Lease between

Sobrato Interests III and Siebel Systems, Inc.

Building 3 - 2207 Bridgepointe Parkway, San Mateo

 

 

Section	Page #

Parties	*
Premises	*

Definitions	*

Description	*

Use	*

Permitted Uses	*

Uses Prohibited	*

Advertisements andSigns	*

Covenants, Conditions andRestrictions	*

Term and Rental	*

Base Monthly Rent	*

Rental Adjustment	*

Late Charges	*

Security Deposit	*

Construction	*

Building Shell Plans	*

Tenant ImprovementPlans	*

Tenant ImprovementPricing	*

Change Orders	*

Building Shell Costs	*

Tenant ImprovementCosts	*

Construction	*

General Contractor Overhead &Profit	*

Tenant Delays	*

Insurance	*

Punch List &Warranty	*

Other Work by Tenant	*

Acceptance of Possession andCovenants to Surrender	*

Delivery andAcceptance	*

Condition UponSurrender	*

Failure to Surrender	*

Alterations andAdditions	*

Tenant's Alterations	*

Free From Liens	*

Compliance With GovernmentalRegulations	*

Maintenance ofPremises	*

Landlord's Obligations	*

Tenant's Obligations	*

Landlord and Tenant's ObligationsRegarding Reimbursable Operating Costs	*

Reimbursable OperatingCosts	*

Tenant's AllocableShare	*

Exclusions to ReimbursableOperating Costs	*

Waiver of Liability	*

Tenant's Right toAudit	*

Hazard Insurance	*

Tenant's Use	*

Landlord's Insurance	*

Tenant's Insurance	*

Waiver	*

Taxes	*

Utilities	*

Toxic Waste and EnvironmentalDamage	*

Tenant'sResponsibility	*

Tenant's Indemnity RegardingHazardous Materials	*

Landlord's Indemnity RegardingHazardous Materials	*

Actual Release byTenant	*

EnvironmentalMonitoring	*

Tenant's Default	*

Remedies	*

Right to Re-enter	*

Abandonment	*

No Termination	*

Non-Waiver	*

Performance byLandlord	*

Landlord's  Liability	*

Limitation on Landlord'sLiability	*

Limitation on Tenant'sRecourse	*

Indemnification ofLandlord	*

Destruction ofPremises	*

Landlord's Obligation toRestore	*

Limitations on Landlord'sRestoration Obligation	*

Tenant's Rights with Respect to aDestruction of the Premises	*

Condemnation	*

Assignment or Sublease	*

Consent by Landlord	*

Assignment or SublettingConsideration	*

No Release	*

Reorganization ofTenant	*

Permitted Transfers	*

Effect of Default	*

Effects of Conveyance	*

Successors and Assigns	*

Option to Extend the LeaseTerm	*

Grant and Exercise ofOption	*

Determination of Fair MarketRental	*

Resolution of a Disagreement overthe Fair Market Rental	*

Personal to Tenant	*

Option to Extend the LeaseTerm	*

Right of First Offering toPurchase	*

Grant and Exercise ofOption	*

Exclusions	*

General Provisions	*

Attorney's Fees	*

Authority of Parties	*

Brokers	*

Choice of Law	*

Dispute Resolution	*

Entire Agreement	*

Entry by Landlord	*

Estoppel Certificates	*

Exhibits	*

Interest	*

Modifications Required byLender	*

No Presumption AgainstDrafter	*

Notices	*

Property Management	*

Rent	*

Representations	*

Rights and Remedies	*

Severability	*

Submission of Lease	*

Subordination	*

Survival ofIndemnities	*

Time	*

Transportation Demand ManagementPrograms	*

EXHIBIT A - Premises and Project -Initial Buildout	*

EXHIBIT B - NotApplicable	*

EXHIBIT C - Declaration ofCovenants and Grant of Easements	*

EXHIBIT D - Shell Plans andSpecifications	*

EXHIBIT E - Building ShellDefinition	*

EXHIBIT F - Tenant ImprovementPlans and Specifications	*

EXHIBIT G - Subordination,Nondisturbance and Attornment Agreement	*
**1.	Parties: ***THIS LEASE,* is enteredinto on this 11th day of June, 1999, ("Effective Date") betweenSOBRATO INTERESTS III, a California Limited Partnership, whose address is 10600North De Anza Boulevard, Suite 200, Cupertino, CA  95014-2075 and SIEBELSYSTEMS, INC., a Delaware Corporation, whose address is 1855 South Grant Street,San Mateo, California, CA  94402-2667, hereinafter called respectively Landlordand Tenant.**2.	Premises:**
	**A.	Definitions**.    

			**i.	Building**. The term"Building" shall mean that five (5) story steel frame buildingcontaining approximately 167,505 rentable square feet and all TenantImprovements installed therein to be constructed by Landlord and leased byTenant pursuant to the terms of this Lease in the location labeled as Building 3on Exhibit "A" and commonly known as 2207 Bridgepointe Parkway.
**			ii.	Building 1. The term "Building1" shall mean that five (5) story steel frame building containingapproximately 141,496 rentable square feet to be constructed by Landlord andleased by Tenant pursuant to a separate lease between the Parties dated March11, 1999 ("Building 1 Lease") in the location labeled as Building 1 onExhibit "A" attached hereto and commonly known as 2215Bridgepointe Parkway

			**iii.	Building 2**.    The term"Building 2" shall mean that five (5) story steel frame buildingcontaining approximately 141,496 rentable square feet to be constructed byLandlord and leased by Tenant pursuant to a separate lease between the Partiesdated March 11, 1999 ("Building 2 Lease") in the location labeled asBuilding 2 on Exhibit "A" and commonly known as 2211Bridgepointe Parkway.

			**iv.	Common Area**.    The term"Common Area" shall mean that certain real property beneath andsurrounding the Building, Building 1 and Building 2 consisting of an undergroundparking garage of approximately 455 parking spaces, on-grade parking lotsconsisting of approximately 255 parking spaces, an above grade parking structureto total approximately 850 parking spaces, and the recreation areas and theadjacent landscaped site areas as shown on Exhibit "A"..

Landlord shall have the power to allocate to each tenant inthe Project, the number of parking spaces in the podium garage, above-gradeparking structure or other portions of the Project as to which Tenant may havethe use in connection with its Building; provided that (i) such allocation isrequested by at least one (1) tenant in the Project, (ii) Landlord shall notallocate to Tenant materially less than the Tenant's prorata share of parkingcalculated on the basis of the square footage of the buildings in the Project,and (iii) Landlord shall allocate parking in a manner so as to maximize theadjacency of parking to each building. Landlord shall further retain the rightto restrict an appropriate amount of the parking for visitors of the Project orfor car pooling (as may be required by a TDM program).  At the request of Tenantor any other tenant in the Project, Landlord further agrees to restrict up toten (10) spaces per building for key employees of Tenant (or of other tenants inthe Project) or for other reasonable uses.  Tenant shall be responsible forseeing that the total number of vehicles parked in the Project by employees andinvitees of Tenant does not exceed the number of total spaces allocated to theBuilding.

			**v.	Project**.    The term"Project" shall be that certain  real property consisting ofapproximately 10.8 acres at the corner of Bridgepointe Circle and BridgepointeParkway in San Mateo, California  and all improvements constructed thereonconsisting at full buildout of the Building, Building 2, Building 3 and theCommon Area as shown in Exhibit "B". 

			**vi.	Premises**.    The term"Premises" shall mean the Building and a non-exclusive right to usethe Common Area. Unless expressly provided otherwise, the term Premises as usedherein shall include the Tenant Improvements (defined in Section 5.B)constructed by Tenant pursuant to Section 5.B.
**		B.	Grant:    Landlord hereby leases thePremises to Tenant, and Tenant hires the Premises from Landlord. 

		**C.	Recordation of Parcel Map and Declaration:** Tenant consents to recordation by Landlord of a Parcel Map (ParcelMap") and a Declaration of Covenants, Conditions and Restrictions("Declaration").  The Parcel Map and the Declaration shall besubstantially in the form attached hereto as Exhibit "C" withsuch changes as may be may be desired by Landlord or Landlord's lenders tofacilitate the operation, construction, financing, sale and/or leasing of theProject, provided such changes do not materially and adversely affect Tenant'suse of the Premises, and with such changes as may be required by the city orother governmental authority having jurisdiction over the Project.   Landlord isseeking approval of the Parcel Map and Declaration to subdivide the existingparcel into the four lots to facilitate Landlord's operation, construction,financing, lease and/or sale of the Project as individual buildings.  Landlord'sfailure to obtain approval of the Parcel Map or Declaration shall in no wayinvalidate this Lease.  In the event the Parcel Map and Declaration are recordedby Landlord, the Section 2.A.vi shall be replaced by following:  The term"Premises" shall mean (i) the land area within Lot 3; (ii) theBuilding; and (iii) the nonexclusive right to use the Common Area in accordancewith the terms and conditions of the Declaration and this Lease.  This Leaseshall be subject and subordinate in all respects to the Declaration, as the samemay be amended from time to time.  Tenant covenants and agrees to refrain fromdoing or causing to be done, or permitting any thing or act to be done, whichwould constitute a default under the Declaration or which would or might makeLandlord liable for any damages, claims or penalty. All assessments charged tothe Premises pursuant to the Declaration, (other than those assessments whichrepresent: the costs required to be paid and borne by Landlord under the expressterms of this Lease (such as Landlord's maintenance costs pursuant to Section8.A; fines, penalties and costs of suit charged by the Association, to theextent not caused by Tenant's breach of this Lease or violation of theDeclaration; reimbursements to the Association for diminution of theAssociation's insurance proceeds, to the extent not caused by Tenant's violationof the insurance provisions of the Declaration; and assessments levied againstthe Premises because of the nonpayment of assessments levied on other lotswithin the Project other than the Premises) shall constitute a part of Tenant'sAllocable Share of Reimbursable Operating Costs pursuant to Article 8 of thisLease.

	Following recordation of the Declaration, if owners andoccupants of Building 1 or Building 2 are violating the terms and conditions ofthe Declaration and such violation materially and adversely affects Tenant'srights under this Lease, then within a reasonable time following Tenant'srequest, Landlord shall take reasonable steps to enforce the provisions of theDeclaration relating to such violation, in accordance with the proceduresestablished in the Declaration, the cost of which shall be a ReimbursableOperating Cost pursuant to Article 8 of this Lease.
**3.	Use:    

	A.	Permitted Uses:    Tenant shall use thePremises only for the following purposes and shall not change the use of thePremises without the prior written consent of Landlord:  General office usesincluding research and development and other incidental uses (such incidentaluses shall include without limitation, a gymnasium and/or a cafeteria for use ofTenant's employees). Tenant shall use only the number of parking spacesallocated to Tenant under this Lease. Following recordation of the Declaration,if occupants of Building 1 or Building 2 are using parking spaces in excess ofthe number of spaces to which they are entitled under the Declaration, thenwithin a reasonable time following Tenant's request, Landlord shall seek toenforce the provisions of the Declaration relating to such excessive use, inaccordance with the procedures established in the Declaration, the cost of whichshall be a Reimbursable Operating Cost pursuant to Article 8 of this Lease.Prior to recording the Declaration, Landlord shall cause the Declarants of theDeclaration to confirm in writing for the benefit of Tenant that the signs andwindow coverings to be installed pursuant to Section 3.C of this Lease areapproved by the Declarants. Landlord shall promptly send to Tenant all noticesreceived from the Association pertaining to the Association's entry onto thePremises and Common Area, insurance coverage affecting the Premises, andassessments levied against the Premises.  All commercial trucks and deliveryvehicles shall be (i) loaded and unloaded in a manner which does not interferewith the businesses of other occupants of the Project, and (ii) permitted toremain on the Project only so long as is reasonably necessary to complete theloading and unloading.  Landlord makes no representation or warranty that anyspecific use of the Premises desired by Tenant is permitted pursuant to anyLaws.
**	B.	Uses Prohibited:    Tenant shall not commitor suffer to be committed on the Premises any waste, nuisance, or other act orthing which may disturb the quiet enjoyment of any other tenant in or around thePremises, nor allow any sale by auction or any other use of the Premises for anunlawful purpose. Tenant shall not (i) damage or overload the electrical,mechanical or plumbing systems of the Premises, (ii) attach, hang or suspendanything from the ceiling, walls or columns of the building or set any load onthe floor in excess of the load limits for which such items are designed, or(iii) generate dust, fumes or waste products which create a fire or healthhazard or damage the Premises or in the soils surrounding the Building.  Nomaterials, supplies, equipment, finished products or semi-finished products, rawmaterials or articles of any nature, or any waste materials, refuse, scrap ordebris, shall be stored upon or permitted to remain on any portion of thePremises outside of the Building without Landlord's prior approval, whichapproval may be withheld in its sole discretion.  
**	C.	Advertisements and Signs:    Tenant shall bepermitted to place two (2) signs mounted on the building, one monument signwithin the Common Area, and any directional signs necessary within the CommonArea, provided such signs are approved by the city or other governing authority.Tenant shall be entitled to additional signage on Building 1 and Building 2pursuant to the leases for these buildings.  Any sign placed on the Premisesshall be removed by Tenant, at its sole cost, prior to the Expiration Date orpromptly following the earlier termination of the lease, and Tenant shallrepair, at its sole cost, any damage or injury to the Premises caused thereby,and if not so removed, then Landlord may have same so removed at Tenant'sexpense.

	**D.	Covenants, Conditions and Restrictions:**This Lease is subject to the effect of (i) easements, mortgages or deeds oftrust, ground leases, rights of way of record and any other matters or documentsof record; and (ii) any zoning laws of the city, county and state where theBuilding is situated (collectively referred to herein as"Restrictions") and Tenant will conform to and will not violate theterms of any such Restrictions.  

	Tenant acknowledges that as to certain matters set forthin this Lease, the Association (defined in the Declaration) has or will haverights of approval or disapproval. If any matter requiring the Association'sapproval is submitted to Landlord by Tenant for Landlord's approval, Landlordshall respond to Tenant in a timely fashion.  If Landlord approves such matterand such matter further requires the Association's approval, Landlord shallpromptly submit the same to  the Association, as applicable.  In no event,however, shall Landlord's disapproval be deemed unreasonable if the Associationhas disapproved of such matter nor shall Landlord have any liability to Tenantby reason thereof.
**4.	Term and Rental:    

	A.	Base Monthly Rent:    The term ("LeaseTerm") shall be for one hundred forty four (144) months, commencing onsubstantial completion of construction as finally determined pursuant to Section5.G (the "Commencement Date") estimated to occur on November 1, 2000,and ending one hundred forty four (144) months thereafter, ("ExpirationDate"). Notwithstanding the foregoing, (i) in no event shall theCommencement Date be less than forty five (45) days following the CommencementDate for Building 1; and (ii) in the event Sobrato Construction acts as generalcontractor for the Tenant Improvements, should substantial completion of thePremises occur between November 2, 2000 and December 31, 2000, the CommencementDate of the Lease shall be deemed to be January 1, 2001. Notwithstanding thefact that the Lease Term begins on the Commencement Date, this Lease and all ofthe obligations of Landlord and Tenant shall be binding and in full force andeffect from and after the Effective Date except for those obligations whichbegin on the Commencement Date.  In addition to all other sums payable by Tenantunder this Lease, Tenant shall pay as base monthly rent ("Base MonthlyRent") for the Premises the amount of Three Hundred Seventy Eight ThousandEight Hundred Ninety Six Dollars ($378,896.00).  Base Monthly Rent and Tenant'spayment of operating expenses and taxes pursuant to Section 8 shall be payablebeginning on the Commencement Date in advance on or before the first day of eachcalendar month during the Lease Term.  All sums payable by Tenant under thisLease shall be paid to Landlord in lawful money of the United States of America,without offset or deduction and without prior notice or demand, at the addressspecified in Section 1 of this Lease or at such place or places as may bedesignated in writing by Landlord during the Lease Term.  Base Monthly Rent forany period less than a calendar month shall be a pro rata portion of the monthlyinstallment.
**	B.	Rental Adjustment:**
		**(i)	For Variation in Rentable Square Feet:**Upon Substantial Completion of construction, the Building shall be measured(from outside wall to outside wall including all areas covered by a structuralroof), and if the actual square footage differs from 167,505 square feet, theinitial Base Monthly Rent hereunder shall be adjusted to the product of Two and262/1000 Dollars ($2.262) and the actual rentable square feet of the Building.

		**(ii)		Periodic Adjustment:** Beginningthirty (30) months after the Commencement Date for Building 1, and every thirty(30) months thereafter, the then-payable Base Monthly Rent shall be increased byseven and 50/100 percent (7.50%).

	**C.	Late Charges:**Tenant hereby acknowledgesthat late payment by Tenant to Landlord of Base Monthly Rent and other sums duehereunder will cause Landlord to incur costs not contemplated by this Lease, theexact amount of which is extremely difficult to ascertain.  Such costs includebut are not limited to:  administrative, processing, accounting, and latecharges which may be imposed on Landlord by the terms of any contract, revolvingcredit, mortgage, or trust deed covering the Premises.  Accordingly, if anyinstallment of Base Monthly Rent or other sum due from Tenant shall not bereceived by Landlord or its designee within ten (10) days after the rent is due,Tenant shall pay to Landlord a late charge equal to five (5%) percent of suchoverdue amount, which late charge shall be due and payable on the same date thatthe overdue amount was due. The parties agree that such late charge represents afair and reasonable estimate of the costs Landlord will incur by reason of latepayment by Tenant, excluding interest and attorneys fees and costs.  If any rentor other sum due from Tenant remains delinquent for a period in excess of thirty(30) days then, in addition to such late charge, Tenant shall pay to Landlordinterest on any rent that is not paid when due at the Agreed Interest Ratespecified in Section 21.J****following the date such amount became due untilpaid.  Acceptance by Landlord of such late charge shall not constitute a waiverof Tenant's default with respect to such overdue amount nor prevent Landlordfrom exercising any of the other rights and remedies granted hereunder.  In theevent that a late charge is payable hereunder, whether or not collected, forthree (3) consecutive installments of Base Monthly Rent, then the Base MonthlyRent shall automatically become due and payable quarterly in advance, ratherthan monthly, notwithstanding any provision of this Lease to the contrary.After four (4) quarterly installments have been paid on time, rent shall againbe payable monthly.  
**	D.	Security Deposit: 

			**(i)	Amount:**Tenant shall deposit withLandlord a letter of credit ("Letter of Credit") in a form reasonablyacceptable to Landlord in the amount of Eight Million Four Hundred ThousandDollars ($8,400,000.00) to secure Tenant's obligation to complete TenantImprovements in the Building pursuant to this Lease.  Upon Landlord's receipt ofevidence reasonably satisfactory to Landlord of lien free completion of theTenant Improvements and that Tenant has fully paid for the cost of all of TenantImprovements for the Building, the Letter of Credit shall be cancelled andreturned to Tenant by Landlord.  Notwithstanding the foregoing, in the eventTenant elects to defer construction on a portion of the non-core TenantImprovements in the Building (as provided further and restricted in Section5.B), Landlord shall not require Tenant to continue to post the Letter of Creditafter payment in full for all other Tenant Improvements associated with theBuilding.

			**(ii)   Use by Landlord:**Landlord shallbe entitled to draw against the full amount of the Letter of Credit at any timeprovided only that Landlord certifies to the issuer of the Letter of Credit thatTenant has failed to make a payment for Tenant Improvement costs as provided in5.F, that Tenant has failed to timely renew or extend the Letter of Credit asrequired by this subsection (ii), or that Tenant has failed to amend the Letterof Credit or obtain a new Letter of Credit as required by this subsection (ii)and such failure has not been cured within ten (10) days following Landlord'snotice to Tenant.  Tenant shall keep the Letter of Credit in effect at all timesprior to payment in full for the Tenant Improvements for the Building.  At leastsixty (60) days prior to expiration of any Letter of Credit, the term thereofshall be renewed or extended for a period until Tenant has paid in full for theTenant Improvements for the Building.  Subject to the notice requirement andcure period provided herein, Tenant's failure to so renew or extend the Letterof Credit shall be a material default of this Lease by Tenant entitling Landlordto draw down on the entire amount of the Letter of Credit.  Any amounts drawn onthe Letter of Credit shall be used to pay for the cost of the TenantImprovements.  In the event the Letter of Credit is drawn by Landlord, and theproceeds used to pay for the completion of the Tenant Improvements in theBuilding, after Landlord's completion of the Tenant Improvements in theBuilding, Landlord shall refund to Tenant any excess proceeds from the Letter ofCredit.  In the event of termination of Landlord's interest in this Lease,Landlord may deliver the Letter of Credit to Landlord's successor in interest inthe Premises and thereupon be relieved of further responsibility with respect tothe Letter of Credit.  Except as provided herein, no other security depositshall be required by Tenant.

		**(iii)  Letter of Credit Fee:**Landlord andTenant agree to share equally in the fee charged to provide the Letter ofCredit.  In no event, however, shall Landlord's share of the fee exceed the sumof Forty Two Thousand Dollars ($42,000.00) per annum.  
**5.	Construction**:
	A.	Building Shell Plans: The Building Shell shallbe constructed in accordance with the Building Shell plans and guidelinespecifications prepared by Korth Sunseri Hagey ("Shell Architect").The design development drawings for the Building Shell are attached hereto asExhibit "D" ("Preliminary Shell Plans andSpecifications").  The Shell Permit Drawings (i) shall be consistent withthe Preliminary Shell Plans in all material respects, and (ii) shall provide formaterials to be of a quality consistent with a "Class A" officeproject the where materials are not currently specified in the Preliminary ShellPlans.  Landlord's affiliated construction company, Sobrato ConstructionCorporation shall act as the general contractor on the Building Shell and shallcontract for the installation of the pile foundation system and shall begin thiswork immediately following the Effective Date.  Upon completion of the TenantImprovement Plans, Landlord and Tenant shall select a general contractor("General Contractor") on the basis of a competitive bid of the costto construct the Tenant Improvements. Landlord and Sobrato Construction shalluse commercially reasonable efforts to ensure effective coordination between theGeneral Contractor selected to construct the Tenant Improvements and SobratoConstruction Corporation. Landlord shall cause Sobrato Construction and theGeneral Contractor to complete construction of the Building Shell and the TenantImprovements.  The Building Shell shall include those items set forth in theattached Exhibit "E" ("Building Shell Definition")which scope includes the cost of the parking structures.  In the event of aconflict between Exhibit "D" and Exhibit "E",Exhibit "E" shall govern.

	**B.	Tenant Improvement Plans:**Tenant, atTenant's sole cost and expense, will hire an interior architect ("InteriorArchitect") to prepare plans and outline specifications to be attached asExhibit "F" ("Tenant Improvement Plans andSpecifications") with respect to the construction of improvements to theinterior premises ("Tenant Improvements").  The Tenant ImprovementPlans and Specifications plans shall be completed for all aspects of the work byJanuary 1, 2000, with all detail necessary for submittal to the city and forconstruction and shall include any information required by the relevant agenciesregarding Tenant's use of Hazardous Materials if applicable.  The TenantImprovements shall consist of all items not included within the scope of theBuilding Shell Definition. All Tenant Improvements affecting or otherwiserelated to the Building Core will be subject to Landlord's reasonable approval.The "Building Core" shall include those items typically associated inthe industry with an office building core including elevators, restrooms, firesprinklers, HVAC and electrical systems distributed to each floor, exiting stairfinishes and a finished building lobby.  As to the balance of the TenantImprovements, Landlord shall not have rights of approval, however, TenantImprovement Plans shall provide for the creation of finished office space readyfor occupancy with a minimum buildout in all areas of the Premises consistingof: (i) fire sprinklers, (ii) floorcoverings, (iii) overhead ceiling system (iv)distribution of the HVAC system, (v) overhead florescent lighting, and (vi) anyother work required by the City of San Mateo necessary to obtain a Certificateof Occupancy.  Tenant shall have the right to defer installation of the TenantImprovements not associated with the Building Core in up to twenty percent (20%)of the rentable square footage of the Building.  Except as provided in thepreceding sentence, Tenant shall have no rights or ability to delay installationof any of the Tenant Improvements.  The Tenant Improvement Plans andSpecifications shall be prepared in sufficient detail to allow GeneralContractor to construct the Tenant Improvements.  The General Contractor shallconstruct the Tenant Improvements in accordance with all Tenant ImprovementPlans and Specifications. The Tenant Improvements shall not be removed oraltered by Tenant without the prior written consent of Landlord as provided inSection 7.  Tenant shall have the right to depreciate and claim and collect anyinvestment tax credits in the Tenant Improvements during the Lease Term.  Tenantshall further retain the right to encumber its leasehold interest with a firstpriority security interest, provided such lienholder has no right to remove anyTenant Improvements installed by Tenant pursuant to this Lease in the event of adefault by Tenant under such encumbrance.  Upon expiration of the Lease Term orany earlier termination of the Lease, the Tenant Improvements shall become theproperty of Landlord and shall remain upon and be surrendered with the Premises,and title thereto shall automatically vest in Landlord without any paymenttherefore.

	**C.	Tenant Improvement Pricing.**Within ten (10)days after completion of the Tenant Improvements Plans and Specifications,Landlord shall cause the General Contractor to submit to Tenant competitive bidsfrom at least three (3) subcontractors for each aspect of the work in excess ofFifty Thousand and No/100 Dollars ($50,000.00) related to the TenantImprovements.  Landlord shall cause the General Contractor to utilize the lowbid in each case unless Tenant approves General Contractor's use of anothersubcontractor, and the cost of the Tenant Improvements shall be based uponconstruction expenses equal to (i) the bid amounts as approved by Tenant, (ii) areasonable contingency approved by Tenant to protect the General Contractoragainst cost overruns, and (iii) the general contractor fee specified in Section5.H below ("Tenant Improvement Budget").  Upon Tenant's writtenapproval of the Tenant Improvement Budget, which approval shall not beunreasonably withheld or delayed, Landlord and Tenant shall be deemed to havegiven their respective approvals of the final Tenant Improvement Plans andSpecifications on which the cost estimate was made, and General Contractor shallproceed with the construction of the Tenant Improvements in accordance with theterms of Section 5.G below.  If Tenant does not specifically approve ordisapprove the bids within ten (10) business days, Tenant shall be deemed tohave approved the bids.

	**D.	Change Orders:**Tenant shall have the rightto order changes in the manner and type of construction of the TenantImprovements. Upon request and prior to Tenant's submitting any binding changeorder, Landlord shall cause the General Contractor to promptly provide Tenantwith written statements of the cost to implement and the time delay andincreased construction costs associated with any proposed change order, whichstatements shall be binding on General Contractor.  If no time delay orincreased construction cost amount is noted on the written statement, theparties agree that there shall be no adjustment to the construction cost or theCommencement Date associated with such change order.  If ordered by Tenant,Landlord shall cause the General Contractor to implement such change order andthe cost of constructing the Tenant Improvements shall be increased or decreasedin accordance with the cost statement previously delivered by General Contractorto Tenant for any such change order.  In no event, however, shall Tenant havethe right to eliminate the minimum buildout requirements specified in Section5.B above.

	**E. 	Building Shell Costs:**Landlord shall payall costs associated with the Building Shell.

	**F. 	Tenant Improvement Costs:**Tenant shallpay all costs associated with the Tenant Improvements.  The cost of TenantImprovements shall consist of only the following to the extent actually incurredby General Contractor in connection with the construction of TenantImprovements:  construction costs, all permit fees, construction taxes or othercosts imposed by governmental authorities related to the Tenant Improvements,and General Contractor overhead and profit as described in Section 5.H below.During the course of construction of Tenant Improvements, Landlord may deliverto Tenant not more than once each calendar month a written request for paymentprepared by the General Contractor ("Progress Invoice") which shallinclude and be accompanied by General Contractor's certified statements settingforth the amount requested, certifying the percentage of completion of each itemfor which reimbursement is requested, and if requested by Tenant, a certificatefrom Landlord's Architect certifying the percentage completion.  Tenant shallpay the amount due pursuant to the Progress Invoice less a ten percent (10%)retention directly to the General Contractor, within thirty (30) days afterTenant's receipt of the above items. All costs for Tenant Improvements shall befully documented to and verified by Tenant.

	**G. 	Construction:**The Building Shell andTenant Improvements shall be deemed substantially complete ("SubstantiallyComplete" or "Substantial Completion") when the Building Shelland Tenant Improvements have been substantially completed in accordance with theShell Plans and Specifications and Tenant Improvement Plans and Specifications,as evidenced by the completion of a final inspection or the issuance of acertificate of occupancy or its equivalent by the appropriate governmentalauthority for the Building Shell and Tenant Improvements, and the issuance of acertificate by the Architect certifying that the Building Shell and TenantImprovements have been completed in accordance with the plans.  Installation of(i) Tenant's data and phone cabling, (ii) Tenant's furniture, or (iii) theexterior landscaping shall not be required in order to deem the PremisesSubstantially Complete.  Any prevention, delay or stoppage due to strikes,lockouts, inclement weather unusual for the season it which it occurs, labordisputes, inability to obtain labor, materials, fuel or reasonable substitutestherefor, governmental restrictions, regulations, controls, civil commotion,fire or other act of God, and another causes beyond the reasonable control ofLandlord (except financial inability) shall extend the dates contained in thisSection 5.G by a period equal to the period of any said prevention, delay orstoppage.  

	If Landlord cannot obtain building permits orSubstantially Complete construction by the dates set forth herein, this Leaseshall not be void or voidable nor shall Landlord be liable for any loss ordamage resulting therefrom.  Notwithstanding anything to the contrary containedherein, if Landlord has not delivered the Premises substantially completed toTenant on or before November, 1, 2001 ("Termination Date"), Tenantshall have the right to cancel this Lease by providing Landlord written noticewithin sixty (60) days following the Termination Date as Tenant's sole andexclusive remedy for such failure.  In such event, Landlord shall return theLetter of Credit to Tenant and thereafter neither party shall have any furtherliability to the other under this Lease.

	**H. 	General Contractor Overhead & Profit:**As compensation to General Contractor for its services related toconstruction of the Building Shell and Tenant Improvements, General Contractorshall receive a fee based upon the cost of construction determined and agreedupon by Landlord and Tenant at the time of the competitive bid of the TenantImprovements.  Except as provided therein, Landlord or General Contractor shallnot receive any other fee or payment from Tenant in connection with GeneralContractor's services.
**	I.	Tenant Delays:    A "Tenant Delay"shall mean any delay in Substantial Completion of the Building as a result ofany of the following: (i) Tenant's failure to complete or approve the TenantImprovement Plans by the dates set forth in Section 5.B, (ii) Tenant's failureto approve the bids for construction by the dates set forth in Section 5.C,(iii) changes to the plans requested by Tenant which delay the progress of thework, (iv) Tenant's request for materials components, or finishes which are notavailable in a commercially reasonable time given the anticipated CommencementDate, (v) Tenant's failure to make a progress payment for Tenant Improvements asprovided in Section 5.F after notice from Landlord and expiration of theapplicable cure period, (vi) Tenant's request for more than one (1) rebidding ofthe cost of all or a portion of the work, and (vii) any errors or omissions inthe Tenant Improvement Plans provided by Tenant's architect unless caused bymisinformation provided by Landlord, Landlord's Architect or the GeneralContractor.  Notwithstanding anything to the contrary set forth in this Lease,and regardless of the actual date the Premises are Substantially Complete, theCommencement Date shall be deemed to be the date the Commencement Date wouldhave occurred if no Tenant Delay had occurred as reasonable determined byLandlord.  In addition, if a Tenant Delay results in an increase in the cost ofthe labor or materials, Tenant shall pay the cost of such increases.  
**	J. 	Insurance:     Sobrato ConstructionCorporation and General Contractor shall each procure (as a cost of the BuildingShell or the Tenant Improvements as applicable) a "Broad Form"liability insurance policies in the amount of Three Million Dollars($3,000,000.00).  Landlord shall also procure (as a cost of the Building Shell)builder's risk insurance for the full replacement cost of the Building Shell andTenant Improvements while the Building and Tenant Improvements are underconstruction, up until the date that the fire insurance policy described inSection 9 is in full force and effect.

	**K. 	Punch List & Warranty:**After theBuilding Shell and Tenant Improvements are Substantially Complete, Landlordshall cause Sobrato Construction Corporation and/or the General Contractor toimmediately correct any construction defect or other "punch list" itemwhich Tenant brings to Landlord's attention.  All such work shall be performedso as to reasonably minimize the interruption to Tenant and its activities onthe Premises. Sobrato Construction Corporation shall provide a standardcontractor's warranty with respect to the Building Shell for one (1) year fromthe Commencement Date. The General Contractor shall provide a standardcontractor's warranty with respect to the Tenant Improvements for one (1) yearfrom the Commencement Date.  Such warranties shall exclude routine maintenance,damage caused by Tenant's negligence or misuse, and acts of God. Notwithstandinganything to the contrary in this Lease, Landlord warrants that on thecommencement of the term hereof, (i) the Premises shall comply with all laws,codes, ordinances and other governmental requirements then applicable to theBuilding Shell and the Common Area, (ii) all components of the Building Shellshall be in good working order, condition, and repair, and (iii) the Premises,the Project, and the land and groundwater thereunder, shall be free ofcontamination by any Hazardous Materials then regulated by any applicable local,state, or federal law not caused by Tenant.  In the event of any breach of anyof the foregoing warranties, Landlord shall promptly rectify the same at itssole cost and expense and shall indemnify, defend, and hold Tenant harmless fromand against any damages, liability, suits, losses, claims, actions, costs orexpenses (including attorneys' and consultants' fees and costs) suffered byTenant in connection with any such breach.

	**L.   Other Work by Tenant:**All work notdescribed in the Shell Plans and Specifications or Tenant Improvement Plans andSpecifications, such as furniture, telephone equipment, telephone wiring andoffice equipment work, shall be furnished and installed by Tenant at Tenant'scost.  Prior to Substantial Completion, Tenant shall be obligated to (i) provideactive phone lines to any elevators, and (ii) contract with a firm to monitorthe fire system.  When the construction of the Tenant Improvements has proceededto the point where Tenant's work of installing its fixtures and equipment in thePremises can be commenced, General Contractor shall notify Tenant and shallpermit Tenant and its authorized representatives and contractors access to thePremises before the Commencement Date for the purpose of installing Tenant'strade fixtures and equipment.  
**6.	Acceptance of Possession and Covenants toSurrender:

	**A.	Delivery and Acceptance:**On theCommencement Date, Landlord shall deliver and Tenant shall accept possession ofthe Premises and enter into occupancy of the Premises on the Commencement Date.Except as otherwise specifically provided herein, Tenant agrees to acceptpossession of the Premises in its then existing condition, subject to allRestrictions and without representation or warranty by Landlord except asprovided in Section 5.K above.  Tenant's taking possession of any part of thePremises shall be deemed to be an acceptance of any work of improvement done byLandlord in such part as complete and in accordance with the terms of this Leaseexcept for (i) "Punch List" type items of which Tenant has givenLandlord written notice prior to the time Tenant takes possession, and (ii)Landlord's warranties provided in Section 5.K above.  Within thirty (30) daysafter the Commencement Date, Tenant agrees to occupy at least a one (1) floor ofthe Premises.

	**B.	Condition Upon Surrender:**    Tenant furtheragrees on the Expiration Date or on the sooner termination of this Lease, tosurrender the Premises to Landlord in good condition and repair, normal wear andtear excepted.  In this regard, "normal wear and tear" shall beconstrued to mean wear and tear caused to the Premises by the natural agingprocess which occurs in spite of prudent application of the commerciallyreasonable standards for maintenance, repair replacement, and janitorialpractices, and does not include items of neglected or deferred maintenance.  Inany event, Tenant shall cause the following to be done prior to the ExpirationDate or sooner termination of this Lease: (i) all interior walls shall be freeof holes and gouges, (ii) all tiled floors shall be cleaned and waxed, (iii) allcarpets shall be cleaned and shampooed, (iv) all broken, marred, stained ornonconforming acoustical ceiling tiles shall be replaced, (v) all cabling placedabove the ceiling by Tenant or Tenant's contractors shall be removed, (vi) allwindows shall be washed; (vii) the HVAC system shall be serviced by a reputableand licensed service firm and left in "good operating condition andrepair" as so certified by such firm, (viii) the plumbing and electricalsystems and lighting shall be placed in good order and repair (includingreplacement of any burned out, discolored or broken light bulbs, ballasts, orlenses. On or before the Expiration Date or sooner termination of this Lease,Tenant shall remove all its personal property and trade fixtures from thePremises.  All property and fixtures not so removed shall be deemed as abandonedby Tenant.  Tenant shall ascertain from Landlord within ninety (90) days beforethe Expiration Date whether Landlord desires to have the Premises or any partsthereof restored to their condition as of the Commencement Date, or to causeTenant to surrender all Alterations (as defined in Section 7) in place toLandlord.  If Landlord shall so desire, and provided that at the time Landlordgave its consent to their installation, Landlord also notified Tenant that suchremoval would be required, Tenant shall, at Tenant's sole cost and expense,remove such Alterations as Landlord requires and shall repair and restore saidPremises or such parts thereof before the Expiration Date. Such repair andrestoration shall include causing the Premises to be brought into compliancewith all applicable building codes and laws in effect at the time of the removalto the extent such compliance is necessitated by the repair and restorationwork.  In no event, however, shall Tenant be required to remove any portion ofthe initial Tenant Improvements installed in accordance with the terms of thisLease. 

	**C.	Failure to Surrender:**If the Premises arenot surrendered at the Expiration Date or sooner termination of this Lease,Tenant shall be deemed in a holdover tenancy pursuant to this Section 6.C andTenant shall indemnify, defend, and hold Landlord harmless against loss orliability resulting from delay by Tenant in so surrendering the Premisesincluding, without limitation, any claims made by any succeeding tenant foundedon such delay and costs incurred by Landlord in returning the Premises to therequired condition, plus interest at the Agreed Interest Rate. **	**Anyholding over after the termination or Expiration Date with Landlord's expresswritten consent, shall be construed as month-to-month tenancy, terminable onthirty (30) days written notice from either party, and Tenant shall pay as BaseMonthly Rent to Landlord a rate equal to one hundred twenty five percent (125%)of the Base Monthly Rent due in the month preceding the termination orExpiration Date, plus all other amounts payable by Tenant under this Lease.  Anyholding over shall otherwise be on the terms and conditions herein specified,except those provisions relating to the Lease Term and any options to extend orrenew, which provisions shall be of no further force and effect following theexpiration of the applicable exercise period.  If Tenant remains in possessionof the Premises after expiration or earlier termination of this Lease withoutLandlord's consent, Tenant's continued possession shall be on the basis of atenancy at sufferance and Tenant shall pay as rent during the holdover period anamount equal to one hundred fifty percent (150%) of the Base Monthly Rent due inthe month preceding the termination or Expiration Date, plus all other amountspayable by Tenant under this Lease.  This provision shall survive thetermination or expiration of the Lease.
**7.	Alterations and Additions: 

	**A.	Tenant's Alterations:**Tenant shall notmake, or suffer to be made, any alteration or addition to the Premises("Alterations"), or any part thereof, without obtaining Landlord'sprior written consent and delivering to Landlord the proposed architectural andstructural plans for all such Alterations at least fifteen (15) days prior tothe start of construction. If such Alterations affect the structure of theBuilding, Tenant additionally agrees to reimburse Landlord its reasonable out-of-pocket costs incurred in reviewing Tenant's plans. Notwithstanding anythingto the contrary contained in this lease, Tenant shall be entitled to constructAlterations which cost Tenant less than One Hundred Thousand Dollars($100,000.00) in the aggregate each year, without obtaining Landlord's consent,provided such Alterations do not affect the exterior of the Premises oradversely affect the structural integrity or life safety systems of thePremises.  Tenant shall not proceed to make such Alterations until Tenant hasobtained all required governmental approvals and permits, and provides Landlordreasonable security, in form reasonably approved by Landlord, to protectLandlord against mechanics' lien claims.  Tenant agrees to provide Landlord (i)written notice of the anticipated and actual start-date of the work, (ii) acomplete set of half-size (15" X 21") vellum as-built drawings, and(iii) a certificate of occupancy for the work upon completion of the Alterationsif required by applicable law.  All Alterations shall be constructed incompliance with all applicable building codes and laws including, withoutlimitation, the Americans with Disabilities Act of 1990.  Upon the ExpirationDate, all Alterations, except movable furniture and trade fixtures, shall becomea part of the realty and belong to Landlord but shall nevertheless be subject toremoval by Tenant as provided in Section 6 above.  Alterations which are notdeemed as trade fixtures include heating, lighting, electrical systems, airconditioning, walls, carpeting, or any other installation which has become anintegral part of the Premises.  All Alterations shall be maintained, replaced orrepaired by Tenant at its sole cost and expense.
**	B.	Free From Liens:    Tenant shall keep thePremises free from all liens arising out of work performed, materials furnished,or obligations incurred by Tenant or claimed to have been performed for Tenant.In the event Tenant fails to discharge any such lien within fifteen (15) daysafter receiving notice of the filing, Landlord shall be entitled to dischargethe lien at Tenant's expense and all resulting reasonable costs incurred byLandlord, including reasonable attorney's fees shall be due from Tenant asadditional rent.

	**C.	Compliance With Governmental Regulations:**The term Laws or Governmental Regulations shall include all federal, state,county, city or governmental agency laws, statutes, ordinances, standards,rules, requirements, or orders now in force or hereafter enacted, promulgated,or issued.  The term also includes government measures regulating or enforcingpublic access, traffic mitigation, occupational, health, or safety standards foremployers, employees, landlords, or tenants. Tenant, at Tenant's sole expenseshall make all repairs, replacements, alterations, or improvements needed tocomply with all Governmental Regulations except as otherwise expressly providedin this Lease.  The judgment of any court of competent jurisdiction or theadmission of Tenant in any action or proceeding against Tenant (whether Landlordbe a party thereto or not) that Tenant has violated any such law, regulation orother requirement in its use of the Premises shall be conclusive of that fact asbetween Landlord and Tenant.

 
**8.	Maintenance of Premises:**
	**A.	Landlord's Obligations:**Landlord at itssole cost and expense, shall maintain in good condition, order, and repair, andreplace as and when necessary, the foundation, exterior load bearing walls glasscurtainwall, and roof structure of the Building Shell. Landlord further agreesto perform repairs and  replacements to the Common Area to maintain the CommonArea in good condition, order and repair (subject to Tenant's reimbursementobligation). Tenant acknowledges and agrees that the Association formed pursuantto the Declaration may perform the maintenance, repair and restorationobligations of Landlord under this Section 8.A and other sections of this Leaseon behalf of Landlord and other owners of any portion of the Project, indischarge of Landlord's maintenance, repair and restoration obligations underthis Lease.  As to increases in annual assessments or the imposition of aspecial assessment under the Declaration which would require the vote of theOwners (as defined in the Declaration), Landlord agrees to vote in favor or suchassessments to the extent Landlord reasonably determines such sums are requiredto maintain the Premises in the condition required by this Lease.Notwithstanding the foregoing, in the event that Tenant leases from Landlord allof the space then developed within the Project, Tenant shall have the right toperform the repairs, replacements and maintenance of the Common Area and paysuch costs directly.

	**B.	Tenant's Obligations:**Subject to Sections15 and 16, Tenant shall clean, maintain, repair and replace when necessary theBuilding and every part thereof through regular inspections and servicing,including but not limited to: (i) all plumbing and sewage facilities, (ii) allheating ventilating and air conditioning facilities and equipment, (iii) allfixtures, interior walls floors, carpets and ceilings, (iv) all electricalfacilities and equipment, (v) all automatic fire extinguisher equipment, (vi)all elevator equipment, and (vii) the roof membrane system.   All wall surfacesand floor tile are to be maintained in an as good a condition as when Tenanttook possession free of holes, gouges, or defacements.   With respect to items(ii), (vi) and (vii) above, Tenant shall provide Landlord a copy of a servicecontract between Tenant and a licensed service contractor providing for periodicmaintenance of all such systems or equipment in conformance with themanufacturer's recommendations.  Tenant shall provide Landlord upon request, acopy of such preventive maintenance contracts and paid invoices for therecommended work if requested by Landlord.
**	C.	Landlord and Tenant's Obligations RegardingReimbursable Operating Costs:    Notwithstanding the provisions of Sections8, 9, 10 and 11 of this Lease, Tenant agrees to reimburse Landlord for Tenant'sAllocable Share (as defined in Section 8.E below) of the expenses resulting fromLandlord's payment of Reimbursable Operating Costs (as defined in Section 8.Dbelow) in connection with the Premises or in connection with the Project whichare not otherwise Landlord's obligation hereunder. Tenant agrees to pay itsAllocable Share of the Reimbursable Operating Costs as additional rental withinten (10) business days of written invoice from Landlord.
**	D.	Reimbursable Operating Costs:    Forpurposes of calculating Tenant's Allocable Share of Building and Project Costs,the term "Reimbursable Operating Costs" is defined as all reasonablecosts and expenses of the nature hereinafter described which are incurred byLandlord in connection with ownership and operation of the Building or theProject in which the Premises are located.  All costs and expenses shall bedetermined in accordance with generally accepted accounting principles whichshall be consistently applied, including but not limited to the following:  (i)common area utilities, including water, power, telephone, heating, lighting, airconditioning, ventilating, and Building utilities to the extent not separatelymetered; (ii) common area maintenance and service agreements for the Buildingand/or Project and the equipment therein, including without limitation, commonarea janitorial services, alarm and security services, exterior window cleaning,and maintenance of the sidewalks, landscaping, waterscape, roof membrane,parking garages and parking areas, driveways, service areas, mechanical rooms,elevators, and the building exterior; (iii) insurance premiums and costs,including without limitation, the premiums and cost of fire, casualty andliability coverage and rental abatement and earthquake (if available atcommercially reasonable rates) insurance applicable to the Building or Project;(iv) repairs, replacements and general maintenance (excluding repairs andgeneral maintenance paid by proceeds of insurance or by Tenant or other thirdparties, and repairs or alterations attributable solely to tenants of theBuilding or Project other than Tenant); and (v) all real estate taxes andassessment installments or other impositions or charges which may be levied onthe Building or Project, upon the occupancy of the Building or Project andincluding any substitute or additional charges which may be imposed during, orapplicable to the Lease Term including real estate tax increases due to a sale,transfer or other change of ownership of the Building or Project, as such taxesare levied or appear on the City and County tax bills and assessment rolls.Landlord shall have no obligation to provide guard services or other securitymeasures for the benefit of the Project.  Tenant assumes all responsibility forthe protection of Tenant and Tenant's Agents from acts of third parties;provided, however, that nothing contained herein shall prevent Landlord, at itssole option, from providing security measures for the Project.  This is a"Net" Lease, meaning that Base Monthly Rent is paid to Landlord net ofall costs and expenses, except as provided otherwise in this Lease.  Theprovision for payment of Reimbursable Operating Costs by means of periodicpayment of Tenant's Allocable Share of Building and/or Project Costs is intendedto pass on to Tenant and reimburse Landlord for all costs of operating andmanaging the Building and/or Project.
**	E.	Tenant's Allocable Share:    For purposes ofprorating Reimbursable Operating Costs which Tenant shall pay, Tenant'sAllocable Share of Reimbursable Operating Costs shall be computed by multiplyingthe Reimbursable Operating Costs by a fraction, the numerator of which is therentable square footage of the Premises and the denominator of which is eitherthe total rentable square footage of the Building if the service or cost isallocable only to the Building, or the total square footage of the buildingscompleted within the Project if the service or cost is allocable to the entireProject.  Tenant's obligation to share in Reimbursable Operating Costs shall beadjusted to reflect the Lease Commencement and Expiration dates and is subjectto recalculation in the event of expansion of the Building or Project.
**	F.	Exclusions to Reimbursable Operating Costs:Notwithstanding anything to the contrary contained in this Lease, thefollowing costs and expenses shall not be included within Reimbursable OperatingCosts:  (i) Leasing commissions, attorneys' fees, costs, disbursements, andother expenses incurred in connection with negotiations or disputes withtenants, or in connection with leasing, renovating, or improving space fortenants or other occupants or prospective tenants or other occupants of theProject; (ii) The cost of any service sold to any tenant (including Tenant) orother occupant for which Landlord is entitled to be reimbursed as an additionalcharge or rental over and above the basic rent and escalations payable under thelease with that tenant; (iii) Any depreciation on the Project; (iv) Expenses inconnection with services or other benefits of a type that are not provided toTenant but which are provided another tenant or occupant of the Project; (v)Costs incurred due to Landlord's violation of any terms or conditions of theDeclaration, this Lease or any other lease relating to the Project; (vi)Overhead profit increments paid to Landlord's subsidiaries or affiliates forservices on or to the building or for supplies or other materials to the extentthat the cost of the services, supplies, or materials exceeds the cost thatwould have been paid had the services, supplies, or materials been provided byunaffiliated parties on a competitive basis; (vii) All interest, loan fees, andother carrying costs related to any mortgage or deed of trust or related to anycapital item, and all rental and other payable due under any ground orunderlying lease, or any lease for any equipment ordinarily considered to be ofa capital nature (except janitorial equipment which is not affixed to theProject.); (viii) Any compensation paid to clerks, attendants, or other personsin commercial concessions operated by Landlord; (ix) Advertising and promotionalexpenditures; (x) Costs of repairs and other work occasioned by fire, windstorm,or other casualty of a nature required to be insured against under this Lease inexcess of the deductible; (xi) Any costs, fines, or penalties incurred due toviolations by Landlord of any governmental rule or authority, this Lease or anyother lease in the Project, or due to Landlord's negligence or willfulmisconduct; (xii) Property management fees; (xiii) Costs for sculpture,paintings, or other objects of art (and insurance thereon or extraordinarysecurity in connection therewith); (xiv) The cost of correcting any buildingcode or other violations which were violations prior to the Commencement Date ofthis Lease; (xv) The cost of containing, removing, or otherwise remediating anycontamination of the Project (including the underlying land and ground water) byany Hazardous Materials where such contamination was not caused by Tenant.

	**F.	Waiver of Liability:**Failure by Landlordto perform any defined services, or any cessation thereof, when such failure iscaused by accident, breakage, repairs, strikes, lockout or other labordisturbances or labor disputes of any character or by any other cause, similaror dissimilar, shall not render Landlord liable to Tenant in any respect,including damages to either person or property, nor be construed as an evictionof Tenant, nor cause an abatement of rent, nor relieve Tenant from fulfillmentof any covenant or agreement hereof.  Should any equipment or machinery utilizedin supplying the services listed herein break down or for any cause cease tofunction properly, upon receipt of written notice from Tenant of any deficiencyor failure of any services, Landlord shall use reasonable diligence to repairthe same promptly, but Tenant shall have no right to terminate this Lease andshall have no claim for rebate of rent or damages on account of anyinterruptions in service occasioned thereby or resulting therefrom.  Tenantwaives the provisions of California Civil Code Sections 1941 and 1942 concerningthe Landlord's obligation of tenantability and Tenant's right to make repairsand deduct the cost of such repairs from the rent.  Landlord shall not be liablefor a loss of or injury to person or property, however occurring, through or inconnection with or incidental to furnishing, or its failure to furnish, any ofthe foregoing unless causes by its gross negligence or willful misconduct.
**	G.  Tenant's Right to Audit:   Tenant shall havethe right to audit at Landlord's local offices, at Tenant's expense, Landlord'saccounts and records relating to Reimbursable Operating Costs.   Such auditshall be conducted by a certified public accountant approved by Landlord, whichapproval shall not be unreasonably withheld. If such audit reveals that Landlordhas overcharged Tenant, the amount overcharged shall be paid to Tenant within 30days after the audit is concluded, together with interest thereon at the rate often percent (10.0%) per annum, from the date paid by Tenant until payment of theovercharge is made to Tenant. In addition, if the amount paid by Tenant exceedsthe Reimbursable Operating Costs which should have been charged to Tenant bymore than five percent (5.0%), the cost of the audit shall be paid byLandlord.
**9.	Hazard Insurance:
**	A.	Tenant's Use:    Tenant shall not use orpermit the Premises, or any part thereof, to be used for any purpose other thanthat for which the Premises are hereby leased; and no use of the Premises shallbe made or permitted, nor acts done, which will cause an increase in premiums ora cancellation of any insurance policy covering the Project or any part thereof,nor shall Tenant sell or permit to be sold, kept, or used in or about thePremises, any article prohibited by the standard form of fire insurancepolicies.  Tenant shall, at its sole cost, comply with all requirements of anyinsurance company or organization necessary for the maintenance of reasonablefire and public liability insurance covering the Premises and appurtenances.
**	B.	Landlord's Insurance:    Landlord agrees topurchase and keep in force fire, extended coverage insurance in an amount equalto the replacement cost of the Building as determined by Landlord's insurancecompany's appraisers. If required by the holder of the first deed of trust onthe property, such fire and property damage insurance may be endorsed to coverloss caused by such additional perils against which Landlord may elect toinsure, including earthquake and/or flood, and shall contain reasonabledeductibles which, in the case of earthquake and flood insurance may be up to15% of the replacement value of the property.  Additionally Landlord maymaintain a policy of (i) commercial general liability insurance insuringLandlord (and such others designated by Landlord) against liability for personalinjury, bodily injury, death and damage to property occurring or resulting froman occurrence in, on or about the Premises or Project in an amount as Landlorddetermines is reasonably necessary for its protection, and (ii) rental lostinsurance covering a twelve (12) month period. Tenant agrees to pay Landlord asadditional rent, on demand, the full cost of said insurance and any insurancecosts allocable to the Building pursuant to the Declaration as evidenced byinsurance billings to Landlord, and in the event of damage covered by saidinsurance, the amount of any commercially reasonable deductible under suchpolicy.  Payment shall be due to Landlord within thirty (30) days after writteninvoice to Tenant.  It is understood and agreed that Tenant's obligation underthis Section will be prorated to reflect the Lease Commencement and ExpirationDates. Tenant acknowledges and agrees that the Association formed pursuant tothe Declaration may procure all or any portion of the insurance required to bemaintained by Landlord under this Lease on behalf of Landlord and in dischargeof Landlord's obligation to procure such insurance under this Lease, under oneor more policies procured by the Association from time to time for the benefitof Landlord and other owners of any portion of the Project, the cost of whichshall be paid by Tenant pursuant to this section 9.B, provided that the cost toTenant shall not be greater than that which Tenant would have had to pay ifLandlord obtained such coverage directly.
**	C.	Tenant's Insurance:    Tenant agrees, at itssole cost, to insure its personal property, Tenant Improvements and Alterationsfor their full replacement value (without depreciation) and to obtain worker'scompensation and public liability and property damage insurance for occurrenceswithin the Premises with a combined single limit of not less than Five MillionDollars ($5,000,000.00).  Tenant's liability insurance shall be primaryinsurance containing a cross-liability endorsement, and shall provide coverageon an "occurrence" rather than on a "claims made" basis.Tenant shall name Master Landlord, Landlord and their respective lenders as anadditional insured and shall deliver evidence of insurance and renewalcertificates to Landlord.  All such policies shall provide for thirty (30) days'prior written notice to Landlord of any cancellation, termination, or reductionin coverage.  

	**D.	Waiver:**Landlord and Tenant hereby waiveall rights each may have against the other on account of any loss or damagesustained by Landlord or Tenant, as the case may be, or to the Premises or itscontents, which may arise from any risk covered by their respective insurancepolicies (or which would have been covered had such insurance policies beenmaintained in accordance with this Lease) as set forth above.  The parties shalluse their reasonable efforts to obtain from their respective insurance companiesa waiver of any right of subrogation which said insurance company may haveagainst Landlord, Master Landlord or Tenant, as the case may be.
**10.	Taxes:    Tenant shall be liable for and shallpay as additional rental, prior to delinquency, the following:  (i) all taxesand assessments levied against Tenant's personal property and trade or businessfixtures; (ii) all real estate taxes and assessment installments or otherimpositions or charges which may be levied on the Premises or upon the occupancyof the Premises, including any substitute or additional charges which may beimposed applicable to the Lease Term; and (iii) real estate tax increases due toan increase in assessed value resulting from a sale, transfer or other change ofownership of the Premises as it appears on the City and County tax bills duringthe Lease Term.  Tenant's obligation under this Section shall be prorated toreflect the Lease Commencement and Expiration Dates.  If, at any time during theLease Term a tax, excise on rents, business license tax or any other tax,however described, is levied or assessed against Landlord as a substitute oraddition, in whole or in part, for taxes assessed or imposed on land orBuildings, Tenant shall pay and discharge its pro rata share of such tax orexcise on rents or other tax before it becomes delinquent; except that thisprovision is not intended to cover net income taxes, inheritance, gift or estatetax imposed upon Landlord.  In the event that a tax is placed, levied, orassessed against Landlord and the taxing authority takes the position thatTenant cannot pay and discharge its pro rata share of such tax on behalf ofLandlord, then at Landlord's sole election, Landlord may increase the BaseMonthly Rent by the exact amount of such tax and Tenant shall pay such increase.If by virtue of any application or proceeding brought by or on behalf ofLandlord, there results a reduction in the assessed value of the Premises duringthe Lease Term, Tenant agrees to reimburse Landlord for all costs incurred byLandlord in connection with such application or proceeding, not to exceed theamount of any savings realized by Tenant.  In the event the Project is notsubdivided as provided in Section 2.C and the tax bill covers the entireProject, the real estate taxes and assessments shall be prorated as provided inSection 8.E.
**11.	Utilities:    Tenant shall pay directly to theproviding utility all water, gas, electric, telephone, and other utilitiessupplied to the Premises.  Landlord shall not be liable for loss of or injury toperson or property, however occurring, through or in connection with orincidental to furnishing or the utility company's failure to furnish utilitiesto the Premises unless caused by Landlord's gross negligence of willfulmisconduct, and Tenant shall not be entitled to abatement or reduction of anyportion of Base Monthly Rent or any other amount payable under this Lease.
**12.	Toxic Waste and Environmental Damage: 
**	A.	Tenant's Responsibility:    Without theprior written consent of Landlord, Tenant shall not bring, use, or permit uponthe Premises, or generate, create, release, emit, or dispose (nor permit any ofthe same) from the Premises any chemicals, toxic or hazardous gaseous, liquid orsolid materials or waste, including without limitation, material or substancehaving characteristics of ignitability, corrosivity, reactivity, or toxicity orsubstances or materials which are listed on any of the Environmental ProtectionAgency's lists of hazardous wastes or which are identified in Division 22 Title26 of the California Code of Regulations as the same may be amended from time totime or any wastes, materials or substances which are or may become regulated byor under the authority of any applicable local, state or federal laws,judgments, ordinances, orders, rules, regulations, codes or other governmentalrestrictions, guidelines or requirements.  ("Hazardous Materials")except for those substances customary in typical office uses for which noconsent shall be required.  In order to obtain consent, Tenant shall deliver toLandlord its written proposal describing the toxic material to be brought ontothe Premises, measures to be taken for storage and disposal thereof, safetymeasures to be employed to prevent pollution of the air, ground, surface andground water.  Landlord's approval may be withheld in its reasonable judgment.In the event Landlord consents to Tenant's use of Hazardous Materials on thePremises or such consent is not required, Tenant represents and warrants that itshall comply with all Governmental Regulations applicable to Hazardous Materialsincluding doing the following:  (i) adhere to all reporting and inspectionrequirements imposed by Federal, State, County or Municipal laws, ordinances orregulations and will provide Landlord a copy of any such reports or agencyinspections; (ii) obtain and provide Landlord copies of all necessary permitsrequired for the use and handling of Hazardous Materials on the Premises; (iii)enforce Hazardous Materials handling and disposal practices consistent withindustry standards; (iv) surrender the Premises free from any HazardousMaterials arising from Tenant's bringing, using, permitting, generating,creating, releasing, emitting or disposing of Hazardous Materials; and (v)properly close the facility with regard to Hazardous Materials including theremoval or decontamination of any process piping, mechanical ducting, storagetanks, containers, or trenches which have come into contact with HazardousMaterials and obtain a closure certificate from the local administering agencyprior to the Expiration Date.
**	B.	Tenant's Indemnity Regarding HazardousMaterials:    Tenant shall, at its sole cost and expense,  comply with alllaws pertaining to, and shall with counsel reasonably acceptable to Landlord,indemnify, defend and hold harmless Landlord, Master Landlord and theirtrustees, shareholders, directors, officers, employees, partners, affiliates,and agents from, any claims, liabilities, costs or expenses incurred or sufferedby Landlord arising from the bringing, using, permitting, generating, emittingor disposing of Hazardous Materials by Tenant or a third party through thesurface soils of the Premises during the Lease Term or the violation of anyGovernmental Regulation or environmental law, by Tenant or Tenant's Agents.Tenant's indemnification and hold harmless obligations include, withoutlimitation, the following arising from the bringing, using, permitting,generating, emitting or disposing of Hazardous Materials by Tenant or a thirdparty through the surface soils of the Premises during the Lease Term or theviolation of any Governmental Regulation or environmental law, by Tenant orTenant's Agents.:  (i) claims, liability, costs or expenses resulting from orbased upon administrative, judicial (civil or criminal) or other action, legalor equitable, brought by any private or public person under common law or underthe Comprehensive Environmental Response, Compensation and Liability Act of 1980("CERCLA"), the Resource Conservation and Recovery Act of 1980("RCRA") or any other Federal, State, County or Municipal law,ordinance or regulation; (ii) claims, liabilities, costs or expenses pertainingto the identification, monitoring, cleanup, containment, or removal of HazardousMaterials from soils, riverbeds or aquifers including the provision of analternative public drinking water source; (iii) all costs of defending suchclaims; (iv) losses attributable to diminution in the value of the Premises orthe Building; (v) loss or restriction of use of rentable space in the Building;(vi) Adverse effect on the marketing of any space in the Building; and (vi) allother liabilities, obligations, penalties, fines, claims, actions (includingremedial or enforcement actions of any kind and administrative or judicialproceedings, orders or judgments), damages (including consequential and punitivedamages), and costs (including attorney, consultant, and expert fees andexpenses) resulting from the release or violation.  This indemnification shallsurvive the expiration or termination o this Lease.

	**C.	Landlord's Indemnity Regarding HazardousMaterials:**Landlord shall with counsel reasonably acceptable to Tenant,indemnify, defend and hold harmless Tenant and Tenant's shareholders, directors,officers, employees, partners, affiliates, and agents from, any claims,liabilities, costs or expenses incurred or suffered by Tenant arising from thebringing, using, permitting, generating, emitting or disposing of HazardousMaterials by Landlord or the violation of any Governmental Regulation orenvironmental law, by Landlord or Landlord's Agents.  Landlord's indemnificationand hold harmless obligations include, without limitation, the following:  (i)claims, liability, costs or expenses resulting from or based uponadministrative, judicial (civil or criminal) or other action, legal orequitable, brought by any private or public person under common law or under theComprehensive Environmental Response, Compensation and Liability Act of 1980("CERCLA"), the Resource Conservation and Recovery Act of 1980("RCRA") or any other Federal, State, County or Municipal law,ordinance or regulation; (ii) claims, liabilities, costs or expenses pertainingto the identification, monitoring, cleanup, containment, or removal of HazardousMaterials from soils, riverbeds or aquifers including the provision of analternative public drinking water source; (iii) all costs of defending suchclaims; and (iv) all other liabilities, obligations, penalties, fines, claims,actions (including remedial or enforcement actions of any kind andadministrative or judicial proceedings, orders or judgments), damages (includingconsequential and punitive damages), and costs (including attorney, consultant,and expert fees and expenses) resulting from the release or violation.  Thisindemnification shall survive the expiration or termination o this Lease. 

	**C.	Actual Release by Tenant:**Tenant agreesto notify Landlord of any lawsuits or orders which relate to the remedying of oractual release of Hazardous Materials on or into the soils or ground water at orunder the Premises.  Tenant shall also provide Landlord all notices required bySection 25359.7(b) of the Health and Safety Code and all other notices requiredby law to be given to Landlord in connection with Hazardous Materials.  Withoutlimiting the foregoing, each party shall also deliver to the other party, withintwenty (20) days after receipt thereof, any written notices from anygovernmental agency alleging a material violation of, or material failure tocomply with, any federal, state or local laws, regulations, ordinances ororders, the violation of which or failure to comply with poses a foreseeable andmaterial risk of contamination of the ground water or injury to humans (otherthan injury solely to Tenant, Tenant's Agents and employees within theBuilding).

		In the event of any release on or into the Premisesor into the soil or ground water under the Premises, the Building or the Projectof any Hazardous Materials used, treated, stored or disposed of by Tenant orTenant's Agents, Tenant agrees to comply, at its sole cost, with all laws,regulations, ordinances and orders of any federal, state or local agencyrelating to the monitoring or remediation of such Hazardous Materials.  In theevent of any such release of Hazardous Materials Tenant shall immediately giveverbal and follow-up written notice of the release to Landlord, and Tenantagrees to meet and confer with Landlord and its Lender to attempt to eliminateand mitigate any financial exposure to such Lender and resultant exposure toLandlord under California Code of Civil Procedure Section 736(b) as a result ofsuch release, and promptly to take reasonable monitoring, cleanup and remedialsteps given, inter alia, the historical uses to which the Property has andcontinues to be used, the risks to public health posed by the release, the thenavailable technology and the costs of remediation, cleanup and monitoring,consistent with acceptable customary practices for the type and severity of suchcontamination and all applicable laws.  Nothing in the preceding sentence shalleliminate, modify or reduce the obligation of Tenant under 12.B of this Lease toindemnify and hold Landlord and Master Landlord harmless from any claimsliabilities, costs or expenses incurred or suffered by them rising from thebringing, using, permitting, generating, emitting or disposing of HazardousMaterials by Tenant or a third party through the surface soils of the Premisesduring the Lease Term or the violation of any Governmental Regulation orenvironmental law, by Tenant or Tenant's Agents.  Tenant shall provide Landlordprompt written notice of Tenant's monitoring, cleanup and remedial steps.

	In the absence of an order of any federal, state or localgovernmental or quasi-governmental agency relating to the cleanup, remediationor other response action required by applicable law, any dispute arising betweenLandlord and Tenant concerning Tenant's obligation to Landlord under thisSection 12.C concerning the level, method, and manner of cleanup, remediation orresponse action required in connection with such a release of HazardousMaterials shall be resolved by mediation and/or arbitration pursuant to theprovisions of Section 21.E of this Lease.

	**D.	Environmental Monitoring:**Landlord andits agents shall have the right to inspect, investigate, sample and monitor thePremises including any air, soil, water, ground water or other sampling or anyother testing, digging, drilling or analysis to determine whether Tenant iscomplying with the terms of this Section 12 provided reasonable grounds tosuspect a violation exist.  If Landlord discovers that Tenant is not incompliance with the terms of this Section 12, any such reasonable costs incurredby Landlord, including attorneys' and consultants' fees, shall be due andpayable by Tenant to Landlord within thirty (30) days following Landlord'swritten demand therefore.
**13.	Tenant's Default:    The occurrence of any ofthe following shall constitute a material default and breach of this Lease byTenant:  (i) Tenant's failure to pay any rent including additional rent or anyother payment due under this Lease within ten (10) days following Landlord'snotice of nonpayment, (ii) the abandonment of the Premises by Tenant; (iii)Tenant's failure to observe and perform any other required provision of thisLease, where such failure continues for thirty (30) days after written noticefrom Landlord, provided, however, that if the nature of the default is such thatit cannot reasonably be cured within the 30-day period, Tenant shall not bedeemed in default if it commences within such period to cure, and thereafterdiligently prosecutes the same to completion; (iv) Tenant's making of anygeneral assignment for the benefit of creditors; (v) the filing by or againstTenant of a petition to have Tenant adjudged a bankrupt or of a petition forreorganization or arrangement under any law relating to bankruptcy (unless, inthe case of a petition filed against Tenant, the same is dismissed after thefiling); (vi) the appointment of a trustee or receiver to take possession ofsubstantially all of Tenant's assets located at the Premises or of Tenant'sinterest in this Lease, where possession is not restored to Tenant within sixty(60) days; (vii) the attachment, execution or other judicial seizure ofsubstantially all of Tenant's assets located at the Premises or of Tenant'sinterest in this Lease, where such seizure is not discharged within sixty (60)days; (viii) a default by Tenant under the Building 2 Lease (if then leased byTenant from Landlord), or (ix) a default by Tenant under the Building 1 Lease(if leased by Tenant from Landlord).
**	A.	Remedies:    In the event of any suchdefault by Tenant, then in addition to other remedies available to Landlord atlaw or in equity, Landlord shall have the immediate option to terminate thisLease and all rights of Tenant hereunder by giving written notice of suchintention to terminate.  In the event Landlord elects to so terminate thisLease, Landlord may recover from Tenant all the following:  (i) the worth attime of award of any unpaid rent which had been earned at the time of suchtermination; (ii) the worth at time of award of the amount by which the unpaidrent which would have been earned after termination until the time of awardexceeds the amount of such rental loss for the same period that Tenant provescould have been reasonably avoided; (iii) the worth at time of award of theamount by which the unpaid rent for the balance of the Lease Term after the timeof award exceeds the amount of such rental loss that Tenant proves could bereasonably avoided; (iv) any other amount necessary to compensate Landlord forall detriment proximately caused by Tenant's failure to perform its obligationsunder this Lease, or which in the ordinary course of things would be likely toresult therefrom; including the following:  (x) reasonable expenses forrepairing, altering or remodeling the Premises if such expenses are necessary torelet the Premises, (y) reasonable broker's fees, advertising costs or otherexpenses of reletting the Premises, and (z) costs of carrying the Premises suchas taxes, insurance premiums, utilities and security precautions and assessmentsdue under the Declaration, and (v) at Landlord's election, such other reasonableamounts in addition to or in lieu of the foregoing as may be permitted byapplicable California law.  The term "rent", as used herein, isdefined as the minimum monthly installments of Base Monthly Rent and all othersums required to be paid by Tenant pursuant to this Lease, all such other sumsbeing deemed as additional rent due hereunder.  As used in (i) and (ii) above,"worth at the time of award" shall be computed by allowing interest ata rate equal to the discount rate of the Federal Reserve Bank of San Franciscoplus five (5%) percent per annum.  As used in (iii) above, "worth at thetime of award" shall be computed by discounting such amount at the discountrate of the Federal Reserve Bank of San Francisco at the time of award plus one(1%) percent.  
**	B.	Right to Re-enter:     In the event of anysuch default by Tenant, Landlord shall have the right, after terminating thisLease, to re-enter the Premises and remove all persons and property.  Suchproperty may be removed and stored in a public warehouse or elsewhere at thecost of and for the account of Tenant, and disposed of by Landlord in any mannerpermitted by law.
**	C.	Abandonment:     If Landlord does not electto terminate this Lease as provided in Section 13.A or 13.B above, then theprovisions of California Civil Code Section 1951.4, (Landlord may continue thelease in effect after Tenant's breach and abandonment and recover rent as itbecomes due if Tenant has a right to sublet and assign, subject only toreasonable limitations) as amended from time to time, shall apply and Landlordmay from time to time, without terminating this Lease, either recover all rentalas it becomes due or relet the Premises or any part thereof for such term orterms and at such rental or rentals and upon such other terms and conditions asLandlord in its sole discretion may deem advisable, with the right to makealterations and repairs to the Premises.  In the event that Landlord elects toso relet, rentals received by Landlord from such reletting shall be applied inthe following order to:  (i) the payment of any indebtedness other than BaseMonthly Rent due hereunder from Tenant to Landlord; (ii) the payment of any costof such reletting; (iii) the payment of the cost of any alterations and repairsto the Premises; and (iv) the payment of Base Monthly Rent due and unpaidhereunder.  The residual rentals, if any, shall be held by Landlord and appliedin payment of future Base Monthly Rent as the same may become due and payablehereunder.  Landlord shall the obligation to market the space but shall have noobligation to relet the Premises following a default if Landlord has othercomparable available space within the Building or Project.  In the event theportion of rentals received from such reletting which is applied to the paymentof rent hereunder during any month be less than the rent payable during thatmonth by Tenant hereunder, then Tenant shall pay such deficiency to Landlordimmediately upon demand.  Such deficiency shall be calculated and paid monthly.Tenant shall also pay to Landlord, as soon as ascertained, any reasonable costsand expenses incurred by Landlord in such reletting or in making suchalterations and repairs not covered by the rentals received from suchreletting.
**	D.	No Termination:     Landlord's re-entry ortaking possession of the Premises pursuant to 13.B or 13.C shall not beconstrued as an election to terminate this Lease unless written notice of suchintention is given to Tenant or unless the termination is decreed by a court ofcompetent jurisdiction. Notwithstanding any reletting without termination byLandlord because of any default by Tenant, Landlord may at any time after suchreletting elect to terminate this Lease for any such default.

	**E.	Non-Waiver:** Landlord may accept Tenant'spayments without waiving any rights under this Lease, including rights under apreviously served notice of default. No payment by Tenant or receipt by Landlordof a lesser amount than any installment of rent due shall be deemed as otherthan payment on account of the amount due.  If Landlord accepts payments afterserving a notice of default, Landlord may nevertheless commence and pursue anaction to enforce rights and remedies under the previously served notice ofdefault without giving Tenant any further notice or demand.  Furthermore, theLandlord's acceptance of rent from the Tenant when the Tenant is holding overwithout express written consent does not convert Tenant's Tenancy from a tenancyat sufferance to a month to month tenancy. No waiver of any provision of thisLease shall be implied by any failure of Landlord to enforce any remedy for theviolation of that provision, even if that violation continues or is repeated.Any waiver by Landlord of any provision of this Lease must be in writing.  Suchwaiver shall affect only the provision specified and only for the time and inthe manner stated in the writing. No delay or omission in the exercise of anyright or remedy by Landlord shall impair such right or remedy or be construed asa waiver thereof by Landlord.  No act or conduct of Landlord, including, withoutlimitation, the acceptance of keys to the Premises, shall constitute acceptanceof the surrender of the Premises by Tenant before the Expiration Date.  Onlywritten notice from Landlord to Tenant of acceptance shall constitute suchacceptance of surrender of the Premises.  Landlord's consent to or approval ofany act by Tenant which requires Landlord's consent or approvals shall not bedeemed to waive or render unnecessary Landlord's consent to or approval of anysubsequent act by Tenant.
**	F.	Performance by Landlord:    If Tenant failsto perform any obligation required under this Lease or by law or governmentalregulation, Landlord in its sole discretion may, following notice and expirationof the applicable cure period, without waiving any rights or remedies andwithout releasing Tenant from its obligations hereunder, perform suchobligation, in which event Tenant shall pay Landlord as additional rent all sumspaid by Landlord in connection with such substitute performance, includinginterest at the Agreed Interest Rate within thirty (30) days of Landlord'swritten notice for such payment.
**14.	Landlord's  Liability:    

	A.	Limitation on Landlord's Liability:    In theevent of Landlord's failure to perform any of its covenants or agreements underthis Lease, Tenant shall give Landlord written notice of such failure and shallgive Landlord thirty (30) days to cure or commence to cure such failure prior toany claim for breach or resultant damages, provided, however, that if the natureof the default is such that it cannot reasonably be cured within the 30-dayperiod, Landlord shall not be deemed in default if it commences within suchperiod to cure, and thereafter diligently prosecutes the same to completion.  Inaddition, upon any such failure by Landlord, Tenant shall give notice byregistered or certified mail to any person or entity with a security interest inthe Premises ("Mortgagee") that has provided Tenant with notice of itsinterest in the Premises, and shall provide Mortgagee a reasonable opportunityto cure such failure, including such time to obtain possession of the Premisesby power of sale or judicial foreclosure, if such should prove necessary toeffectuate a cure.  Tenant agrees that each of the Mortgagees to whom this Leasehas been assigned is an expressed third-party beneficiary hereof.  Tenant waivesany right under California Civil Code Section 1950.7 or any other present orfuture law to the collection of any payment or deposit from Mortgagee or anypurchaser at a foreclosure sale of Mortgagee's interest unless Mortgagee or suchpurchaser shall have actually received and not refunded the applicable paymentor deposit.   Tenant Further waives any right to terminate this Lease and tovacate the Premises on Landlord's default under this Lease.  Tenant's soleremedy on Landlord's default is an action for damages or injunctive ordeclaratory relief.
**	B.	Limitation on Tenant's Recourse:    IfLandlord is a corporation trust, partnership, joint venture, unincorporatedassociation or other form of business entity: (i) the obligations of Landlordshall not constitute personal obligations of the officers, directors, trustees,partners, joint venturers, members, owners, stockholders, or other principals orrepresentatives except to the extent of their interest in the Premises.  Tenantshall have recourse only to the interest of Landlord in the Premises or for thesatisfaction of the obligations of Landlord and shall not have recourse to anyother assets of Landlord for the satisfaction of such obligations.

	**C.	Indemnification of Landlord:**   As amaterial part of the consideration rendered to Landlord, Tenant hereby waivesall claims against Landlord except to the extent caused by Landlord's grossnegligence, willful misconduct or a breach of this Lease for damages to goods,wares and merchandise, and all other personal property in, upon or about saidPremises and for injuries to persons in or about said Premises, from any causearising at any time to the fullest extent permitted by law, and Tenant shallindemnify and hold Landlord, Master Landlord and their shareholders, directors,officers, trustees, employees, partners, affiliates and agents exempt andharmless from any damage or injury to any person, or to the goods, wares andmerchandise and all other personal property of any person, arising from the useof the Premises, Building, and/or Project by Tenant and Tenant's Agents or fromthe failure of Tenant to keep the Premises in good condition and repair asherein provided, except to the extent due to the gross negligence or willfulmisconduct of Landlord.  Further, in the event Landlord is made party to anylitigation due to the acts or omission of Tenant and Tenant's Agents, Tenantwill indemnify, defend (with counsel reasonably acceptable to Landlord) and holdLandlord harmless from any such claim or liability including Landlord's costsand expenses and reasonable attorney's fees incurred in defending such claimsexcept to the extent due to the gross negligence or willful misconduct ofLandlord.
**15.	Destruction of Premises: 

	**A.	Landlord's Obligation to Restore:**In theevent of a destruction of the Premises during the Lease Term Landlord shallrepair the same to the approximate condition which existed prior to suchdestruction.  Such destruction shall not annul or void this Lease; however,Tenant shall be entitled to a proportionate reduction of Base Monthly Rent whilerepairs are being made, such proportionate reduction to be based upon the extentto which the repairs interfere with Tenant's business in the Premises, asreasonably determined by the Parties. In no event shall Landlord be required toreplace or restore Alterations, Tenant Improvements, Tenant's fixtures orpersonal property.  With respect to a destruction which Landlord is obligated torepair or may elect to repair under the terms of this Section, Tenant waives theprovisions of Section 1932, and Section 1933, Subdivision 4, of the Civil Codeof the State of California, and any other similarly enacted statute, and theprovisions of this Section 15 shall govern in the case of such destruction.  IfLandlord is required to repair the Premises in the event of destruction pursuantto this Lease, Landlord agrees that it will not vote under the Declaration infavor or not repairing the Premises or Common Area.

	**B.	Limitations on Landlord's RestorationObligation:**Notwithstanding the provisions of Section 15.A, Landlord shallhave no obligation to repair, or restore the Premises if any of the followingoccur:  (i) if the repairs cannot be made in three hundred sixty five (365) daysfrom the date of receipt of all governmental approvals necessary under the lawsand regulations of State, Federal, County or Municipal authorities, asreasonably determined by Landlord, (ii) if the holder of the first deed of trustor mortgage encumbering the Building elects not to permit the insurance proceedspayable upon damage or destruction to be used for such repair or restoration,(iii) the damage or destruction is not fully covered by the insurance maintainedby Landlord, (iv) the damage or destruction occurs in the last twenty four (24)months of the Lease Term (unless Tenant commits to exercise any available optionto extend the Lease Term pursuant to Section 18 of this Lease), (v) Tenant is indefault pursuant to the provisions of Section 13 beyond expiration of theapplicable cure period, (vi) Tenant has vacated the Premises for more thanninety (90) days, or (vii) if repair of the Common Area is necessary beforerepairs to the Premises can be

performed and Landlord reasonably determines that repairs tothe Common Area will not be made within one hundred eighty (180) days after thedate of the damage and destruction.  In any such event Landlord may elect eitherto (i) complete the repair or restoration, or (ii) terminate this Lease byproviding Tenant written notice of its election within sixty (60) days followingthe damage or destruction.
**	C.  Tenant's Rights with Respect to a Destruction ofthe Premises:    Notwithstanding anything to the contrary contained in thisLease:  Landlord shall give notice to Tenant of its election to rebuild or notto rebuild the Premises within thirty (30) days of casualty to the Premises andsuch notice shall specify Landlord's architect's or engineer's reasonableestimate as to the time required to rebuild or restore the Premises.  If, in thereasonable opinion of Landlord's architect or engineer, the Premises will takelonger than three hundred sixty five (365) days to rebuild or restore andLandlord has elected to perform such rebuilding or restoration, Tenant may,notwithstanding Landlord's election, terminate this Lease by written notice toLandlord of such termination within five (5) days after its receipt ofLandlord's notice. Such termination shall be effective thirty (30) days afterthe giving of Tenant's notice.  If Landlord fails to restore the Premises(including reasonable means of access thereto) within a period which is sixty(60) days longer than the period stated in Landlord's notice to Tenant as theestimated rebuilding period, 'Tenant, at any time thereafter until suchrebuilding is completed, may terminate this Lease by delivering written noticeto Landlord of such termination, in which event this Lease shall terminate as ofthe date of the giving of such notice.  If casualty to the Premises occurswithin the last twenty-four months of the term and the period in which Tenant isobligated to exercise its option to renew the term pursuant to Section 18 hasnot expired, Tenant shall have thirty (30) days after the date of casualty inwhich to notify Landlord of its election to exercise such renewal option. IfTenant elects to renew the term as provided above, Landlord shall have no rightto terminate the Lease pursuant to this Section 15.
**16.	Condemnation:    If any part of the Premisesshall be taken for any public or quasi-public use, under any statute or by rightof eminent domain or private purchase in lieu thereof, and only a part thereofremains which is susceptible of occupation hereunder, this Lease shall, as tothe part so taken, terminate as of the day before title vests in the condemnoror purchaser ("Vesting Date") and Base Monthly Rent payable hereundershall be adjusted so that Tenant is required to pay for the remainder of theLease Term only such portion of Base Monthly Rent as the value of the partremaining after such taking bears to the value of the entire Premises prior tosuch taking.  If all of the Premises or such part thereof be taken so that theredoes not remain a portion susceptible for occupation hereunder, this Lease shallterminate on the Vesting Date.  If part or all of the Premises be taken, allcompensation awarded upon such taking shall go to Landlord, and Tenant shallhave no claim thereto; but Landlord shall cooperate with Tenant, without cost toLandlord, to recover compensation for damage to or taking of any Alterations,Tenant Improvements, or for Tenant's moving costs.  Tenant hereby waives theprovisions of California Code of Civil Procedures Section 1265.130 and any othersimilarly enacted statue, and the provisions of this Section 16 shall govern inthe case of such taking.
**17.	Assignment or Sublease:   

	**A.	Consent by Landlord:**Except asspecifically provided in this Section 17.E, Tenant may not assign, sublet,hypothecate, or allow a third party to use the Premises without the expresswritten consent of Landlord which shall not be unreasonably withheld,conditioned or delayed.  Except in connection with a Permitted Transfer, in theevent Tenant desires to assign this Lease or any interest herein including,without limitation, a pledge, mortgage or other hypothecation, or sublet thePremises or any part thereof, Tenant shall deliver to Landlord (i) executedcounterparts of any agreement and of all ancillary agreements with the proposedassignee/subtenant, (ii) current financial statements of the transferee coveringthe preceding three years if available, (iii) the nature of the proposedtransferee's business to be carried on in the Premises, (iv) a statementoutlining all consideration to be given on account of the Transfer, and (v) acurrent financial statement of Tenant.  Landlord may condition its approval ofany Transfer to a certification from both Tenant and the proposed transferee ofall consideration to be paid to Tenant in connection with such Transfer.  AtLandlord's request, Tenant shall also provide additional information reasonablyrequired by Landlord to determine whether it will consent to the proposedassignment or sublease.  Landlord shall have a fifteen business (15) day periodfollowing receipt of all the foregoing within which to notify Tenant in writingthat Landlord elects to: (i) terminate this Lease in the event of an assignmentonly; (ii) permit Tenant to assign or sublet such space to the namedassignee/subtenant on the terms and conditions set forth in the notice; or (iii)refuse consent.  If Landlord should fail to notify Tenant in writing of suchelection within the 15-day period, Landlord shall be deemed to have electedoption (ii) above.  In the event Landlord elects option (i) above, this Leaseshall expire with respect to such part of the Premises on the date upon whichthe proposed sublease was to commence, and from such date forward, Base MonthlyRent and Tenant's Allocable Share of all other costs and charges shall beadjusted based upon the proportion that the rentable area of the Premisesremaining bears to the total rentable area of the Premises.  In the eventLandlord elects option (ii) above, Landlord's written consent to the proposedassignment or sublease shall not be unreasonably withheld, provided and upon thecondition that: (i) the proposed assignee or subtenant is engaged in a businessthat is limited to the use expressly permitted under this Lease; (ii) theproposed assignee or subtenant is a company with sufficient financial worth andmanagement ability to undertake the financial obligation of this Lease andLandlord has been furnished with reasonable proof thereof; (iii) the proposedassignment or sublease is in form reasonably satisfactory to Landlord; (iv)Tenant reimburses Landlord on demand for any reasonable costs that may beincurred by Landlord in connection with said assignment or sublease, includingthe costs of making investigations as to the acceptability of the proposedassignee or subtenant and legal costs incurred in connection with the grantingof any requested consent; and (vi) Tenant shall not have advertised orpublicized in any way the availability of the Premises without prior notice toLandlord.  In the event all or any one of the foregoing conditions are notsatisfied, Landlord shall be considered to have acted reasonably if it withholdsits consent.
**	B.	Assignment or Subletting Consideration:Any rent or other economic consideration realized by Tenant under anysublease and assignment, in excess of the rent payable hereunder after deducting(i) reasonable subletting and assignment costs (ii) the Monthly Amortized Cost(defined below) of the Tenant Improvements paid by Tenant, and (iii) anyeconomic consideration received by Tenant for services rendered or personalproperty sold or leased, shall be divided and paid fifty percent (50%) toLandlord and fifty percent (50%) to Tenant.  Monthly Amortized Cost shall bedetermined by taking sum paid by Tenant for the Tenant Improvements installed inthe Building and dividing this sum by one hundred forty four (144) months.Tenant's obligation to pay over Landlord's portion of the considerationconstitutes an obligation for additional rent hereunder.  The above provisionsrelating to Landlord's right to terminate the Lease and relating to theallocation of bonus rent are independently negotiated terms of the Lease whichconstitute a material inducement for the Landlord to enter into the Lease, andare agreed by the parties to be commercially reasonable.  No assignment orsubletting by Tenant shall relieve it of any obligation under this Lease.  Anyassignment or subletting except in connection with a Permitted Transfer whichconflicts with the provisions hereof shall be void.

	**C.	No Release:**Any assignment or subleaseexcept in connection with a Permitted Transfer shall be made only if and shallnot be effective until the assignee or subtenant shall execute, acknowledge, anddeliver to Landlord an agreement, in form and substance satisfactory toLandlord, whereby the assignee or subtenant shall assume all the obligations ofthis Lease on the part of Tenant to be performed or observed and shall besubject to all the covenants, agreements, terms, provisions and conditions inthis Lease.  Notwithstanding any such sublease or assignment and the acceptanceof rent by Landlord from any subtenant or assignee, Tenant and any guarantorshall remain fully liable for the payment of Base Monthly Rent and additionalrent due, and to become due hereunder, for the performance of all the covenants,agreements, terms, provisions and conditions contained in this Lease on the partof Tenant to be performed and for all acts and omissions of any licensee,subtenant, assignee or any other person claiming under or through any subtenantor assignee that shall be in violation of any of the terms and conditions ofthis Lease, and any such violation shall be deemed a violation by Tenant.Tenant shall indemnify, defend and hold Landlord harmless from and against alllosses, liabilities, damages, costs and expenses (including reasonable attorneyfees) resulting from any claims that may be made against Landlord by theproposed assignee or subtenant or by any real estate brokers or other personsclaiming compensation in connection with the proposed assignment or sublease,unless caused by Landlord's breach of this Lease.  
**	D.	Reorganization of Tenant:    The provisionsof this Section 17.D shall apply if Tenant is a corporation and: (i) there is adissolution, merger, consolidation, or other reorganization of or affectingTenant, where Tenant is not the surviving corporation, or (ii) there is a saleor transfer to one person or entity (or to any group of related persons orentities) of stock possessing more than 50% of the total combined voting powerof all classes of Tenant's capital stock issued, outstanding and entitled tovote for the election of directors, and after such sale or transfer of stockTenant's stock is no longer publicly traded. In a transaction under clause (i)the surviving corporation shall promptly execute and deliver to Landlord anagreement in form reasonably satisfactory to Landlord under which suchcorporation assumes the obligations of Tenant hereunder, and in a transactionunder clause (ii) the transferee shall promptly execute and deliver to Landlordan agreement in form reasonably satisfactory to Landlord under which suchtransferee assumes the obligations of Tenant to the extent accruing after suchtransferee's acquisition of Tenant's stock possessing more than 50% of the totalcombined voting of all classes of Tenant's capital stock issued, outstanding andentitled to vote for the election of directors.

	**E.	Permitted Transfers:**Notwithstandinganything contained in this Section 17, Tenant may enter into any of thefollowing transfers (a "Permitted Transfer") without Landlord's priorconsent, and Landlord shall not be entitled to terminate the Lease or to receiveany part of any subrent resulting therefrom that would otherwise be due pursuantto Sections 17.A and 17.B.  Tenant may sublease all or part of the Premises orassign its interest in this Lease to (i) any person or entity which controls, iscontrolled by, or is under common control with the original Tenant to this Leaseby means of an ownership interest of more than 50%; (ii) any person or entitywhich results from a merger, consolidation or other reorganization in whichTenant is not the survivor, so long as the survivor has a net worth at the timeof such transfer sufficient to enable it to meet its obligations under thisLease; and (iii) any person or entity which purchases or otherwise acquires allor substantially all of the assets of Tenant so long as such acquiring person orentity has a net worth at the time of such transfer that is sufficient at thetime of such transfer to enable it to meet its obligations under this Lease.
**	F.	Effect of Default:    In the event of Tenant'sdefault, Tenant hereby assigns all rents due from any assignment or sublettingto Landlord as security for performance of its obligations under this Lease, andLandlord may collect such rents as Tenant's Attorney-in-Fact, except that Tenantmay collect such rents unless a default occurs as described in Section 13 above.A Lease termination due to Tenant's default shall not automatically terminate anassignment or sublease then in existence; rather at Landlord's election, suchassignment or sublease shall survive the Lease termination, the assignee orsubtenant shall attorn to Landlord, and Landlord shall undertake the obligationsof Tenant under the sublease or assignment; except that Landlord shall not beliable for prepaid rent, security deposits or other defaults of Tenant to thesubtenant or assignee, or for any acts or omissions of Tenant and Tenant'sAgents.
**	G.	Conveyance by Landlord:    As used in thisLease, the term "Landlord" is defined only as the owner for the timebeing of the Premises, so that in the event of any sale or other conveyance ofthe Premises or in the event of a master lease of the Premises, Landlord shallbe entirely freed and relieved of all its covenants and obligations hereunder,and it shall be deemed and construed, without further agreement between theparties and the purchaser at any such sale or the master tenant of the Premises,that the purchaser or master tenant of the Premises has assumed and agreed tocarry out any and all covenants and obligations of Landlord hereunder.  Suchtransferor shall transfer and deliver Tenant's security deposit to the purchaserat any such sale or the master tenant of the Premises, and thereupon thetransferor shall be discharged from any further liability in referencethereto.

	**F.	Successors and Assigns:**   Subject to theprovisions this Section 17, the covenants and conditions of this Lease shallapply to and bind the heirs, successors, executors, administrators and assignsof all parties hereto; and all parties hereto shall be jointly and severallyliable hereunder.
**18.	**Option to Extend the Lease Term:**
	**A.	Grant and Exercise of Option:**Landlordgrants to Tenant, subject to the terms and conditions set forth in this Section18.A, two (2) options (the "Options") to extend the Lease Term for anadditional term (the "Option Term").  Each Option Term shall be for aperiod of sixty (60) months and shall be exercised, if at all, by written noticeto Landlord no earlier than eighteen (18) months prior to the date the LeaseTerm would expire but for such exercise but no later than twelve (12) monthsprior to the date the Lease Term would expire but for such exercise, time beingof the essence for the giving of such notice.  If Tenant exercises the firstOption or both of the Options, all of the terms, covenants and conditions ofthis Lease except this Section shall apply during the Option Term as though theexpiration date of the Option Term was the date originally set forth herein asthe Expiration Date, provided that Base Monthly Rent for the Premises payable byTenant during the Option Term shall be the greater of (i) the average amount ofBase Monthly Rent paid during the initial Lease Term, and (ii) ninety fivepercent (95%) of the Fair Market Rental as hereinafter defined.  Notwithstandinganything herein to the contrary, if Tenant is in monetary or material non-monetary default after expiration of any applicable cure period under any of theterms, covenants or conditions of this Lease either at the time Tenant exercisesthe Option or at any time thereafter prior to the commencement date of theOption Term, Landlord shall have, in addition to all of Landlord's other rightsand remedies provided in this Lease, the right to terminate the Option uponnotice to Tenant, in which event the expiration date of this Lease shall be andremain the Expiration Date.  As used herein, the term "Fair MarketRental" is defined as the rental and all other monetary payments, includingany escalations and adjustments thereto (including without limitation ConsumerPrice Indexing) that Landlord could obtain during the Option Term from a thirdparty desiring to lease the Premises, based upon the current use and otherpotential uses of the Premises, as determined by the rents then being obtainedfor new leases of space comparable in age and quality to the Premises in thelocality of the Building. The appraisers shall be instructed that the foregoingfive percent (5%) discount is intended to reduce comparable rents which include(i) brokerage commissions, (ii) tenant improvement allowances, and (iii) vacancycosts, to account for the fact that Landlord will not suffer such costs in theevent Tenant exercises its Option.

	**B.	Determination of Fair Market Rental:**IfTenant exercises the Option, Landlord shall send Tenant a notice setting forththe Fair Market Rental for the Option Term within thirty (30) days following theExercise Date.  If Tenant disputes Landlord's determination of Fair MarketRental for the Option Term, Tenant shall, within thirty (30) days after the dateof Landlord's notice setting forth Fair Market Rental for the Option Term, sendto Landlord a notice stating that Tenant either elects to terminate its exerciseof the Option, in which event the Option shall lapse and this Lease shallterminate on the Expiration Date, or that Tenant disagrees with Landlord'sdetermination of Fair Market Rental for the Option Term and elects to resolvethe disagreement as provided in Section 18.C below.  If Tenant elects to resolvethe disagreement as provided in Section 18.C and such procedures are notconcluded prior to the commencement date of the Option Term, Tenant shall pay toLandlord as Base Monthly Rent the Fair Market Rental as determined by Landlordin the manner provided above.  If the Fair Market Rental as finally determinedpursuant to Section 18.C is greater than Landlord's determination, Tenant shallpay Landlord the difference between the amount paid by Tenant and the FairMarket Rental as so determined in Section 18.C within thirty (30) days aftersuch determination.  If the Fair Market Rental as finally determined in Section18.C is less than Landlord's determination, the difference between the amountpaid by Tenant and the Fair Market Rental as so determined in Section 18.C shallbe credited against the next installments of rent due from Tenant to Landlordhereunder.
**	C. 	Resolution of a Disagreement over the FairMarket Rental:    Any disagreement regarding Fair Market Rental shall beresolved as follows:

		1.	Within thirty (30) days after Tenant's responseto Landlord's notice setting forth the Fair Market Rental, Landlord and Tenantshall meet at least two (2) times at a mutually agreeable time and place, in anattempt to resolve the disagreement.

		2.	If within the 30-day period referred to above,Landlord and Tenant cannot reach agreement as to Fair Market Rental, each partyshall select one appraiser to determine Fair Market Rental.  Each such appraisershall arrive at a determination of Fair Market Rental and submit theirconclusions to Landlord and Tenant within thirty (30) days after the expirationof the 30-day consultation period described above.

		3.	If only one appraisal is submitted within therequisite time period, it shall be deemed as Fair Market Rental.  If bothappraisals are submitted within such time period and the two appraisals sosubmitted differ by less than ten percent (10%), the average of the two shall bedeemed as Fair Market Rental.  If the two appraisals differ by more than 10%,the appraisers shall immediately select a third appraiser who shall, withinthirty (30) days after his selection, make and submit to Landlord and Tenant adetermination of Fair Market Rental.  This third appraisal will then be averagedwith the closer of the two previous appraisals and the result shall be FairMarket Rental.

		4.	All appraisers specified pursuant to thisSection shall be members of the American Institute of Real Estate Appraiserswith not less than ten (10) years experience appraising office and industrialproperties in the Santa Clara Valley.  Each party shall pay the cost of theappraiser selected by such party and one-half of the cost of the thirdappraiser.
**	D.	Personal to Tenant:    All Options providedto Tenant in this Lease are personal and granted to Siebel Systems, Inc. and anyPermitted Transferee and are not exercisable by any third party should Tenantassign or sublet all or a portion of its rights under this Lease, unlessLandlord consents to permit exercise of any option by any assignee or subtenant,in Landlord's sole and absolute discretion.  In the event Tenant has multipleoptions to extend this Lease, a later option to extend the Lease cannot beexercised unless the prior option has been so exercised.
**19.	**This section intentionally left blank.
20.  Right Of First Offering To Purchase:    

		A.	Grant and Exercise of Option: In the eventeither or both Master Landlord and Landlord elect to sell their respectiveinterests in the Building, Master Landlord and Landlord hereby grants Tenant aright of first offering to purchase their respective interests in the Building(Master Landlord and Landlord are individually and collectively referred to inthis Section as "Seller").  Prior to Seller offering to sell itsinterest in the Building to a third party, Seller shall give Tenant writtennotice of such desire and the terms and other information under which Sellerintends to sell the Building.  Provided at the time of exercise, Tenant is notin default beyond the expiration of any applicable cure period, Tenant shallhave the option, which must be exercised, if at all, by written notice to Sellerwithin thirty (30) days after Tenant's receipt of Seller's notice, to purchaseits interest in the Building at the sales price and terms of sale specified inthe notice.  In the event Tenant timely exercises such option to purchase itsinterest in the Building, Seller shall sell its interest in the Building toTenant, and Tenant shall purchase its interest in the Building from Seller inaccordance with the price and terms specified in Seller's notice.  Seller andTenant shall, in good faith, attempt to reach agreement on the terms of amutually acceptable purchase agreement consistent with the terms set forth inSeller's notice within thirty (30) days of Seller's notice.  In the event (i)Seller and Tenant are unable to reach agreement on a mutually acceptablepurchase agreement within such thirty (30) day period or (ii) Tenant fails toexercise Tenant's option within said thirty (30) day period, Seller shall haveone hundred eighty (180) days thereafter to sell its interest in the Building atno less than ninety five percent (95%) of the sales price and upon the same orsubstantially the same other terms of sale as specified in the notice to Tenant.In the event Seller fails to sell its interest in the Building within said onehundred eighty (180) day period or in the event Seller proposes to sell itsinterest in the Building at less than ninety five percent (95%) of the salesprice or on other material terms which are more favorable to the prospectivebuyer than that proposed to Tenant, Seller shall be required to resubmit suchoffer to Tenant in accordance with this Right of First Offering except thatTenant shall be required to respond to any resubmission within a seven (7) dayperiod.

		**B.	Exclusions:**    This Right of FirstOffering shall automatically terminate, (i) upon the expiration or soonertermination of the Lease, or (ii) in the event of a foreclosure or otherinvoluntary transfer of Landlord's interest in the Building.   Notwithstandingthe forgoing, this Right of First Offering shall not apply to transfers (butshall survive such transfers ) of all or a portion of the Building or Project to(i) John A. Sobrato and/or John M. Sobrato (individually and collectively"Sobrato"), and (ii) any immediate family member of Sobrato, and (iii)any trust established, in whole or in art, for the benefit of Sobrato and/or anyimmediate family member of Sobrato, (iv) any partnership in which Sobrato or anyimmediate family member, either directly or indirectly (e.g., through apartnership or corporate entity or a trust) retains a general partner interest,and/or (v) any corporation under the control, either directly or indirectly, bySobrato or any immediate family member of Sobrato.
**21.	General Provisions:****	A.	Attorney's Fees:    In the event a suit oralternative form of dispute resolution is brought for the possession of thePremises, for the recovery of any sum due hereunder, to interpret the Lease, orbecause of the breach of any other covenant herein; then the losing party shallpay to the prevailing party reasonable attorney's fees including the expense ofexpert witnesses, depositions and court testimony as part of its costs whichshall be deemed to have accrued on the commencement of such action.  Theprevailing party shall also be entitled to recover all costs and expensesincluding reasonable attorney's fees incurred in enforcing any judgment or awardagainst the other party.  The foregoing provision relating to post-judgmentcosts is severable from all other provisions of this Lease.
**	B.	Authority of Parties:   Tenant representsand warrants that it is duly formed and in good standing, and is duly authorizedto execute and deliver this Lease on behalf of said corporation, in accordancewith a duly adopted resolution of the Board of Directors of said corporation orin accordance with the by-laws of said corporation, and that this Lease isbinding upon said corporation in accordance with its terms.  At Landlord'srequest, Tenant shall provide Landlord with corporate resolutions or other proofin a form acceptable to Landlord, authorizing the execution of the Lease.
**	C.	Brokers:    Tenant represents it has notutilized or contacted a real estate broker or finder with respect to this Leaseother than Chris Allen, d/b/a Resource Real Estate Group, which fee shall bepayable by Landlord pursuant to a written agreement and the Parties agree toindemnify, defend and hold each other harmless against any claim, cost,liability or cause of action asserted by any other broker or finder.
**	D.	Choice of Law:    This Lease shall begoverned by and construed in accordance with California law.   Except asprovided in Section 21.E, venue shall be Santa Clara County.

	**E.	Dispute Resolution:**Landlord and Tenant andany other party that may become a party to this Lease or be deemed a party tothis Lease including any subtenants agree that, except for any claim by Landlordfor unlawful detainer or any claim within the jurisdiction of the small claimscourt (which small claims court shall be the sole court of competentjurisdiction), any controversy, dispute, or claim of whatever nature arising outof, in connection with or in relation to the interpretation, performance orbreach of this Lease, including any claim based on contract, tort, or statute,shall be resolved at the request of any party to this agreement through a two-step dispute resolution process administered by J.A.M.S. or another judicialmediation service mutually acceptable to the parties located in Santa ClaraCounty, California. The dispute resolution process shall involve first,mediation, followed, if necessary, by final and binding arbitration administeredby and in accordance with the then existing rules and practices of J.A.M.S. orother judicial mediation service selected. In the event of any dispute subjectto this provision, either party may initiate a request for mediation and theparties shall use reasonable efforts to promptly select a J.A.M.S. mediator andcommence the mediation. In the event the parties are not able to agree on amediator within thirty (30) days, J. A. M. S. or another judicial mediationservice mutually acceptable to the parties shall appoint a mediator. Themediation shall be confidential and in accordance with California Evidence Code  1119 et. seq. The mediation shall be held in Santa Clara County, Californiaand in accordance with the existing rules and practice of J. A. M. S. (or otherjudicial and mediation service selected). The parties shall use reasonableefforts to conclude the mediation within sixty (60) days of the date of eitherparty's request for mediation.  The mediation shall be held prior to anyarbitration or court action (other than a claim by Landlord for unlawfuldetainer or any claim within the jurisdiction of the small claims court whichare not subject to this mediation/arbitration provision and may be fileddirectly with a court of competent jurisdiction). Should the prevailing party inany dispute subject to this Section 19.E attempt an arbitration or a courtaction before attempting to mediate, the prevailing party shall not be entitledto attorney's fees that might otherwise be available to them in a court actionor arbitration and in addition thereto, the party who is determined by thearbitrator to have resisted mediation, shall be sanctioned by the arbitrator orjudge.

If a mediation is conducted but is unsuccessful, it shall befollowed by final and binding arbitration administered by and in accordance withthe then existing rules and practices of J.A.M.S. or the other judicial andmediation service selected, and judgment upon any award rendered by thearbitrator(s) may be entered by any state or federal court having jurisdictionthereof AS PROVIDED BY CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1280 ET. SEQ,AS SAID STATUTES THEN APPEAR, INCLUDING ANY AMENDMENTS TO SAID STATUTES ORSUCCESSORS TO SAID STATUTES OR AMENDED STATUTES, EXCEPT THAT in no event shallthe parties be entitled to propound interrogatories or request for admissionsduring the arbitration process. The arbitrator shall be a retired judge or alicensed California attorney. The venue for any such arbitration or mediationshall be in Santa Clara County, California.

NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TOHAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "MEDIATION ANDARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BYCALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THEDISPUTE LITIGATED IN A COURT OR fURY TRIAL.  BY INITIALING IN THE SPACE BELOWYOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSERIGHTS ARE SPECIFICALLY INCLUDED IN THE "MEDIATION AND ARBITRATION OF DISPUTES"PROVISION.  IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THISPROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THECALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISIONIS VOLUNTARY.

WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMITDISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE "MEDIATION AND ARBITRATIONOF DISPUTES" PROVISION TO NEUTRAL ARBITRATION.

LANDLORD:  ______       TENANT:  _______
**	F.	Entire Agreement:    This Lease and theexhibits attached hereto contains all of the agreements and conditions madebetween the parties hereto and may not be modified orally or in any other mannerother than by written agreement signed by all parties hereto or their respectivesuccessors in interest.  This Lease supersedes and revokes all previousnegotiations, letters of intent, lease proposals, brochures, agreements,representations, promises, warranties, and understandings, whether oral or inwriting, between the parties or their respective representatives or any otherperson purporting to represent Landlord or Tenant.
**	G.	Entry by Landlord:    Upon prior notice toTenant and subject to Tenant's reasonable security regulations, Tenant shallpermit Landlord and his agents to enter into and upon the Premises at allreasonable times, and without any rent abatement or reduction or any liabilityto Tenant for any loss of occupation or quiet enjoyment of the Premises therebyoccasioned, unless caused by Landlord's negligence or willful misconduct, forthe following purposes:  (i) inspecting and maintaining the Premises; (ii)making repairs, alterations or additions (only if agreed by Tenant) to thePremises; (iii) erecting additional building(s) and improvements on the landwhere the Premises are situated or on adjacent land owned by Landlord; and (iv)performing any obligations of Landlord under the Lease including remediation ofhazardous materials if determined to be the responsibility of Landlord providedthat Landlord agrees to use reasonable efforts to minimize interference withTenant's use.  Tenant shall permit Landlord and his agents, at any time withinone hundred eighty (180) days prior to the Expiration Date (or at any timeduring the Lease if Tenant is in default hereunder), to place upon the Premises"For Lease" signs and exhibit the Premises to real estate brokers andprospective tenants at reasonable hours.
**	H.	Estoppel Certificates:    At any time duringthe Lease Term, each party (the "Responding Party") shall, within ten(10) days following written notice from the other party (the "RequestingParty"), execute and deliver to the Requesting Party a written statementcertifying, if true, the following:  (i) that this Lease is unmodified and infull force and effect (or, if modified, stating the nature of suchmodification); (ii) the date to which rent and other charges are paid inadvance, if any; (iii) acknowledging that there are not, to Responding Party'sknowledge, any uncured defaults on Requesting Party's part hereunder (orspecifying such defaults if they are claimed); and (iv) such other informationas Requesting Party may reasonably request.  Any such statement may beconclusively relied upon by any prospective purchaser or encumbrancer ofRequesting Party's interest in the Premises.  The Responding Party's failure todeliver such statement within such time shall be conclusive upon the RespondingParty that this Lease is in full force and effect without modification, exceptas may be represented by the Requesting Party, and that there are no uncureddefaults in Requesting Party's performance.  Tenant agrees to provide, withinfive (5) days of Landlord's request, Tenant's most recent three (3) years ofaudited financial statements for Landlord's use in financing the Premises orLandlord's interest therein.
**	I.	Exhibits:    All exhibits referred to areattached to this Lease and incorporated by reference.
**	J.	Interest:    All rent due hereunder, if notpaid when due, shall bear interest at the rate of the Reference Rate publishedby Bank of America, San Francisco Branch, plus two percent (2%) per annum fromthat date until paid in full ("Agreed Interest Rate").  This provisionshall survive the expiration or sooner termination of the Lease.  Despite anyother provision of this Lease, the total liability for interest payments shallnot exceed the limits, if any, imposed by the usury laws of the State ofCalifornia.  Any interest paid in excess of those limits shall be refunded toTenant by application of the amount of excess interest paid against any sumsoutstanding in any order that Landlord requires.  If the amount of excessinterest paid exceeds the sums outstanding, the portion exceeding those sumsshall be refunded in cash to Tenant by Landlord.  To ascertain whether anyinterest payable exceeds the limits imposed, any non-principal payment(includinglate charges) shall be considered to the extent permitted by law to be anexpense or a fee, premium, or penalty rather than interest.

	**K.	Modifications Required by Lender:**If anyLender of Landlord or ground lessor of the Real Property Requires a modificationof this Lease that will not increase Tenant's cost or expense or materially oradversely change Tenant's rights and obligations, this Lease shall be somodified and Tenant shall execute whatever documents are required and deliverthem to Landlord within ten (10) days after the request.

	**L.	No Presumption Against Drafter:**Landlordand Tenant understand, agree and acknowledge that this Lease has been freelynegotiated by both parties; and that in any controversy, dispute, or contestover the meaning, interpretation, validity, or enforceability of this Lease orany of its terms or conditions, there shall be no inference, presumption, orconclusion drawn whatsoever against either party by virtue of that party havingdrafted this Lease or any portion thereof.
**	M.	Notices:    All notices, demands, requests,or consents required to be given under this Lease shall be sent in writing byU.S. certified mail, return receipt requested, or by personal delivery or by anationally recognized overnight courier addressed to the party to be notified atthe address for such party specified in Section 1 of this Lease, or to suchother place as the party to be notified may from time to time designate by atleast fifteen (15) days prior notice to the notifying party.****When thisLease requires service of a notice, that notice shall replace rather thansupplement any equivalent or similar statutory notice, including any noticesrequired by Code of Civil Procedure Section 1161 or any similar or successorstatute.  when a statute requires service of a notice in a particular manner,service of that notice (or a similar notice required by this lease) shallreplace and satisfy the statutory service-of-notice procedures, including thoserequired by Code of Civil Procedure Section 1162 or any similar or successorstatute.
**	N.	Property Management:    No propertymanagement fee shall be payable to Landlord.
**	O.	Rent:    All monetary sums due from Tenantto Landlord under this Lease, including, without limitation those referred to as"additional rent", shall be deemed as rent.
**	P.	Representations:    Tenant acknowledges thatneither Landlord nor any of its employees or agents have made any agreements,representations, warranties or promises with respect to the Premises or withrespect to present or future rents, expenses, operations, tenancies or any othermatter.  Except as herein expressly set forth herein, Tenant relied on nostatement of Landlord or its employees or agents for that purpose.
**	Q.	Rights and Remedies:    All rights andremedies hereunder are cumulative and not alternative to the extent permitted bylaw, and are in addition to all other rights and remedies in law and inequity.
**	R.	Severability:    If any term or provision ofthis Lease is held unenforceable or invalid by a court of competentjurisdiction, the remainder of the Lease shall not be invalidated thereby butshall be enforceable in accordance with its terms, omitting the invalid orunenforceable term.

	**S.	Submission of Lease:**    Submission of thisdocument for examination or signature by the parties does not constitute anoption or offer to lease the Premises on the terms in this document or areservation of the Premises in favor of Tenant.  This document is not effectiveas a lease or otherwise until executed and delivered by both Landlord andTenant.
**	T.	Subordination:    This Lease is subject andsubordinate to ground and underlying leases, mortgages and deeds of trust(collectively "Encumbrances") which may now affect the Premises, toany covenants, conditions or restrictions of record, and to all renewals,modifications, consolidations, replacements and extensions thereof; provided,however, if the holder or holders of any such Encumbrance ("Holder")require that this Lease be prior and superior thereto, within seven (7) daysafter written request of Landlord to Tenant, Tenant shall execute, haveacknowledged and deliver all documents or instruments, in the form presented toTenant, which Landlord or Holder deems necessary or desirable for such purposes.Landlord shall have the right to cause this Lease to be and become and remainsubject and subordinate to any and all Encumbrances which are now or mayhereafter be executed covering the Premises or any renewals, modifications,consolidations, replacements or extensions thereof, for the full amount of alladvances made or to be made thereunder and without regard to the time orcharacter of such advances, together with interest thereon and subject to allthe terms and provisions thereof; provided only, that in the event oftermination of any such lease or upon the foreclosure of any such mortgage ordeed of trust, Holder agrees to recognize Tenant's rights under this Lease aslong as Tenant is not then in default beyond the expiration of any applicablecure period and continues to pay Base Monthly Rent and additional rent andobserves and performs all required provisions of this Lease. Within ten (10)days after Landlord's written request, Tenant shall execute any documentsrequired by Landlord or the Holder to make this Lease subordinate to any lien ofthe Encumbrance.  If Tenant fails to do so, then in addition to such failureconstituting a default by Tenant, it shall be deemed that this Lease is sosubordinated to such Encumbrance. Notwithstanding anything to the contrary inthis Section, Tenant hereby attorns and agrees to attorn to any entitypurchasing or otherwise acquiring the Premises at any sale or other proceedingor pursuant to the exercise of any other rights, powers or remedies under suchencumbrance.

	This Lease constitutes a sublease under that certainGround Lease dated March 5, 1999 (the "Existing Ground Lease") between TheSobrato 1979 Revocable Trust, As Amended ("Master Landlord"), as landlord andLandlord, as tenant, covering all of the real property within the Project, acopy which has been provided to Tenant, and under the Parcel Lease described inthe next sentence. In connection with the subdivision of the Project ascontemplated by Section 2.C above, it is anticipated that a separate ParcelLease (as defined in the Existing Ground Lease) will be entered into betweenMaster Landlord, as landlord, and Landlord, as tenant, for the lot within whichthe Building will be constructed.  As used in this Lease, "Master Lease" shallmean the Existing Ground Lease, until such time as the Parcel Lease is enteredinto, and thereafter shall mean the Parcel Lease. Notwithstanding this Section21.T above, concurrently with the execution of this Lease by Landlord andTenant, Landlord and Tenant shall execute in recordable form, and Landlord shallcause Master Landlord to execute in recordable form, the Subordination,Nondisturbance and Attornment Agreement attached hereto as Exhibit "G" (the"SNDA").  Landlord shall cause the SNDA to be recorded at Landlord's cost in theOfficial Records of San Mateo County, California within five (5) days after thisLease is executed by Landlord and Tenant. Similarly, in connection with theParcel Lease, within ten (10) days after Landlord's request, Landlord and Tenantshall execute in recordable form, and Landlord shall cause Master Landlord toexecute in recordable form, a Subordination, Nondisturbance and AttornmentAgreement substantially in the form of the SNDA (the "Revised SNDA"), modifiedto refer to the Parcel Lease, Memorandum of Parcel Lease to be recorded inconnection with the Parcel Lease  and the revised Premises description, ratherthan the Original Ground Lease, the Memorandum of Ground Lease referenced in theSNDA and the original Premises described in this Lease.  Landlord shall causethe Revised  SNDA to be recorded at Landlord's cost in the Official Records ofSan Mateo County, California  immediately after recordation of the Memorandum ofLease recorded for the Parcel Lease.

	Notwithstanding the foregoing, Tenant shall not berequired to subordinate its interest under this Lease unless (i) suchsubordination' does not materially increase Tenant's obligations, or materiallydecrease its rights under this Lease, and (ii) Landlord first obtains from theholder of the mortgage, deed of trust, or other instrument of security to whichthis Lease is to become subordinated a written agreement that providessubstantially  that as long as Tenant performs its obligations under this Lease,no foreclosure of, deed given in lieu of foreclosure of, or sale under theencumbrance, and no steps or procedures taken under the encumbrance, shallaffect Tenant's rights hereunder.

	**U.	Survival of Indemnities:**Allindemnification, defense, and hold harmless obligations of Landlord and Tenantunder this Lease shall survive the expiration or sooner termination of theLease.
**	V.	Time:    Time is of the essencehereunder.
**	W.	**Transportation Demand ManagementPrograms:**Should a government agency or municipality require Landlord toinstitute TDM (Transportation Demand Management) facilities and/or program,Tenant agrees that the cost of TDM imposed facilities required on the Premises,including but not limited to employee showers, lockers, cafeteria, or lunchroomfacilities, shall be paid by Tenant.  Further, any ongoing costs or expensesassociated with a TDM program which are required for the Premises and notprovided by Tenant, such as an on-site TDM coordinator, shall be provided byLandlord with such reasonable costs being included as additional rent andreimbursed to Landlord by Tenant within thirty (30) days after demand. If TDMfacilities and programs are instituted on a Project wide basis, Tenant shall payits proportionate share of such costs in accordance with Section 8 above.
** 

 

 

IN WITNESS WHEREOF, Landlord and Tenant have executedthis Lease on the day and year first above written. 
**Landlord:  SOBRATO INTERESTS III**			Tenant:**SIEBEL SYSTEMS, INC.

a California Limited Partnership				a DelawareCorporation

 

By:  _____________________________			By:_____________________________

Its:  General Partner					Its:_____________________________
** 

Master Landlord:  THE SOBRATO 1979 REVOCABLE TRUST

 

By:  _____________________________

Its:  Trustee	
** 

EXHIBIT "A" - Building and Project**** 

Exhibit "B" - Not applicable

 

EXHIBIT "C" - Parcel Map & Declaration ofCovenants and Grant of Easements

 

EXHIBIT "D" - Shell Plans and Specifications***(sheet references to be attached)*
 
**EXHIBIT "E" - Building Shell Definition****1.	Building Structure**
	(a)	All foundations to include footings, piling,grade beams, foundation walls or other building foundation components requiredto support the building structure.

	(b)	Concrete slab supported on beams and columns abovethe parking podium and any other reinforcing or structural connections that maybe necessary or required as specified by structural engineer.

	(c)	Complete structural framing system comprised ofrolled steel beams, columns, and braced-frame steel construction with corrugatedmetal deck and concrete fill,  all members required by code to be fireproofed.Upper floor systems  provide a minimum of 3" concrete over metal deck and aredesigned for an 80 lb. live load plus 20 lb. partition load.  Structural framingwill include intermediate beams for HVAC units at the roof, and for major shaftson each floor.  A roof screen consistent with the design of the building andacceptable to the local Building and Planning Departments is included.

	(d)	Tinted high performance glass including requiredcaulking and sealants.  Tinted reflective glass window wall system with graniteand stainless steel accents.  Two (2) pair of lobby doors, and two (2) exitdoors per building.  All shell doors will be fitted with electric locks andconduit to J-boxes ready for connection to the Tenant's security system.

	(e)	Four (4) ply built up roofing by Owens-Corning,John Manville, or equal and all flashings over a light weight concrete oncorrugated metal deck roof system.  Title 24 code required roof insulation isincluded.

	(f)	Exterior painting where required with Texcoattextural paint and all caulking of exterior concrete joints in preparation forpainting.

	(g)	One (1) steel fire stair at perimeter of building,and two (2) interior fire stairs which will extent to the roof.

	(h)	At grade loading area with screening and scissorslift external of building.

	(i)	Riser for Building sprinkler system (no sprinklergrid or drops).
**2.	Podium Garage Structure**
	(a)	Podium garage structure with access ramps,fire sprinkler system, emergency exit stairways, and mechanical venting (ifrequired).

	(b)	Lighting in podium parking to a minimum level percode.
**3.	Sitework**
	(a)	All work outside the building perimeter wallsshall be considered site work for the Building Shell and shall include asphaltconcrete paving, landscaping, landscape irrigation, storm drainage, utilityservice laterals, curbs, gutters, sidewalks, specialty paving (if required),retaining walls, planters, trash enclosure, parking lot and landscape lightingand other exterior lighting per code.  All fountains and podium landscapingshall also be considered site work for the Building Shell.

	(b)	Paving sections for automobile and truck accessshall be according to the Geologic Soils Report.

	(c)	All parking lot striping to include handicapspaces and signage.

	(d)	Underground site storm drainage system shall beconnected to the city storm system main.
**4.	Plumbing**
	(a)	Underground sanitary sewer lateral connectedto the city sewer main in the street and stubbed to the core of thebuilding.

	(b)	Domestic water mains connected to the city watermain in the street and stubbed to the building.

	(c)	Roof drain leaders and downspouts piped andconnected to the site storm drainage system.

	(d)	Gas lines connected to the city or public utilitymains and run to gas meters adjacent to, and in close proximity to the building.Meter supplied by utility company.
**5. 	Electrical**
	(a)	A primary and secondary electrical servicefrom the street to the building electrical room in the garage podium includingunderground conduit, wire feeders, and transformer pads.  Transformer suppliedby utility company.  

	(b) Two 4" Underground conduit from the street to thebuilding for telephone trunk lines by Pacific Telephone. 

	(c)	Two 4" conduit from the building to each of theadjacent buildings for future data connections.

	(d)	An electrically operated landscape irrigationsystem, with controller, that is a complete and functioning system.

	(e) Underground conduit from the building to the mainfire protection system post indicated valve (PIV) for installation ofsupervisory alarm wiring.
**6.	General**
	(a)	All construction shall conform to State andLocal Building Codes, Title 24 Regulations, and shall be ADA Compliant.

	(b)	All building shell work shall be constructed asdescribed above and as show on the drawings listed in the attached Exhibit(TBD).

	(c)	All other costs shall be deemed TenantImprovements.
**EXHIBIT "F" - Tenant Improvement Plans andSpecifications***(sheet references to be attached)

 ***EXHIBIT "G" - Subordination, Nondisturbanceand Attornment Agreement**************************************************************************************************************************************************