical adjustment, or
decoration remain to be performed, the noncompletion of which does not materially
interfere with Tenant’s beneficial use of the Premises for their intended
purposes;


(b)          Access and Services.  Reasonable means of access and facilities
necessary to Tenant’s use and occupancy of the Premises, including corridors,
elevators, stairways, heating, ventilating, air-conditioning, sanitary,
water, and electrical facilities (but exclusive of parking facilities) have
been installed and are in reasonably good operating order and available to
Tenant; and


(c)          Certificate of Occupancy
or Completion.  A certificate of
occupancy, certificate of completion, final inspection card, or similar
required governmental approval (temporary or final) has been issued by the City
of South San Francisco permitting use of the Premises for office purposes.



 16
 









The parties anticipate that Substantial Completion of Landlord’s Work
in Suite        shall occur on or before February 1, 2004 (the “Target Date”) and that
Substantial Completion of Landlord’s Work in Suite 400
shall occur on or before August 1, 2004
(the “Suite 400 Target Date”).


3.2.3 Tenant Delays.  If the occurrence of
any of the Occupancy Conditions and Landlord’s preparation of the Premises for
occupancy shall be delayed owing materially to either (a) any act,
omission, or failure of Tenant or any of its employees, agents, or contractors
which shall continue after Landlord shall have given Tenant reasonable notice
that such act, omission, or failure would result in delay, and such delay shall
have been unavoidable by Landlord in the exercise of reasonable diligence and
prudence; or (b) the nature of any items of additional work or change
orders that Landlord undertakes to perform for the account of Tenant (including
any delays incurred by Landlord, after making reasonable efforts, in procuring
any materials, equipment, or fixtures of a kind or nature not used by Landlord
as part of its standard construction) (collectively “Tenant Delays”), then the
Premises shall be deemed ready for occupancy on the date when they would have
been ready but for such Tenant Delays.


3.3    EARLY ENTRY.  During any period that Tenant shall be
permitted to enter the Premises prior to the Commencement Date other than to
occupy the same (e.g., to perform alterations or
improvements), Tenant shall comply with all terms and provisions of this Lease,
except those provisions requiring the payment of Rent.  If Tenant shall be permitted to enter the
Premises prior to the Commencement Date for the purpose of occupying the same,
Rent shall commence on the date Tenant commences business operations from the
Premises at the rate specified in the Table for the first period during which
Rent is payable after the Commencement Date; and if Tenant shall commence
occupying only a portion of the Premises prior to the Commencement Date, Rent
shall be prorated based on the number of rentable square feet occupied by
Tenant.  Landlord shall permit early
entry, provided the Premises are legally available and Landlord has completed
any Work required under this Lease.  In
no event shall Tenant’s early entry extend or shorten the Term of the Lease set
forth in § 1.2 above.  Landlord
agrees that, subject to the provisions of this Article 3, Tenant’s
telecommunication vendors shall have the right to install Tenant’s telephone
and data lines in Suite      as soon as the walls are
roughed out in anticipation of Tenant’s move into Suite       
on or after the Commencement Date, provided such vendors shall not delay or
interfere in the construction of the Work.


3.4    NOTICE OF DEFECTS.  It shall be conclusively presumed upon Tenant’s
taking actual possession of the Premises that the same were in satisfactory
condition (except for latent defects and punchlist items) as of the date of
such taking of possession, unless with respect to punchlist items within
thirty (30) days after the Commencement Date and within thirty (30) after
discovery with respect to latent defects Tenant shall give Landlord notice in
writing specifying the respects in which the Premises were not in satisfactory
condition.


4       ADJUSTMENTS
OF RENT


4.1    TAXES, UTILITIES, AND OPERATING
EXPENSES.  In addition to the Base Rent and all other
payments due under this Lease, Tenant shall pay to Landlord, in the manner set
forth in this Article 4, as Additional Rent, the following amounts:


(a)                       Increased
Operating Expenses.  An amount equal
to Tenant’s Pro Rata Share of that portion of Operating Expenses paid by
Landlord during each Adjustment Period which exceeds the amount of Base
Operating Expenses (as all of such terms are defined in § 4.2 below).



 17
 









(b)                       Increased
Utilities.  An amount equal to Tenant’s Pro Rata
Share of that portion of Utilities paid by Landlord during each Adjustment
Period which exceeds the amount of Base Utilities (as all of such terms are
defined in § 4.2 below).


(c)                       Increased
Taxes.  An amount equal to Tenant’s
Pro Rata Share of that portion of Real Estate Taxes paid by Landlord during
each Adjustment Period which exceeds the amount of Base Real Estate Taxes (as
all of such terms are defined in § 4.2 below).


Tenant’s Pro Rata Share
of (i) such increase in Operating Expenses over the Base Operating
Expenses, (ii) such increase in Utilities over Base Utilities, and
(iii) such increase in Real Estate Taxes over the Base Real Estate Taxes
is sometimes referred to collectively herein as the “Rental Adjustment.”


4.2    DEFINITIONS.  For the purposes of this Lease, the following
definitions shall apply:


(a)                       Base Operating Expenses. 
“Base Operating Expenses” means the total of Operating Expenses paid by
Landlord during calendar year 2004 (the “Base
Expense Year”), as adjusted under § 4.6 below.


(b)                       Base Utilities.  “Base
Utilities” means the total of Utilities paid by Landlord during calendar year 2004 (the “Base Utilities Year”), as adjusted
under § 4.6 below.


(c)                       Base Real Estate Taxes. 
“Base Real Estate Taxes” means the total of Real Estate Taxes paid by
Landlord during calendar year 2004 (the “Base Tax
Year”).


(d)                       Tenant’s Pro Rata Share. 
“Tenant’s Pro Rata Share” as to the Building is the percentage labeled
as such in the Table in § 1.3 and is calculated by dividing the agreed
rentable area of the Premises (numerator) by the agreed rentable area of the
Property (denominator) and expressing the resulting quotient as a percentage. “Tenant’s
Pro Rata Share” as to the Complex is the percentage labeled as such in the
Table in § 1.3 as is calculated by dividing the agreed rentable area of
the Premises (numerator) by the agreed rentable area of the Complex
(denominator) and expressing the resulting quotient as a percentage.  Tenant’s Pro Rata Share shall be adjusted
during the Term in proportion to any change in the area of the Premises,
Building, or Complex in accordance with the formula stated herein.


(e)                       Adjustment Period. 
“Adjustment Period” as to Operating Expenses, Utilities, and Real Estate
Taxes means each calendar year of which any portion occurs during the Term,
excluding the Base Year and beginning with the first calendar year immediately
following the Base Year.


(f)                         Real Estate Taxes. 
“Real Estate Taxes” means all of the following charges, whether or not
now customary or in the contemplation of the parties hereto, and whether or not
general, special, ordinary, or extraordinary, which Landlord shall pay during
any Adjustment Period because of or in connection with the ownership, leasing,
or operation of the Property:


(1)                     ad valorem real property taxes;


(2)                     any form of
assessment, license fee, license tax, business license fee, commercial rental
tax, levy, charge, fee, tax, or other imposition imposed by any authority,
including any city, county, state, or federal governmental 



 18
 









agency, or any
school, agricultural, lighting, transportation, housing, drainage, or other
improvement or special assessment district thereof;


(3)                     any tax on
Landlord’s ‘right’ to rent or ‘right’ to other income from the Building or as
against Landlord’s business of leasing the Building;


(4)                     any
assessment, tax, fee, levy, or charge in substitution, partially or totally, of
any assessment tax, fee, levy or charge previously included within the
definition of Real Estate Taxes, it being acknowledged by Tenant and Landlord
that Proposition 13 was adopted by the voters of the State of California in the
Election of June, 1978, and that assessments, taxes, fees, levies, and charges
may be imposed by governmental agencies for such services as fire protection,
street, sidewalk, and road maintenance, refuse removal, and for other
governmental services formerly provided without charge to property owners or
occupants, and it being the intention of Tenant and Landlord that all such new
and increased assessments, taxes, fees, levies, and charges be included within
the definition of Real Estate Taxes for the purposes of this Lease;


(5)                     any
assessment, tax, fee, levy, or charge allocable to or measured by the area of
the Building or Property or the Rent payable hereunder, including any gross
income tax or excise tax levied by any city, county, state, or federal
governmental agency or any political subdivision thereof with respect to the
receipt of such Rent, or upon or with respect to the possession, leasing,
operating, management, maintenance, alteration, repair, use, or occupancy by
Tenant of the Property or any portion thereof;


(6)                     any
assessment, tax, fee, levy, or charge upon this transaction or any document to
which Tenant is a party, creating or transferring an interest or an estate in
the Building or Property;


(7)                     any
assessment, tax, fee, levy, or charge by any governmental agency related to any
transportation plan, fund, or system instituted within the geographic area of
which the Building is a part; or


8)                         reasonable
legal and other professional fees, costs and disbursements incurred in
connection with proceedings to contest, determine or reduce Real Estate Taxes.


Exclusions.  Notwithstanding the foregoing, Real Estate
Taxes shall not include (A) federal, state, or local income taxes;
(B) franchise, gift, transfer, excise, capital stock, estate, succession,
or inheritance taxes; or (C) penalties or interest for late payment of
Real Estate Taxes.


(g)                     Operating Expenses. 
“Operating Expenses” means all expenses, costs, and amounts (other than
Real Estate Taxes and Utilities) of every kind and nature which Landlord shall
pay during any Adjustment Period of which any portion occurs during the Term,
because of or in connection with the ownership, management, repair,
maintenance, restoration, and/or operation of the Property.  Operating Expenses shall be calculated in
accordance with generally-accepted accounting principles, consistently applied,
except to the extent that any other method of 



 19
 









calculation or
characterization shall expressly be permitted hereunder, including costs of the
following:


(1)                     permits,
licenses, and certificates necessary to operate, manage, and lease the
Property;


(2)                     supplies,
tools, equipment, and materials used in the operation, repair, and maintenance
of the Property;


(3)                     all insurance
premiums for any insurance policies deemed necessary or desirable by Landlord
(including workers’ compensation, health, accident, group life, public
liability, property damage, earthquake, and fire and extended coverage
insurance for the full replacement cost of the Property as required by Landlord
or its lenders for the Property);


(4)                     the
deductible portion of any claim paid under any insurance policy other than any
earthquake policy maintained by Landlord in connection with its management and
operation of the Property;


(5)                     reasonable
accounting, legal, inspection, consulting, concièrge, and other similar
services;


(6)                     services of
independent contractors;


(7)                     compensation
(including employment taxes and fringe benefits) of all persons who perform
duties in connection with the operation, maintenance, repair, or overhaul of
the Building or Property, and equipment, improvements, and facilities located
within the Property, including engineers, janitors, painters, floor waxers,
window washers, security, parking personnel, and gardeners;


(8)                     operation and
maintenance of a room for delivery and distribution of mail to tenants of the
Building as required by the U.S. Postal Service (including an amount equal to
the fair market rental value of the mail room premises);


(9)                     management of
the Building or Property, whether managed by Landlord or an independent
contractor (including an amount equal to the fair market value of any on-site
manager’s office), provided that such amount shall not exceed the management
fee that would be charged by a third-party manager if the Property is managed
by Landlord or an affiliate of Landlord;


(10)               rental expenses for
(or a reasonable depreciation allowance on) personal property used in
maintenance, operation, or repair of the Property and installment equipment
purchase or equipment financing agreements for such personal property;


(11)               costs,
expenditures, or charges (whether capitalized or not) required by any
governmental or quasi-governmental authority after the Commencement Date;


(12)               payments to a third
party under any easement, operating agreement, declaration, restrictive
covenant, or instrument pertaining to the sharing of costs in any planned
development;



 20















(13)               amortization of
capital expenses (including financing costs) incurred by Landlord after the
Commencement Date in order to (A) comply with Laws, (B) reduce
Property Operating Expenses or Utilities, or (C) upgrade the utility,
efficiency, or capacity of any utility or telecommunication systems serving
tenants of the Property, provided that, as to (B) and (C), such expenses shall
be included only to the extent of the savings generated thereby;


(14)               operation, repair,
and maintenance of all Systems and Equipment and components thereof (including
replacement of components); janitorial service; alarm and security service;
window cleaning; trash removal; elevator maintenance; cleaning of walks,
parking facilities, and building walls; removal of ice and snow; replacement of
wall and floor coverings, ceiling tiles, and fixtures in lobbies, corridors,
restrooms and other common or public areas or facilities; maintenance and
repair of the roof and exterior fabric of the Building, including replacement
of glazing as needed; maintenance and replacement of shrubs, trees, grass, sod,
and other landscaped items, irrigation systems, drainage facilities, fences,
curbs, and walkways; repaving and restriping parking facilities; and roof
repairs;


(15)               the operation of
any on-site maintenance shop(s) and the operation and maintenance of the
Athletic Facility, any other fitness center, conference rooms, and all other
common areas and amenities in the Property;


(16)               provision of
shuttle busses, shuttle services, and drivers between the Complex and BART and
SFO airport, as required by the Bay Area Regional Transportation Act and deed
covenants and restrictions applicable to the Complex; and


(17)               any other costs or
expenses reasonably incurred by Landlord which are reasonably necessary to
operate, repair, manage, and maintain the Building and Property in a
first-class manner and condition and which are not otherwise reimbursed by
tenants of the Building.


(h)                     Utilities.  “Utilities”
means all expenses, costs, and amounts of every kind and nature which Landlord
shall pay during any Adjustment Period of which any portion occurs during the
Term, because of or in connection with the electricity, power, gas, steam, oil
or other fuel, water, sewer, lighting, heating, air conditioning, and ventilating
delivered to or consumed or used in or on the Property.


4.2.1 Exclusions from Operating Expenses. 
Notwithstanding anything to the contrary herein, Operating Expenses
shall not include (A) depreciation, interest, and amortization on Superior
Mortgages (as defined in § 18.1 below), and other debt costs or ground
lease payments, if any; (B) legal fees in connection with leasing, tenant
disputes, or enforcement of leases; (C) real estate brokers’ leasing
commissions; (D) improvements or alterations to tenant spaces;
(E) the cost of providing any service directly to, and reimbursed or paid
directly by, any tenant; (F) any costs expressly excluded from Operating
Expenses elsewhere in this Lease; (G) costs of any items to the extent
Landlord receives reimbursement from insurance proceeds or from a third party
(such proceeds to be deducted from Operating Expenses in the year in which
received); (H) capital expenditures, except those expressly permitted
above; provided, all such permitted capital expenditures (together with
reasonable financing charges) shall be amortized for purposes of this 



 21
 









Lease over the shorter of (x) their useful lives or
(y) the period during which the reasonably estimated savings in Operating
Expenses equals the expenditures.  The following
specific categories of expenses are also excluded hereunder from the definition
of Operating Expenses:


(a)     Real Estate Taxes;


(b)     leasing commissions, costs, disbursements, and other
expenses incurred for leasing, renovating, or improving space for tenants;


(c)     costs (including permit, license, and inspection fees and
tenant improvement allowances) incurred in renovating, improving, decorating,
painting, or redecorating vacant space or space for tenants;


(d)     Landlord’s cost of electricity or other service sold to
tenants for which Landlord is to be reimbursed as a charge over the Rent and
Additional Rent payable under the lease with that tenant;


(e)     except as otherwise expressly permitted hereunder, costs
incurred by Landlord for alterations that are considered capital improvements
and replacements under generally-accepted accounting principles
consistently applied;


(f)     depreciation and amortization on the Building except as
expressly permitted elsewhere in the Lease;


(g)    except as otherwise expressly permitted hereunder, costs of
a capital nature including capital improvements, capital repairs, capital
equipment, and capital tools, as determined under generally-accepted
accounting principles consistently applied;


(h)    costs incurred because Landlord or another tenant violated
the terms of any lease;


(i)     overhead and profit paid to subsidiaries or affiliates of
Landlord for management or other services on or to the Property or for supplies
or other materials, to the extent that the costs of the services, supplies, or
materials exceed the amount customarily charged by an independent entity for
such services, supplies, or materials;


(j)     interest on debt or amortization payments on mortgages or
deeds of trust or any other debt for borrowed money;


(k)    compensation paid to clerks, attendants, or other persons in
commercial concessions operated by Landlord;


(l)     rentals and other related expenses incurred in leasing air
conditioning systems, elevators, or other equipment ordinarily considered to be
of a capital nature, except equipment used in providing janitorial services
that is not affixed to the Building;


(m)   items and services for which Tenant reimburses Landlord or
pays third parties or that Landlord provides selectively to one or more tenants
of the Building other than Tenant without reimbursement;



 22
 









(n)    advertising and promotional expenditures;


(o)     repairs or other work needed because of fire, windstorm, or
other casualty or cause insured against by Landlord or to the extent Landlord’s
insurance required under the Lease would have provided insurance, whichever is
the greater coverage;


(p)     costs incurred in operating the parking facilities for the
Building except to the extent the cost of operating the parking facilities
exceeds the revenues generated from operating the parking facilities;


(q)     nonrecurring costs incurred to remedy structural defects in
original construction materials or installations;


(r)     any costs, fines, or penalties incurred because Landlord
violated any governmental rule or authority;


(s)     costs incurred to test, survey, cleanup, contain, abate,
remove, or otherwise remedy Hazardous Material in, on, or under the Property
unless the Hazardous Material were in, on, or under the Property because of
Tenant’s negligence or intentional acts;


(t)     costs incurred to comply with the Americans with
Disabilities Act, except to the extent compliance is required because of
amendments to the ADA which amendment(s) became effective after the date this
Lease is signed;


(u)    costs for sculpture, paintings, or other art beyond what is
customary and usual commercial practice in the vicinity of the Building; and


(v)     except as otherwise expressly permitted hereunder, other
expenses that under generally-accepted accounting principles consistently
applied would not be considered normal maintenance, repair, management, or
operation expenses.


4.3    MANNER OF
PAYMENT.  To provide for current payments of the Rental
Adjustment, Tenant shall pay as Additional Rent during each Adjustment Period
an amount equal to Landlord’s estimate of the Rental Adjustment which will be
payable by Tenant for such Adjustment Period. 
Such payments shall be made in monthly installments, commencing on the
first day of the month following the month in which Landlord notifies Tenant of
the amount it is to pay hereunder and continuing until the first day of the
month following the month in which Landlord gives Tenant a new notice of the
estimated Rental Adjustment.  It is the
intention hereunder to estimate from time to time the amount of Tenant’s Rental
Adjustment for each Adjustment Period and then to effect a reconciliation in
the following year based on the actual expenses incurred for the preceding
Adjustment Period, as provided in 4.4 below.


4.4    RECONCILIATION. 
On or before the first day of April of each year after the first
Adjustment Period (or as soon thereafter as is practical), Landlord shall
deliver to Tenant a statement (the “Statement”) setting forth the Rental
Adjustment for the preceding year.  If
the actual Rental Adjustment for the preceding Adjustment Period exceeds the
total of the estimated monthly payments made by Tenant for such Adjustment
Period, Tenant shall pay Landlord the amount of the deficiency within
ten (10) business days of the receipt of the Statement.  If such total of estimated payments made
exceeds the actual Rental Adjustment for such Adjustment Period, then Tenant
shall receive a refund for the difference within ten (10) business days.  If the credit is due from Landlord on the
Expiration Date, Landlord shall pay Tenant



 23
 









the amount of
the credit, less any Rent then due.  The
obligations of Tenant and Landlord to make payments required under this
§ 4.3 shall survive the expiration or earlier termination of the Term of
this Lease.


4.4.1 Changes in Method. 
So long as Tenant’s obligations hereunder are not materially adversely
affected thereby, Landlord reserves the right reasonably to change the manner
or timing of the foregoing payments.  In
lieu of providing one Statement covering Real Estate Taxes, Utilities, and Operating
Expenses, Landlord may provide separate statements, at the same or different
times.  No delay by Landlord in providing
the Statement (or separate statements) shall be deemed a default by Landlord or
a waiver of Landlord’s right to require payment of Tenant’s obligations for
actual or estimated Real Estate Taxes, Utilities, or Operating Expenses.  Subject to § 4.7 below, in no event
shall a decrease in Real Estate Taxes, Utilities, or Operating Expenses below
the Base Operating Expenses, Base Utilities, or Base Real Estate Taxes ever
decrease the monthly Base Rent or give rise to a credit in favor of Tenant.


4.4.2 Proration of Rental Adjustment. 
If the Term does not commence on January 1 or does not end on
December 31, Tenant’s obligations to pay estimated and actual amounts
towards Real Estate Taxes, Utilities, and Operating Expenses for such first or
final calendar year shall be prorated to reflect the portion of such year(s)
included in the Term.  Such proration
shall be made by multiplying the total estimated or actual (as the case may be)
Real Estate Taxes, Utilities, and Operating Expenses for such calendar year(s),
as well as the Base Real Estate Taxes, Base Utilities, and Base Operating
Expenses, by a fraction, the numerator of which shall be the number of days of
the Term during such calendar year, and the denominator of which shall be three
hundred sixty-five (365).


4.5    GROSS-UP.
 If the Building or Complex is less than
ninety-five percent (95%) occupied during any Adjustment Period, then
Operating Expenses, Utilities, and Real Estate Taxes for such Adjustment Period
shall be “grossed up” to that amount of Operating Expenses, Utilities, and Real
Estate Taxes that, using reasonable projections, would normally have been
incurred during such Adjustment Period if the Building or Complex had been
ninety-five percent (95%) occupied during the Adjustment Period.  Only those component elements or items of
expense of Operating Expenses, Utilities, and Real Estate Taxes that are
affected by variations in occupancy levels shall be grossed up.


4.6    ADJUSTMENT
OF BASE OPERATING EXPENSES.  Notwithstanding anything to the contrary
contained in the Lease, the parties agree that Base Operating Expenses and
Operating Expenses for any subsequent Adjustment Period (herein called “Subsequent
Operating Expenses”) shall be subject to further adjustment by Landlord as
follows:


(a)                       Exclusion
of Capital Expenditures.  Landlord
may exclude from Base Operating Expenses capital expenditures otherwise
permitted, provided Landlord shall also exclude any amortization of such
expenditures from Subsequent Operating Expenses.


(b)                       Elimination
of Recurring Expenses.  If Landlord
eliminates from any Subsequent Operating Expenses a category of recurring
expenses previously included in Base Operating Expenses, Landlord may subtract
such category from Base Operating Expenses commencing with such subsequent
Adjustment Period.


(c)                       New
Recurring Expenses.  If Landlord
includes a new category of recurring Subsequent Operating Expenses not previously
included in Base Operating Expenses, Landlord shall also include an amount (the
“Assumed Base Amount”)



 24
 









for such category
in Base Operating Expenses commencing in such subsequent Adjustment Period.


(d)                       Assumed
Base Amount.  The “Assumed Base
Amount” under § 4.6(c) above shall be the annualized amount of expenses
for such new category in the first Adjustment Period it is included, reduced by
an amount determined in Landlord’s sole good faith discretion (but in no event
by an amount less than five percent (5%)) for each full or partial
Adjustment Period that has elapsed during the Term of the Lease before such
Adjustment Period.


4.7    ADJUSTMENT
OF REAL ESTATE TAXES.   If Base Real Estate Taxes are reduced as the
result of protest, by means of agreement, as the result of legal proceedings,
or otherwise, Landlord may adjust Tenant’s obligations for Real Estate Taxes in
all years affected by any refund of taxes following the Base Tax Year; and
Tenant shall pay Landlord within thirty (30)days after notice any additional
amount required by such adjustment for any Adjustment Periods that have
theretofore occurred.  Tenant shall be
entitled to receive a share of any refund or abatement of Real Estate Taxes
received by Landlord to the extent of and in proportion to Tenant’s actual
contribution to the amount of Real Estate Taxes paid by Landlord during the
period to which such refund or abatement relates; and in addition Landlord
agrees to give Tenant an equitable credit against the total amount of
Additional Rent that would otherwise be due hereunder to the extent that any
reassessment (other than a reassessment triggered by a sale of the Building or
Property) reduces the annual amount of Real Estate Taxes payable by Landlord
with respect to the Building or Property and such Real Estate Taxes were
allocated to the computation of Tenant’s Base Year Real Estate Taxes
hereunder.  If Real Estate Taxes for any
Adjustment Period during the Term or any extension thereof shall be increased
after payment thereof by Landlord for any reason, including error or
reassessment by applicable governmental authorities, Tenant shall pay Landlord
upon demand Tenant’s Pro Rata Share of such increased Real Estate Taxes.  Tenant shall pay increased Real Estate Taxes
whether Real Estate Taxes are increased as a result of increases in the
assessment or valuation of the Property (whether based on a sale, change in
ownership, refinancing of the Property, or otherwise), increases in the tax
rates, reduction or elimination of any rollbacks or other deductions available
under current law, scheduled reductions of any tax abatement, as a result of
the elimination, invalidity, or withdrawal of any tax abatement, or for any
other cause whatsoever.  Notwithstanding
the foregoing, if any Real Estate Taxes shall be paid based on assessments or
bills by a governmental authority using a fiscal year other than a calendar
year, Landlord may elect to average the assessments or bills for the subject
calendar year, based on the number of months of such calendar year included in
each such assessment or bill.


4.7.1 Tax Increases after a Property Transfer. 
Notwithstanding anything to the contrary contained herein, in the event
the Property is sold or otherwise transferred during the initial term of this
Lease (the “Sale”), and the assessed value of the Property is increased as a
result of the Sale, only the following percentages of any increase in Real
Property Taxes above the Base Year Real Property Taxes resulting from such
increase in assessed valuation shall be included in Real Property Taxes for
purposes of determining Additional Rent:


	
  If the Sale
  Occurs

  	
   

  	
  Percentage of Increased Real

  Property Taxes Applicable For

  Remainder of the Lease Term

  	
   

  
	
  Prior to first
  anniversary of Commencement Date

  	
   

  	
  Zero

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after first
  anniversary of Commencement Date

  but prior to second anniversary of Commencement Date

  	
   

  	
  25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after
  second anniversary of Commencement Date

  but prior to third anniversary of Commencement Date

  	
   

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after
  third anniversary of Commencement Date

  but prior to fourth anniversary of Commencement Date

  	
   

  	
  75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after
  fourth anniversary of Commencement Date

  	
   

  	
  100

  	
  %

  



 



 25
 









In addition,
following any such Sale, the same restrictions specified in the above table
shall again apply with respect to any subsequent Sale in determining the
allowable amount of any increases in Real Property Taxes used to compute Tenant’s
Additional Rent under § 4.1 above, except that the time periods shall run
from the date of any such Sale instead of from the Commencement Date.


4.8    ALLOCATION WITHIN COMPLEX.  So long as the Property shall be part of the
Complex collectively owned or managed by Landlord or its affiliates or
collectively managed by Landlord’s managing agent, Landlord shall allocate Real
Estate Taxes, Utilities, and Operating Expenses within the Complex and between
the buildings and structures comprising the Complex and the parcels on which
they are located.  In the alternative,
Landlord shall have the right to determine Tenant’s Pro Rata Share of Real
Estate Taxes, Utilities, and Operating Expenses based upon the totals of each
of the same for all such buildings and structures, the land constituting
parcels on which the same are located, and all related facilities, including
common areas and easements, corridors, lobbies, sidewalks, elevators, loading
areas, parking facilities, driveways, and other appurtenances and public areas,
in which event Tenant’s Pro Rata Share shall be based on the ratio of the
rentable area of the Premises to the rentable area of all buildings in the
Complex.


4.9    LANDLORD’S
RECORDS.  Landlord shall maintain records
with respect to Real Estate Taxes, Utilities, and Operating Expenses and
determine the same.  Although this Lease
contemplates the computation of Real Estate Taxes, Utilities, and Operating
Expenses on a cash basis, Landlord shall make reasonable and appropriate
accrual adjustments (including adjustment of Base Year Real Estate Taxes,
Utilities, and Operating Expenses) to ensure that each Adjustment Period
includes substantially the same recurring items.  Landlord reserves the right to change to a
full accrual system of accounting so long as the same is consistently applied
and Tenant’s obligations are not materially adversely affected.  Tenant or its representative shall have the
right to examine such records, upon reasonable prior written notice specifying
such records Tenant desires to examine, during normal business hours at the
place or places where such records are normally kept, by sending such notice no
later than forty-five (45) days following the furnishing of the Statement.


4.9.1 Tenant’s Audit Right. 
Upon written notice to Landlord delivered within forty-five (45) days
following the furnishing of the Statement, Tenant shall have the right to have
Landlord’s records with respect to Real Estate Taxes, Utilities, and Operating
Expenses audited by an accountant of Tenant’s choice.  Tenant shall pay the cost of such audit,
unless such audit determines that Tenant was overbilled for Real Estate Taxes,
Utilities, or Operating Expenses by more than four percent (4%).  Pending resolution of any such exceptions in
the foregoing manner, Tenant shall continue paying Tenant’s Pro Rata Share of
Real Estate Taxes and Operating Expenses in the amounts determined by Landlord,
subject to adjustment after any such exceptions are so resolved.  Any specific matter that has formed the
subject of an audit hereunder shall not be subject to re-audit at any
subsequent time.



 26
 









4.10  OTHER
TAXES PAYABLE BY TENANT.   In addition to the Base Rent and any other
charges to be paid by Tenant hereunder, Tenant shall, as an element of Rent,
reimburse Landlord upon demand for any and all taxes payable by Landlord (other
than net income taxes) which are not otherwise reimbursable under this Lease, whether
or not now customary or within the contemplation of the parties, where such
taxes are upon, measured by, or reasonably attributable to (A) the cost or
value of Tenant’s equipment, furniture, fixtures, and other personal property
located at the Premises, or the cost or value of any improvements made in or to
the Premises by or for Tenant, regardless of whether title to such improvements
is held by Tenant or Landlord; (B) the gross or net Rent payable under
this Lease, including any rental or gross receipts tax levied by any taxing
authority with respect to the receipt of the Rent hereunder; (C) the
possession, leasing, operation, management, maintenance, alteration, repair,
use, or occupancy by Tenant of the Premises or any portion thereof; or (D) this
transaction or any document to which Tenant is a party creating or transferring
an interest or an estate in the Premises. 
Tenant shall pay any rent tax, sales tax, service tax, transfer tax,
value-added tax, or any other applicable tax on the Rent or services
herein or otherwise respecting this Lease.


5       SECURITY
DEPOSIT


5.1    DEPOSIT
FOR SECURITY.  Tenant shall deposit with Landlord the amount
of One Hundred Thousand Dollars ($100,000)
in cash or by irrevocable standby letter of credit in form reasonably satisfactory
to Landlord (the “Security Deposit”) upon Tenant’s execution and submission of
this Lease.  The Security Deposit shall
serve as security for the prompt, full, and faithful performance by Tenant of
the terms and provisions of this Lease. 
Landlord shall not be required to keep the Security Deposit separate
from Landlord’s general funds or pay interest on the Security Deposit.


5.1.1 Application of Deposit. 
In the event that Tenant is in Default hereunder and fails to cure
within any applicable time permitted under this Lease, or in the event that
Tenant owes any amounts to Landlord upon the expiration of this Lease, Landlord
may use or apply the whole or any part of the Security Deposit for the payment
of Tenant’s obligations hereunder.  The
use or application of the Security Deposit or any portion thereof shall not
prevent Landlord from exercising any other right or remedy provided hereunder
or under any Law and shall not be construed as liquidated damages.


5.1.2 Restoration of Full Deposit. 
In the event the Security Deposit is reduced by such use or application,
Tenant shall deposit with Landlord, within ten (10) business days after
written notice, an amount sufficient to restore the full amount of the Security
Deposit.


5.1.3 Disposition of Security Deposit. 
After the Expiration Date or any earlier termination of the Lease, any
remaining portion of the Security Deposit shall be returned to Tenant in
accordance with the provisions of § 1950.7 of the California Civil Code.


6       COMPLIANCE
WITH LAWS


6.1    TENANT’S
COMPLIANCE WITH LAWS.  Tenant shall use the Premises in compliance
with all applicable federal, state, county, and local governmental and
municipal laws, statutes, ordinances, rules, regulations, codes, decrees,
orders, and other such requirements, and decisions by courts in cases where
such decisions are considered binding precedents in the State of California
(the “State”), and decisions of federal courts applying the laws of the State
applicable to Tenant’s use of the Premises (collectively “Laws”).  Tenant shall, at its sole cost and expense,
promptly comply with each and all of such Laws, and also with the requirements
of any board of fire underwriters or other similar body now or hereafter
constituted to deal with the condition, use, or occupancy of the Premises,
except in the case of required



 27
 









structural
changes not triggered by Tenant’s change in use of the Premises or Tenant’s
alterations, additions, or improvements therein.  Tenant shall comply with all applicable Laws
regarding the physical condition of the Premises, but only to the extent that
the applicable Laws pertain to the particular manner in which Tenant uses the
Premises or the particular use to which Tenant puts the Premises, if different
from that permitted under Article 2 of this Lease.  Tenant shall also comply with all applicable
Laws which do not relate to the physical condition of the Premises and with
which only the occupant can comply, such as laws governing maximum occupancy,
workplace smoking, VDT regulations, and illegal business operations, such as
gambling.  The judgement of any court of
competent jurisdiction or the admission of Tenant in any judicial action,
regardless of whether Landlord is a party thereto, that Tenant has violated any
of such Laws shall be conclusive of that fact as between Landlord and Tenant.


6.1.1 Code Costs.  Notwithstanding
anything to the contrary in this Article 6, if the requirement of any
public authority obligates either Landlord or Tenant to expend money in order
to bring the Premises and/or any area of the Property into compliance with Laws
as a result of (a) Tenant’s particular use or alteration of the Premises;
(b) Tenant’s change in the use of the Premises; (c) the manner of
conduct of Tenant’s business or operation of its installations, equipment, or
other property therein; (d) any cause or condition created by or at the
instance of Tenant, other than by Landlord’s performance of any work for or on
behalf of Tenant; or (e) breach of any of Tenant’s obligations hereunder,
then Tenant shall bear all costs (“Code Costs”) of bringing the Premises and/or
Property into compliance with Laws, whether such Code Costs are related to
structural or nonstructural elements of the Premises or Property.


6.2    LANDLORD’S
COMPLIANCE WITH LAWS.   Landlord represents that on the Commencement
Date Landlord has no actual knowledge of any violation of any applicable Laws
respecting the Premises.  During the Term
Landlord shall comply with all applicable Laws regarding the Premises,
Building, Property, or Complex, except to the extent Tenant must comply under
§ 6.1 above.


7       HAZARDOUS
MATERIALS


7.1    REGULATION
OF HAZARDOUS MATERIALS.  Tenant shall not transport, use, store,
maintain, generate, manufacture, handle, dispose, release, or discharge any “Hazardous
Material” (as defined below) upon or about the Property, nor permit Tenant’s
employees, agents, contractors, and other occupants of the Premises to engage
in such activities upon or about the Property. 
However, the foregoing provisions shall not prohibit the transportation
to and from, and use, storage, maintenance, and handling within, the Premises
of substances customarily used in offices, provided all of the following
conditions are met:


(a)                       such
substances shall be used and maintained only in such quantities as are
reasonably necessary for such permitted use of the Premises, strictly in
accordance with applicable Laws and the manufacturers’ instructions therefor;


(b)                      such
substances shall not be disposed of, released, or discharged on the Property
and shall be transported to and from the Premises in compliance with all
applicable Laws, and as Landlord shall reasonably require;


(c)                       if any
applicable Laws or Landlord’s trash removal contractor requires that any such
substances be disposed of separately from ordinary trash, Tenant shall make
arrangements at Tenant’s expense for such disposal directly with a qualified
and licensed disposal company at a lawful disposal site (subject to scheduling
and approval by Landlord), and shall ensure that disposal occurs frequently
enough to prevent unnecessary storage of such substances in the Premises; and



 28
 









(d)                      any
remaining such substances shall be completely, properly, and lawfully removed
from the Property upon expiration or earlier termination of this Lease.


7.1.1 DEFINITION OF HAZARDOUS MATERIAL. 
The term “Hazardous Material” for purposes hereof shall mean any
chemical, substance, material, or waste or component thereof which is now or
hereafter listed, defined, or regulated as a hazardous or toxic chemical,
substance, material, or waste or component thereof by any federal, state, or
local governing or regulatory body having jurisdiction, or which would trigger
any employee or community “right-to-know” requirements adopted by any such
body, or for which any such body has adopted any requirements for the
preparation or distribution of an MSDS.


7.2    NOTIFICATIONS. 
Tenant and Landlord each shall promptly notify the other of  (A) any enforcement, cleanup, or other
regulatory action taken or threatened by any governmental or regulatory
authority with respect to the presence of any Hazardous Material on the
Premises or in the Complex or the migration thereof from or to other property;
(B) any demands or claims made or threatened by any party against Tenant
or Landlord, as the case may be, or the Premises or Complex relating to any
loss or injury resulting from any Hazardous Material on or from the Premises or
Complex; and (C) any matters where Tenant or Landlord is required by law
to give a notice to any governmental or regulatory authority respecting any
Hazardous Material on the Premises or in the Complex, as the case may be.  Landlord shall have the right (but not the
obligation) to join and participate, as a party, in any legal proceedings or
actions affecting the Premises initiated in connection with any environmental,
health, or safety law.


7.3    LIST OF
HAZARDOUS MATERIALS.  At such times as Landlord may reasonably
request, Tenant shall provide Landlord with a written list identifying any
Hazardous Material then used, stored, or maintained upon the Premises, the use
and approximate quantity of each such material, a copy of any material safety
data sheet (“MSDS”) issued by the manufacturer thereof, written information
concerning the removal, transportation, and disposal of the same, and such
other information as Landlord may reasonably require or as may be required by
law.


7.4    CLEANUP.  If any Hazardous Material is released,
discharged or disposed of by Tenant or any other occupant of the Premises, or
their employees, agents, or contractors, on or about the Property in violation
of the foregoing provisions, Tenant shall immediately, properly, and in
compliance with applicable Laws clean up and remove the Hazardous Material from
the Property and any other affected property and clean or replace any affected
personal property (whether or not owned by Landlord), at Tenant’s expense.  Such clean up and removal work shall be
subject to Landlord’s prior written approval (except in emergencies), and shall
include any testing, investigation, and the preparation and implementation of
any remedial action plan required by any governmental body having jurisdiction
or reasonably required by Landlord.  If
Tenant shall fail to comply with the provisions of this § 7.2 within such
time as may be required by Laws or in order to minimize any hazard to persons
or property, Landlord may (but shall not be obligated to) arrange for such
compliance directly or as Tenant’s agent through contractors or other parties
selected by Landlord, at Tenant’s expense (without limiting Landlord’s other
remedies under this Lease or applicable Laws).


7.5    CASUALTY
DAMAGE.  If any Hazardous Material is released,
discharged, or disposed of on or about the Property and such release,
discharge, or disposal is not caused by Tenant or other occupants of the
Premises, or their employees, agents, or contractors, such release, discharge,
or disposal shall be deemed casualty damage under Article 15 to the extent
that the Premises or common areas serving the Premises are affected thereby; in
such case, Landlord and Tenant shall have the obligations and rights respecting
such casualty damage provided under Article 15 of this Lease.


 



 29















 


7.6    REFRIGERANT.
 Except as specified in Tenant’s Plans, Tenant
shall not install any refrigerant-containing systems or equipment, including
refrigerators, freezers, supplemental HVAC systems or self-contained air
conditioners, without Landlord’s prior approval, which Landlord may withhold in
its reasonable discretion.  Unless Tenant
shall have obtained Landlord’s prior written approval to install existing
equipment after an inspection, at Tenant’s sole cost and expense, by Landlord’s
engineer for defects and proper proposed installation in the Premises, all
refrigerant-containing equipment and/or systems which Tenant installs in the
Premises shall be new.  Whether Tenant’s
refrigerant-containing equipment or systems are defective and are properly
installed shall be determined at the sole discretion of Landlord’s
engineer.  If Tenant wishes to install
any refrigerant-containing equipment or systems, Tenant shall obtain and
provide Landlord with copies of all required permits associated with such
equipment or systems.


7.6.1 Removal of Refrigerant. 
Notwithstanding anything to the contrary in this Lease and the Work
pursuant to Exhibit F, Tenant shall remove all refrigerant and
refrigerant-containing equipment and/or systems installed in the Premises by or
on behalf of Tenant prior to the Expiration Date of this Lease.  Prior to the removal of any such refrigerant
or refrigerant-containing equipment and/or systems, Tenant shall submit to
Landlord for Landlord’s approval, the names of Tenant’s contractors and all
plans and specifications for such removal. 
Tenant and Tenant’s contractors shall comply with all legal
requirements, industry practices and reasonable rules established by Landlord
in performing such removal work.  Tenant
shall repair any damage to the Property or the Systems and Equipment associated
with such removal, and Tenant shall be responsible for the costs associated
with restoring the Property to the condition which existed immediately prior to
any modification undertaken by Landlord in order to accommodate Tenant’s
refrigerant-containing equipment or systems.


8       SERVICES AND
UTILITIES


8.1    LANDLORD’S
SERVICES.
Landlord agrees to provide, on the terms and conditions specified herein, the
following services and utilities for Tenant’s use and consumption in the
Premises, the cost of which shall be included in Operating Expenses and/or
Utilities and reimbursed to Landlord in accordance with § 4.1 above:


(a)             Electricity.  Electricity for standard office lighting
fixtures and for equipment and accessories customary for offices, provided
(i) the connected electrical load of all the same does not exceed an
average of seven point eight (7.8) watts per usable square foot of the
Premises (or such lesser amount as may be available, based on the safe and
lawful capacity of the existing electrical circuit(s) and facilities serving
the Premises); (ii) the electricity will be at nominal 120 volts, single
phase (or 110 volts, depending on available service in the Building); and
(iii) the safe and lawful capacity of the existing electrical circuit(s)
serving the Premises is not exceeded. 
Landlord will permit its electric feeders, risers, and wiring servicing
the Premises to be used by Tenant to the extent available and safely capable of
being used for such purpose.


(b)             Telecommunications
Interface.  Interface with the
telephone network at the demarcation point or minimum point of entry (“MPOE”)
supplied by the local regulated public utility by means of Landlord’s INC
consisting of cable pairs with a capacity consistent with the engineering
standards to which the Building was designed.


(c)             HVAC.  Heat, ventilation, and air-conditioning (“HVAC”)
to provide a temperature required, under the specifications stated in the Plans
and in accordance with applicable Laws, for the comfortable occupancy of the
Premises during business hours (as defined in 



 30
 









§ 8.1.1 below). 
Landlord shall not be responsible for inadequate air-conditioning
or ventilation to the extent the same occurs because Tenant uses any item of
equipment consuming more than 500 watts at rated capacity without providing
adequate air-conditioning and ventilation therefor.  Notwithstanding anything to the contrary
herein, Landlord agrees to engineer and calibrate, at its sole cost and
expense, the 4th Floor portion of the Premises to address the
special conditions associated with the Building’s western exposure, and Tenant’s
architect or consultants shall be involved in the design and engineering of
Tenant’s HVAC systems.  Landlord agrees
that CalAir shall be an approved vendor for Tenant’s Supplemental HVAC System
and one of the approved bidders for the HVAC work to be completed as part of
Landlord’s Work under the Work Letter Agreement and as specified in
§ 3.2(ii) above.   Notwithstanding
anything to the contrary herein, Tenant shall maintain the Supplemental HVAC
System to be installed in the 5th Floor of the Premises as specified in
§ 3.2(ii) above at Tenant’s cost and expense.  The cost to maintain the Supplemental HVAC
System shall not be included within Operating Expenses.  Tenant’s Supplemental HVAC System shall be
separately metered and separately controlled by Tenant, and the cost for Tenant’s
use of the Supplemental HVAC System shall be allocated as follows: (a) the
cost of the Data Rooms HVAC during normal business hours shall be included in
the services to be provided by Landlord hereunder, but Tenant shall be billed
for after-hours use of its Data Rooms HVAC as provided in §§ 8.6.1 and
8.6.2 below; and (b) the cost of the Southeast Wing HVAC shall not be included
in the services to be provided by Landlord hereunder, and Tenant shall be
billed for all use of its Southeast Wing HVAC at all times (including normal
business hours) as provided in §§ 8.6.1 and 8.6.2 below.


(d)             Water.  Water for drinking, lavatory and toilet
purposes at those points of supply provided for nonexclusive general use of
other tenants at the Property.


(e)             Janitorial Services.  Customary office cleaning and trash removal
service Monday through Friday or Sunday through Thursday in and about the
Premises.


(f)               Elevator Services.  Operatorless passenger elevator service and
freight elevator service (if the Property has such equipment serving the
Premises, and subject to scheduling by Landlord) in common with Landlord and
other tenants and their contractors, agents, and visitors.


8.1.1 Business Hours.  The term business hours in this Lease shall mean the hours from 8:00
a.m. until 6:00 p.m. on Monday through Friday and from 9:00 a.m. until
1:00 p.m. on Saturday throughout the year, except for New Year’s Day,
Presidents’ Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
Christmas Day, and any other federally-observed holiday which may be
created during the Term (“Holidays”).


8.1.2 Separate Janitorial Services. 
Notwithstanding anything to the contrary herein, Tenant shall have the
right, upon written notice to Landlord, to provide its own janitorial services
to the Premises under a separate direct contract with a janitorial services
provider subject to Landlord’s reasonable approval, which shall not be
unreasonably withheld, conditioned, or delayed. 
If Tenant elects to utilize any such separate janitorial services,
Landlord shall give Tenant a credit against the Additional Rent due hereunder
in the amount of any saving realized by Landlord in the cost of janitorial
services provided by Landlord to the Building by virtue of Tenant’s provision
of such separate services; and any such separate janitorial services shall be
excluded from Tenant’s Base 



 31
 









Operating Expenses and each Adjustment Period during which
Tenant separately contracts for its own janitorial services.


8.2    ADDITIONAL
ELECTRICAL CAPACITY.  Subject to Exhibit F, any additional
risers, feeders, or other equipment or service proper or necessary to supply
Tenant’s electrical requirements will be installed by Landlord, upon written
request of Tenant, at the sole cost and expense of Tenant, if, in Landlord’s
sole judgement, the same are necessary and will not cause permanent damage or
injury to the Property, the Premises, or the Systems and Equipment or cause or
create a dangerous or hazardous condition or entail excessive or unreasonable
alterations, repairs, or expense or interfere with or disturb other tenants or
occupants.  Rigid conduit only will be
allowed.


8.2.1 Approved Electrical Load. 
Tenant agrees not to connect any additional electrical equipment of any
type to the building electric distribution system, beyond that on Tenant’s
approved plans for initial occupancy, other than lamps, typewriters, PCs, copy
machines, and other office machines which consume comparable amounts of
electricity or other electrical equipment which in the aggregate consumes the
same amount of electricity as those approved for initial occupancy and will not
result in any overload of electrical circuits, lines, or wiring, without
Landlord’s prior written consent.  In no
event shall Tenant use or install any fixtures, equipment, or machines the use
of which in conjunction with other fixtures, equipment, and machines in the
Premises would result in an overload or the electrical circuits servicing the
Premises.  Tenant covenants and agrees
that at all times its use of electric current shall never exceed the capacity
of the feeders to the Building or the risers or wiring installation existing at
the time in question.


8.3    ADDITIONAL
TELECOMMUNICATIONS CAPACITY.  If Tenant desires any telecommunications
capacity in excess of that available as of the Commencement Date in the form of
the INC between the MPOE and the telephone closet nearest the Premises and provided
pursuant to § 8.1 above, Tenant shall bear the cost of installing
additional risers or INC or replacing existing INC serving the Premises
pursuant to Article 9 below.


8.4    REPLACEMENT
BULBS AND TUBES.  Tenant shall furnish, install, and replace, as
required, all non-Building-standard lighting tubes, lamps, bulbs,
and ballasts required in the Premises, at Tenant’s sole cost and expense.  All lighting tubes, lamps, bulbs, and
ballasts so installed become Landlord’s property upon the expiration or sooner termination
of this Lease.  Landlord shall provide
and install all Building-standard tubes, lamps, bulbs, and ballasts.


8.5    TWENTY-FOUR
HOURS ACCESS.  Subject to the provisions of § 8.8,
Tenant, its employees, agents, and invitees shall have access to the Premises
twenty-four (24) hours a day, seven (7) days a week.  Landlord may restrict access outside of
business hours by requiring persons to show a badge or identification card
issued by Landlord.  Landlord shall not
be liable for denying entry to any person unable to show the proper
identification.  Landlord may without
liability temporarily close the Building if required because of a
life-threatening or Building-threatening situation; provided, however, that
loss of power shall not be a Building-threatening or life-threatening
situation.  Landlord shall also provide
Tenant with one (1) access card that will allow Tenant to gain entry through
the front door of the Building, should the Building ever be locked for whatever
reason.


8.6    EXTRA
SERVICES.  Landlord shall, subject to all applicable
Laws, seek to provide such utilities or services in excess of those Landlord is
required to provide under § 8.1 above as Tenant may from time to time
request, if the same are reasonable and feasible for Landlord to provide and do
not involve modifications or additions to the Property or the Systems and
Equipment and if Landlord shall receive 



 32
 









Tenant’s
request within a reasonable period prior to the time such extra utilities or
services are required.  Landlord may
comply with written or oral requests by any officer or employee of Tenant,
unless Tenant shall notify Landlord of, or Landlord shall request, the names of
authorized individuals (up to three (3) for each floor on which the
Premises are located) and procedures for written requests.  Tenant shall, for such extra utilities or
services, pay such reasonable charges as Landlord shall from time to time
establish.


8.6.1 Extraordinary Service Usage. 
If Tenant shall utilize Building services for the Premises at any time
other than during business hours, Landlord shall furnish such extraordinary
services (excluding air-conditioning, except as provided below) at Landlord’s
then-current prevailing rate for such services.  In addition to the foregoing services, if
Tenant shall require air-conditioning service for the Premises at any time
other than during business hours, Landlord shall, upon reasonable advance
notice from Tenant, furnish such after-hours air-conditioning service at
Landlord’s then-current prevailing rate for such services as a separate
charge; provided, however, in the event Tenant requests such after-hours air-conditioning
service at a time not immediately preceding or immediately succeeding times
when “regular hours” service is being furnished hereunder, then, except for
Tenant’s use of the Supplemental HVAC System, Tenant must request not less than
five (5) hours of after-hours air-conditioning service.  Notwithstanding anything contained herein to
the contrary, Landlord’s prevailing rate for the extraordinary services
described herein shall be subject to increase from time to time as Landlord may
reasonably determine.


8.6.2 Payment for Excess Usage. 
All charges for extra utilities or services or those requested outside
business hours shall be due at the same time as the installment of Base Rent
with which the same are billed, or if billed separately, shall be due within
twenty (20) days after such billing.


8.6.3 Changes in HVAC System. 
Use of the Premises, or any part thereof, in a manner exceeding the
design conditions (including occupancy and connected electrical load) for the
heating or cooling units in the Premises, or rearrangement of partitioning
which interferes with normal operation of the HVAC system in the Premises, may
require changes in the HVAC system servicing the Premises.  Such changes shall be made by Tenant, at its
expense, as Tenant’s Changes pursuant to Article 9.  Except for thermostats fitted with externally
accessible adjustments, Tenant shall not change or adjust any closed or sealed
thermostat or other element of the HVAC system without Landlord’s express prior
written consent.


8.6.4 Separate Metering. 
Landlord may install and operate meters or any other reasonable system
for monitoring or estimating any services or utilities used by Tenant in excess
of those required to be provided by Landlord under this Article 8
(including a system for Landlord’s engineer reasonably to estimate any such
excess usage).  If such system indicates
such excess services or utilities, Tenant shall pay Landlord’s reasonable
charges for installing and operating such system and any supplementary air-conditioning,
ventilation, heat, electrical, or other systems or equipment (or adjustments or
modifications to the existing Systems and Equipment), and Landlord’s reasonable
charges for such amount of excess services or utilities used by Tenant.  If Tenant’s use of extra utilities or
services causes Landlord’s regulated baseline quantities of water, gas,
electricity, or any other utility or service to be exceeded, Tenant shall pay
for such excess quantities of such utilities or services at the rate which is
imposed upon Landlord for quantities in excess of the regulated baseline.  In addition, Tenant shall pay prior to
delinquency any fine or penalty which may be imposed upon or assessed against
Landlord or the Building or the Property by virtue of Tenant’s excess usage of
any services or utilities, including water, gas, and electricity.


8.7    INTERRUPTION
OF SERVICES.  Landlord does not warrant that any services or
utilities provided hereunder for Tenant’s use in the Premises will be free from
shortages, failures, variations, or 



 33
 









interruptions
caused by repairs, maintenance, replacements, improvements, alterations,
changes of service, strikes, lockouts, labor controversies, accidents,
inability to obtain services, fuel, steam, water or supplies, governmental
requirements or requests, or other causes beyond Landlord’s reasonable control,
including interference with light or other incorporeal hereditaments and any
interruption in services or any failure to provide services to Landlord by a
designated utility company at the demarcation point at which Landlord accepts
responsibility for such service or at any point prior thereto, which
interference impedes Landlord in furnishing plumbing, HVAC, electrical,
sanitary, life safety, elevator, telecommunications, or other Building
services, utilities, or the Systems and Equipment.  None of the same shall be deemed an eviction
or disturbance of Tenant’s use and possession of the Premises or any part
thereof, shall render Landlord liable to Tenant for abatement of Rent, or shall
relieve Tenant from performance of Tenant’s obligations under this Lease.  Landlord in no event shall be liable for
damages by reason of loss of profits, business interruption, or other
compensatory or consequential damages.


8.8    SAFETY
AND SECURITY DEVICES, SERVICES, AND PROGRAMS.  The parties
acknowledge that safety and security devices, services, and programs provided
by Landlord, if any, while intended to deter crime and ensure safety, may not
in given instances prevent theft or other criminal acts or ensure safety of
persons or property, and such devices, services and programs shall not under
any circumstances be deemed to be a guaranty, representation, or warranty by
Landlord to Tenant or any third parties as to the safety or protection of
person or property.  The risk that any
safety or security device, service, or program may not be effective, or may
malfunction, or be circumvented by a criminal, is assumed by Tenant with
respect to Tenant’s property and interests; and Tenant shall obtain insurance
coverage to the extent Tenant desires protection against such criminal acts and
other losses, as further described in Article 14.  Tenant agrees to coöperate in any reasonable
safety or security program developed by Landlord or required by Law.


9       TENANT’S
CHANGES


9.1    TENANT’S
REQUESTED CHANGES.  Tenant may, subject to § 9.2 below, from
time to time during the Term of this Lease, at its expense, make such
alterations, additions, installations, substitutions, improvements, and
decorations (collectively “Tenant’s Changes”) in and to the Premises as Tenant
may reasonably consider necessary for the conduct of its business in the
Premises (except for changes which would require modification of the Property
outside the Premises), on the following conditions:


(a)               the outside
appearance or the strength of the Building or of any of its structural parts
shall not be affected, and Tenant shall cause no penetration of the roof or the
exterior fabric of the Building;


(b)               no part of the
Building outside of the Premises shall be physically affected;


(c)               the proper
functioning of any of the Systems and Equipment shall not be adversely
affected, and the usage of such systems by Tenant shall not be increased;


(d)               no such change
shall require the addition of new INC riser cable or expand the number of
telephone pairs dedicated to the Premises by the Buildings’ telecommunications
engineering design;


(e)               in performing
the work involved in making such changes, Tenant shall be bound by and observe
all of the conditions and covenants contained in the following sections of this
Article 9; and



 34
 









(f)                 with respect
to Tenant’s Changes, Tenant shall make all arrangements for use of the freight
elevators servicing the Premises.


9.2    PLANS AND
APPROVAL.  Before proceeding with any Tenant’s Changes,
Tenant shall advise Landlord thereof. 
All work to be performed in the Building shall be performed by the
Contractor on the basis of plans and drawings prepared by the Landlord’s
Architect (as defined in and in the manner stated in the Work Letter
Agreement).  If Landlord grants
permission for Tenant to utilize another architect for its Changes, before
proceeding with any Tenant’s Changes, Tenant shall submit to Landlord plans and
specifications and all changes and revisions thereto for the work to be done
for Landlord’s reasonable approval; and Tenant shall, upon demand of Landlord,
pay to Landlord the reasonable costs incurred and paid to third parties by
Landlord for the review of such plans and specifications and all changes and
revisions thereto by its architect, engineer, and other consultants.  Landlord may as a condition of its approval
require Tenant to make reasonable revisions in and to the plans and specifications.  Landlord may require Tenant to post a bond or
other security reasonably satisfactory to Landlord to insure the completion of
such change.  If Landlord consents to any
Tenant’s Changes or supervises the work of constructing any Tenant’s Changes,
such consent or supervision shall not be deemed a warranty as to the adequacy
of the design, workmanship, or quality of materials, and Landlord hereby
expressly disclaims any responsibility or liability for the same.  Landlord shall under no circumstances have
any obligation to repair, maintain, or replace any portion of such work.  Notwithstanding anything to the contrary
herein,  Landlord shall not unreasonably
withhold its consent to any request of Tenant at its own expense and subject to
§ 8.6.3 above at any time during the Term to install additional
supplemental HVAC in the Premises to the same specifications as applied to the
installation of Tenant’s Supplemental HVAC under § 3.2(ii) above.


9.2.1 As-Built Plans. 
Within thirty (30) days after completion of Tenant’s Changes
requiring the submission of plans to Landlord, Tenant shall furnish to Landlord
a complete set of “as-built” plans and specifications.


9.3    PERMITS
AND PERFORMANCE.  Tenant, at its expense, shall obtain all
necessary governmental permits and certificates for the commencement and
prosecution of Tenant’s Changes and for final approval thereof upon completion
and shall furnish copies thereof to Landlord. 
Tenant shall cause Tenant’s Changes to be performed in compliance
therewith and with all applicable Laws and requirements of public authorities
and with all applicable requirements of insurance bodies, and in good and
workmanlike manner, using new materials and equipment at least equal in quality
and class to the original installations in the Premises.  Tenant’s Changes shall be performed in such
manner as not unreasonably to interfere with, delay, or impose any additional
expense upon Landlord in the renovation, maintenance, or operation of the
Property or any portion thereof, unless Tenant shall indemnify Landlord
therefor to the latter’s reasonable satisfaction.


9.4    CONTRACTORS.
 All electrical, mechanical, and plumbing work
in connection with Tenant’s Changes shall be performed by Contractors at Tenant’s
expense.  If Tenant shall request any
electrical, mechanical, or plumbing work in connection with Tenant’s Changes,
Landlord shall request the Contractors to furnish Tenant with prices to perform
the same prior to prosecuting same.  In
addition to the foregoing, and notwithstanding anything to the contrary in this
Article 9, Landlord may, at Landlord’s option, require that the work of
constructing any Tenant’s Changes be performed by the Contractor.


9.5    SUPERVISION
AND FEE.  Landlord may require that all work of
constructing Tenant’s Changes be performed under Landlord’s supervision.  Tenant shall pay to Landlord upon completion
of any such work by the Contractor an administrative fee of five
percent (5%) of the cost of the work, to cover 



 35
 









Landlord’s
overhead in reviewing Tenant’s plans and specifications and performing any
supervision of the work of Tenant’s Changes.


9.6    RESTORATION
OF FIXTURES.  If any of Tenant’s Changes shall involve the
removal of any fixtures, equipment, or other property in the Premises which are
not Tenant’s Property (as defined in Article 10), such fixtures,
equipment, or other property shall be promptly replaced, at Tenant’s expense,
with new fixtures, equipment, or other property (as the case may be) of like
utility and at least equal value, unless Landlord shall otherwise expressly
consent in writing; and Tenant shall, upon Landlord’s request made at the time
of Tenant’s submittal of Tenant’s plans for Tenant’s Changes, store and
preserve, at Tenant’s sole cost and expense, any such fixtures, equipment or
property so removed and shall return same to Landlord upon the expiration or
sooner termination of this Lease.


9.7    MECHANIC’S
LIENS.  Tenant shall keep the Property and Premises
free from any mechanic’s, materialman’s, or similar liens or other such
encumbrances, including the liens of any security interest in, conditional
sales of, or chattel mortgages upon, any materials, fixtures, or articles so
installed in and constituting part of the Premises, in connection with any
Tenant’s Changes on or respecting the Premises not performed by or at the
request of Landlord and shall indemnify, defend, protect, and hold Landlord
harmless from and against any claims, liabilities, judgements, or costs
(including reasonable attorneys’ fees) arising out of the same or in connection
with any such lien, security interest, conditional sale or chattel mortgage or
any action or proceeding brought thereon. 
Tenant shall give Landlord written notice at least twenty (20) days
prior to the commencement of work on any Tenant’s Change in the Premises (or
such additional time as may be necessary under applicable Laws), in order to
afford Landlord the opportunity of posting and recording appropriate notices of
nonresponsibility.  Tenant shall remove
any such lien or encumbrance by bond or otherwise within thirty (30) days
after written notice by Landlord or at the conclusion of any contested matter
not resolved in Tenant’s favor; and if Tenant shall fail to do so, Landlord may
pay the amount necessary to remove such lien or encumbrance, without being
responsible for investigating the validity thereof.  The amount so paid shall be deemed Additional
Rent under this Lease payable upon demand, without limitation as to other
remedies available to Landlord under this Lease.  Nothing contained in this Lease shall
authorize Tenant to do any act which shall subject Landlord’s title to the
Property or Premises to any liens or encumbrances, whether claimed by operation
of law or express or implied contract. 
Any claim to a lien or encumbrance upon the Property or Premises arising
in connection with any Work on or respecting the Premises not performed by or
at the request of Landlord shall be null and void, or, at Landlord’s option,
shall attach only against Tenant’s interest in the Premises and shall in all
respects be subordinate to Landlord’s title to the Property and Premises.


9.8    NOTICES
OF VIOLATION.  Tenant, at its expense, and with diligence and
dispatch, shall procure the cancellation or discharge of all notices of
violation arising from or otherwise connected with Tenant’s Changes which shall
be issued by any governmental, public, or quasi-public authority having or
asserting jurisdiction.  However, nothing
herein contained shall prevent Tenant from contesting, in good faith and at its
own expense, any such notice of violation, provided that Landlord’s rights
hereunder are in no way compromised or diminished thereby.


9.9    INDUSTRIAL
RELATIONS.  Tenant agrees that the exercise of its rights
pursuant to the provisions of this Article 9 or any other provision of
this Lease shall not be done in a manner which would create any work stoppage,
picketing, labor disruption, or dispute or violate Landlord’s union contracts
affecting the Property and/or Complex or unreasonably interfere with the
business of Landlord or any Tenant or occupant of the Building.  Tenant shall, immediately upon notice from
Landlord, cease any activity, whether or not permitted by this Lease, giving
rise to such condition.  If Tenant fails
to do so, Landlord, 



 36
 









in addition to
any rights available to it under this Lease and pursuant to Law, shall have the
right to an ex parte injunction without notice.


10     TENANT’S
PROPERTY


10.1  FIXTURES
AND IMPROVEMENTS.  All fixtures, equipment, improvements,
alterations, and appurtenances attached to or built into the Premises at the
commencement of or during the Term of this Lease, including cabinets, sinks,
faucets, appliances, hot water heaters, etc. (collectively “Improvements”),
whether or not by or at the expense of Tenant, shall be and remain a part of
the Premises, shall be deemed the property of Landlord, and shall not be
removed by Tenant, except as expressly provided in Article 11 below.


10.2  TENANT’S
PROPERTY AND TRADE FIXTURES.  All movable partitions, trade fixtures, office
machinery and equipment, communications equipment, and computer equipment
(whether or not attached to or built into the Premises) which are installed in
the Premises by or for the account of Tenant, without expense to Landlord and
which can be removed without structural damage to the Property, and all
furniture, furnishings, and other articles of movable personal property owned
by Tenant and located in the Premises (collectively “Tenant’s Property”) shall
be and shall remain the property of Tenant and may be removed by it at any time
during the Term of this Lease; provided that if any of Tenant’s Property is
removed, Tenant or any party or person entitled to remove same shall repair or
pay the cost of repairing any damage to the Premises or to the Property
resulting from such removal.  Any
equipment or other property for which Landlord shall have granted any allowance
or credit to Tenant or which has replaced such items originally provided by
Landlord at Landlord’s expense shall not be deemed to have been installed by or
for the account of Tenant, without expense to Landlord, and shall not be
considered Tenant’s Property.


11     CONDITION
UPON SURRENDER


11.1  CONDITION
AND RESTORATION.  At or before the Expiration Date or the date
of any earlier termination of this Lease, or as promptly as practicable after
such an earlier termination date, Tenant, at its expense, shall do all of the
following:


(a)                       surrender
possession of the Premises in the condition required under § 12.1 below,
ordinary wear and tear  and damage from
casualty or condemnation excepted;


(b)                       surrender
all keys, any key cards, and any parking stickers or cards to Landlord and give
Landlord in writing the combinations of any locks or vaults then remaining in
the Premises;


(c)                       remove
from the Premises all of Tenant’s Property, except such items thereof as Tenant
shall have expressly agreed in writing with Landlord were to remain and to
become the property of Landlord; and


(d)                       fully
repair any damage to the Premises or the Property resulting from such removal.


Tenant’s obligations
herein shall survive the expiration or earlier termination of the Lease, unless
expressly provided to the contrary herein. 
All Improvements and other items in or upon the Premises (except Tenant’s
Property), whether installed by Tenant or Landlord, shall be Landlord’s
property and shall remain upon the Premises, all without compensation, setoff,
allowance, or credit to Tenant; 



 37
 









provided, however,
that if, when consent for the installation of the Improvements is requested,
Landlord so directs by notice, Tenant shall promptly remove such of the
Improvements in the Premises as are designated in such notice and shall restore
the Premises to their condition prior to the installation of such
Improvements.  Notwithstanding the
foregoing, Landlord shall not require removal of customary office improvements
and server rooms installed pursuant to the Work Letter Agreement, if any
(except as expressly provided to the contrary therein), or installed by Tenant
with Landlord’s written approval (except as expressly required by Landlord in
connection with granting such approval).


11.2  TENANT’S
FAILURE TO REMOVE OR RESTORE.  If Tenant shall fail
to perform any repairs or restoration or fail to remove any items from the
Premises as required under this Article 11, Landlord may do so, and Tenant
shall pay Landlord the cost thereof upon demand.  All property removed from the Premises by
Landlord pursuant to any provisions of this Lease or any Law may be handled or
stored by Landlord at Tenant’s expense, and Landlord shall in no event be
responsible for the value, preservation, or safekeeping thereof.  All property not removed from the Premises or
retaken from storage by Tenant within thirty (30) days after expiration or
earlier termination of this Lease or Tenant’s right to possession shall at
Landlord’s option be conclusively deemed to have been conveyed by Tenant to
Landlord as if by bill of sale without payment by Landlord.  Unless prohibited by applicable Laws,
Landlord shall have a lien against such property for the costs incurred in
removing and storing the same.


12     REPAIRS AND
MAINTENANCE


12.1  TENANT’S
CARE OF PREMISES.  Except for customary cleaning and trash
removal provided by Landlord under § 8.1 above and damage covered under
Article 15, Tenant shall keep the interior of the Premises in good and
sanitary condition, working order, and repair, including carpet, wall-covering,
doors pertinent to and within the Premises, plumbing, all telecommunications
cables and wiring within Tenant’s Premises (“IW”) from the interface of such IW
with the INC, and other fixtures, equipment, alterations, and improvements,
whether installed by Landlord or Tenant. 
In addition, Tenant, at its expense, shall promptly make all repairs,
ordinary or extraordinary, interior or exterior, structural or otherwise, in
and about the Premises and the Property, as shall be required by reason of
(a) the performance or existence of Tenant’s Work or Tenant’s Changes;
(b) the installation, use, or operation of Tenant’s Property in the
Premises; (c) the moving of Tenant’s Property in or out of the Building;
or (d) the misuse or neglect of Tenant or any of its employees, agents, or
contractors.  Tenant, at its expense,
shall replace all scratched, damaged, or broken doors or other glass in or
about the Premises and shall be responsible for all repairs, maintenance, and
replacement of wall and floor coverings in the Premises and for the repair and
maintenance of all non-Building-standard lighting fixtures therein.  All repairs except for emergency repairs made
by Tenant as provided herein shall be performed by Contractors.  If Tenant does not promptly make such
arrangements, Landlord may, but need not, make such repairs, maintenance, and
replacements, and the costs paid or incurred by Landlord therefor shall be
reimbursed by Tenant promptly after request by Landlord.  Notwithstanding anything to the contrary
herein,  Tenant shall be responsible for
cleaning the bottom surface of the interior roof skylight in the Premises and
the top surface of the associated lantern at least once every two (2) calendars
year during the Term.


12.2  LANDLORD’S
CARE OF COMPLEX.  Landlord, at its expense, shall keep and
maintain the common areas of the Complex and the Systems and Equipment serving
the Premises in good working order, condition, and repair and shall make all
repairs, structural and otherwise, interior and exterior, as and when needed in
or about the Complex and the Premises, except for those repairs for which
Tenant is responsible pursuant to § 12.1 above or any other provisions of
this Lease.  Landlord shall maintain and
repair all INC in the Building, and Tenant shall have no right to make repairs
to INC.  The cost of Landlord’s
maintenance and repairs pursuant to this Article 12 shall be reimbursed to
Landlord to the 



 38
 









extent provided
in Article 4 above.  Landlord, at
its sole cost and expense, which expense shall not be passed through to Tenant
as an Operating Expense, shall repair all exterior walls of the Building to
prevent wind and water infiltration no later than three (3) months after the
Commencement Date.  Landlord shall
provide notice to Tenant when any work is being done to the electrical system
of the Building that might affect the Premises.


12.3  WAIVER BY
TENANT.  Tenant waives the benefits of any statute now
or hereafter in effect which would otherwise afford Tenant the right to make
repairs at Landlord’s expense or to terminate this Lease because of Landlord’s
failure to keep the Premises in good order, condition, and repair.


13     RULES AND
REGULATIONS


13.1  OBSERVANCE
AND MODIFICATION.  Tenant and its employees and agents shall
faithfully observe and comply with the Rules and Regulations attached hereto as
Exhibit C (the “Rules”) and such
reasonable changes therein (whether by modification, elimination, or addition)
as Landlord at any time or times hereafter may make and communicate in writing
to Tenant, so long as such changes do not unreasonably affect the conduct of
Tenant’s business in the Premises, except as required by any applicable Law and
are consistently applied to all occupants; provided, however, that in case of
any conflict or inconsistency between the provisions of this Lease and any of
the Rules as originally promulgated or as changed, the provisions of this Lease
shall control.


13.2  APPLICATION
TO TENANT.  Nothing in this Lease shall be construed to
impose upon Landlord any obligation to Tenant to enforce the Rules or the
terms, covenants, or conditions in any other lease, as against any other
tenant, and Landlord shall not be liable to Tenant for violation of the same by
any other tenant or its employees, agents, or visitors.


14     INSURANCE
AND INDEMNIFICATION


14.1  TENANT’S
INSURANCE.  Tenant shall obtain and maintain in effect at
all times during Tenant’s possession of the Premises the following insurance
coverages and policies:


14.1.1        Liability Insurance. 
Tenant shall maintain a policy of commercial general liability
insurance, which shall include coverages for (a) personal injury;
(b) broad-form contractual liability; (c) owner’s (i.e., Tenant’s) & contractor’s protective;
(d) automobile liability; and (e) broad-form property damage
liability.  The minimum limits of
liability shall be a combined single limit with respect to each occurrence of
not less than Two Million Dollars ($2,000,000) and an aggregate limit of not
less than Three Million Dollars ($3,000,000). 
The policy shall contain a cross-liability endorsement and a
severability of interest clause.  Tenant
shall increase the insurance coverage as reasonably required by Landlord’s
lender.


14.1.2        Tenant’s Business Personal Property Insurance. 
Tenant shall maintain on all of its business personal property,
including valuable business papers and accounts receivable; operating supplies;
inventory; and furniture, fixtures, and equipment (whether owned, leased, or
rented) (collectively “Business Personal Property”) an “all risk” property
damage insurance policy including coverages for earthquake damage and sprinkler
leakage and containing an agreed amount endorsement (or, if applicable, a
business owner’s policy with a no-coinsurance provision) in an amount not
less than one hundred percent (100%) of the full replacement cost
valuation of such Business Personal Property. 
The proceeds from any such policy shall be used by Tenant for the
replacement of such Business Personal property.


 



 39















 


14.1.3        Workers’ Compensation Insurance. 
Tenant shall maintain workers’ compensation insurance as required by law
and employer’s liability insurance in an amount not less than Five Hundred
Thousand Dollars ($500,000).


14.1.4        Business Interruption/Extra Expense Insurance. 
Tenant shall maintain business interruption or (if applicable)
contingent business interruption and extra expense insurance in such amounts as
will reimburse Tenant for direct or indirect loss of earnings and incurred
costs attributable to the perils commonly covered by Tenant’s property
insurance described in § 14.1.2 above but in no event less than the
average total of Tenant’s annual gross receipts from the Premises during the
three-year period immediately preceding such interruption or loss.


14.2  TENANT’S
INSURANCE CRITERIA.  All insurance required to be maintained by
Tenant under this Lease shall conform to the following criteria:


(i)        Tenant’s insurance
shall be issued by insurance companies authorized to do business in the State
of California with a financial rating of at least A:XIII for any property
insurance and at least A-:IX for any liability insurance, as rated in the most
recent edition of Best’s Insurance Reports;


(ii)       Tenant’s insurance
shall be issued as primary and noncontributory;


(iii)      Tenant’s liability and
property insurance policies shall name Tenant as the insured and Landlord,
Landlord’s agents, and any Lessors and Holders (as such terms are defined in
§ 18.1 below) whose names shall have been furnished to Tenant as additional
insureds;


(iv)       Tenant’s insurance
shall contain an endorsement requiring at least thirty (30) days’ written
notice from the insurance company to each insured and additional insured before
cancellation or any material change in the coverage, scope, or amount of any
policy; and


(v)        with respect to damage
to or loss of Tenant’s Business Personal Property, a waiver of subrogation must
be obtained, as required under § 14.4 below.


14.2.1        Blanket Coverage. 
All of the insurance requirements set forth herein on the part of Tenant
to be observed shall be deemed satisfied if the Premises are covered by a
blanket insurance policy complying with the limits, requirements, and criteria
contained in this Article 14 insuring all or most of Tenant’s facilities
in California.


14.2.2        Evidence of Coverage. 
A duplicate original policy or a certificate of insurance shall be
deposited with Landlord at the commencement of the Term or, if earlier, upon
Tenant’s taking possession of the Premises; and on renewal of the policy a
certificate of insurance listing the insurance coverages required hereunder and
naming the appropriate additional insureds shall be deposited with Landlord not
less than seven (7) days before expiration of the policy.


14.3  LANDLORD’S
INSURANCE.  Landlord shall maintain “all risk” property
damage insurance containing an agreed amount endorsement covering not less than
one hundred percent (100%) of the full insurable replacement cost valuation of
(y) the Building and the tenant improvements, betterments, and the
alterations thereto; and (z) Landlord’s personal property, business
papers, furniture, fixtures, and equipment (collectively “Landlord’s Property”),
exclusive of the costs of excavation, foundations and footings, and risks
required to be covered by Tenant’s insurance, and subject to commercially
reasonable deductibles.  Landlord shall
also obtain and keep in full force the following policies of insurance:
(a) commercial general liability insurance with limits at lease equal to
those applicable to Tenant under



 40
 









§ 14.1.1
above; (b) loss of rent insurance (also known as rent continuation
insurance); (c) workers’ compensation insurance, if required by applicable
Law; and (d) such other insurance as Landlord deems appropriate or as may
be required by any Holder or Lessor. 
Landlord agrees to cause Tenant to be named as an additional insured
under its commercial general liability insurance policy, provided that Tenant’s
additional insured status shall be limited to apply only to occurrences of
bodily injury and property damage caused solely by Landlord in areas of the
Complex under Landlord’s exclusive control (including the common areas).


14.4  RELEASES
AND WAIVERS OF SUBROGATION.  The purpose of this provision is to allow
Landlord and Tenant to allocate and assume certain risks to coincide with
insurance coverages required to be maintained pursuant to the terms to this
Lease.  Landlord and Tenant recognize the
benefit that each will receive from the waivers of subrogation each is required
to obtain pursuant to this § 14.4 and that there are significant
advantages to each in connection with minimizing duplication of insurance
coverages.  Accordingly, Landlord and
Tenant agree to accept and place the limitations which follow on each other’s
respective liabilities and responsibility for damages in order to coincide with
required insurance coverages.


14.4.1        Tenant’s Property Agreement. 
In light of Tenant’s agreement to insure Tenant’s Business Personal
Property in accordance with § 14.1.2 above, Tenant agrees that Landlord
will have no liability to Tenant in the event Landlord damages or destroys,
negligently or otherwise, all or any part of Tenant’s Business Personal
Property.  Tenant will cause to be placed
in its insurance policies covering Tenant’s Business Personal Property a waiver
of subrogation so that its insurance company will not become subrogated to
Tenant’s rights and will not be able to proceed against Landlord in connection
with any such damage or destruction.


14.4.2        Landlord’s Property Agreement. 
In light of Landlord’s agreement to insure Landlord’s Property in
accordance with § 14.3 above, Landlord agrees that Tenant will have no
liability to Landlord in the event that Tenant damages or destroys, negligently
or otherwise, all or any part of Landlord’s Property.  Landlord will cause to be placed in its
insurance policies covering Landlord’s Property a waiver of subrogation so that
its insurance company will not become subrogated to Landlord’s rights and will
not be able to proceed against Tenant in connection with any such damage or
destruction.


14.4.3        Tenant’s Release. 
Landlord shall not be responsible or liable to Tenant for any damages or
destruction to Tenant’s Business Personal Property caused by Landlord’s
employees, agents, visitors, invitees, guests, or independent contractors
(collectively “Landlord’s Associates”), and Tenant hereby releases Landlord
from any claims, liabilities, demands, losses, damages, consequential damages,
and the like, including reasonable attorneys’ fees and court costs
(collectively “Claims”) resulting from damage or destruction to Tenant’s
Business Personal Property caused directly or indirectly by Landlord and/or
Landlord’s Associates; provided, however, that nothing herein shall be deemed
to release Landlord’s independent contractors from any such Claims Tenant may
have against Landlord’s independent contractors.


14.4.4        Landlord’s Release. 
Tenant shall not be responsible or liable to Landlord for any damages or
destruction to Landlord’s Property caused by Tenant’s employees, agents,
visitors, invitees, guests, or independent contractors (collectively “Tenant’s
Associates”), and Landlord hereby releases Tenant from any Claims resulting
from damage or destruction to Landlord’s Property caused directly or indirectly
by Tenant and/or Tenant’s Associates; provided, however, that nothing herein
shall be deemed to release Tenant’s independent contractors from any such
Claims Landlord may have against Tenant’s independent contractors.



 41
 









14.4.5        Damage to Business and Loss of Rents. 
In light of Landlord’s agreement to carry continuation of rent insurance
pursuant to § 14.3 above and Tenant’s agreement to carry business
interruption insurance (extra expense insurance) in accordance with
§ 14.1.4 above, in the event that Landlord’s Property is damaged or
destroyed because of any act or conduct, negligent or otherwise, by Tenant
and/or by Tenant’s Associates, Landlord shall have no rights against Tenant by
virtue of such damage or destruction, and Landlord hereby releases Tenant from
all Claims, including claims for loss of rent or profits, by Landlord directly
or indirectly resulting from the damage or destruction of Landlord’s Property
by conduct by Tenant and/or by Tenant’s Associates.  Likewise, in the event that Tenant’s Business
Personal Property is damaged or destroyed because of any act or conduct,
negligent or otherwise, by Landlord and/or by Landlord’s Associates, Tenant
shall have no rights against Landlord by virtue of such damage or destruction,
and Tenant hereby releases Landlord from all Claims by Tenant directly or
indirectly resulting from the damage or destruction to Tenant’s Business
Personal Property by the conduct of Landlord and/or Landlord’s Associates,
including Claims for loss of business or loss of profits.  Notwithstanding the foregoing, nothing herein
shall be deemed to release Tenant’s or Landlord’s independent contractors from
any liability to Tenant and/or Landlord.


14.4.6        Injury and Death to Individuals. 
Landlord and Tenant understand that waivers of subrogation do not apply
to injury to and death of individuals. 
Landlord and Tenant shall each carry insurance, as provided by this
Article 14, in connection with injury and death to individuals.  Landlord hereby agrees to indemnify and hold
Tenant harmless from any Claims which Tenant may otherwise have with respect to
injury or death to individuals occurring within the Property but outside the
Premises, except to the extent that such injury or death is caused by Tenant
and/or Tenant’s Associates, through negligence or otherwise, and is not covered
by the insurance Landlord is required to carry under this Lease.  Likewise, Tenant agrees to indemnify, defend,
protect, and hold Landlord harmless from any Claims for injury or death to
persons occurring within the Premises or caused, directly or indirectly, by
Tenant or Tenant’s Associates outside the Premises, except to the extent such
injuries or death are caused by Landlord and/or Landlord’s Associates, through
negligence or otherwise, and are not covered by the insurance Tenant is
required to carry under this Lease.


14.4.7        Abatement of Rent. 
Except as may be expressly provided elsewhere in this Lease, Tenant
shall not be entitled to Rent abatement and shall not otherwise have, and
hereby releases Landlord from, any Claims resulting from Tenant’s inability to
utilize all or any part of the Premises, except to the extent that Tenant is
unable to use all or any part of the Premises and does not use all or any part
of the Premises as a result of Landlord’s intentional decision to refuse to
provide access to the Building and/or the Premises and/or to provide services
and/or utilities to Tenant as required to be provided by Landlord to Tenant
pursuant to this Lease, where such refusal is not caused by a Force Majeure occurrence.


14.4.8        Availability of Waiver of Subrogation. 
If an insurance policy cannot be obtained with a waiver of subrogation
or is obtainable only by the payment of an additional premium charge above that
charged by insurance companies issuing policies without waiver of subrogation,
the party undertaking to obtain the insurance shall notify the other party of
this fact.  The other party shall have a
period of ten (10) days after receiving the notice either to place the
insurance with a company that is reasonably satisfactory to the other party and
that will carry the insurance with a waiver of subrogation at no additional
cost or to agree to pay the additional premium if such a policy is obtainable
at additional cost.  If the insurance
cannot be obtained or the party in whose favor a waiver of subrogation is
desired refuses to pay the additional premium charged, the other party is
relieved of the obligation to obtain a waiver of subrogation with respect to
the particular insurance involved.



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14.5  OTHER CASES
OF DAMAGE OR INJURY.  In all cases not covered by the foregoing
provisions of this Article 14, Tenant hereby assumes all risk of damage to
property or injury to persons in, upon, or about the Premises from any cause
other than the negligence or intentional misconduct of Landlord and its agent
or employees.  Without limiting the
generality of the foregoing, Landlord shall not be liable for injury or damage
which may be sustained by the person, goods, wares, merchandise, or property of
Tenant or Tenant’s Associates or any other person in or about the Premises
caused by or resulting from fire, steam, electricity, gas, water or rain, which
may leak or flow from or into any part of the Premises, or from the breakage,
leakage, obstruction, or other defects of the Systems and Equipment, pipes,
sprinklers, wires, INC, appliances, plumbing, heating, air-conditioning,
or lighting fixtures of the same, whether the damage or injury results from
conditions arising upon the Premises or upon other portions of the Property,
the Complex, or from other sources. 
Landlord shall not be liable for any damages arising from any act or
omission of any other tenant or occupant of the Property or Complex.  In all cases not covered by the foregoing
provisions of this Article 14, Tenant shall indemnify, defend, protect,
and hold Landlord harmless against (a) any and all Claims arising from any
death or injury to any person or damage to any property whatsoever occurring
in, on, or about the Premises or any part thereof, and (b) any and all
Claims occurring in, on or about any of the Common Areas, the Property, or the
Complex, when such death, injury or damage is caused in whole or in part by the
act, negligence, fault, or omission of any duty with respect to the same by
Tenant or Tenant’s Associates.  In all
cases not covered by the foregoing provisions of this Article 14, Tenant
shall further indemnify, defend, protect, and hold Landlord harmless from and
against any and all Claims arising from any breach or default in the
performance of any obligation on Tenant’s part to be performed under this
Lease, or arising from any act or negligence of Tenant or Tenant’s Associates,
and from and against all reasonable costs, attorneys’ fees, expenses, and
liabilities incurred in connection with any such Claim or any action or
proceeding brought thereon.  In case any
action or proceeding be brought against Landlord by reason of any such Claim,
Tenant, upon notice from Landlord, shall defend the same at Tenant’s expense by
counsel reasonably satisfactory to Landlord; provided, however, that Tenant
shall not be liable in any case for damage to property or death or injury to
person(s) occasioned by the negligence or intentional misconduct of Landlord or
Landlord’s Associates, unless covered by insurance Tenant is required to
provide.


15     DAMAGE OR
DESTRUCTION


15.1  LOSSES.  If at any time prior to the expiration or
termination of this Lease the Premises or the Property is wholly or partially
damaged or destroyed by any casualty which renders the Premises totally or
partially inaccessible or unusable by Tenant in the ordinary conduct of Tenant’s
business, the parties agree that the following provisions shall modify their
obligations under this Lease after such damage or destruction.


15.1.1        Repairs Which Can Be Completed Within Six (6)
Months.  Within thirty (30) days after Tenant’s
written notice to Landlord of such damage or destruction, Landlord shall
provide Tenant with notice of its determination of whether the damage or
destruction can be repaired within six (6) months after the commencement
of the work of repairing such damage or destruction without the payment of
overtime or other premiums.  If all
repairs to Premises or Property can, in Landlord’s reasonable judgement, be
completed within six (6) months following the date of the commencement of
the work of repairing such damage or destruction without the payment of
overtime or other premiums, Landlord shall, at Landlord’s expense,
expeditiously repair the same; and this Lease shall remain in full force and
effect, except that a proportionate reduction of the Base Rent shall be allowed
Tenant to the extent that the Premises shall be rendered inaccessible or
unusable by Tenant and are not used by Tenant during the period of time that
such portion is unusable or inaccessible and not used by Tenant.



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15.1.2        Repairs Which Cannot Be Completed Within
Six (6) Months.  If all such repairs to the Property and
Premises cannot, in Landlord’s reasonable judgement, be completed within
six (6) months following the commencement of the work of repairing such
damage or destruction without the payment of overtime or other premiums,
Landlord shall notify Tenant of such determination; and in such an event,
either Landlord or Tenant may, at its option, upon written notice to the other
party given within sixty (60) days after the occurrence of such damage or
destruction, elect to terminate this Lease as of the date of the occurrence of
such damage or destruction.  In the event
that neither Landlord nor Tenant elects to terminate the Lease in accordance
with the foregoing provisions, then Landlord shall, at Landlord’s expense,
repair such damage or destruction; and in such event, this Lease shall continue
in full force and effect, except that the Base Rent shall be proportionately reduced
as provided in § 15.1.1 above; provided, however, that if any such repair
is not commenced by Landlord within ninety (90) days after the occurrence
of such damage or destruction or is not substantially completed by Landlord
within nine (9) months after the occurrence of such damage or destruction,
then in either such event Tenant may, at its option, upon written notice to
Landlord, elect to terminate this Lease as of the date of Landlord’s receipt of
such notice.  Notwithstanding the
foregoing, Tenant shall have no right to terminate this Lease in the situation
just described if all of the following conditions are met: (x) Landlord
shall have informed Tenant in its notice of determination that the repair of
such damage or destruction could not be substantially completed by Landlord
within nine (9) months after the occurrence of such damage or
destruction; (y) Tenant shall not have elected to terminate the Lease by
written notice delivered to Landlord within sixty (60) days after the
occurrence of such damage or destruction; and (z) Landlord shall have
commenced the work of repairing such damage or destruction and diligently
prosecuted the same thereafter.


15.2  DESTRUCTION
DURING FINAL YEAR.  Notwithstanding anything to the contrary
contained in § 15.1, if the Premises or the Building are wholly or
materially damaged or destroyed within the final twelve (12) months of the
Term of this Lease or, if an applicable renewal option has been exercised,
during the last year of any renewal term, in such a way that Tenant shall be
prevented from using the Premises for at least thirty (30) consecutive
days as a result of such damage or destruction, then either Landlord or Tenant
may, at the option of either, by written notice to the other party delivered
within sixty (60) days after the occurrence of such damage or destruction,
elect to terminate the Lease as of the date of such notice.


15.3  DESTRUCTION
OF TENANT’S PROPERTY.  Under no circumstances shall Landlord be
required to repair any injury or damage to, or make any repairs to or
replacements of, Tenant’s Property. 
However, as part of Operating Expenses, Landlord shall cause to be
insured the Improvements in the Premises which do not consist of Tenant’s
Property and shall cause such Improvements to be repaired and restored at
Landlord’s sole expense, except that Tenant shall pay any applicable
deductible.  Landlord shall have no
responsibility for any contents placed or kept in or on the Premises or the
Property by Tenant or Tenant’s employees or invitees or any other person
claiming through Tenant.


15.4  EXCLUSIVE
REMEDY.  Landlord and Tenant agree that their
respective rights and obligations in the event of any damage or destruction of
the Premises, Property, or Complex shall be governed exclusively by this Lease.  Tenant, as a material inducement to Landlord
entering into this Lease, irrevocably waives and releases Tenant’s rights under
California Civil Code §§ 1932(2), 1933(4), and 1942, as the same may be
modified or replaced hereafter.  No
damages, compensation, setoff, allowance, or claim shall be payable by Landlord
for any inconvenience, interruption, or cessation of Tenant’s business or any
annoyance arising from any damage to or destruction of all or any portion of
the Premises, Property, or Complex.



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16     EMINENT
DOMAIN


16.1  CONDEMNATION.
 If the whole or any material part of the
Premises or Property shall be taken by power of eminent domain or condemned by
any competent authority for any public or quasi-public use or purpose; or if
any adjacent property or street shall be so taken, condemned, reconfigured, or
vacated by such authority in such manner as to require the use, reconstruction,
or remodeling of any part of the Premises or Property; or if Landlord shall
grant a deed or other instrument in lieu of such taking by eminent domain or
condemnation (collectively “Takings”), either party shall have the option to
terminate this Lease upon ninety (90) days’ notice, provided such notice
is given no later than one hundred and eighty (180) days after the date of
such Taking.  Tenant shall have
reciprocal termination rights, on the same terms and conditions and to be
exercised in the same manner as the foregoing sentence provides, if the whole
or any material part of the Premises is permanently taken, or if access to the
Premises is permanently materially impaired.


16.2  RENTAL
APPORTIONMENT.  All Rent shall be apportioned as of the date
of such termination or the date of such Taking, whichever shall first
occur.  If any part of the Premises shall
be taken, and this Lease shall not be so terminated, the Rent shall be
proportionately abated.


16.3  AWARDS
AND DAMAGES.  Landlord shall be entitled to receive the
entire award or payment in connection with any Taking, except that Tenant shall
have the right to file any separate claim available to Tenant for any taking of
Tenant’s personal property and fixtures belonging to Tenant and removable by
Tenant upon expiration of the Term, and for moving expenses, so long as such
claim does not diminish the award available to Landlord and such claim is
payable separately to Tenant.


16.4  TEMPORARY
CONDEMNATION.  If part or all of the Premises are condemned
for a limited period of time (“Temporary Condemnation”), this Lease shall
remain in effect.  The Rent and Tenant’s
obligations for the part of the Premises taken shall abate during the Temporary
Condemnation in proportion to the part of the Premises that Tenant is unable to
use in its business operations as a result of the Temporary Condemnation.  Landlord shall receive the entire award for
any Temporary Condemnation.


17     ASSIGNMENT
AND SUBLETTING


17.1  CONSENT
REQUIRED FOR TRANSFER.  Except as otherwise provided herein, Tenant
agrees that it shall not assign, sublet, mortgage, hypothecate, or encumber
this Lease, nor permit or allow the Premises or any part thereof to be used or
occupied by others, without the prior written consent of Landlord in each
instance, which consent shall not be unreasonably withheld, conditioned, or
delayed in accordance with the criteria herein established.  The actions described in the foregoing
sentence are referred to collectively herein as “Transfers” and individually as
a “Transfer.”  If the Premises or any
part thereof be sublet or occupied by anybody other than Tenant, Landlord may,
after default by Tenant, collect rent from the subtenant or occupant and apply
the net amount collected to the Rent herein reserved; but no Transfer,
occupancy, or collection shall be deemed a waiver of the provisions hereof, the
acceptance of the subtenant or occupant as tenant, or a release of Tenant from
the further performance hereunder by Tenant. 
The consent by Landlord to a Transfer shall not relieve Tenant from
obtaining the Landlord’s express written consent to any further Transfer.  In no event shall any permitted sublessee
assign or encumber its sublease or further sublet all or any portion of its
sublet space, or otherwise suffer or permit the sublet space or any part
thereof to be used or occupied by others, without Landlord’s prior written
consent in each instance.



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17.1.1        Corporate Transferor. 
If Tenant is a corporation, the provisions of § 17.1 shall apply to
a transfer (by one or more transfers) of a majority of the stock of Tenant as
if such transfer of a majority of the stock of Tenant were an assignment of this
Lease.


17.2  NOTICE OF
INTENT TO TRANSFER.  If Tenant shall at any time or times during
the Term of this Lease desire to assign this Lease or sublet all or part of the
Premises, Tenant shall give notice thereof (the “Transfer Notice”) to Landlord,
which notice shall set forth all of the following:


(a)                       the
proposed terms of the assignment or subletting, including (i) the
effective or commencement date thereof, which shall be not less than
thirty (30) nor more than one hundred eighty (180) days after the giving
of such notice; (ii) in the case of a proposed assignment, the
consideration therefor; and (iii) in the case of a proposed subletting,
the rental rate to be paid by the proposed subtenant (including any escalation
or Additional Rent payable), the term of the proposed sublease (including any
renewal options), any work to be performed or paid for by Tenant, the amount of
any security deposit, the cost and extent of any so-called “take-over”
obligations to be assumed by Tenant on behalf of such subtenant, the amount of
any rent concessions to be granted by Tenant, and any other additional monetary
or so-called “business” terms or conditions;


(b)                      a statement
setting forth in reasonable detail the identity of the proposed assignee or
subtenant, the nature of its business, and its proposed use of the Premises;
and


(c)                       current
financial information with respect to the proposed assignee or subtenant,
including its most recent financial report, and any other information which may
reasonably be required by Landlord.


17.3  CONDITIONS
OF CONSENT.  Providing that Tenant is not in default of any
of Tenant’s material obligations under this Lease after notice and the
expiration of any applicable grace period, Landlord’s consent (which must be in
writing and in form reasonably satisfactory to Landlord) to the proposed
assignment or sublease shall not be unreasonably withheld or delayed, provided
the following conditions are met:


(a)                       Tenant
shall have complied with the provisions of § 17.2 above;


(b)                      In Landlord’s
reasonable judgement the proposed assignee or subtenant is engaged in a
business which would use the Premises, or the relevant part thereof, in a
manner which is in keeping with the then-current standards of the
Building, is limited to the use expressly permitted under this Lease, and will
not violate any negative covenant or other restriction or agreement as to use
contained in any other lease of space in the Complex;


(c)                       The
proposed assignee or subtenant has not been convicted of fraud or illegality
and has reasonably sufficient financial worth considering the responsibility
involved (and in no event of less financial standing than Tenant, if the
proposed Transfer is for the entirety of the Premises), is not subject to any
toxic or hazardous materials cleanup order with respect to any other property,
and Landlord has been furnished with reasonable proof thereof;


(d)                      Neither the
proposed assignee or sublessee nor any person which, directly or indirectly,
controls, is controlled by, or is under common control with, the proposed



 46
 









 assignee or sublessee or any person who
controls the proposed assignee or sublessee, is then an occupant of any part of
the Complex, provided Landlord then has suitable space in the Complex available
for leasing.  For purposes of this Lease control shall be deemed to mean ownership of more than fifty
percent (50%) of all the voting stock of a corporation or more than fifty
percent (50%) of all the legal and equitable interest in any other
business entity;


(e)                       The
proposed assignee or sublessee is not a person or entity with whom Landlord is
then negotiating to lease space in the Building;


(f)                         The
form of the proposed lease shall be in form reasonably satisfactory to Landlord
and shall comply with the applicable provisions of this Article 17;


(g)                      There
shall not be more than three (3) subtenants (not including the Permitted
Occupant (as defined in § 17.13 below) of the Premises);


(h)                      Tenant
shall reimburse Landlord on demand for any reasonable costs that may be
incurred or paid by Landlord to third persons in connection with said
assignment or sublease, including costs of making investigations as to the
acceptability of the proposed assignee or subtenant and legal costs incurred in
connection with the granting of any requested consent; and


(i)                          Tenant
shall not have advertised or publicized in any way the availability of the
Premises without prior notice to and approval by Landlord, nor shall any
advertisement state the name (as distinguished from the address) of the Complex
or the rental rate;


(j)                          The
sublease shall not allow the use of the Premises or any part thereof for
(i) the sale of food for on or off-premises consumption or
(ii) use by a foreign or domestic governmental agency.


17.4  CONTINUATION
OF LEASE TERMS.  Each subletting pursuant to this
Article 17 shall be subject to all of the covenants, agreements, terms,
provisions, and conditions contained in this Lease.  Notwithstanding any such subletting to any
other subtenant and/or acceptance of Rent by Landlord from any subtenant,
Tenant shall remain liable for the payment of the Base Rent and Additional Rent
due and to become due hereunder and for the performance of all the covenants,
agreements, terms, provisions, and conditions contained in this Lease on the
part of Tenant to be performed and all acts and omissions of any licensee or
subtenant or anyone claiming under or through any subtenant which shall be in
violation of any of the obligations of this Lease; and any such violation shall
be deemed to be a violation by Tenant. 
Tenant further agrees that notwithstanding any such subletting, no other
and further subletting of the Premises by Tenant or any person or entity
claiming through or under Tenant shall or will be made except upon compliance
with and subject to the provisions of this Article 17.


17.5  LAPSE OF
CONSENT.  In the event that Landlord consents to a
proposed Transfer described in the Transfer Notice and Tenant fails to execute
and deliver the assignment or sublease described in the Transfer Notice to
which Landlord consented within one hundred twenty (120) days after the
giving of such consent, then Tenant shall again comply with all of the
provisions and conditions of § 17.2 above before assigning this Lease or
subletting all or part of the Premises.


17.6  TRANSFER
DOCUMENTATION.  With respect to each and every Transfer
authorized by Landlord under the provisions of this Lease, it is further agreed
as follows:



 47
 









(a)                       no
subletting shall be for a term ending later than one day prior to the
Expiration Date of this Lease;


(b)                      no sublease
shall be valid, and no subtenant shall take possession of the Premises or any
part thereof, until an executed counterpart of such sublease has been delivered
to Landlord;


(c)                       each
sublease shall provide that it is subject and subordinate to this Lease and to
the matters to which this Lease is or shall be subordinate, and that in the
event of termination (whether by voluntary surrender or otherwise), re-entry,
or dispossession by Landlord under this Lease, Landlord may, at its option,
take over all of the right, title, and interest of Tenant, as sublessor, under
such sublease, and such subtenant shall, at Landlord’s option, attorn to
Landlord pursuant to the then-executory provisions of such sublease,
except that Landlord shall not be (i) liable for any previous act or
omission of Tenant under such sublease; (ii) subject to any offset,
credit, or allowance not expressly provided in such sublease which theretofore
accrued to such subtenant against Tenant or (iii) bound by any previous
modification of such sublease or by any previous prepayment of more than one
month’s rentals; and


(d)                      each
assignment or sublease document must provide that the assignee or subtenant
expressly assumes all obligations of the Tenant under the Lease as joint and
several obligations without any release of Tenant.


17.7  TRANSFER
PREMIUM.  If Landlord shall give its consent to any
assignment of this Lease or to any sublease, Tenant shall in consideration
therefor pay to Landlord, as Additional Rent, the following amounts
(collectively the “Transfer Premium”):


(a)                       in the case
of an assignment, an amount equal to fifty percent (50%) of all sums and other
considerations paid to Tenant by the assignee for or by reason of such
assignment, including sums paid for the sale of Tenant’s Property, but
excluding the following: (i) in the case of a sale of Tenant’s Property,
the then-current net unamortized or undepreciated cost thereof determined
on the basis of Tenant’s federal income tax returns; (ii) then-customary
brokerage commissions being paid by Landlord for leasing of space in the
Building or, if less, the brokerage commission paid by Tenant in connection
with the assignment; (iii) reasonable legal fees and disbursements; and
(iv) reasonable amounts paid by Tenant for tenant improvements constructed
for the assignee; and


(b)                      in the case
of a sublease, fifty percent (50%) of any rents, additional charge, or other
consideration payable under the sublease to Tenant by the subtenant which is in
excess of the Base Rent and Additional Rent accruing during the term of the
sublease in respect of the subleased space (at the rate per square foot payable
by Tenant hereunder) pursuant to the terms hereof, including sums paid for the
sale or rental of Tenant’s Property, but excluding the following: (i) in the
case of the sale or lease of Tenant’s Property, the then-current net
unamortized or undepreciated cost thereof determined on the basis of Tenant’s
federal income tax returns; (ii) then-customary brokerage
commissions being paid by Landlord for leasing of space in the Building or, if
less, the brokerage commission paid by Tenant in connection with the sublease;
(iii) reasonable legal fees and disbursements; and



 48
 









(iv) reasonable
amounts paid by Tenant for tenant improvements constructed for the subtenant.


The sums payable as the
Transfer Premium under this § 17.7 shall be paid to Landlord as and when
payable by the subtenant or assignee to Tenant.


17.8  ASSUMPTION
BY TRANSFEREE   Any Transfer, whether made with Landlord’s
consent pursuant to § 17.1 or without Landlord’s consent pursuant to
§ 17.1.1, shall be made only if, and shall not be effective until, the
assignee or subtenant shall execute, acknowledge, and deliver to Landlord an
agreement in form and substance satisfactory to Landlord under which the assignee
or transferee shall assume the obligations of this Lease on the part of Tenant
to be performed or observed, from and after the date of Transfer, and whereby
the assignee or transferee shall agree that the provisions in § 17.1
shall, notwithstanding such Transfer, continue to be binding upon it in respect
of all future Transfers.  The original
named Tenant covenants that, notwithstanding any Transfer, whether or not in
violation of the provisions of this Lease, and notwithstanding the acceptance
of Base Rent and/or Additional Rent by Landlord from an assignee, transferee,
or any other party, the original named Tenant shall remain fully liable for the
payment of the Base Rent and Additional Rent and for the other obligations of
this Lease on the part of Tenant to be performed or observed.


17.9  WAIVER OR
DISCHARGE.  The parties agree that it shall be reasonable
for Landlord to refuse its consent to any proposed Transfer in connection with
which Tenant also seeks a release.


17.10         LISTING
OF NAME.  The listing of any name other than that of
Tenant, whether on the doors of the Premises or the Building directory, or
otherwise, shall not operate to vest any right or interest in this Lease or in
the Premises, nor shall it be deemed to be the consent of Landlord to any
Transfer of this Lease or to any sublease of the Premises or to the use or
occupancy of the Premises by others.


17.11         NET
PROFITS AGREEMENT.  Anything contained in the foregoing provisions
of this Article 17 to the contrary notwithstanding, neither Tenant nor any
other person or entity having an interest in the possession, use, occupancy, or
utilization of the Premises shall enter into any lease, sublease, license,
concession, or other agreement for use, occupancy, or utilization of space in
the Premises which provides for rental or other payment for such use,
occupancy, or utilization based, in whole or in part, on the net income or
profits derived by any person from the premises leased, used, occupied, or
utilized (other than an amount based on a fixed percentage or percentages of
receipts or sales); and any such purported lease, sublease, license,
concession, or other agreement shall be absolutely void and ineffective as a
conveyance of any right or interest in the possession, use, occupancy, or utilization
of any part of the Premises.


17.12         AFFILIATES.
 Notwithstanding anything to the contrary in
this Article 17, Landlord’s consent shall not be required in the event
Tenant desires to assign this Lease or sublet the Premises or any portion
thereof to any corporation or entity which controls, is controlled by, or is
under common control with Tenant, provided and subject to the following
conditions:


(a)                       Tenant
shall not be in default of any of the material terms, covenants, or conditions
on Tenant’s part to observe or perform hereunder beyond all applicable notice and cure periods;


(b)                      such sublet
or assignment shall be subject to all of the terms, covenants, and conditions
of this Lease;



 49
 









(c)                       Tenant
shall notify Landlord of such sublet or assignment in accordance with
§ 17.2 hereof and furnish Landlord with reasonably satisfactory evidence
that such sublessee or assignee controls, is controlled by, or is under common
control with Tenant; and


(d)                      in the event
of such merger, consolidation, or transfer of substantially all of Tenant’s
assets, the successor to Tenant has a net worth, computed in accordance with
generally-accepted accounting principles, at least equal to the greater
of (i) the net worth of Tenant immediately prior to such merger,
consolidation, or transfer or (ii) the net worth of Tenant herein named on
the date of this Lease; and proof satisfactory to Landlord of such net worth
shall have been delivered to Landlord at least ten (10) days prior to the
effective date of any such transaction.


As used herein, the terms
control and common
control shall be deemed to mean that the ownership of fifty percent
(50%) or more of all of the issued and outstanding voting shares of such
corporation, or fifty percent (50%) or more of all the legal and equitable
interest in any such business entities.


17.13         PERMITTED
OCCUPANTS.  Landlord hereby agrees that the provisions of
this Article 17 shall not apply to the shared occupancy of individual
offices in the Premises with Tenant by individuals renting not more than
one (1) such office (the “Permitted Occupant”), provided that the space
occupied by the Permitted Occupant shall not be separately demised or contain
separate entrances, demarcations, or reception areas and the occupancy by the
Permitted Occupant shall be upon and subject to all of the terms and conditions
of this Lease.


18     SUBORDINATION
AND ATTORNMENT


18.1  SUBORDINATION
OF LEASE.  This Lease and all rights of Tenant hereunder
are and shall be subject and subordinate in all respects to (a) all ground
leases, overriding leases, and underlying leases of the Building, Property,
and/or the Complex now or hereafter existing; (b) all mortgages which may
now or hereafter affect the Building, Property, or Complex and any of such
leases, whether or not such mortgages shall also cover other lands and/or
buildings; (c) each and every advance made or hereafter to be made under
such mortgages; and (d) to all renewals, modifications, replacements, and
extensions of such leases and such mortgages and spreaders and consolidations
of such mortgages.  This § 18.1
shall be self-operative, and no further instrument of subordination shall
be required.  In confirmation of such
subordination, Tenant shall promptly execute and deliver any instrument that
Landlord, the lessor of any such lease or the holder (“Holder”) of any such
mortgage or any of their respective successors in interest may reasonably
request to evidence such subordination, so long as such instrument provides
that Tenant’s use and occupancy of the Premises shall not be disturbed in the
absence of a material default.  The
leases to which this Lease is, at the time referred to, subject and subordinate
pursuant to this Article 18 are hereinafter sometimes referred to as “Superior
Leases”; the mortgages to which this Lease is, at the time referred to, subject
and subordinate are hereinafter sometimes referred to as “Superior Mortgages”;
and the lessor of a superior lease or its successor in interest at the time
referred to is sometimes hereinafter referred to as a “Lessor.”  Notwithstanding the foregoing, Tenant agrees,
upon written request from Landlord or any Holder or Lessor, to reorder the
relative priority of the Lease with respect to any particular Superior Mortgage
or Superior Lease so as to subordinate the lien of any such Superior Mortgage
or Superior Lease to the Lease.  Tenant
agrees to execute any instrument which Landlord or any Holder or Lessor may
present in order to effect such prioritization of the Lease, provided that such
instrument does not modify any material term of the Lease or increase Tenant’s
obligations thereunder.


 



 50















 


18.1.1        Nondisturbance Agreement. 
Landlord agrees that it will use reasonable efforts to obtain a
nondisturbance agreement for the benefit of Tenant from the Holder(s) of any
Superior Lease(s) or Superior Mortgage(s) now existing or hereafter created
during the Term of this Lease.  Such
nondisturbance agreement shall provide, in effect, that so long as there exists
no Event of Default, and provided Tenant attorns as herein specified, the
following terms shall govern such attornment, subject to the terms of
§ 18.3 below:


(a)     Tenant’s rights as set forth in the Lease shall not be
affected or terminated;


(b)     Tenant’s possession of the Premises shall not be disturbed;


(c)     no action or proceeding shall be commenced to remove or
evict Tenant solely by virtue of such Successor Landlord’s succession to the
rights of Landlord under the Lease;


(d)     this Lease shall at all times continue in full force and
effect notwithstanding the foreclosure of the Superior Mortgage prior to the
expiration or termination of this Lease;


(e)     Tenant shall pay Rent to said Holder or Lessor from the date
of said attornment; and


(f)     such Holder or Lessor shall not be responsible to Tenant
under this Lease, except as to obligations accruing subsequent to the date of
such attornment.


The inability
of Landlord to obtain such a nondisturbance agreement as referred to in the
preceding sentence shall not be deemed a default on Landlord’s part of its
obligations under the Lease or affect the validity thereof or create any claim
in favor of Tenant against Landlord by reason thereof.


18.2  NOTICE
AND CURE RIGHT.  In the event of any action or omission of
Landlord which would give Tenant the right, immediately or after lapse of a
period of time, to cancel or terminate this Lease, or to claim a partial or
total eviction, Tenant shall not exercise such right unless and until
(i) Tenant shall have given written notice of such act or omission to the
Holder of each Superior Mortgage and the Lessor of each Superior Lease whose
name and address shall previously have been furnished to Tenant in writing; and
(ii) unless such act or omission shall be one which is not capable of
being remedied by Landlord or such mortgage Holder or Lessor within a
reasonable period of time, a reasonable period for remedying such act or
omission shall have elapsed following the giving of such notice and following
the time when such Holder or Lessor shall have become entitled under such
Superior Mortgage or Superior Lease, as the case may be, to remedy the same
(which reasonable period shall in no event be less than the period to which
Landlord would be entitled under this Lease or otherwise, after similar notice,
to effect such remedy), provided such Holder or Lessor shall with due diligence
give Tenant written notice of intention to remedy such act or omission and
shall thereafter diligently and continuously prosecute such cure to completion.


18.3  ATTORNMENT.
 If the Lessor of a Superior Lease or the
Holder of a Superior Mortgage shall succeed to the rights of Landlord under
this Lease, whether through possession or foreclosure action or delivery of a
new lease or deed, then at the request of such party so succeeding to Landlord’s
rights or other person having or acquiring title by virtue of such foreclosure
or termination (herein sometimes referred to as “Successor Landlord”) and upon
such Successor Landlord’s written agreement to accept Tenant’s attornment,
Tenant shall attorn to and recognize such Successor Landlord as Tenant’s
landlord under this Lease and shall promptly execute and deliver any instrument
that such Successor Landlord may reasonably request to evidence such
attornment, so long as such instrument provides for nondisturbance



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of Tenant’s use
and occupancy of the Premises in the absence of material default. Upon such
attornment this Lease shall continue in full force and effect as a direct lease
between the Successor Landlord and Tenant upon all of the terms, conditions,
and covenants in this Lease, except as follows:


(a)                       the
Successor Landlord shall not be liable for any previous act or omission of
Landlord under this Lease;


(b)                      the
Successor Landlord shall not be subject to any offset (unless expressly
provided for in this Lease) which shall have theretofore accrued to Tenant
against Landlord;


(c)                       the
Successor Landlord shall not be bound by any previous modification of this
Lease, unless expressly provided for in this Lease, or by any previous
prepayment of more than one month’s Base Rent, unless such modification or
prepayment shall have been expressly approved in writing by the Lessor of the
Superior Lease or the Holder of the Superior Mortgage through or by reason of
which the Successor Landlord shall have succeeded to the rights of Landlord
under this Lease.


19     FINANCING
REQUIREMENTS


19.1  LENDER-REQUESTED
MODIFICATIONS.  If, in connection with obtaining financing or
refinancing for the Property or Complex a prospective lender shall request
reasonable modifications to this Lease as a condition to such financing or
refinancing, Tenant shall not withhold, delay, or unreasonably condition its
consent thereto, so long as such modifications do not materially increase
Tenant’s obligations under the Lease or materially adversely affect any of
Tenant’s rights.  It is agreed that,
among the modifications which shall be deemed reasonable, are modifications to
the subordination and attornment provisions of this Lease, modifications to the
notice provisions of this Lease, modifications to the provisions of this Lease
which permit the lender to cure any defaults by Landlord, and modifications to
the provisions which grant additional time to cure as may be reasonably
required by the lender.


20     DEFAULT


20.1  TENANT’S
DEFAULT.  Tenant’s failure to perform any of its
obligations under this Lease when due and in the manner required shall constitute
a breach and default (“Event of Default”) of this Lease by Tenant, subject to
any cure period(s) permitted or available under applicable laws or
statutes.  In addition, the following
shall also be deemed Events of Default hereunder:


(a)                       Tenant’s
failure to pay any Rent or any other charges required to be paid by Tenant
under this Lease, where such failure continues for five (5) days after notice
from Landlord that such payment is overdue and payable, provided that Landlord
shall not be required to give any such notice more often than one (1) time
during each calendar year of the Term;


(b)                      Tenant’s
failure promptly and fully to perform any other covenant, condition, or
agreement contained in this Lease, where such failure continues for thirty (30)
days after written notice thereof from Landlord to Tenant;


(c)                       Tenant’s
failure to take possession of the Premises for a period of sixty (60) days
or longer after the Commencement Date;


(d)                      Tenant’s
abandonment of the Premises;



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(e)                       any
material misrepresentation or omission herein or in any financial statements or
other materials provided by Tenant or any Guarantor in connection with
negotiating or entering this Lease or in connection with any Transfer under
Article 17;


 (f)                      failure by Tenant to cure within
any applicable times permitted thereunder any default under any other lease for
space in the Complex or any other buildings owned or managed by Landlord or its
affiliates now or hereafter entered by Tenant; and any Default hereunder not
cured within the times permitted for cure herein shall, at Landlord’s election,
constitute a default under any other such lease or leases;


(g)                      The levy of
a writ of attachment or execution on this Lease or on any of Tenant’s property;


(h)                      Tenant’s or
any Guarantor’s general assignment for the benefit of creditors or arrangement,
composition, extension, or adjustment with its creditors;


(i)                          Tenant’s
or any Guarantor’s filing of a voluntary petition for relief, or the filing of
a petition against Tenant or any Guarantor in a proceeding under the Federal
Bankruptcy laws or other insolvency laws which is not withdrawn or dismissed
within forty-five (45) days thereafter; or, under the provisions of any
law providing for reorganization or winding up of corporations, the assumption
by any court of competent jurisdiction of jurisdiction, custody, or control of
Tenant or any substantial part of its property, or of any Guarantor, where such
jurisdiction, custody, or control remains in force unrelinquished, unstayed, or
unterminated for a period of forty five (45) days;


(j)                          In any
proceeding or action in which Tenant is a party, the appointment of a trustee,
receiver, agent, or custodian to take charge of the Premises or Tenant’s
Property for the purpose of enforcing a lien against the Premises or Tenant’s
Property; or


(k)                       If Tenant
or any Guarantor is a partnership or consists of more than one (1) person
or entity, the involvement of any partner of the partnership or other person or
entity in any of the acts or events described in subsections (i) through (l)
above.


20.2  LANDLORD’S
REMEDIES.  Upon the occurrence of an Event of Default
hereunder, Landlord shall have the right, in addition to any other rights or
remedies Landlord may have under Laws, at Landlord’s option, without further
notice or demand of any kind, to elect to do one of the following alternatives:


(i)                          Terminate
this Lease and Tenant’s right to possession of the Premises, re-enter the
Premises upon receipt of a judgement for possession, and take possession
thereof; and Tenant shall have no further claim to the Premises or under this
Lease; or


(ii)                       Continue
this Lease in effect and collect any unpaid Rent or other charges which have
theretofore accrued or which thereafter become due and payable.  It is intended hereunder that Landlord have
the remedy described in California Civil Code § 1951.4, which provides
that a landlord may continue a lease in effect after a tenant’s breach and
abandonment and recover rent as it becomes due, if tenant has the right to
sublease or assign, subject only to reasonable limitations.



 53
 









In the event of any
re-entry or retaking of possession by Landlord, Landlord shall have the right,
but not the obligation, to remove all or any part of Tenant’s Property from the
Premises and to place such property in storage at a public warehouse at the
expense and risk of Tenant.


20.2.1        No Waiver of Default. 
The waiver by Landlord of any Event of Default or of any other breach of
any term, covenant, or condition of this Lease shall not be deemed a waiver of
such term, covenant, or condition or of any subsequent breach of the same or
any other term, covenant, or condition. 
Acceptance of Rent by Landlord subsequent to any Event of Default or
breach hereof shall not be deemed a waiver of any preceding Event of Default or
breach other than the failure to pay the particular Rent so accepted,
regardless of Landlord’s knowledge of any breach at the time of such acceptance
of Rent.  Landlord shall not be deemed to
have waived any term, covenant, or condition of this Lease, unless Landlord
gives Tenant written notice of such waiver. 
Tenant should not rely upon Landlord’s failure or delay in enforcing any
right or remedy hereunder.


20.2.2        Landlord’s Right to Cure. 
If Tenant defaults in the performance of any of its obligations under
this Lease, Landlord may (but shall not be obligated to), without waiving such
default, after the expiration of all applicable notice and cure periods,
perform the same for the account and at the expense of Tenant.  Tenant shall pay Landlord all reasonable
costs of such performance promptly upon receipt of a bill therefor.


20.3  DAMAGES.  Should Landlord elect to terminate this Lease
under the provisions of § 20.2 (i) above, Landlord may recover as damages
from Tenant the following:


(a)                       Past Rent:  The worth
at the time of the award of any unpaid Rent which had been earned at the time
of termination; plus


(b)                       Rent Prior to Award: 
The worth at the time of the 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)                       Rent After Award: 
The worth at the time of the award of the amount by which the unpaid
Rent for the balance of the Term after the time of award exceeds the amount of
the rental loss that Tenant proves could have been reasonably avoided; plus


(d)                       Proximately Caused Damages:  Any other amount necessary to compensate
Landlord for all 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, including, but not limited to, any costs
or expenses (including attorneys’ fees), incurred by Landlord in
(i) retaking possession of the Premises; (ii) maintaining the
Premises after Tenant’s default; (iii) preparing the Premises for
reletting to a new tenant, including any repairs or alterations; and
(iv) reletting the Premises, including brokers’ commissions.


“The worth at the time of
the award” as used in subsections (a), (b), and (c) above is to be computed at
the discount rate of the Federal Reserve Bank situated nearest to the Premises
at the time of the award plus one percent (1%).


20.4  LANDLORD’S
DEFAULT.  If Landlord fails to perform any covenant,
condition, or agreement contained in this Lease within thirty (30) days
after receipt of written notice from Tenant specifying a default and the
relevant Lease provision, or if Landlord fails within that thirty-day period
after notice to



 54
 









commence to
cure any such default which cannot reasonably be cured within thirty (30)
days, then, subject to § 21.1 below, Landlord shall be liable to Tenant
for any damages sustained by Tenant as a result of Landlord’s breach.  Tenant shall not have the right to terminate
this Lease or to withhold, reduce, or offset any amount against any payments of
Rent or any other charges due and payable under this Lease, except to the
extent that a specific Lease provision permits such termination or withholding,
reduction, or offset of Rent.


20.4.1        Tenant’s Right to Cure. 
If Landlord defaults in the performance of any of its obligations under
this Lease, Tenant may (but shall not be obligated to), without waiving such
default, after the expiration of all applicable notice and cure periods,
perform the same for the account and at the expense of Landlord.  Landlord shall pay Tenant all reasonable
costs of such performance promptly upon receipt of a bill therefor.


20.4.2        Holder’s Right to Cure.  Tenant shall give any Holder a copy, by
certified mail with return receipt requested, of any notice of default served
upon Landlord, provided that Tenant previously has been notified in writing of
the address of such Holder.  If Landlord
fails to cure such default within the time provided in this Lease, any such
Holder shall have an additional thirty (30) days within which to cure such
default by Landlord or, if such default cannot reasonably be cured within that
time, such additional time as may be necessary, provided that within such
thirty-day period the Holder has commenced and is pursuing the remedies
necessary to cure such default (including commencement of foreclosure
proceedings, if necessary to effect such cure), in which event this Lease shall
not be terminated while such remedies are being so pursued.


20.5  SURVIVAL
OF REMEDIES.  The remedies permitted under this
Article 20, the parties’ indemnities under §§ 14.4.3, 14.4.4,
and14.4.5, and § 28.5 below shall survive the termination of this Lease.


21     LIMITATIONS
ON LANDLORD’S LIABILITY


21.1  PERSONAL
LIABILITY.  The liability of Landlord to Tenant for any
default by Landlord under this Lease or arising in connection herewith or with
Landlord’s operation, management, leasing, repair, renovation, alteration, or
any other matter relating to the Property or the Premises shall be limited to
the interest of Landlord in the Property (and the rental proceeds
thereof).  Under no circumstances shall
Landlord ever be liable for consequential or punitive damages, including
damages for lost profits or for business interruption.  Tenant agrees to look solely to Landlord’s
interest in the Property (and the rental proceeds thereof) for the recovery of
any judgement against Landlord, and Landlord shall not be personally liable for
any such judgement or deficiency after execution thereon.  The limitations of liability contained in
this Article 21 shall apply equally and inure to the benefit of Landlord’s
present and future partners, beneficiaries, officers, directors, trustees,
shareholders, agents, and employees, and their respective partners, heirs,
successors, and assigns.  Under no
circumstances shall any present or future general or limited partner of
Landlord (if Landlord is a partnership), or trustee or beneficiary (if Landlord
or any partner of Landlord is a trust) or corporate officer, director, or
shareholder (if Landlord or any partner of Landlord is a corporation or
company) or member (if Landlord is a limited liability company) have any
liability for the performance of Landlord’s obligations under this Lease.


21.2  LIABILITY
UPON TRANSFER.  The term Landlord as
used in this Lease, so far as covenants or obligations on the part of the
Landlord are concerned, shall be limited to mean and include only the owner or
owners, at the time in question, of the fee title to, or a lessee’s interest in
a ground lease or master lease of the Property. 
In the event of any transfer, assignment, or other conveyance or
transfer of any such title or interest, Landlord herein named (and in case of
subsequent transfers or conveyances, the current grantor) shall be
automatically freed and relieved from and after the date of such transfer,



 55
 









assignment, or
conveyance of all liability with respect to the performance of any covenants or
obligations on the part of Landlord contained in this Lease thereafter to be
performed, except for return of the Security Deposit, unless transferred to the
successor Landlord; and, without further agreement, the transferee of such
title or interest shall be deemed to have assumed and agreed to observe and
perform any and all obligations of Landlord hereunder, during its ownership of
the Premises.  Landlord may transfer its
interest in the Premises without the consent of Tenant, and such transfer or subsequent
transfer shall not be deemed a violation on Landlord’s part of any of the terms
and conditions of this Lease.


22     ESTOPPEL
CERTIFICATES


22.1  REQUEST
AND DELIVERY.  Within ten (10) business days following
any written request either party may make from time to time, the other party
without any charge therefor, shall execute, acknowledge, and deliver a
statement certifying the following: (a) the Commencement Date of this
Lease; (b) the fact that this Lease is unmodified and in full force and
effect or, if there have been modifications hereto, that this Lease is in full
force and effect, as modified, and stating the date and nature of such
modifications; (c) the date to which the Rent and other sums payable under
this Lease have been paid; (d) the fact that there are no current defaults
under this Lease by either Landlord or Tenant except as specified in the
statement; and (e) such other matters as may be reasonably requested by
such party.  Landlord and Tenant intend
that any statement delivered pursuant to this Article 22 may be relied
upon by any Holder, Lessor, beneficiary, purchaser, or prospective purchaser of
the Building, the Complex, or any interest therein.  A party’s failure to deliver any such
statement within the specified ten-day period shall constitute a material
default hereunder, and a party shall indemnify, defend, protect, and hold the
other party harmless from and against any and all Claims which the other party
may sustain or incur as a result of or in connection with a party’s failure or
delay in delivering such statement.


22.2  ELECTION
TO SELL BUILDING.  If Landlord elects to sell the Building or to
obtain loans secured by a lien on the Building, Tenant, promptly after demand,
shall include with the estoppel certificate(s) provided to any prospective
purchaser or lender as required under this Article 22 any financial
statements of Tenant reasonably required by the purchaser or lender.  The financial statements so provided shall be
kept confidential as to any parties other than the purchaser or lender.


23     NOTICES


23.1  MANNER OF
DELIVERY.  Any notice required or permitted under this
Lease shall be in writing and shall be delivered in at least one of the
following ways: (a) personally or by private hand-delivery messenger
service; (b) by depositing the same in the United States mail, postage
prepaid, registered or certified, return receipt requested; or (c) by
depositing such notice, postage prepaid, with Federal Express or another
nationally-recognized private overnight delivery service.  Each such notice shall be addressed to the
intended recipient at such party’s address set forth as follows, or at such
other address as such party has theretofore specified by written notice
delivered in accordance with this § 23.1:



 56
 









if to Landlord:


 


copy to:


 


if to
Tenant:


 


copies
to:


 


and


 


23.2  REQUIRED
CONTENTS.  Every notice (other than the giving or
withholding of consent or approval under the provisions of the Lease) given to
a party shall state the section of the Lease pursuant to which the notice is
given; the period of time within which the recipient of the notice must respond
(or, if no response is required, a statement to that effect); and if
applicable, that the failure to object to the notice within the stated time
period will be deemed to be the equivalent of the recipient’s approval, consent
to, or satisfaction with the subject matter of the notice.


23.3  PRESUMPTION
OF RECEIPT.  Any notice delivered personally or by private
messenger service during normal business hours shall be deemed delivered on the
day delivered to the recipient’s address. 
Any notice delivered by Federal Express or another nationally-recognized
private overnight delivery service shall be deemed delivered on the earlier of
(y) the second day following deposit thereof with the carrier or
(z) the delivery date shown on the carrier’s record of delivery.  Any notice delivered by mail in the manner
specified in § 23.1 shall be deemed delivered on the earlier of
(a) the third day following deposit thereof in the United States Mail or
(b) the delivery date shown on the return receipt prepared in connection
therewith.  Refusal by Tenant or Landlord
to accept notice delivered in accordance with any of the foregoing means shall
constitute a waiver of such notice by the refusing party.


24     BROKERS


24.1  TENANT’S
REPRESENTATION.  Tenant represents and warrants to Landlord
that Tenant has dealt with no broker in connection with this Lease other than
                            
(Tenant’s broker) and
                            
(Landlord’s broker).  Each party shall be
responsible for all foreseeable consequences of damages (including attorneys’
fees and costs) resulting from any claims that may be asserted against the
other party by any other broker, finder, or other person with whom a party has
or purportedly has dealt in connection with this Lease, and each party agrees
to indemnify, defend, protect, and hold the other party harmless in connection
with any such Claims which may be asserted. 
Payment of brokers’ commissions and fees is the subject of separate
agreement by and among the parties hereto and the named brokers.



 57
 









25     RIGHTS
RESERVED TO LANDLORD


25.1  ACCESS TO
PROPERTY.  All of the Property except the inside surfaces
of all walls, windows, and doors bounding the Premises (including exterior
Building walls, core corridor walls and doors, and any core corridor entrance)
and any space in or adjacent to the Premises used for shafts, stacks, pipes,
conduits, fan rooms, ducts, electric, or other utilities, sinks or other
Building facilities, and the use thereof, as well as access thereto through the
Premises for the purpose of operation, maintenance, decoration, and repair, are
reserved to Landlord.  Tenant shall
permit Landlord to install, use, replace, and maintain pipes, ducts, and conduits
within the demising walls, bearing columns, and ceilings of the Premises, so
long as Landlord’s exercise of such rights is done in such a manner as to
minimize all unreasonable disruption to the conduct of Tenant’s business in the
Premises.


25.2  CONTROL
OF PROPERTY.  Except to the extent expressly limited herein,
Landlord reserves full rights to control the Property (which rights may be
exercised without subjecting Landlord to claims for constructive eviction,
abatement of Rent, damages, or other claims of any kind), including more particularly
the following rights:


(a)                       Name,
Address, Access.  To change the name
or street address of the Property; install and maintain signs on the exterior
and interior of the Property; retain at all times, and use in appropriate
instances, keys to all doors within and into the Premises; grant to any Person
the right to conduct any business or render any service at the Property,
whether or not it is the same or similar to the use permitted Tenant by this
Lease; and have access for Landlord and other tenants of the Property to any
mail chutes located on the Premises according to the rules of the United States
Postal Service.


(b)                       Entry into
Premises.  To enter the Premises at
reasonable hours for reasonable purposes upon not less than two (2) days’ prior
written notice, except in the case of an emergency or to provide janitorial
services and subject to §§ 1.7.3 and 1.7.4 above, including inspection and
supplying cleaning service or other services to be provided Tenant hereunder,
to show the Premises to current and prospective lenders, ground lessors,
insurers, and prospective purchasers, tenants and brokers, at reasonable hours;
and if Tenant shall abandon the Premises at any time, or shall vacate the same
during the last three (3) months of the Term, to decorate, remodel,
repair, or alter the Premises.


(c)                       Safety
Measures.  To limit or prevent access
to the Property, shut down elevator service, activate elevator emergency
controls, or otherwise take such action or preventative measures deemed
necessary by Landlord for the safety of tenants or other occupants of the
Property or the protection of the Property and other property located thereon
or therein, in case of fire, invasion, insurrection, riot, civil disorder,
public excitement or other dangerous condition, or threat thereof.


(d)                       Improvements.  To decorate and to make alterations,
additions and improvements, structural or otherwise, in or to the Property or
any part thereof, and any adjacent building, structure, parking facility, land,
street or alley (including changes and reductions in corridors, lobbies,
parking facilities and other public areas and the installation of kiosks,
planters, sculptures, displays, escalators, mezzanines, and other structures,
facilities, amenities and features therein, and changes for the purpose of
connection with or entrance into or use of the Property in conjunction with any
adjoining or adjacent building or buildings, now existing or hereafter



 58
 









constructed).  In connection with such matters, or with any
other repairs, maintenance, improvements or alterations, in or about the
Property, Landlord may erect scaffolding and other structures reasonably
required, and during such operations may enter upon the Premises and take into
and upon or through the Premises, all materials required to make such repairs,
maintenance, alterations or improvements, so long as Landlord’s exercise of
such rights is done in such a manner as to minimize all unreasonable disruption
to the conduct of Tenant’s business in the Premises, and may close public entry
ways, other public areas, restrooms, stairways or corridors.


25.3  LANDLORD’S
RIGHT TO MAINTAIN.  Except as expressly otherwise provided in this
Lease, Landlord shall have no liability to Tenant by reason of any
inconvenience, annoyance, interruption, or injury to business arising from
Landlord’s making any repairs or changes which Landlord is required or
permitted to make by this Lease, by any other lease or agreement affecting the
Property, or by Law, in or to any portion of the Property, Complex, or the
Premises, including the Systems and Equipment and appurtenances of the Property
or the Premises, provided that Landlord shall use due diligence with respect
thereto and shall perform such work, except in case of emergency, at times
reasonably convenient to Tenant and otherwise in such manner as will not
materially diminish Tenant’s beneficial enjoyment of the Premises for their
intended use.  Landlord shall provide not
less that two (2) days’ prior written notice to Tenant whenever any work is to
be performed on the electrical system of the Building that could affect the
Premises, with such notice to specify the contractor that will perform such
work, the work to be done, and the location.


25.4  REASONABLE
NOTICE.  In connection with entering the Premises to
exercise any of the foregoing rights, Landlord shall: (a) provide
reasonable advance written or oral notice to Tenant’s on-site manager or
other appropriate person (except in emergencies, or for routine cleaning or
other routine matters), and (b) take reasonable steps to avoid any
unreasonable interference with Tenant’s business.


26     HOLDING OVER


26.1  HOLDOVER.
 Unless Landlord expressly agrees otherwise in
writing, Tenant shall pay Landlord one hundred fifty percent (150%) of the
amount of Rent then applicable prorated on per diem basis for each day Tenant
shall retain possession of the Premises or any part thereof after expiration of
the Term or earlier termination of this Lease, together with all damages
sustained by Landlord on account thereof. 
The foregoing provisions shall not serve as permission for Tenant to
hold over, nor serve to extend the Term, although Tenant shall remain bound to
comply with all provisions of this Lease until Tenant vacates the Premises and
shall be subject to the provisions of § 11.1 above.


26.2  PERMISSIVE
MONTH-TO-MONTH TENANCY.  Notwithstanding the
foregoing to the contrary, at any time before or after expiration or earlier
termination of the Term of the Lease, Landlord may serve notice advising Tenant
of the amount of Rent and other terms required, should Tenant desire to enter a
month-to-month tenancy.  If Tenant shall
hold over more than one full calendar month after such notice, Tenant shall
thereafter be deemed a month-to-month tenant, on the terms and
provisions of this Lease then in effect, as modified by Landlord’s notice,
except that Tenant shall not be entitled to any renewal or expansion rights
contained in this Lease or any amendments hereto.


 



 59















 


27     PARKING


27.1  AVAILABLE
PARKING.  Subject to the terms and conditions contained
in the balance of this Article 27, Landlord agrees to make available free
of charge to Tenant during the Term of this Lease and any renewal term up to a
maximum of one hundred ninety-three (193) parking spaces on a non-exclusive
basis in the area(s) designated by Landlord for parking in the Building’s
parking lots and/or facility (the “Parking Facility”); provided, that if Tenant
exercises its termination right with respect to Suite 400 pursuant to
§ 1.5.2 above, Tenant’s parking allocation shall be reduced to a maximum
of one hundred sixty-four (164) parking spaces. 
Said parking spaces shall be in locations designated by Landlord, and
parking shall be on a first-come-first-served, unassigned,
nonreserved basis.  Landlord reserves the
right reasonably to designate different locations or different parking areas
for Tenant’s use without any liability to Tenant and Tenant agrees that any
change shall not give rise to any claims or offset against Landlord
hereunder.  Tenant shall abide by any and
all reasonable parking regulations and rules established from time to time by
Landlord or Landlord’s parking operator. 
Landlord reserves the right in its sole and absolute discretion to restrict
or prohibit the use of the Parking Facility for any vehicles other than
passenger automobiles, such as full-sized vans or trucks.  Tenant shall not permit any vehicles
belonging to Tenant or Tenant’s employees, agents, customers, contractors, or
invitees to be loaded, unloaded, or parked in areas other than those designated
by Landlord for such activities.  A
failure to comply with the foregoing provisions shall afford Landlord the right
without notice to remove any vehicles involved and to charge the cost to
Tenant, which cost shall be immediately due and payable upon demand by
Landlord.


27.2  USE AT
TENANT’S OWN RISK.  Landlord shall have no obligation to monitor
the use of the Parking Facility.  Tenant’s
and its employees’ use of the Parking Facility shall be at the sole risk of
Tenant and its employees.  Unless caused
by the willful harmful act of Landlord, Landlord shall have no responsibility
or liability for any injury or damage to any person or property by or as a
result of the use of the Parking Facility (or substitute parking) by Tenant and
its employees, whether by theft, collision, criminal activity, or otherwise,
and Tenant hereby assumes, for itself and its employees, all risks associated
with any such occurrences in or about the Parking Facility.  Landlord agrees to instruct its security
service to use reasonable efforts to provide escort service to Tenant’s
employees if requested as an accommodation, subject to the availability of
security personnel to accommodate such requests in light of their primary
security duties.


28     MISCELLANEOUS
PROVISIONS.


28.1  GENERAL
DEFINITIONS.  The definitions which follow shall apply
generally to the provisions of this Lease.


(a)                       The term business days means Monday through
Friday inclusive, excluding Holidays as defined in § 8.1.1 above.  Throughout this Lease, wherever days is used the term shall refer to calendar days.  Wherever the term business
days is used the term shall refer to business days as defined
hereunder.


(b)                      The term mortgage shall include any mortgage
or deed of trust, and the term mortgagee
shall include a trustee.


(c)                       The terms include, including,
and such as shall each be construed as
if followed by the phrase “without limitation.” 
The rule of eiusdem generis
shall not be applicable to limit a general statement following or referrable to
an enumeration of specific matters to matters similar to the matters
specifically mentioned.



 60
 









(d)                      The term obligations under this Lease and
words of like import shall mean the covenants to pay Rent and Additional Rent
under this Lease and all of the other covenants and conditions contained in
this Lease.  Any provision in this Lease
that one party or the other or both shall do or not do or shall cause or permit
or not cause or permit a particular act, condition, or circumstance shall be
deemed to mean that such party so covenants or both parties so covenant, as the
case may be.


(e)                       The term Tenant’s obligations hereunder and
words of like import and the term Landlord’s obligations
hereunder and words of like import shall mean the obligations
under this Lease which are to be performed or observed by Tenant, or by
Landlord, as the case may be.  Reference
to performance of either party’s
obligations under this Lease shall be construed as “performance and observance.”


(f)                         Reference
to Tenant being or not being in default hereunder
or words like import shall mean that Tenant is in default in the performance of
one or more of Tenant’s obligations hereunder, or that Tenant is not in default
in the performance of any of Tenant’s obligations hereunder, or that a
condition of the character described in § 20.1 above has occurred and
continues or has not occurred or does not continue, as the case may be.


(g)                      References
to Landlord as having no liability to Tenant
or being without liability to Tenant
shall mean that Tenant is not entitled to terminate this Lease or to claim
actual or constructive eviction, partial or total, or to receive any credit,
allowance, setoff, abatement, or diminution of Rent, or to be relieved in any
manner of any of its other obligations hereunder, or to be compensated for loss
or injury suffered or to enforce any other kind of liability whatsoever against
Landlord under or with respect to this Lease or with respect to Tenant’s use or
occupancy of the Premises.


(h)                      The term requirements of insurance bodies and
words of like import shall mean rules, regulations, orders, and other
requirements of the California Board of Fire Underwriters and/or the California
Fire Insurance Rating Organization and/or any other similar body performing the
same or similar functions and having jurisdiction or cognizance of the Property
and/or the Premises.


(i)                          The term
repair shall be deemed to include
restoration and replacement as may be necessary to achieve and/or maintain good
working order and condition.


(j)                          Reference
to termination of this Lease includes
expiration or earlier termination of the Term of this Lease or cancellation of
this Lease pursuant to any of the provisions of this Lease or to Law.  Upon a termination of this Lease, the Term
and estate granted by this Lease shall end at noon local time of the date of
termination as if such date were the date of expiration of the Term of this
Lease, and neither party shall have any further obligation or liability to the
other after such termination, except as shall be expressly provided for in this
Lease and except for any such obligation as by its nature or under the
circumstances can only be, or by the provisions of this Lease may be, performed
after such termination; and in any event, unless expressly provided to the
contrary in this Lease, any liability for a payment or obligation which shall
have accrued to or with respect to any period ending at the time of termination
shall survive the termination of this Lease.


(k)                       The term in full force and effect when herein
used in reference to this Lease as a condition to the existence or exercise of
a right on the part of Tenant shall be 



 61
 









construed in each
instance as including the further condition that at the time in question no
default on the part of Tenant exists, and no event has occurred which has
continued to exist for such period of time (after the notice, if any, required
by this Lease), as would entitle Landlord to terminate this Lease or to
dispossess Tenant.


(l)                          The term
Tenant shall mean Tenant herein
named or any assignee, heir, distributee, executor, administrator, legal
representative, or other successor in interest (immediate or remote) of Tenant
herein named, while such Tenant or such assignee or other successor in
interest, as the case may be, is in possession of the Premises as owner of the
Tenant’s estate and interest granted by this Lease and also, if Tenant is not a
single individual or a corporation, all of the persons, firms, and corporations
then comprising Tenant; and their liability hereunder shall be joint and
several.


28.2  LIGHT AND
AIR.  No diminution of light, air or view by any
structure which may hereafter be erected (whether or not by Landlord) shall
entitle Tenant to any reduction of Rent under this Lease, result in any
liability of Landlord to Tenant, or in any other way affect this Lease.


28.3  WAIVER OF
TERMS.  If either Landlord or Tenant waives the
performance of any term, covenant, or condition contained in this Lease, such
waiver shall not be deemed to be a waiver of the term, covenant, or condition
itself or a waiver of any subsequent breach of the same or any other term,
covenant, or condition contained herein. 
Furthermore, the acceptance of Rent by Landlord shall not constitute a
waiver of any preceding breach by Tenant of any term, covenant, or condition of
this Lease, regardless of Landlord’s knowledge of such preceding breach at the
time Landlord accepts such Rent.  Failure
by Landlord to enforce any of the terms, covenants, or conditions of this Lease
for any length of time shall not be deemed to waive or to decrease the right of
Landlord to insist thereafter upon strict performance by Tenant.  Waiver by Landlord of any term, covenant, or
condition contained in this Lease may only be made by a written document signed
by Landlord.


28.4  FAILURE
TO DELIVER STATEMENTS.
Landlord’s failure during the Term of this Lease to prepare and deliver any of
the Statements, estimates, notices, or bills contemplated or required under
this Lease, or Landlord’s failure to make a demand, shall not in any way cause
Landlord to forfeit or surrender its rights to collect any of the foregoing
items of Rent which may have become due during the Term of this Lease.


28.5  ATTORNEY’S
FEES. In the
event that any action or proceeding (including arbitration) is brought to
enforce or interpret any term, covenant, or condition of this Lease on the part
of Landlord or Tenant, the prevailing party in such action or proceeding
(whether after trial or upon appeal) shall be entitled to recover from the
party not prevailing its expenses therein, including reasonable attorneys’ fees
and all allowable costs as fixed by the court.


28.6  JURY
TRIAL.  Tenant and Landlord each hereby waive their
respective rights to a trial by jury under applicable Laws in the event of any
litigation or dispute between Landlord and Tenant arising out of or in
connection with this Lease and the parties’ performance thereunder.


28.7  MERGER.  Notwithstanding the acquisition (if same
should occur) by the same party of the title and interests of both Landlord and
Tenant under this Lease, there shall never be a merger of the estates of
Landlord and Tenant under this Lease, but instead the separate estates, rights,
duties, and obligations of Landlord and Tenant, as existing hereunder, shall
remain unextinguished and continue, separately, in full 



 62
 









force and
effect until this Lease expires or otherwise terminates in accordance with the
express provisions herein contained.


28.8  NO MERGER
ON VOLUNTARY SURRENDER.  A voluntary or other surrender of this Lease
by Tenant or the mutual cancellation of this Lease shall not work a merger and
shall, at the option of Landlord, terminate all or any existing subleases or
subtenancies, or may, at the option of Landlord, operate as an assignment to it
of any or all such subleases or subtenancies.


28.9  CONSENT. 
Notwithstanding anything contained in this Lease to the contrary, Tenant
shall have no claim and hereby waives the right to any claim against Landlord
for money damages by reason of any refusal, withholding, or delaying by
Landlord of any consent, approval, statement, or satisfaction; and in such
event, Tenant’s only remedies therefor shall be an action for specific
performance, injunction, or declaratory judgement to enforce any right to such
consent, approval, statement, or satisfaction.


28.10         COUNTERPARTS. 
This Lease may be executed in multiple counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same instrument.


28.11         FINANCIAL
STATEMENTS.  In order to induce Landlord to enter into
this Lease, Tenant agrees that it shall promptly furnish Landlord, from time to
time, upon Landlord’s written request, with financial statements reflecting
Tenant’s current financial condition. 
Tenant represents and warrants that all financial statements, records,
and information furnished by Tenant to Landlord in connection with this Lease
are and shall be true, correct, and complete in all respects.


28.12         GENDER
AND NUMBER.  Words used in neuter gender include the
feminine and masculine, where applicable, and words used in the singular or
plural shall include the opposite number if appropriate.


28.13         JOINT AND
SEVERAL OBLIGATION.  If more than one person executes this Lease as
Tenant, each of them is jointly and severally liable for the keeping,
observing, and performing of all of the terms, covenants, conditions,
provisions, and agreements of this Lease to be kept, observed, and performed by
Tenant.  The term Tenant
as used in this Lease shall mean and include each of such signatories jointly
and severally.  The act of or notice
from, or notice or refund to, or the signature of, any one or more of such
signatories with respect to the tenancy or this Lease, including any renewal,
extension, expiration, termination, or modification of this Lease, shall be
binding upon each and all of the persons executing this Lease as Tenant with
the same force and effect as if each and all of them had so acted or so given
or received such notice or refund or so signed.


28.14         HEADINGS
AND SECTION NUMBERS.  The headings and titles of the articles and
sections of this Lease are used for convenience only and shall have no effect
upon the construction or interpretation of this Lease.  Wherever a reference is made in this Lease to
a particular article or section, such reference shall be deemed to include all
subsections following such section reference, unless the contrary is expressly
provided in connection with such reference. 
All references in this Lease to numbered articles, numbered sections,
and lettered exhibits are references to articles and sections of this Lease and
exhibits annexed to (and thereby made part of) this Lease, as the case may be,
unless expressly otherwise designated in the context.


28.15         APPLICABLE
LAW.  This Lease shall in all respects be governed
by and interpreted in accordance with the laws of the State of California.



 63
 









28.16         SEVERABILITY.
 If any provision of this Lease or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Lease and the application of
such provision to other persons or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law.


28.17         SIGNS.  Tenant shall not place or permit to be placed
in or upon the Premises where visible from outside the Premises or any part of
the Building, any signs, notices, drapes, shutters, blinds or window coatings,
or displays of any type without the prior written consent of Landlord.  Landlord shall consent to the location at the
cost of Tenant of a building standard sign on or near the entrance of the
Premises and shall include Tenant in the Building and Complex directories
located in the Building.  Landlord
reserves the right in Landlord’s sole discretion to place and locate on the
roof and exterior of the Building and Complex and in any area of the Building
and the Complex not leased to Tenant, such signs, notices, displays and similar
items as Landlord deems appropriate in the proper operation of the Building and
the Complex.  Notwithstanding the
foregoing, Tenant shall have the right, at Tenant’s sole cost and expense, to
install a prominent exterior monument sign, subject to applicable Laws and
Landlord’s reasonable approval.


28.18         EXECUTION
BY LANDLORD.  The submission of this document for
examination and negotiation does not constitute an offer to lease, or a
reservation of, or option for, the Premises. 
This document becomes effective and binding only upon execution and
delivery hereof by Tenant and by Landlord. 
No act or omission of any employee or agent of Landlord or of Landlord’s
broker shall alter, change or modify any of the provisions hereof.


28.19         USE OF
NAME.  Tenant shall not use the name of the Building
or Complex for any purpose other than the address of the business to be
conducted by Tenant in the Premises. 
Tenant shall not use any picture of the Building or Complex in its
advertising, stationery or in any other manner so as to imply that the entire
Building or Complex is leased by Tenant. 
Landlord expressly reserves the right at any time to change the name or
street address of the Building and/or Complex without in any manner being
liable to Tenant therefor.


28.20         NONRECORDABILITY
OF LEASE.  Tenant agrees that in no event shall this
Lease or a memorandum hereof be recorded without Landlord’s express prior
written consent, which consent Landlord may withhold in its sole discretion.


28.21         CONSTRUCTION.
 All provisions hereof, whether covenants or
conditions, shall be deemed to be both covenants and conditions.  The definitions contained in this Lease,
shall be used to interpret the Lease. 
All rights and remedies of Landlord and Tenant shall, except as
otherwise expressly provided, be cumulative and non-exclusive of any other
remedy at law or in equity.


28.22         FORCE
MAJEURE DELAYS.  This Lease and the obligations (other than
monetary obligations) of either party hereunder shall not be affected or
impaired because a party is unable to fulfill any of its obligations (other
than monetary obligations) hereunder or is delayed in doing so, if such
inability or delay is caused by reason of force majeure, strike, labor
troubles, acts of God, acts of government, unavailability of materials or
labor, or any other cause beyond the reasonable control of such party
(collectively “Force Majeure Delays”).


28.23         AUTHORITY.
 If either party is a corporation, each
individual executing this Lease on behalf of each such party represents and
warrants that such party is qualified to do business in California and that he
is duly authorized to execute and deliver this Lease on behalf of such party
and shall deliver 



 64
 









appropriate
certification to that effect if requested. 
If either party is a limited liability company, partnership, joint
venture, or other unincorporated association, each individual executing this
Lease on behalf of such party represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of such party and that
this Lease is binding on such party. 
Furthermore, each party agrees that the execution of any written consent
hereunder, or any written modification or termination of this Lease, by any
general partner or member of such party or any other authorized agent of such
party shall be binding on such party.


28.24         NONDISCLOSURE.  Tenant agrees that it shall not disclose any
of the matters set forth in this Lease or disseminate or distribute any
information concerning the terms, covenants, or conditions thereof to any
person, firm, or entity, other than a prospective assignee or subtenant of the
Premises, without first obtaining the express written approval of Landlord;
provided, however, that Tenant may disclose the contents of this Lease to any
director, officer, or employee of Tenant, to Tenant’s lawyers, accountants, or
other third party consultants or professionals, to any lenders, investors, or
others to whom Tenant provides financial statements, or in response to any
legally effective demand for disclosure pursuant to court order or from any
other properly constituted legal authority.


28.25         QUIET
ENJOYMENT.  So long as Tenant is not in default under this
Lease, Tenant shall have quiet enjoyment of the Premises for the Term, subject
to all the terms and conditions of this Lease and all liens and encumbrances
prior to this Lease.


28.26         EXHIBITS
AND ATTACHMENTS.  All exhibits and attachments referred to in
the body of this Lease are deemed attached hereto and incorporated herein by
reference.  The parties have attached the
following exhibits to the Lease prior to execution:




	
  Exhibit A

  	
   

  	
  Site Plan

  
	
  Exhibit B

  	
   

  	
  Floor Plans of Premises

  
	
  Exhibit C

  	
   

  	
  Rules and Regulations

  
	
  Exhibit D

  	
   

  	
  Athletic Facility Use Agreement

  
	
  Exhibit E

  	
   

  	
  Commencement Date Agreement

  
	
  Exhibit F

  	
   

  	
  Work Letter Agreement

  






28.27         ENTIRE
AGREEMENT.  This Lease, together with its exhibits,
contains all the agreements of the parties hereto and supersedes any previous
negotiations.  There have been no
representations made by the Landlord or understandings made between the parties
other than those set forth in this Lease and its exhibits.  This Lease may not be modified except by a
written instrument duly executed by the parties hereto.


IN
WITNESS WHEREOF, the parties have executed this Lease as of
the date first above written.




	
  Landlord:

  	
   

  
	
   

  	
  By:

  	
   

  
	
  Tenant:

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
  By:

  	
   

  






 



 65















 


TABLE OF
CONTENTS


	
  1

  	
  BASIC LEASE
  TERMS

  	
  1

  
	
  2

  	
  USE

  	
  13

  
	
  3

  	
  PREPARATION OF
  THE PREMISES

  	
  14

  
	
  4

  	
  ADJUSTMENTS OF
  RENT

  	
  16

  
	
  5

  	
  SECURITY DEPOSIT

  	
  26

  
	
  6

  	
  COMPLIANCE WITH
  LAWS

  	
  26

  
	
  7

  	
  HAZARDOUS
  MATERIALS

  	
  27

  
	
  8

  	
  SERVICES AND
  UTILITIES

  	
  29

  
	
  9

  	
  TENANT’S CHANGES

  	
  33

  
	
  10

  	
  TENANT’S
  PROPERTY

  	
  36

  
	
  11

  	
  CONDITION UPON
  SURRENDER

  	
  36

  
	
  12

  	
  REPAIRS AND
  MAINTENANCE

  	
  37

  
	
  13

  	
  RULES AND
  REGULATIONS

  	
  38

  
	
  14

  	
  INSURANCE AND
  INDEMNIFICATION

  	
  38

  
	
  15

  	
  DAMAGE OR
  DESTRUCTION

  	
  42

  
	
  16

  	
  EMINENT DOMAIN

  	
  44

  
	
  17

  	
  ASSIGNMENT AND
  SUBLETTING

  	
  44

  
	
  18

  	
  SUBORDINATION
  AND ATTORNMENT

  	
  49

  
	
  19

  	
  FINANCING
  REQUIREMENTS

  	
  51

  
	
  20

  	
  DEFAULT

  	
  51

  
	
  21

  	
  LIMITATIONS ON
  LANDLORD’S LIABILITY

  	
  54

  
	
  22

  	
  ESTOPPEL
  CERTIFICATES

  	
  55

  
	
  23

  	
  NOTICES

  	
  55

  
	
  24

  	
  BROKERS

  	
  56

  
	
  25

  	
  RIGHTS RESERVED
  TO LANDLORD

  	
  57

  
	
  27

  	
  HOLDING OVER

  	
  58

  
	
  28

  	
  PARKING

  	
  59

  
	
  29

  	
  MISCELLANEOUS
  PROVISIONS

  	
  59

  



 



 i
 









INDEX OF
DEFINED TERMS


	
  A

  	
   

  
	
  Additional Rent

  	
  11, 16, 22, 35, 44, 46,
  47, 59

  
	
  Adjustment Period

  	
  16, 17, 18, 20, 22, 23,
  24, 25

  
	
  Assumed Base Amount

  	
  23, 24

  
	
  Athletic Facility

  	
  12, 20, 64

  
	
  B

  	
   

  
	
  Base Expense Year

  	
  17

  
	
  Base Operating Expenses

  	
  16, 17, 23

  
	
  Base Real Estate Taxes

  	
  17, 23, 24

  
	
  Base Rent

  	
  2, 3, 11, 16, 23, 26,
  32, 42, 46, 47, 50

  
	
  Base Tax Year

  	
  17, 24

  
	
  Base Utilities

  	
  16, 17, 23

  
	
  Building

  	
  3, 12, 13, 14, 17, 18,
  19, 20, 23, 29, 31, 32, 33, 35, 37, 39, 41, 43, 45, 47, 48, 49, 55, 56, 58,
  62, 63

  
	
  Business Hours

  	
  30

  
	
  Business Personal Property

  	
  38, 39, 40

  
	
  C

  	
   

  
	
  Claims

  	
  40, 41, 55, 56

  
	
  Code Costs

  	
  27

  
	
  Commencement Date

  	
  3, 9, 11, 16, 19, 27,
  31, 51, 54, 64

  
	
  Complex

  	
  1, 3, 11, 12, 13, 14,
  17, 20, 25, 35, 41, 43, 45, 46, 49, 51, 55, 58, 62, 63

  
	
  E

  	
   

  
	
  Event of Default

  	
  51, 52

  
	
  Expiration Date

  	
  3, 9, 22, 26, 29, 36,
  46

  
	
  F

  	
   

  
	
  Force Majeure Delays

  	
  63

  
	
  H

  	
   

  
	
  Hazardous Material

  	
  27, 28

  
	
  Holder

  	
  39, 49, 50, 53, 55

  
	
  Holidays

  	
  30, 59

  
	
  HVAC

  	
  29, 32, 33

  
	
  I

  	
   

  
	
  Improvements

  	
  14, 35, 36, 43, 57

  
	
  INC

  	
  1, 13, 14, 29, 31, 33,
  37, 41, 64

  
	
  IW

  	
  37

  
	
  L

  	
   

  
	
  Landlord

  	
  1, 3, 9, 11, 12, 13,
  14, 15, 16, 17, 18, 19, 20, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33,
  34, 35, 36, 37,

  
	
   

  	
  38, 39, 40, 41, 42, 43,
  44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62,
  63, 64

  
	
  Laws

  	
  14, 19, 26, 27, 28, 29,
  31, 34, 35, 37

  
	
  Lease

  	
  i, 2, 3, 9, 11, 12, 13,
  14, 16, 17, 18, 20, 23, 24, 25, 26, 27, 28, 29, 30, 31, 33, 34, 35, 36, 37,
  38, 39, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57,
  58, 59, 60, 61, 62, 63, 64

  
	
  Lessor

  	
  39, 49, 50, 55

  



 



 ii
 









 


 


	
  M

  	
   

  
	
  MPOE

  	
  29, 31

  
	
  MSDS

  	
  28

  
	
  O

  	
   

  
	
  Occupancy Conditions

  	
  15, 16

  
	
  Operating Expenses

  	
  16, 17, 18, 19, 20, 23,
  24, 25, 29, 43

  
	
  P

  	
   

  
	
  Parking Facility

  	
  58, 59

  
	
  Permitted Occupant

  	
  45, 49

  
	
  Premises

  	
  1, 2, 3, 9, 12, 13, 14,
  15, 16, 17, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 41,
  42, 43, 44, 45, 46, 48, 49, 51, 52, 53, 54, 56, 57, 58, 60, 62, 63, 64

  
	
  Property

  	
  3, 12, 13, 14, 17, 18,
  19, 20, 24, 25, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41,
  42, 43, 47, 49, 51, 52, 54, 55, 56, 57, 58, 60

  
	
  R

  	
   

  
	
  Real Estate Taxes

  	
  17, 18, 23, 24, 25

  
	
  Rent

  	
  2, 3, 11, 12, 13, 16,
  18, 22, 23, 26, 32, 33, 35, 41, 42, 44, 46, 47, 48, 50, 52, 53, 55, 57, 58,
  59, 60, 61

  
	
  Rental Adjustment

  	
  17, 22, 23

  
	
  Rules

  	
  13, 37, 38, 64

  
	
  S

  	
   

  
	
  Security Deposit

  	
  26

  
	
  State

  	
  1, 18, 26, 38, 62

  
	
  Statement

  	
  22, 23, 25

  
	
  Subsequent Operating Expenses

  	
  23

  
	
  Successor Landlord

  	
  50

  
	
  Superior Leases

  	
  49

  
	
  Superior Mortgages

  	
  20, 49

  
	
  Systems and Equipment

  	
  12, 13, 14, 20, 29, 31,
  32, 33, 37, 41, 58

  
	
  T

  	
   

  
	
  Table

  	
  2, 3, 11, 16, 17

  
	
  Takings

  	
  43

  
	
  Temporary Condemnation

  	
  44

  
	
  Tenant

  	
  1, 2, 3, 9, 11, 12, 13,
  14, 15, 16, 17, 18, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35,
  36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55,
  56, 57, 58, 59, 60, 61, 62, 63, 64

  
	
  Tenant Delays

  	
  16

  
	
  Term

  	
  2, 9, 11, 14, 16, 17,
  18, 20, 23, 24, 27, 30, 33, 35, 36, 39, 43, 44, 53, 57, 58, 60, 61, 64

  
	
  Transfer

  	
  44, 46, 47, 48, 51, 54

  
	
  Transfer Notice

  	
  44, 46

  
	
  Transfer Premium

  	
  47

  
	
  U

  	
   

  
	
  Utilities

  	
  16, 17, 18, 20, 23, 25,
  29

  
	
  W

  	
   

  
	
  Work

  	
  14, 15, 16, 35, 36, 37,
  64

  



 



 iii















OYSTER POINT
MARINA PLAZA


First Addendum to Office Lease


THIS FIRST ADDENDUM TO
OFFICE LEASE (the “First Addendum”) is made and entered into as of December 15,
2004, by and between                                   ,
a California corporation (“Landlord”) and                           ,
a Delaware limited partnership (“Tenant”).


Recitals


A.         Landlord and Tenant have heretofore
entered into that certain lease dated June 1, 2003 (the “Lease”) for premises
described as
Suites                 
& 400 (the “Premises”), initially containing approximately                     
rentable square feet, in the building located at 395 Oyster Point Boulevard,
South San Francisco, California (the “Building”), which forms part of the
office building complex commonly known as Oyster Point Marina Plaza (the “Complex”).


B.         The parties mutually desire to amend
the terms of the Lease so as to expand the Premises by the addition of
Suite 401 containing approximately 1,250 rentable square feet of space and
in certain other respects, all on and subject to the terms and conditions
hereof.


Agreement


Now, therefore,  in consideration of the mutual terms
and conditions herein contained and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:


1      EFFECT
OF ADDENDUM.  Landlord
and Tenant agree that, notwithstanding anything contained in the Lease to the
contrary, the provisions set forth below will be deemed to be part of the Lease
and shall supersede, to the extent they differ, any contrary provisions in the
Lease.  Terms defined in the Lease shall
have the same meanings in this First Addendum, unless a different definition is
set forth in this First Addendum.


2      EFFECTIVE
DATE.  The amendments
and changes specified in this First Addendum shall become effective on January 1, 2005 (the “Effective Date”).  Notwithstanding the foregoing, this First
Addendum shall constitute the fully-binding agreement and contract of the
parties from and after the date of the parties’ execution and delivery to each
other of this First Addendum.


3      EXPANSION
OF PREMISES.  Upon the
Effective Date, the Premises shall be expanded by the addition of
Suite 401 containing approximately 1,250 rentable square feet of space in
the Building (“Suite 401”) for all purposes under the Lease; and all
references in the Lease to the “Premises” shall refer to the combination of
both the existing Premises under the Lease and Suite 401 from and after
the Effective Date.  The floor plan and
location of Suite 401 is shown on Exhibit A
which is attached hereto and incorporated herein by reference.  The parties agree that, upon the Effective
Date, Suite 401 shall become part of the Premises pursuant to the basic
terms specified in the Table below (as hereby amended) regarding Term, Base
Rent, Tenant’s Share of increases in Operating Expenses and Taxes, and the Base
Year for the purposes of calculating Additional Rentable payable with respect
to Suite 401.


3.1    Early Occupancy.  Notwithstanding anything to the contrary herein,
Tenant shall be permitted early entry to Suite 401 from and after the date
of the parties’ execution and delivery to each other of this First Addendum for
the purpose of installing Tenant’s telephone and data network cables and
wiring, provided that Tenant does not interfere with the performance of
Landlord’s Work Suite 401 (if any); but 



 1
 









 


shall not be obligated to begin paying Base Rent therefore until the
Effective Date, as specified in the Table below.


4      TABLE.  The Table set forth in § 1.3 of the
Lease is hereby superseded and replaced in its entirety by the following table,
which shall constitute the Table under § 1.3 of the Lease for all purposes
from and after the Effective Date of this First Addendum:


	
  PERIOD

  	
   

  	
  SUITE

  NO.

  	
   

  	
  RSF

  	
   

  	
  USF

  	
   

  	
  MONTHLY

  BASE RENT

  	
   

  	
  T’S

  SHARE

  BLDG

  	
   

  	
  T’S SHARE

  COMPLEX

  	
   

  	
  BASE

  YEAR

  	
   

  
	
  March 1, 2004, to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2004

  	
   

  
	
  February 28, 2005

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  14,784.00

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  January 1, 2005,
  to

  February 28, 2005

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,000.00

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
  2004

  	
   

  
	
  March 1, 2005 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 28, 2006

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  15,206.40

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,000.00

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
  March 1, 2006 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 28, 2007

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  15,628.80

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
   

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,062.50

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
  March 1, 2007 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 29, 2008

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  16,051.20

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,125.00

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
  March 1, 2008 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 28, 2009

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  16,473.60

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
   

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,187.50

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
  March 1, 2009 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 28, 2010

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  16,896.00

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,250.00

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
  March 1, 2010 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 28, 2011

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  17,318.40

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
   

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,312.50

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
  March 1, 2011 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 29, 2012

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  17,740.80

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,375.00

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
  March 1, 2012 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 28, 2013

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  18,163.20

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
   

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,437.50

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
  March 1, 2013 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 28, 2014

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  18,585.60

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
   

  	
   

  
	
  

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,500.00

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
  2004

  	
   

  
	
  TOTALS:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


5      AMENDMENT OF RENT.  From and after the Effective Date, the Base
Rent reserved in § 1.6(a) of the Lease is hereby amended to that specified
in the Table in ¶ 4 above with respect to the various spaces and time
periods referenced therein.  Tenant shall
pay to Landlord the first month’s Base Rent with respect to Suite 401 upon
Tenant’s execution and delivery of this First Addendum to Landlord.



 2
 









5.1    Suite
400 Base Rent Abatement. 
Notwithstanding anything to the contrary in this First Addendum
(including the Table above) Tenant’s Abatement Period with respect to
Suite 400 provided under § 1.6.3 of the Lease remains in effect,
provided that said § 1.6.3 of the Lease is hereby amended and restated as
follows:


Notwithstanding
anything to the contrary in this § 1.6 or § 1.3 above, beginning on March 1, 2004, Tenant’s Monthly Installment of Base
Rent with respect to Suite 400 only shall be abated for a period of
eighteen (18) months (the “Abatement Period”). 
The parties agree that the Abatement Period shall terminate on  September 1, 2005.  If Tenant shall materially default under the
Lease and fail to cure within the time permitted for cure thereunder, while the
Abatement Period is still in effect, the Abatement Period shall thereupon
terminate, and Tenant shall commence paying the Base Rent under the Lease as
specified in the Table.


6      BASE YEAR AND ADDITIONAL RENT.  As specified in the Table below, the Base
Year for the purposes of Article 4 of the Lease from and after the
Effective Date shall be calendar year 2004 with
respect to Suite 401.


7       CONDITION OF PREMISES.  Tenant shall accept Suite 401, any
existing Improvements in Suite 401, and the Systems and Equipment serving
the same in an “as is” condition on the Effective Date, and Landlord shall
have no obligation to improve, alter, remodel, or otherwise modify the
Suite 401 in connection with Tenant’s occupancy of the Premises from and
after the Effective Date.


7.1    Landlord’s
Work; Improvement Allowance. 
Notwithstanding anything to the contrary in ¶ 4 above, Landlord
agrees to provide an improvement allowance in the amount of Four Thousand Nine Hundred Fifteen Dollars ($4,915.00)
toward the cost of any work or improvements that Tenant may elect to install in
Suite 401, subject to Article 9 of the Lease, after the Effective
Date hereof.  If Tenant elects to
implement any such Changes in Suite 401, Landlord shall use reasonable
diligence in completing the approved work in Suite 401 for Tenant.  The facilities, materials, and work to be
furnished, installed, and performed in Suite 401 by Landlord are referred
to as the “Work.”  Any other installations,
materials, and work which may be undertaken by or for the account of Tenant to
prepare, equip, decorate, and furnish Suite 401 are referred to as the “Tenant’s
Work.”  If required by Landlord, Tenant
agrees to enter into an appropriate work letter agreement to reflect the
parties’ agreement with respect to any such Changes in Suite 401 and the
expenditure of the improvement allowance granted under this ¶ 7.1.


7.1.1     Occupancy
during Work.  The parties
acknowledge that Tenant shall be in possession of the Premises and shall
conduct its business in the Premises during the Work contemplated under
¶ 7.1 above.  Landlord shall have no
liability to Tenant, nor shall Tenant’s obligations under the Lease be reduced
or abated in any manner whatsoever, by reason of any inconvenience, annoyance,
interruption, or injury to business arising from Landlord’s performance of the
Work or from Landlord’s making any repairs or changes which Landlord is
required or permitted to perform by the Lease. 
Landlord shall nevertheless use reasonable efforts to minimize any
interference with Tenant’s business in the Premises.  Landlord agrees to use reasonable efforts to
avoid interference with Tenant’s use and occupancy of the Premises during the
performance of the Work and agrees to cause the application of paint and any
work generating unreasonable noise outside of normal business hours.  The parties agree that Landlord shall not be
liable for any damages which Tenant may incur during the performance of the
Work, except to the extent that Tenant’s actual damages are the result of
Landlord’s negligence or wilfull misconduct. 
In no circumstances shall Landlord be liable to Tenant for business
interruption, lost profits, or compensatory or consequential damages of any
kind by virtue of Landlord’s Work. 
Tenant specifically agrees that any interference with Tenant’s use or
occupancy of the Premises caused by the performance of the Work shall not
constitute a constructive eviction.



 3
 









7.2    Notice
of Defects.  It shall be
conclusively presumed upon Tenant’s taking actual possession of Suite 401
that the same were in satisfactory condition (except for latent defects) as of
the date of such taking of possession, unless within thirty (30) days
after the Effective Date Tenant shall give Landlord notice in writing
specifying the respects in which Suite 401 was not in satisfactory
condition.


8      TENANT’S SUPPLEMENTARY IMPROVEMENT ALLOWANCE.  Notwithstanding anything to the contrary n
¶ 3 of the Work Letter Agreement, the parties agree that, during the
performance of Landlord’s Work under the Work Letter Agreement, Tenant elected
to apply of sum of Sixty Thousand Dollars ($60,000) referenced in said ¶ 3
to improvements other than the Southeast Wing HVAC portion of the Supplemental
HVAC system in the 5th Floor of the Premises as required under
§ 3.2 of the Lease and that Landlord’s entire obligation under the Work
Letter Agreement with respect to the Southeast Wing HVAC portion of the
Supplemental HVAC system in the 5th Floor of the Premises as required under
§ 3.2 of the Lease has been fully and completely discharged.


9      Tenant’s
Termination Right.  From and
after the Effective Date the parties agree that Suite 401 shall be deemed
part of Suite 400 for the purpose of exercising Tenant’s Suite 400 termination
right under § 1.5.2 of the Lease; provided, that said § 1.5.2 is
hereby amended in its entirety to read as follows:


Suite 400 Termination Right.  Notwithstanding anything to the contrary
herein, Tenant shall have the right to terminate the Lease with respect to
Suites 400 and 401 only effective on either September 30,
2008, or September 30, 2010,
upon written notice given to Landlord not less than six (6) months and not more
than nine (9) months prior to either such termination date that may be selected
by Tenant.  If Tenant exercises such
termination right, Tenant shall pay to Landlord a termination fee on the
termination date of either One Hundred Seven Thousand
Five Hundred Thirteen Dollars and Forty Cents ($107,513.40), if
Tenant exercises its right to terminate the Lease with respect to
Suites 400 and 401 on September 30, 2008, or Seventy-Seven
Thousand Three Hundred Thirty-Four Dollars and Twenty Cents ($77,334.20),
if Tenant exercises its right to terminate the Lease with respect to
Suites 400 and 401 on September 30, 2010.


10   PARKING.  The number of parking spaces designated for
Tenant’s use under § 27.1 of the Lease shall be increased from and after
the Effective Date from the number stated in the Lease to up to a maximum of
One Hundred Ninety-Seven (197) parking spaces on a non-exclusive basis in the
area(s) designated by Landlord for parking in the Building’s parking lots.


11   NO DISCLOSURE.  Tenant agrees that it shall not disclose any
of the matters set forth in this First Addendum or disseminate or distribute
any information concerning the terms, details, or conditions hereof to any
person, firm, or entity without obtaining the express written approval of
Landlord.


12   SURVIVAL.  Warranties, representations, agreements, and
obligations contained in this First Addendum shall survive the execution and
delivery of this First Addendum and shall survive any and all performances in
accordance with this First Addendum.


13   COUNTERPARTS.  This First Addendum may be executed in any
number of counterparts, which each severally and all together shall constitute
one and the same First Addendum.


14   ATTORNEYS’ FEES.  If any party obtains a judgement against any
other party or parties by reason of breach of this First Addendum, reasonable
attorneys’ fees and costs as fixed by the court shall be included in such
judgement against the losing party or parties.


15   SUCCESSORS.  This First Addendum and the terms and
provisions hereof shall inure to the benefit of and be binding upon the heirs,
successors, and assigns of the parties.


16   AUTHORITY.  Each of the individuals executing this First
Addendum represents and warrants that he or she is authorized to execute this
First Addendum on behalf of the party for whom he or she is



 4
 









executing this First Addendum and that by his or her
signature such party is legally bound by the terms, covenants, and conditions
of this First Addendum.


17   GOVERNING LAW.  This First Addendum shall be construed and
enforced in accordance with the laws of the State of California.


18   CONTINUING VALIDITY
OF LEASE.  Except as expressly modified herein, the
Lease remains in full force and effect, and its provisions shall apply equally
to the Expansion Space as to the remainder of the Premises, including
(i) Tenant’s termination right under § 1.5.2 of the Lease with
respect to Suite 400, of which the Expansion Space shall be deemed a part
of the purposes of exercising Tenant termination right thereunder;
(ii) the exercise of Tenant’s Extension Option under § 1.5.1 of the
Lease; and (iii) Tenant’s Security Deposit stated under § 5.1 of the
Lease, which shall remain unchanged by this First Addendum.


19   CONFLICTS.  In the event of any conflict between the
provisions of the Lease and those of this First Addendum, the terms and
provisions of this First Addendum shall control.


20   WHOLE AGREEMENT.  The mutual obligations of the parties as
provided herein are the sole consideration for this First Addendum, and no
representations, promises, or inducements have been made by the parties other
than as appear in this First Addendum, which supersedes any previous
negotiations.  There have been no
representations made by the Landlord or understandings made between the parties
other than those set forth in this First Addendum.  This First Addendum may not be amended except
in writing signed by all the parties.


In
witness whereof, the parties have executed this First Addendum as of the
date first above written.


	
  Landlord:

  	
   

  	
  Tenant:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
					



 



 5
 









 


[Exhibit A]


[Suite 401]


 



 6















OYSTER POINT
MARINA PLAZA


Second Addendum to Office Lease


THIS SECOND
ADDENDUM TO OFFICE LEASE (the “Second Addendum”) is made and entered into as of
March 1, 2005, by and between                        ,
a California corporation (“Landlord”) and                                                  ,
a Delaware limited partnership (“Tenant”).


Recitals


A.         Landlord and Tenant have heretofore
entered into that certain lease dated June 1, 2003 (the “Lease”) for premises
described as Suites         & 400
(the “Premises”), initially containing approximately             
rentable square feet, in the building located at 395 Oyster Point Boulevard,
South San Francisco, California (the “Building”), which forms part of the
office building complex commonly known as Oyster Point Marina Plaza (the “Complex”).


B.         The Lease has heretofore been amended
by that certain First Addendum to Office Lease dated as of December 15, 2004 (“the
“First Addendum”), under which the parties agreed to expand the Premises by the
addition of Suite 401 containing approximately 1,250 rentable square feet
of space and in certain other respects, all as set forth in the First Addendum.


C.         The parties mutually desire to amend
the terms of the Lease so as to expand the Premises by the addition of
Suite 402 containing approximately 5,680 rentable square feet of space and
in certain other respects, all on and subject to the terms and conditions
hereof.


Agreement


Now, therefore,  in consideration of the mutual terms
and conditions herein contained and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:


1      EFFECT OF ADDENDUM.  Landlord and Tenant agree that,
notwithstanding anything contained in the Lease to the contrary, the provisions
set forth below will be deemed to be part of the Lease and shall supersede, to
the extent they differ, any contrary provisions in the Lease.  Terms defined in the Lease shall have the
same meanings in this Second Addendum, unless a different definition is set
forth in this Second Addendum.


2      EFFECTIVE DATE.  The amendments and changes specified in this Second
Addendum shall become effective on April 1, 2005
(the “Effective Date”).  Notwithstanding
the foregoing, this Second Addendum shall constitute the fully-binding
agreement and contract of the parties from and after the date of the parties’
execution and delivery to each other of this Second Addendum.


3      TABLE.  The Table set forth in § 1.3 of the
Lease (as heretofore modified in the First Addendum) is hereby superseded and
replaced in its entirety by the following table, which shall constitute the
Table under § 1.3 of the Lease for all purposes from and after the
Effective Date of this Second Addendum:



 7
 









 


	
  PERIOD

  	
   

  	
  SUITE

  NO.

  	
   

  	
  RSF

  	
   

  	
  USF

  	
   

  	
  MONTHLY

  BASE RENT

  	
   

  	
  SHARE

  BLDG

  	
   

  	
  SHARE

  COMPLEX

  	
   

  	
  BASE

  YEAR

  	
   

  
	
  March 1, 2004, to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2004

  	
   

  
	
  February 28, 2005

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  14,784.00

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  January
  1, 2005, to February 28, 2005

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,000.00

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
  2004

  	
   

  
	
  March 1, 2005 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 28, 2006

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  15,206.40

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,000.00

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
  April
  1, 2005, to

  February 28, 2006

  	
   

  	
  402

  	
   

  	
  5,680

  	
   

  	
  4,939

  	
   

  	
  $

  	
  9,088.00

  	
   

  	
  2.441

  	
  %

  	
  1.223

  	
  %

  	
  2004

  	
   

  
	
  March 1, 2006 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 28, 2007

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  15,628.80

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,062.50

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
  

  	
   

  	
  402

  	
   

  	
  5,680

  	
   

  	
  4,939

  	
   

  	
  $

  	
  9,372.00

  	
   

  	
  2.441

  	
  %

  	
  1.223

  	
  %

  	
   

  	
   

  
	
  March 1, 2007 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 29, 2008

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  16,051.20

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
   

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,125.00

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
  402

  	
   

  	
  5,680

  	
   

  	
  4,939

  	
   

  	
  $

  	
  9,656.00

  	
   

  	
  2.441

  	
  %

  	
  1.223

  	
  %

  	
   

  	
   

  
	
  March 1, 2008 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 28, 2009

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  16,473.60

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,187.50

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
  

  	
   

  	
  402

  	
   

  	
  5,680

  	
   

  	
  4,939

  	
   

  	
  $

  	
  9,940.00

  	
   

  	
  2.441

  	
  %

  	
  1.223

  	
  %

  	
   

  	
   

  
	
  March 1, 2009 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 28, 2010

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  16,896.00

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
   

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,250.00

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
  402

  	
   

  	
  5,680

  	
   

  	
  4,939

  	
   

  	
  $

  	
  10,224.00

  	
   

  	
  2.441

  	
  %

  	
  1.223

  	
  %

  	
   

  	
   

  
	
  March 1, 2010 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 28, 2011

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  17,318.40

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,312.50

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
  

  	
   

  	
  402

  	
   

  	
  5,680

  	
   

  	
  4,939

  	
   

  	
  $

  	
  10,508.00

  	
   

  	
  2.441

  	
  %

  	
  1.223

  	
  %

  	
   

  	
   

  
	
  March 1, 2011 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 29, 2012

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  17,740.80

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
   

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,375.00

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
  402

  	
   

  	
  5,680

  	
   

  	
  4,939

  	
   

  	
  $

  	
  10,792.00

  	
   

  	
  2.441

  	
  %

  	
  1.223

  	
  %

  	
   

  	
   

  
	
  March 1, 2012 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 28, 2013

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  18,163.20

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
  

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,437.50

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
  

  	
   

  	
  402

  	
   

  	
  5,680

  	
   

  	
  4,939

  	
   

  	
  $

  	
  11,076.00

  	
   

  	
  2.441

  	
  %

  	
  1.223

  	
  %

  	
   

  	
   

  
	
  March 1, 2013 to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 28, 2014

  	
   

  	
  400

  	
   

  	
  8,448

  	
   

  	
  7,346

  	
   

  	
  $

  	
  18,585.60

  	
   

  	
  3.630

  	
  %

  	
  1.819

  	
  %

  	
  2004

  	
   

  
	
   

  	
   

  	
  401

  	
   

  	
  1,250

  	
   

  	
  1,087

  	
   

  	
  $

  	
  2,500.00

  	
   

  	
  0.537

  	
  %

  	
  0.269

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
  402

  	
   

  	
  5,680

  	
   

  	
  4,939

  	
   

  	
  $

  	
  11,360.00

  	
   

  	
  2.441

  	
  %

  	
  1.223

  	
  %

  	
   

  	
   

  
	
  TOTALS:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 



 8
 









4      EXPANSION OF PREMISES.  Upon the Effective Date, the Premises shall
be expanded by the addition of Suite 402 containing approximately 5,680
rentable square feet of space in the Building (“Suite 402”) for all
purposes under the Lease; and all references in the Lease to the “Premises”
shall refer to the combination of both the existing Premises under the Lease as
heretofore amended and Suite 402 from and after the Effective Date.  The floor plan and location of Suite 402
is shown on Exhibit A which is attached
hereto and incorporated herein by reference. 
The parties agree that, upon the Effective Date, Suite 402 shall
become part of the Premises pursuant to the basic terms specified in the Table
below (as hereby amended) regarding Term, Base Rent, Tenant’s Share of
increases in Operating Expenses and Taxes, and the Base Year for the purposes
of calculating Additional Rentable payable with respect to Suite 402.


4.1    Early
Occupancy.  Notwithstanding
anything to the contrary herein, Tenant shall be permitted early entry to
Suite 402 from and after the date of the parties’ execution and delivery
to each other of this Second Addendum for the purpose of installing Tenant’s
telephone and data network cables and wiring, provided that Tenant does not interfere
with the performance of Landlord’s Work Suite 402 (if any); but shall not
be obligated to begin paying Base Rent therefore until the Effective Date, as
specified in the Table below.


5      AMENDMENT OF RENT.  From and after the Effective Date, the Base Rent
reserved in § 1.6(a) of the Lease is hereby amended to that specified in
the Table in ¶ 3 above with respect to the various spaces and time periods
referenced therein.  Tenant shall pay to
Landlord the first month’s Base Rent with respect to Suite 402 upon Tenant’s
execution and delivery of this Second Addendum to Landlord.


6      BASE YEAR AND ADDITIONAL RENT.  As specified in the Table above, the
Base Year for the purposes of Article 4 of the Lease from and after the
Effective Date shall be calendar year 2004 with
respect to Suite 402.


7       CONDITION OF PREMISES.  Except as provided in ¶ 7.1 below, Tenant
shall accept Suite 402, any existing Improvements in Suite 402, and
the Systems and Equipment serving the same in an “as is” condition on the
Effective Date, and Landlord shall have no obligation to improve, alter,
remodel, or otherwise modify the Suite 402 in connection with Tenant’s
occupancy of the Premises from and after the Effective Date.


7.1    Landlord’s
Work.  Landlord shall use
reasonable diligence in completing and preparing the Suite 402 for Tenant’s
occupancy on or before the Effective Date; provided, however, that the
commencement date for the lease of Suite 402 shall be the Effective Date,
and Tenant shall begin paying Rent therefore on the Effective Date, regardless
of whether Landlord’s Work (as defined below) is substantially completed on or
before the Effective Date or not.  The
facilities, materials, and work to be furnished, installed, and performed in
Suite 402 by Landlord are referred to as the “Work.”  Any other installations, materials, and work
which may be undertaken by or for the account of Tenant to prepare, equip,
decorate, and furnish Suite 402 are referred to as the “Tenant’s Work,”
which shall include the connection and/or rewiring of Tenant’s telephone and
data lines.  The parties agree that
Landlord’s Work shall consist of the following items only, to be completed at
Landlord’s sole cost and expense:


(i)                                     Landlord
shall re-activate the corridor in the Suite 402 wing and install Building-standard
carpet, wall covering, and light fixtures in Suite 402 wing corridor; and


(ii)                                  Landlord
shall construct a demising wall for Suite 402.


7.1.1    Occupancy
during Work.  The parties
acknowledge that Tenant may be in possession of the Premises and shall conduct
its business in the Premises during the Work contemplated under ¶ 7.1 



 9
 









above.  Landlord shall have no liability to Tenant,
nor shall Tenant’s obligations under the Lease be reduced or abated in any
manner whatsoever, by reason of any inconvenience, annoyance, interruption, or
injury to business arising from Landlord’s performance of the Work or from
Landlord’s making any repairs or changes which Landlord is required or
permitted to perform by the Lease. 
Landlord shall nevertheless use reasonable efforts to minimize any
interference with Tenant’s business in the Premises.  Landlord agrees to use reasonable efforts to
avoid interference with Tenant’s use and occupancy of the Premises during the
performance of the Work and agrees to cause the application of paint and any
work generating unreasonable noise outside of normal business hours.  The parties agree that Landlord shall not be
liable for any damages which Tenant may incur during the performance of the
Work, except to the extent that Tenant’s actual damages are the result of
Landlord’s negligence or wilfull misconduct. 
In no circumstances shall Landlord be liable to Tenant for business
interruption, lost profits, or compensatory or consequential damages of any
kind by virtue of Landlord’s Work. 
Tenant specifically agrees that any interference with Tenant’s use or
occupancy of the Premises caused by the performance of the Work shall not
constitute a constructive eviction.


7.1.2    Notice
of Defects.  It shall be
conclusively presumed upon Tenant’s taking actual possession of Suite 402
that the same were in satisfactory condition (except for latent defects) as of
the date of such taking of possession, unless within thirty (30) days
after the Effective Date Tenant shall give Landlord notice in writing
specifying the respects in which Suite 402 was not in satisfactory
condition.


7.2    Improvement
Allowance.  In addition to bearing
the cost of the Work specified in ¶ 7.1 above, Landlord agrees to provide to
Tenant an improvement allowance in the amount of Twenty-Eight Thousand Four Hundred Dollars ($28,400.00) toward
the cost of any work or improvements that Tenant may elect to install in
Suite 402, subject to Article 9 of the Lease, after the Effective
Date hereof.  If Tenant elects to
implement any such Changes in Suite 402, Landlord shall use reasonable
diligence in completing the approved work in Suite 402 for Tenant.  If required by Landlord, Tenant agrees to
enter into an appropriate work letter agreement to reflect the parties’
agreement with respect to any such Changes in Suite 402 and the
expenditure of the improvement allowance granted under this ¶ 7.2.


8      Suite 402
Termination Right.  Notwithstanding anything to the contrary in
the Lease as herein amended, Tenant shall have the right to terminate the Lease
with respect to Suite 402 only effective on September 30,
2009, upon written notice given to Landlord not less than six (6)
months and not more than nine (9) months prior to such termination date.  If Tenant exercises such termination right,
Tenant shall pay to Landlord upon exercise of its termination right, together
with Tenant’s written notice of exercise, a termination fee in the amount of Fifty-Five Thousand Two Hundred Thirteen Dollars and Twenty Cents ($55,213.20).  If Tenant exercises its termination right as
herein provided, the Lease with respect to Suite 402 only shall terminate
on the effective date of such termination with the same effect as if the Term
of the Lease had expired with respect to Suite 402 only.  In addition to paying the termination fee to
Landlord, Tenant agrees to pay to Landlord upon receipt of Landlord’s bill
therefor the reasonable cost to Landlord of constructing a new demising wall to
separate Suite 402 from Suite 401 following the effective date of the
termination provided for herein, if Tenant exercises its termination right with
respect to Suite 402 only.


9      SECURITY DEPOSIT.  Tenant’s Security Deposit required under
§ 5.1 of the Lease shall remain unchanged in consequence of the parties’
execution and delivery of this Second Addendum.


10   EXTENSION OPTIONS.  The Extension Option granted to Tenant under
§ 1.5.1 of the Lease shall apply to Suite 402 equally with the rest
of the Premises, as herein and heretofore amended, provided that 



 10
 









Tenant has not exercised its termination right under
¶ 8 above with respect to Suite 402 only prior to Tenant’s exercise
of such Extension Option.


11   PARKING.  The number of parking spaces designated for
Tenant’s use under § 27.1 of the Lease shall be increased from and after
the Effective Date from the number stated in the Lease to up to a maximum of Two
Hundred Sixteen (216) parking spaces on a non-exclusive basis in the area(s)
designated by Landlord for parking in the Building’s parking lots.


12   NO DISCLOSURE.  Tenant agrees that it shall not disclose any
of the matters set forth in this Second Addendum or disseminate or distribute
any information concerning the terms, details, or conditions hereof to any
person, firm, or entity without obtaining the express written approval of Landlord.


13   SURVIVAL.  Warranties, representations, agreements, and
obligations contained in this Second Addendum shall survive the execution and
delivery of this Second Addendum and shall survive any and all performances in
accordance with this Second Addendum.


14   COUNTERPARTS.  This Second Addendum may be executed in any
number of counterparts, which each severally and all together shall constitute
one and the same Second Addendum.


15   ATTORNEYS’ FEES.  If any party obtains a judgement against any
other party or parties by reason of breach of this Second Addendum, reasonable
attorneys’ fees and costs as fixed by the court shall be included in such
judgement against the losing party or parties.


16   SUCCESSORS.  This Second Addendum and the terms and
provisions hereof shall inure to the benefit of and be binding upon the heirs,
successors, and assigns of the parties.


17   AUTHORITY.  Each of the individuals executing this Second
Addendum represents and warrants that he or she is authorized to execute this Second
Addendum on behalf of the party for whom he or she is executing this Second Addendum
and that by his or her signature such party is legally bound by the terms,
covenants, and conditions of this Second Addendum.


18   GOVERNING LAW.  This Second Addendum shall be construed and
enforced in accordance with the laws of the State of California.


19   CONTINUING VALIDITY
OF LEASE.  Except as expressly modified herein, the
Lease remains in full force and effect, and its provisions shall apply equally
to the Expansion Space as to the remainder of the Premises, including
(i) Tenant’s termination right under § 1.5.2 of the Lease with
respect to Suite 400, of which the Expansion Space shall be deemed a part
of the purposes of exercising Tenant termination right thereunder; (ii) the
exercise of Tenant’s Extension Option under § 1.5.1 of the Lease; and
(iii) Tenant’s Security Deposit stated under § 5.1 of the Lease,
which shall remain unchanged by this Second Addendum.


20   CONFLICTS.  In the event of any conflict between the
provisions of the Lease and those of this Second Addendum, the terms and
provisions of this Second Addendum shall control.


21   WHOLE AGREEMENT.  The mutual obligations of the parties as
provided herein are the sole consideration for this Second Addendum, and no representations,
promises, or inducements have been made by the parties other than as appear in
this Second Addendum, which supersedes any previous negotiations.  There have been no representations made by
the Landlord or understandings made between the parties other than those set
forth in this Second Addendum.  This Second
Addendum may not be amended except in writing signed by all the parties.



 11
 









In
witness whereof, the parties have executed this Second Addendum as of
the date first above written.


	
  Landlord:

  	
   

  	
  Tenant:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  , President

  
						



 



 12
 









[Exhibit A]


[Suite 402]



 13















EXHIBIT B


MASTER
LEASE AGREEMENT


















EXHIBIT C


DISCLOSURE
LIST


















EXHIBIT D


MASTER
LANDLORD CONSENT


Master Landlord
hereby acknowledges receipt of a copy of this Sublease, and consents to the
terms and conditions of this Sublease. 
By this consent, Master Landlord shall not be deemed in any way to have
entered the Sublease or to have consented to any further assignment or
sublease. Master Landlord further agrees that, notwithstanding anything to the
contrary in the Master Lease Agreement:


(a)           Master Landlord shall deliver to
Subtenant at the address set forth in the Sublease notices of any defaults
under the Master Lease Agreement at the same time such notices are sent to
Sublandlord as set forth in the Master Lease Agreement and shall permit
Subtenant to cure such defaults.


(b)           Master Landlord agrees that the
release and waiver of subrogation in Section 24 of the Sublease shall apply as
between Master Landlord and Subtenant.


(c)           In the event that the Master Lease
Agreement terminates prior to the expiration of the term thereof, the Sublease
shall continue in full force and effect as a direct lease between Master
Landlord and Subtenant upon all of the terms, covenants and conditions of the
Sublease.


(d)           Subtenant may, without Master
Landlord’s prior written consent, sublet the Premises or assign the Sublease as
described in Section 17.12 of the Master Lease Agreement.


	
  MASTER LANDLORD:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  a  

  	
   

  	
  corporation

  	 

	
   

  	
   

  	
   

  	 

	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	 

	
  Its:

  	
   

  	
   

  	
   

  	 

	
  Address: