WATERGATE OFFICE LEASE

 

 

 

 

 

WATERGATE TOWER ASSOCIATES,

A California Limited Partnership,

Landlord

 

 

And

 

 

SCOPUS TECHNOLOGY, INC.,

A California Corporation,

Tenant

 

 

 

 

 

TABLE OF CONTENTS

 

 

 

 

- PARTIES; BASIC LEASE PROVISIONS; DEFINED TERMS
Parties
Basic Lease Provisions
Defined Terms

- PREMISES; COMMON AREAS; TENANT PARKING
Demise of Premises
Condition of Premises
Common Areas
Tenant Parking

- TERM
Period
Term Commencement
Delayed Occupancy
Holding Over

- BASE RENT; SECURITY DEPOSIT; OPERATING COSTS; TAXES
Base Rent
Security Deposit
Operating Costs
Taxes Payable By Tenant
Late Charges and Interest

- USES
Authorized
Suitability
Insurance
Laws
Nuisance
Rules and Regulations

	
- SERVICES AND UTILITIES
Basic Services by Landlord
Additional Heating and Air Conditioning
Special Apparatuses
Interruption in Services
Tenant's Other Utilities

- TENANT'S ALTERATIONS; PROTECTION AGAINST LIENS
Landlord's Consent Required
Removal of Tenant's Alterations
Protection Against Liens

- MAINTENANCE AND REPAIRS
Landlord's Obligations
Tenant's Obligations

- INDEMNITY AND EXEMPTIONS OF LANDLORD
Indemnity
Exemption of Landlord From Liability

- INSURANCE
Tenant's Insurance
Landlord's Insurance
Subrogation Waiver

- ASSIGNMENT AND SUBLETTING
Landlord's Consent Required
Tenant's Application
Required Provisions
Bonus Rent
Fees for Review
No Release of Tenant
Assumption of Obligations
Deemed Transfers
Landlord's Option to Recapture

- SUBORDINATION AND ATTORNMENT
Subordination
Attornment
Nonmaterial Amendments

- DEFAULT BY TENANT
Acts Constituting Default
Landlord's Remedies

- DEFAULT BY LANDLORD
Existence of Default
Mortgagee's Right To Cure
Judgment Against Landlord

- CONDEMNATION
Termination Due To Taking
Award For Taking
No Termination Due To Taking

- DAMAGE AND DESTRUCTION
Partial Damage - Insured
Partial Damage - Uninsured
Total Destruction
Landlord's Obligations
Waiver by Tenant

- DEFINITIONS
"Base Rent"
"Base Year"
"Basic Lease Provisions"
"Bonus Rent"
"Building"
"Commencement Date"
"Common Areas"
"Environmental Damages"
"Environmental Requirements"
"Expiration Date"
"Hazardous Materials"
"Increased Operating Costs'
"Landlord's Work"
"Lease Date"
"Mortgagee"
"Office Complex"
"Operating Costs"
"Overdue Rates"
"Parking Charge"
"Parking Facilities"
"Premises"
"Rules and Regulations"
"Security Deposit"
"Scope of Work"
"Subsequent Year"
"Substantial Completion"
"Taking"
"Tenant Parking"
"Tenant's Share"
"Term"

- MISCELLANEOUS PROVISIONS
Estoppel Certificates
Surrender of Premises
Light and Air
Waiver
Attorneys' Fees
Notices
Merger
Substituted Premises
Headings
Time and Applicable Law
Successors and Assigns
Entry by Landlord
Entire Agreement
Severability
Signs
Execution by Landlord
Brokers
Name of building
Nonrecordability of Lease
Construction
Inability to Perform
Authority
Quiet Enjoyment

- EXTRA PARKING PERMITS  
- LETTER OF CREDIT/SECURITY DEPOSIT
- RIGHT TO NEGOTIATE LEASE OF ADDITIONAL SPACE
Grant of Right
Notice of Space Requirement
Exercise of Negotiation Right
Limitation of Right

22.	TERMINATION OF EXISTING LEASE

	

 

	

 

 

 

 

 

**WATERGATE OFFICE LEASE**

**1.      PARTIES BASIC LEASE PROVISIONS; DEFINED TERMS**

          1.1     Parties. This Watergate Office Lease ("Lease") is enteredinto in the City of Emeryville, County of Alameda, State of California,between Watergate Tower Associates, a California limited partnership("Landlord"), and Scopus Technology, Inc,, a California corporation("Tenant").
          1.2     Basic Lease Provisions. The following Basic Lease Provisionsconstitute an integral part of this Lease, and each reference in thisLease to the Basic Lease Provisions shall mean the provisions set forthin this Paragraph 1.2. Section references in this Paragraph 1.2 are tothe section in which the particular Basic Lease Provision is firstdiscussed. In the event of any conflict between the Basic LeaseProvisions and the remainder of the Lease, the latter shall control.      Lease  Date:          August 24,  1994      Address of Landlord:  2000 Powell Street,  Suite 1600                            Emeryville, CA 94608      Address of Tenant:    Before Lease Execution:                            1900 Powell Street                            Suite 900                            Emeryville, CA  94608                            After Lease Execution;                            1900 Powell Street                            Suite 700                            Emeryville, CA  94608Section 2:      Premises:             Suite 700      Building:             Watergate Tower 1                            1900 Powell Street                            Emeryville, CA  94608      Premises Rentable Area:     18,539 square feet      Premises Usable Area:       16,406 square feet      Building Rentable Area:     215,978 square feet      Tenant Parking:             Forty-nine (49)      Extra Parking:              Permits Sixteen (16)                                  permits subject to Section                                  19, hereinbelow      Parking Charge:             $25.00 per permitSection 3:      Term:                Five (5) years      Commencement Date:   October 16, 1994      Expiration Date:     October 15, 1999Section 4:      Base Rent:                October 16, 1994 - October 31, 1994:                   $9,722.22                November 1, 1994 - November 30, 1994:                   $18,836.80 per month                December 1, 1994 - December 31, 1994:                   $23,636.80 per month                January 1, 1995 - September 30, 1995:                   $27,577.40 per month                October 1, 1995 - September 30, 1997:                   $31,516.34 per month                October 1, 1997 - October 15,  1999:                   $32,443.25 per month      Security Deposit:  $32,443.25, subject to Section 20 hereinbelow      Base Year:              1995      Tenant's Share:         8.58 percent
          1.3 Defined Terms. Words and phrases which are capitalized in thisLease (other than words which are capitalized solely to donate thebeginning of sentences) are defined terms. The definitions of such wordsand phrases are set forth in Section 17 of this Lease.
**2.      PREMISES COMMON AREAS; TENANT PARKING**

           2.1 Demise of Premices. on and subject to the terms, covenants andconditions set forth in this Lease, Landlord demises the Premises toTenant and Tenant rents and hires the Premises from Landlord. The usableand rentable area of the Premises, and the rentable area of the Building,for all purposes under this Lease, are stipulated to be as specified inthe Basic Lease Provisions. Landlord shall not be liable to Tenant, norshall Tenant have any claim against Landlord or defense to theenforcement of this Lease, if it is determined that the actual rentableor usable area of the Premises or the rentable area of the Buildingdiffers from that specified in the Basic Lease Provisions.
          2.2 Condition of Premises. Except as otherwise expressly providedin a Scope of Work executed by Landlord and Tenant concurrently withtheir execution of this Lease, Tenant shall accept the Premises in an "asis" condition on the date the Term commences and Landlord shall have noobligation to improve, alter, remodel or otherwise modify the Premisesprior to Tenant's occupancy. Landlord shall construct or install in thePremises only the improvements specified in the Scope of Work, The Scopeof Work, if any, will be attached as Exhibit B to this Lease, and ,subject to events of force majeure and Tenant delays, Landlord shallcause the Substantial Completion of Landlord's Work pursuant to the Scopeof Work on or before the Commencement Date.
          2.3 Common Areas, During the Term, Tenant shall have thenonexclusive right to use of the Common Areas for their intended andusual purpose. However, the manner in which the Common Areas aremaintained shall be at the sole reasonable discretion of landlord and usethereof shall be subject to the Rules and Regulations. Landlord reservesthe right to make alterations, additions or deletions to, or to changethe location of elements of the Common Areas, Building Or Office Complex,and to use the roof, exterior walls and the area above and beneath thePremises, together with the right to install, use, maintain and replaceequipment, machinery, pipes, conduits and wiring through the Premises,which serve other parts of the Building or Office Complex, in a mannerand in locations which do not unreasonably interfere with Tenant's use ofor access to the Premises.
          2.4 Tenant Parking. Tenant shall have the right to obtain thenumber of parking permits designated as Tenant Parking in the Basic LeaseProvisions, and each such permit shall authorize Tenant or its employeesto park one passenger automobile in the Parking Facilities. Issuance ofsuch parking permits shall be subject to Tenant's payment of the ParkingCharge for each permit specified in the Basic Lease Provisions, whichParking Charge shall be payable on the first day of each calendar monthduring the Term and may be increased by Landlord at any time, and fromtime to time, during the Term upon not less than thirty (30) days' priorwritten notice to Tenant. Tenant and its employees shall at all timesobserve such terms and conditions and charges as may be established byLandlord from time to time concerning the operation and use of theParking Facilities. Tenant's employees shall not be entitled to park inareas located in the Parking Facilities designated by Landlord forreserved parking or for use by visitors to the Office Complex.
**3. TERM**

          3.1 Period. The Term shall be for the period specified in the BasicLease Provisions. The Term shall commence on the Commencement Date endshall end on the Expiration Date, as such dates are determined underParagraph 3.2 below, unless sooner terminated pursuant to any provisionof this Lease.
          3.2 Term Commencement. The anticipated Commencement Date and thecorresponding Expiration Date are specified in the Basic LeaseProvisions. However, the actual Commencement Date shall be the earlier of(a) the date Tenant first occupies any part of the Premises, or (b) thedate of Substantial Completion of the Landlord's Work or (c) the dateestablished by Landlord in the event of a delay by Tenant, as provided inParagraph 3.3(b) below; and the Expiration Date shall be adjusted so thatthe period between the actual Commencement Date and the Expiration Dateis equal to the Term specified in the Basic Lease Provisions. If theactual Commencement I-ease Date and the Expiration Date differ from thoseinserted in the Base Lease Provisions as of the Lease Date, then promptlyafter the Commencement Date Landlord and Tenant shall execute a writtenacknowledgment of the Commencement Date and the Expiration Late, andattach it as Exhibit C to this Lease,
          3.3     Delayed Occupancy.
                         (a) Landlord shall Substantially Complete any Landlord'sWork on or before the Commencement Date specified in the Basic LeaseProvisions, provided, however, that the Commencement Date for purposes ofLandlord's obligation with respect to Landlord's Work shall be extendedone (1) day for each day (i) that the Lease is not fully executed byAugust 22, 1994, (ii) that Tenant causes a delay in Landlord's Work, and(iii) that an event of force majeure delays Landlord's Work. However,this Lease shall not be void or voidable, nor shall Landlord or itsagents or contractors have any liability to Tenant, by reason ofLandlord's failure to substantially complete Landlord's Work by theCommencement Date specified in the Basic Lease Provisions, or by reasonof Landlord's failure to deliver possession of the Premises due to anyother cause beyond Landlord's reasonable control, arid postponement ofTenant's rental obligation prior to delivery of possession of thePremises shall be Tenant's exclusive remedy and in sole satisfaction ofall claims Tenant might otherwise have by reason of Landlord's failure todeliver the Premises by the Commencement Date specified in the BasicLease Provisions. Notwithstanding the foregoing, if the Premises are notSubstantially Completed on or before the termination date under theExisting Lease (as defined in Section 22) or the date Tenant's right tooccupy a portion of its existing space on the ninth floor of the Buildingunder a certain sublease with Preferred Health Network ("Sublease")expires, provided such delay in Landlord's Work has not been caused byTenant and the termination of the Existing Lease or the Sublease, as thecase may be, does not result from Tenant's default, Tenant shall have theright to continue to occupy its entire existing space on the ninth floorof the Building on the same terms and conditions as the Existing Lease.
                         (b) Time is of the essence in connection with thedelivery to Landlord of each and every drawing, plan, specification,schedule or other item required to be given by Tenant to Landlord or tobe approved by Tenant pursuant to the schedule in and provisions of theScope of Work. Accordingly, notwithstanding any contrary provision ofthis Lease, if Landlord is delayed in the Substantial Completion ofLandlord's Work as a result of (i) Tenant's failure to approve plans,specifications, changes, cost estimates and other items within the timelimits specified therefor in the Scope of Work, or (ii) any change byTenant in said plans, specifications, or other items after the expirationof such time limits, or ;iii) any default by Tenant relating to itsobligations hereunder or under the Scope of Work, then, in any or allsuch instances and without limitation as to any other right or remedyavailable to Landlord, Landlord may under clause (c) of Paragraph 3.2determine in its sole reasonable discretion that the actual CommencementDate is the date that Substantial Completion of Landlord's Work wouldhave occurred but for such delay.
          3.4 Holding Over. Tenant shall not be entitled to remain inpossession of the Premises after the Expiration Date or after earliertermination of this Lease, except with Landlord's prior written consent.Any such continuance of possession with Landlord's consent shallconstitute a month-to-month tenancy on all of the terms and conditions ofthis Lease, except that the Base Rent shall be 150% of the Base Rent ineffect as of the Expiration Date or the earlier termination date. Anysuch continuance in possession without Landlord's consent (or after suchconsent has been withdrawn upon thirty (30) days' notice to Tenant) shallconstitute an unlawful detention of the Premises; and Tenant shallindemnify, defend and hold Landlord harmless from all claims, losses orliability resulting from Landlord's inability to timely deliverpossession of the Premises to any succeeding tenant.
**4.      BASE RENT; SECURITY DEPOSIT; OPERATING COSTS; TAXES**

          4.1 Base Rent. Tenant shall pay to Landlord as monthly Base Rentfor the Premises, in advance, without deduction, setoff, prior notice ordemand, the sum specified in the Basic Lease Provisions. The firstmonth's Base Rent shall be paid upon Tenant's execution of this Lease,and the Base Rent for each calendar month thereafter during the Termshall be paid on the first day of each such calendar month. If theCommencement Date occurs ors a day other than the first day of a calendarmonth, the Base Rent payable for the first calendar month of the Termshall be prorated on the basis which the number of days of the Term inthe first month bears to the total number of days in such month; and, insuch case, Tenant shall pay such prorated Base Rent to Landlord on theCommencement Date, and the first month's Base Rent paid upon execution ofthis Lease shall be credited against the Base Rent for the secondcalendar month. If the Term ends on a day other than the last day of acalendar month, the Base Rent payable for the last calendar month of theTerm shall be prorated on the basis which the number of days of the Termin the last calendar month tears to the total number of days in suchmonth.
          4.2     Security Deposit.
                         (a) Upon Tenant's execution of this Lease, Tenant shalldeposit with Landlord the sum specified as the Security Deposit in theBasic Lease Provisions, which shall be held by Landlord as security forthe faithful performance by Tenant of all of the terms, covenants, andconditions of this Lease, it being expressly understood and agreed thatthe Security Deposit is not an advance deposit for rent or a measure ofLandlord's damages in case of Tenant's default. If at any time Tenant'sBase Rent is increased, the Security Deposit shall also be increased bythe same percentage Ds the increase in Base Rent and Tenant shall, withinten (101 days after receipt of notice of such increase in Base Rent,deposit cash with Landlord in an amount sufficient to affect suchadjustment.
                         (b)     The Security Deposit may be retained, used orapplied by Landlord to remedy any default by Tenant, to repair damagecaused by Tenant to any part of the Premises or the Building, and toclean the Premises upon expiration or earlier termination of this Lease,as well as to reimburse Landlord for any amount which Landlord may spendby reason of Tenant's default or to compensate Landlord for any otherloss or damage which Landlord may suffer by reason of Tenant's default.If any portion of the Security Deposit is so used or applied, Tenantshall, within ten 110) days after written demand therefor, deposit cashwith Landlord in an amount sufficient to restore the Security Deposit tothe full amount required hereunder, and Tenant's failure to do so shallbe a material breach of this Lease. Landlord shall not be required tokeep the Security Deposit separate from its general funds, and Tenantshall not be entitled to interest on, or any other compensation for,Landlord's retention of the Security Deposit. Tenant may not elect toapply any portion of the Security Deposit toward payment of Base Rent orany other amounts payable by Tenant under this Lease, although Landlordmay elect to do so in the event Tenant is in default or is insolvent, IfTenant shall fully and faithfully perform every provision of this Leaseto be performed by it, the Security Deposit or any balance thereof shallbe returned to Tenant at Tenant's last known address (or, at Landlord'soption, to the last assignee of -tenant's interest hereunder) withinthirty (30) days after the Term has ended and Tenant has vacated thePremises.
          4.3     Operating Costs. Tenant shall pay to Landlord Tenant's Shareof the Increased Operating Costs as follows:
                         (a) Landlord shall submit to Tenant before January 1 ofeach Subsequent Year, or as soon thereafter as Landlord has sufficientdata, a reasonably detailed statement showing the estimated IncreasedOperating Costs for such Subsequent Year, which determination shall bemade by Landlord based upon experience with actual costs andprojections. At the first monthly Base Rent payment date following thesubmittal of such statement and at each succeeding monthly rent paymentdate thereafter during the Subsequent Year, Tenant shall pay to Landlordan amount equal to one-twelfth (1112th) of the Increased OperatingCosts. If Landlord does not submit said statement to Tenant prior toJanuary 1 of any Subsequent Year, Tenant shall continue to pay Tenant'sShare of the Increased Operating Costs at the then existing rate untilsuch statement is submitted and, thereafter, at the monthly Base Rentpayment date next following the submittal of such statement Tenant shallpay Tenant's Share of the Increased Operating Costs based on the rateset forth in such statement plus, if the new rate is greater than theold rate, the difference accrued from January 1 of such Subsequent Year.Landlord may revise such estimated Increased Operating Costs at the endof any calendar quarter.
                         (b) On or before March 31 of the second and eachsucceeding Subsequent Year or as soon thereafter as Landlord hassufficient data, Landlord shall submit to Tenant a reasonably detailedstatement showing the actual Building Operating Costs paid or incurred byLandlord during the previous calendar year. If Tenant's Share of theactual Increased Operating Costs is less than the amount of Tenant'sShare of the estimated Increased Operating Costs for the previousSubsequent Year theretofore paid by Tenant, Landlord shall credit suchdifference against the next Increased Operating Costs payments comingdue. If Tenant's Share of the actual Increased Operating Costs is morethan the amount of Tenant's Share of the estimated Increased OperatingCosts for such previous Subsequent Year theretofore paid by Tenant,Tenant shall pay to Landlord the full amount of such difference at themonthly Base Rent payment date next following the submittal of suchstatement to Tenant.
                         (c) If the Expiration Date or the date of earliertermination of this Lease is other than December 31, the Operating Costsfor both the Base Year and the last Subsequent Year shall be proratedbased on what the number of days in the Term in the last Subsequent Yearbears to 365; and any amounts owed or to be credited pursuant toParagraph shall be paid at the time in the last Subsequent Year, or inthe calendar year immediately following the last Subsequent Year, thatsuch amount is calculated pursuant to Paragraph 4.3(c).
          4.4     Taxes Payable By  Tenant, Tenant shall pay before delinquencyany and all taxes levied or assessed and which become payable by Tenant(or directly or indirectly by Landlord) during the Term (excluding,however, state and .federal personal or corporate income taxes measuredby the income of Landlord from all sources, capital stock taxes, andestate and inheritance taxes, collectively, "Landlord's Taxes"), whetheror not now customary or within the contemplation of the parties hereto,which are based upon, measured by or otherwise calculated with respectto: (a) the gross or net rental income of Landlord under this Lease,including, without limitation, any gross receipts tax levied by anytaxing authority as a supplemental tax, or any other gross income tax orexcise tax levied by any taxing authority with respect to the receipt ofthe rental payable hereunder as a supplemental tax, but specificallyexcluding Landlord's Taxes; (b1 the value of Tenant's equipment,furniture, fixtures or other personal property located in the Premises;(c1 the possession, lease, operation, management, maintenance,alteration, repair, use or occupancy by Tenant of the Premises or anyportion thereof; (d) the value of any leasehold improvements, alterationsor additions made in or to the Premises, regardless of whether title tosuch improvements, alterations or additions shall be in Tenant orLandlord; or (e) this transaction or any document to which Tenant is aparty creating or transferring an interest or an estate in the Premises.
          4.5 Late Charges and Interest. Ail amounts payable under this Leaseshall be paid in lawful money of the United States of America. Any amountof Base Rent, Tenant's Share of Increased Operating Costs, ParkingCharges or any other amount payable under this Lease which is not paidwithin ten (1 0) days after it is due shall be subject to a late chargeof 5% of the amount unpaid, Any amount due to Landlord that is not paidwhen due shall bear interest at the Overdue Rate, except that no interestshall accrue for the month in which a late charge is assessed. Tenant'sfailure to perform any monetary obligations under this Lease shall havethe same consequences as Tenant's failure to pay Base Rent.
**5.     USES**

          5.1 Authorized. Tenant shall use the Premises solely for generaloffice purposes and for no other purpose. Tenant shall not use or permitor suffer the Premises or any part thereof to be used for any purposeother than the purpose expressly authorized herein.
          5.2 Suitability, Tenant acknowledges that neither Landlord nor anyagent of Landlord has made any representation or warranty with respect tothe Premises, the Building or the Office Complex, or with respect to thesuitability of same for the conduct of Tenant's business, except asexpressly provided in this Lease. Tenant's acceptance of possession ofthe Premises shall conclusively establish that the foregoing were at suchtime in satisfactory condition.
          5.3 Insurance. Tenant shall not do or suffer anything to be done inor about the Premises, nor shall Tenant bring or allow anything to bebrought into the Premises, which will in any way increase the rate of anyfire insurance or other insurance upon the Building or its contents,cause a cancellation of said insurance or otherwise affect said insurancein any manner: provided, however, that Tenant's business as a computersoftware vendor, in particular Tenant's proposed electrical usage asshown on the Final Plans, shall be deemed to comply with this Section5.3,
          5.4  Laws. Tenant shall not do or suffer anything to be done in orabout the Premises which will in any way conflict with any law, statute,ordinance or other governmental rule,  regulation or requirement now inforce or which may be subsequently enacted or promulgated. Tenant shall,at its sole cost and expense, promptly comply with each and all of saidgovernmental measures and also with the requirements of any board of fireunderwriters or other similar body now or hereafter constituted to dealwith the condition, use or occupancy of the Premises, excludingstructural changes not related to or affected by Tenant's alterations,additions or improvements. Without limiting the generality of theforegoing, Tenant will maintain throughout the Term a copy of the mostcurrent list of chemicals known to the State of California to causecancer or reproductive toxicity, as published by the State Health andWelfare Agency in accordance with the Safe Drinking Water and ToxicEnforcement Act of 1986 ("Proposition 65"). Tenant will monitor thechemicals Tenant maintains on the Premises and will comply with both thewarning requirements and the discharge prohibitions of Proposition 65 forall chemicals on the Premises that appear on such list. The judgment ofany court of competent jurisdiction or the admission 8f Tenant in anyjudicial action, regardless of whether Landlord is a party thereto, thatTenant has violated any of said governmental measures or requirementsshall be conclusive of that fact as between Landlord and Tenant.
          5.5 Nuisance. Tenant shall not place or permit to be placed on anyfloor a load exceeding the floor load which such floor was designed tocarry. Tenant also shall not do or suffer anything to be done in or aboutthe Premises which will in any way obstruct or interfere with the rightsof other tenants or occupants of the Building or injure or annoy saidtenants or occupants, nor shall Tenant use or suffer the Premises to beused for any unlawful purposes, In no event shall Tenant cause or permitany nuisance in or about the Premises, and no loudspeakers or similardevices shall be used without the prior written approval of Landlord,which approval may be withheld in Landlord's sole discretion. Tenantshall not commit or suffer to be committed any waste in or upon thePremises. The provisions of this paragraph are for the benefit ofLandlord only and shall not be construed to be for the benefit of anytenant or occupant of the Building.
          5.6 Rules and Regulations. Tenant shall comply with the Rules andRegulations for the Building, together with all modifications andadditions thereto adopted by Landlord from time to time. If there is anyconflict between the Rules and Regulations and the provisions of thisLease, the provisions of this Lease shall prevail. Subject to Tenant'sright to quiet enjoyment of the Premises under Section 18.23, Landlordshall not be responsible to Tenant for the nonperformance of any of theRules and Regulations by any other tenants or occupants of the Building,
**6.      SERVICES AND UTILITIES**

          6.1 Basic Services by Landlord. Provided Tenant is not in defaultunder this Lease, and subject to the provisions elsewhere in this Leaseand to the Rules arid Regulations of the Building, Landlord shall furnishthe Premises with: (a) water, sewage and electricity suitable inLandlord's judgment for the intended use of the Premises and for theoperation of Tenant's business as a computer software vendor, providedTenant's electrical usage does not exceed Tenant's proposed usage asshown on the Final Plans; (b) heat and air conditioning between 8:00 a.m.and 5:00 p.m. on days other than Saturdays, Sundays arid generallyrecognized holidays, in an amount reasonably required in Landlord'sjudgment for the comfortable occupation of the Premises; (c) elevatorservice, which shall mean service by non-attended automatic elevators orelevators with attendants, either or both, at the option of Landlord; and(d) daily janitorial service (five nights per week) similar to that whichis provided in comparable office buildings in the Oakland/Emeryvillearea. Landlord shall maintain the Common Areas in a clean and orderlymanner and in a good state of repair,
          6.2     Additional Heating and Air Conditioning. Landlord shall usereasonable efforts to provide additional or after-hours heating or airconditioning at Tenant's request, provided Tenant  pays to Landlord thecost of such services as determined solely by Landlord based uponLandlord's reasonable estimates of the costs of such additional services,plus a reasonable charge (not to exceed ten percent (10%) of the cost ofsuch services) for Landlord's overhead expense. Tenant shall keep alldraperies closed when necessary because of the sun's position and at alltimes reasonably cooperate with Landlord and abide by all the regulationsand requirements which Landlord may prescribe from time to time for theproper functioning and protection of the heating, ventilating and airconditioning systems. Whenever heat-generating machines or equipment orlighting used in the Premises by Tenant affect the temperature otherwisemaintained by the air conditioning system, Landlord shall have the rightto install any machinery and equipment Landlord deems reasonablynecessary to restore the temperature balance in any affected part of theBuilding, including but not limited to modifications to the Building'sair conditioning system or installation of supplementary air conditioningunits. Tenant shall pay the cost thereof, including installation and anyadditional costs of operation and maintenance occasioned thereby, toLandlord upon demand.
          6.3 Special Apparatus. Tenant shall not, except with Landlord'sprior written consent, which consent may be withheld in Landlord's solediscretion, either: (a) use any apparatus or device in the Premises whichwill increase the amount of cooling, ventilation, electricity or watersupplied to the Premises beyond that provided as part of Landlord's Work;or (b) connect with electric current or water pipes any device orapparatus for the purpose of using electrical current or water, except assuch connections now exist or as may be provided for in the Scope ofWork. If Landlord consents to the use and/or connection of any apparatusor device described in clauses (a) and (b) above, Landlord may installmeters or similar monitoring devices to measure the amount of utilitiesconsumed by such apparatus or devices and Tenant shall pay for the costof all work and materials required for the installation, maintenance anduse of such meters and monitoring devices. If Landlord elects not toinstall a special meter or monitoring device, Landlord shall determinethe amount of additional utilities and resources consumed by suchapparatus tar device based upon Landlord's reasonable estimates and bestjudgment, and such determination, made in good faith by Landlord, shallbe conclusive on Tenant. Tenant shall pay to Landlord promptly upondemand the cost of any excess use of utilities and resources based on therates charged by the local public utility company or other supplierfurnishing same, plus any additional expense incurred by Landlord inkeeping account of the foregoing and administering same.
          6.4 Interruption In Service. Landlord shall use diligent efforts toremedy any interruption in the furnishing of services and utilities.However, Landlord shall not be in default under this Lease or liable forany damages directly or indirectly arising from, nor shall the rent beabated except as provided below by reason of, any failure to provide orany reduction in any of the above services or utilities if such failureor reduction is caused by the making of repairs or improvements to thePremises or the Building, the installation of equipment, acts of God orthe elements, labor disturbances of any character, or any other events orconditions whatsoever beyond the reasonable control of Landlord, orrationing or restrictions on the use of said services and utilities dueto energy shortages or other causes, whether or not any of the aboveresult from acts or omissions of Landlord. Furthermore, Landlord shall beentitled to cooperate voluntarily in a reasonable manner with the effortsof national, state or local governmental bodies or utilities suppliers inreducing energy or other resources consumption. The failure of Landlordto provide the utilities and services specified in this Section B shallnot constitute a constructive or other eviction of Tenant. If anyinterruption in the furnishing of utilities or services to the Premisesmaterially, adversely affects Tenant's use and occupancy of the Premises,Tenant shall be entitled to an abatement of Base Rent in proportion tothe interference with Tenant's use and occupancy, only if, and to theextent that, such interruption continues for more than thirty (30) days.
          6.5 Tenant's Other Utilities. Tenant shall pay prior t0delinquency for all telephone and all other materials and services notexpressly required to be provided by Landlord, which may be furnished toor used in, on or about the Premises during the Term.
**7.   TENANT'S ALTERATIONS; PROTECTION AGAINST LIENS**

          7.1 Landlord's Consent Required, Tenant shall not make or permit tobe made any alterations, additions or improvements to the Premises or anypart thereof, without first obtaining Landlord's written consent. Whenapplying for such consent, Tenant shall, if required by Landlord, furnishcomplete plans and specifications for such alterations, additions orimprovements. All alterations, additions or improvements to the Premisesshall be performed by contractors selected and supervised by Landlord forTenant's account and at Tenant's sole cost and expense. Within ten (101days after receipt of a written statement from Landlord, Tenant shallreimburse Landlord for all reasonable costs arising in connection withLandlord's approval of plans and specifications and supervision ofcontractors. Landlord shall have the right to require that any contractorperforming alterations, improvements or additions to the Premises shall,prior to commencement of any work, provide Landlord with a performancebond and labor and materials payment bond in the amount of the contractprice for the work, naming Landlord and Tenant (and any other personsdesignated by Landlord as co-obligees). All alterations, additions,fixtures and improvements, including without limitation all improvementsmade pursuant to a Scope of Work, whether temporary or permanent incharacter, made in or upon the Premises either by Landlord or Tenant,shall at once belong to Landlord and become part of the Premises andshall remain on the Premises without compensation of any kind to Tenant,unless Landlord requires their removal under Paragraph 7.2 below. Tenantshall carry insurance as required by Section 10 covering anyimprovements, alterations or additions to the Premises made or paid forby Tenant except for Landlord's Work described in the Scope of Work, itbeing understood and agreed that none of such alterations, additions orimprovements shall be insured by Landlord nor shall Landlord be requiredunder any provision of this Lease to repair, reconstruct or reinstall anysuch alterations, additions or improvements. Movable furniture andequipment which are removable without material damage to the Building orthe Premises shall remain the property of Tenant.
          7.2 Removal of Tenant's Alterations. Notwithstanding any contraryprovision in this Lease, Tenant shall, upon Landlord's written requestmade prior to or within thirty (30i days following the Expiration pate orthe earlier termination of this Lease, promptly remove any alterations,additions, fixtures or improvements designated by Landlord to be removedand repair any damage to the Premises resulting from such removal.Landlord may, in connection with any such removal which might inLandlord's judgment involve damage to the Promises, require that suchremoval be performed by a bonded contractor or other person for whom abond satisfactory to Landlord has been furnished covering the cost ofrepairing the anticipated damage.
          7.3 Protection Against Liens. Tenant shall keep the Premises, theBuilding and the Common Areas free from any liens arising out of workperformed, materials furnished, or obligations incurred by Tenant andshall indemnify, hold harmless and defend Landlord from any liens andencumbrances arising out of any work performed or materials furnished byor at the direction of Tenant, In the event that Tenant shall not,within twenty (201 days following written notice of the imposition ofany such lien, cause such lien to be released of record by payment orposting of a proper bond, Landlord shall have, in addition to all otherremedies provided in this Lease and by law, the right, but noobligation, to cause the same to be released by such means as Landlordshall deem proper, including payment of the claim giving rise to suchlien. All such sums paid by Landlord and all expenses incurred by it inconnection therewith, including attorneys' fees and costs, shall bepayable by Tenant upon demand with interest at the Overdue Rate from thedate such sums are  paid or expenses incurred by Landlord. Landlord shallhave the right at all times to post and keep posted on the Premises anynotices permitted or required by law, or which Landlord shall deemproper, for the protection of Landlord and the Premises, and any otherparty having an interest therein, from mechanics' and materialmen'sliens, and Tenant shall give to Landlord at least ten (101 business days'prior written notice of the day of commencement of any work relating toalterations,  additions or improvements in or to the Premises.
**8. MAINTENANCE AND REPAIRS**

          8.1 Landlord's Obligations. Subject to Sections 15 and 16, Landlordshall maintain in good order, condition and repair the structuralportions of the Building including the exterior walls, underflooring androof, the basic heating, ventilating, air conditioning, plumbing,electrical, arid fire detection and security systems, and all otherportions of the Premises not the obligation of Tenant or any other tenantin the Building. However, if any such maintenance or repair becomesnecessary in whole or in part because of wrongful acts or omissions byTenant or Tenant's employees, agents, invitees or customers, or becauseof a breaking and entering, Tenant shall pay the entire cost thereof upondemand. Landlord shall not be liable to Tenant, and rent shall not beabated, for any failure by Landlord to maintain and repair areas whichare being used in connection with construction of improvements, or forany failure to make any repairs or perform any maintenance unless suchfailure shall continue for an unreasonable time after written notice ofthe need therefor is given to Landlord by Tenant. Landlord shall also notbe liable under any circumstances for loss of profits or for injury to orinterference with Tenant's business arising from or in connection withthe making of or the failure of Landlord to make any repairs,maintenance, alterations or improvements in order to make any repairs,maintenance, alterations or improvements in or to any portion of theBuilding or the Common Areas or in or to fixtures, appurtenances andequipment therein. Notwithstanding the foregoing. if Landlord fails tomake any repairs or perform any maintenance within a reasonable timeafter written notice of the need therefor from Tenant to Landlord, Tenantmay, after giving Landlord at least ten (10) days' prior written noticeof its intent to do so, make necessary repairs or perform necessarymaintenance, provided, however, (a) Tenant's work does not affectstructural elements of the Building or Building systems, and (b) so longas Landlord is diligently attempting to make the necessary repairs orperform the necessary maintenance, Tenant shall have no right of"self-help."
          8.2 Tenant's Obligation,
                         (a) Tenant shall maintain the Premises in good order,condition and repair including the interior surfaces of the ceilings,walls and floors, all doors, interior windows, and all special plumbingpipes, valves and fixtures, electrical wiring, panels, switches, and allother fixtures and equipment installed for the use of the Premises by oron behalf of Tenant, including, without limitation, the "PBX SwitchboardArea" and "Computer Labs" shown on the Final Plans (as defined in theScope of Work. Tenant expressly waives the benefit of any statute,ordinance or judicial decision now or hereafter in effect which wouldotherwise afford Tenant the right to make repairs at Landlord's expenseor to terminate this Lease because of Landlord's failure to keep thePremises in good order, condition and repair,
                         (b) Upon the Expiration Date or the earlier terminationof this Lease, Tenant shall surrender the Premises in the same conditionas received, except for ordinary wear and tear and damage by fire,earthquake, acts of God or the elements, not caused by wrongful act oromission of Tenant or Tenant's agents, and shall promptly remove or causeto be removed, at Tenant's expense, from the Premises and the Buildingany signs, notices and displays placed by Tenant.
                         (c) Tenant shall repair any damage to the Premises orthe Building caused by or in connection with the removal of any articlesof personal property, business or trade fixtures, machinery, equipment,cabinetwork, furniture, movable partitions or permanent improvements oradditions, including without limitation, repairing the floor and patchingand painting the walls where required by Landlord to Landlord'sreasonable satisfaction, but excluding any damage caused by reasonableuse. Tenant shall indemnify Landlord against any loss or liabilityresulting from delay by Tenant in so surrendering the Premises, includingwithout limitation, any claims made by any succeeding tenant reasonablyfounded on such delay.
                         (d) Tenant shall do all acts required to comply with allapplicable laws, ordinances, regulations and rules of any publicauthority relating to Tenant's use and occupancy of the Premises.
                         (e) If Tenant fails to maintain the Premises in goodorder, condition and repair, or to comply with applicable laws,ordinances, regulations or rules, Landlord shall give Tenant writtennotice to do such acts as are reasonably required to satisfy itsobligations under this paragraph. If Tenant fails to promptly commencesuch work and diligently prosecute it to completion, Landlord shall havethe right after first giving Tenant at least ten (10) days' writtennotice (except in an emergency), but no obligation, to do such acts andexpend such funds as are reasonably required to perform such work. Anyamount so expended by Landlord shall be paid by Tenant promptly afterdemand with interest at the Overdue Rate from the date of such work.Landlord shall have no liability to Tenant for any damage, inconvenienceor interference with the use of the Premises by Tenant as a result ofperforming any such work.
**9.      INDEMNITY AND EXEMPTIONS OF LANDLORD**

          9.1 Indemnity. Except as set forth herein, Tenant shall indemnify,hold harmless, and defend Landlord against arty and all claims ofliability for any death or injury to any person or damage to any propertywhatsoever occurring in, on or about the Premises or any part thereof, oroccurring in, on or about any of the Common Areas, to the extent suchinjury or damage is cause by the act, negligence, fault or omission ofany duty with respect to the same by Tenant, its agents, contractors,employees, invitees or customers. Tenant shall further indemnify, holdharmless and defend Landlord from and against any and all claims, actionsand liabilities arising from (a) any breach or default in the performanceof any obligation on Tenant's part to be performed under this Lease, or(b) arising from any act or negligence of Tenant, or any of its agents,contractors, invitees or employees, or (c) any Environmental Damagesarising from the presence of Hazardous Materials upon, within or aboutthe Premises due to any act or omission of Tenant or any of its agents,contractors, invitees or employees, or Id) violation of any EnvironmentalRequirements pertaining to the Premises or the activities therein, and(e) from and against all costs, attorneys' fees, expenses and liabilitiesincurred in the defense of any such claim, action or liability, and anyproceeding brought thereon. In case any action or proceeding be broughtagainst Landlord by reason of any such claim, Tenant, upon notice fromLandlord, shall defend the same at Tenant's expense by counsel reasonablysatisfactory to Landlord; provided, however, that Tenant shall not beliable for damage to property or death or injury to persons) occasionedby the gross negligence or intentional misconduct of Landlord or itsagents or employees unless covered by insurance Tenant is required toprovide.
          9.2 Exemption of Landlord From Liability. Tenant hereby assumes allrisk of damage to property or injury to persons in, upon or about thePremises from any cause other than the active negligence or intentionalmisconduct of Landlord and its agents or employees. Without limiting thegenerality of the foregoing, Landlord shall not be liable for injury ordamage which may be sustained by the person, goods, wares, merchandise orproperty of Tenant, its employees, invitees or customers, or any otherperson in or about the Premises caused by or resulting from fire, steam,electricity, gas, water or rain, which may leak or flow from or into anypart of the Premises, or from the breakage, leakage, obstruction or otherdefects of the pipes, sprinklers, wires, appliances, plumbing, heating,air conditioning or lighting fixtures of the same, whether the damage orinjury results from conditions arising upon the Premises or upon otherportions of the Building from other sources. Landlord shall not be liablefor any damages arising from any act or omission of any other tenant oroccupant of the Building except to the extent caused by the grossnegligence or  intentional misconduct of Landlord.
**10.     INSURANCE**

          10.1    Tenant's Insurance.
                         (a) At all times during the Term Tenant shall maintainin effect policies of casualty insurance covering (i) all alterations,additions or improvements in, on or to the Premises as may be made orpaid for by Tenant (except for Landlord's Work described in the Scope ofWork), and (11) al( trade fixtures, merchandise and other personalproperty from time to time in, on or upon the Premises, in an amount notless than their actual replacement cost, providing protection against anyperil included within the classification of "Fire and Extended Coverage"together with insurance against sprinkler damage, vandalism and maliciousmischief, including cost of debris removal and demolition. Replacementcost for purposes hereof shall be determined by mutual agreement, orfailing such agreement, by an accredited appraiser selected by Landlord,with the cost of such appraisal to be borne by Tenant. The proceeds ofsuch insurance shall be used for the repair or replacement of theproperty so insured. Upon termination of this Lease following a casualtyas set forth in Section 16, the proceeds under clause (i) above shall bepaid to Landlord, and the proceeds under clause (ii) above shall be paidto Tenant.
                         (b) At all times during the Term Tenant shall maintainin effect workers' compensation insurance and comprehensive publicliability and property damage insurance adequate to protect Landlordagainst liability for injury to or death of any person or loss or injuryto any property in connection with the activities of Tenant in, on orabout the Premises or with the use, operation or condition of thePremises. Such insurance at all times shall afford combined single limitcoverage in an amount of not less than Two Million Dollars ($2,000,000).The limits of such insurance shall not limit the liability of Tenantunder this Lease. All public liability and property damage policies shallcontain a provision that Landlord, although named as an insured, shallnevertheless be entitled to recovery under said policies for any lossoccasioned to it, its servants, agents or employees by reason of Tenant'snegligence.
                         (c) All insurance required to be carried by Tenanthereunder shall be issued by responsible insurance companies acceptableto Landlord and any Mortgagee. All policies of insurance provided for inthis Lease shall be issued by insurance companies licensed to do businessin the State of California, with general policy holder's rating of notless than "A" and a financial rating of not less than "Class X" as ratedin the most current available "Best's Insurance Reports,' Each policyshall name Landlord and at Landlord's request any Mortgagee as anadditional insured, as their respective interests may appear, and aduplicate original of all policies or certificates evidencing theexistence and amounts of such insurance shall be delivered to Landlord byTenant at least ten (10) days prior to Tenant's occupancy of thePremises. All policies of insurance delivered to Landlord must contain aprovision that the company writing said policy will give Landlord thirty(30) days' written notice in advance of any cancellation or lapse of orany change in such insurance. All public liability, property damage andother casualty insurance policies shall be written as primary policies,not contributing with, and not in excess of coverage which Landlord maycarry. Tenant shall furnish Landlord with renewals or "binders" of anysuch policy at least thirty (301 flays prior to the expiration thereof.If Tenant does not procure and maintain such insurance, Landlord may (butshall not be required to) obtain such insurance on Tenant's behalf andcharge Tenant the premiums therefor which shall be payable upon demand,and no such action by Landlord shall constitute a waiver of Tenant'sdefault hereunder. Tenant may carry such insurance under a blanketpolicy, provided such blanket policy expressly affords the coveragerequired by this Lease by a Landlord's protective liability endorsementor otherwise.
                         (d) Every five (5) years during the Term or wheneverTenant materially improves or alters the Premises, Tenant shall increasethe policy limits for the insurance to be carried by Tenant under thisSection 10 to such amounts as Landlord reasonably determines areappropriate.
          10.2 Landlord's Insurance. At all times during the Term Landlordshall maintain in effect a policy or policies of insurance covering theBuilding in an amount not less than ninety percent 190%) of fullreplacement cost (exclusive of the cost of excavations, foundations,footings and all tenant improvements constructed at the request or costof Tenant, but inclusive of the cost of building standard tenantimprovements) from time to time during the Term, providing protectionagainst any peril generally included in the classification "Fire andExtended Coverage" together with insurance against sprinkler damage,vandalism and malicious mischief. Landlord's obligation to carry theinsurance provided for herein may be brought within the coverage of anyblanket policy or policies of insurance carried and maintained byLandlord. In addition to the coverage required by this paragraph,Landlord shall be entitled to procure (and include the premiums thereforin Operating Costs) such other types of insurance and in such amounts asLandlord may deem to be necessary or appropriate.
          10.3 Subrogation Waiver. Landlord and Tenant each hereby waive anyand all rights of recovery against the other or against the officers,partners, employees, agents and representatives of the other, on accountof loss or damage of such waiving party or its property, or the propertyof others under its control, to the extent that such loss or damage isinsured against under any fire and extended coverage insurance policywhich either may have in force at the time of such loss or damage. Tenantshall, upon obtaining the policies of insurance required under thisLease, give notice to its insurance carriers) that the foregoing mutualwaiver of subrogation is contained in this Lease. The waivers set forthherein shall be required and effective only to the extent such waiversare available from each party's insurer without additional premium; if anextra charge is incurred to obtain such waiver, it shall be paid by theparty in whose favor the waiver runs within fifteen (15) days afterwritten notice from the other party, and, if not so paid, such otherparty's waiver under this paragraph shall be neither required noreffective.
**11.     ASSIGNMENT AND SUBLETTING**

          11.1 Landlord's Consent Required. Tenant shall not sell, assign,mortgage, pledge, hypothecate, encumber or otherwise transfer this Leaseor any interest therein, and shall not sublet the Premises or any partthereof, or suffer or permit the Premises or any part thereof to beoccupied by any other person (the agents, employees, and invitees ofTenant excepted), without the prior written consent of Landlord in eachinstance; and any attempt to do so without such consent shall be voidableand, at Landlord's election, shall constitute a noncurable default underthis Lease. No interest of Tenant in this Lease or the Premises shall beassignable by operation of law. Subject to the terms and conditionscontained in this section, Landlord shall not unreasonably withhold itsconsent to a voluntary assignment of this Lease or a subletting of thePremises.
          11.2 Tenant's Application If Tenant desires at any time to assignthis Lease or to sublet the Premises or any portion thereof, Tenant shallsubmit to Landlord at least thirty (30) days prior to the proposedeffective date of the assignment or sublease, in writing: (a) a notice ofintent to assign or sublease, setting forth the proposed effective datethereof; (b) the name of the proposed assignee or subtenant;  (c) thenature of the proposed assignee's or subtenant's business to be carriedon in the Premises; (d) the terms and provisions of the proposedassignment or sublease; and (e) such financial information as Landlordmay request concerning the proposed assignee or subtenant, includingrecent financial statements and bank references. At the time of Tenant'sapplication to assign the Lease, Tenant may also request Landlord inwriting to be released from liability under this Lease, which request mayor may not be granted in Landlord's sole  discretion.
          11.3 Required Provisions. All assignment or sublease agreementsshall (a) contain such terms as are described in Tenant's notice underParagraph 11.2 above or as otherwise agreed by Landlord, (b) prohibitfurther assignments or subleases except with Landlord's written consent,(c) impose the same obligations and conditions on the assignee orsublessee as are imposed on Tenant by this Lease (except as to rent andterm or as otherwise agreed by Landlord), (d) be expressly subject andsubordinate to each and every provision of this Lease, (e) have a termthat expires on or before the Expiration Date, and (f) provide thatTenant and/or the assignee or sublessee shall pay Landlord the amount ofany additional costs or expenses incurred by Landlord for repairs,maintenance or otherwise as a result of any change in the nature ofoccupancy caused by the assignment or sublease.
          11.4 Bonus Rent. Landlord shall be entitled to receive all BonusRent payable in connection with any assignment or sublease. Withinfifteen (15) days after written request by Landlord, Tenant shallprovide and certify to Landlord all financial information required forthe calculation of Bonus Rent.
          11.5 Fees for Review. If Landlord retains the services of anattorney to review any aspect of the proposed assignment or subleasetransaction, Tenant shall pay to Landlord all attorneys' fees reasonablyincurred by Landlord in connection therewith, Tenant shall pay suchattorneys' fees to Landlord within thirty (30) days after writtenrequest therefor.
          11.6 No Release of Tenant. Unless Landlord has specificallyreleased Tenant in writing from all obligations under the Lease, noconsent of landlord to any assignment or subletting by Tenant shallrelieve Tenant of the obligations to be performed by Tenant under thisLease, whether accruing before or after such assignment, or subletting,and notwithstanding any subsequent modification, extension or renewal ofthis Lease made with or without Tenant's consent. The consent by Landlordto any assignment, transfer or subletting shall not relieve Tenant fromthe obligations to obtain Landlord's express prior written consent to anysubsequent or other transfer or subletting. The acceptance by Landlord ofpayment from any other person shall not be deemed to be a waiver byLandlord of any provision of this Lease or to be a consent to anytransfer or sublease, or to be a release of Tenant from any obligationunder this Lease. If the Premises or any part thereof is sublet oroccupied by any person other than Tenant, Landlord may, after default byTenant, collect the rent from any such transferee, subtenant or occupantand apply the net amount collected to the rent reserved herein, and nosuch action by Landlord shall be deemed a consent to such transfer,sublease or occupancy.
          11.7 Assumption of Obligations. Each assignee of Tenant shallassume all obligations of Tenant under this Lease and shall be and remainliable jointly and severally with Tenant (unless Landlord hasspecifically released Tenant in writing from all obligations under theLease) for the payment of the rent and the performance of all the terms,covenants, conditions and agreements herein contained on Tenant's part tobe performed for the Term. No assignment shall be binding on Landlordunless the assignee or Tenant delivers to Landlord a counterpart of theassignment instrument in recordable form which contains a covenant ofassumption by the transferee satisfactory in substance and form toLandlord, consistent with the requirements of this section.The failure or refusal of any assignee t0 execute such instrument ofassumption shall not release or discharge the assignee from its liabilityto Landlord hereunder. Landlord shall have no obligation whatsoever toperform directly any duty to or respond directly to any request from anysublessee, it being the obligation of Tenant to administer the terms ofits subleases; provided, however, Landlord shall remain liable to Tenantto perform all of Landlord's obligations under this Lease.
          11.8 Deemed Transfers. If Tenant is a privately held corporation,or is an unincorporated association or partnership, the transfer,assignment or hypothecation of any stock or interest in suchcorporation, association or partnership in the aggregate from the LeaseDate in excess of fifty percent (50%) shall be deemed an assignment ortransfer within the meaning of this section.Tenant may assign this Lease or sublet the Premises or any part thereofwithout Landlord's prior written consent to any corporation whichcontrols Tenant, is controlled by Tenant, or is under common control withTenant or to any entity resulting from any reorganization, merger or thesale of substantially all of Tenant's stock, provided Tenant givesLandlord at least thirty (301 days' prior written notice of suchsubletting or assignment; and such subletting or assignment shall notrelease or discharge Tenant from any liability under this Lease.
          11.9 Landlord's Option t Recapture. Landlord reserves the option,to be exercised by giving notice to Tenant within fifteen (151 days afterreceipt of Tenant's notice of intent to assign of sublease to recapturethe portion of the Premises described in Tenant's notice for theremainder of the Term, and to terminate this Lease with respect to suchrecaptured Premises. The effective date of such recapture and terminationshall be as specified in Landlord's notice of exercise of its recaptureoption, but shall not be less than thirty (301 days nor more than sixty(601 days after the delivery of such notice. The option to recapturereserved to Landlord hereunder shall also arise in the event Tenantshall, voluntarily or involuntarily, sell, assign, mortgage, pledge,encumber or otherwise transfer this Lease or any interest herein, orsublet the Premises or any portion thereof, or suffer or permit thePremises to be occupied by any third person (the agents, employees,invitees and customers of Tenant excepted), without first obtaining thewritten consent of Landlord and in such event the recapture option shallapply to the portion of the Premises so affected and be exercisable butLandlord at any time after the occurrence of the event for whichLandlord's consent was required by not obtained by Tenant. If this Leaseis terminated pursuant to Landlord's recapture option with respect toonly a portion of the Premises, the Base Rent required under this Leaseand Tenant's Share shall be adjusted proportionately based on therentable square footage retained by Tenant and the rentable squarefootage of the Premises leased by Tenant immediately prior to suchrecapture and cancellation, and Landlord and Tenant shall thereuponexecute an amendment of this Lease in accordance therewith. If Landlordso recaptures a portion of the Premises, it shall construct and erect atis sole cost such partitions as may be required in Landlord's andTenant's reasonable judgment to sever the space retained by Tenant fromthe space recaptured by Landlord; provided, however, that Tenant shallbear the cost of painting, covering or otherwise decorating the surfacesof such partitions which face the remaining Premises. Landlord may,without limitation, lease the recaptured portion of the Premises to theproposed subtenant or assignee, on the same or different terms as wereproposed by Tenant, without liability to Tenant.
**12.     SUBORDINATION AND ATTORNMENT**

          12.1 Subordination. Upon the written request of Landlord or anyMortgagee, Tenant will in writing subordinate its rights under this Leaseto the lien of any mortgage or deed of trust now or hereafter in forceagainst the Premises, the Building or the underlying land and to alladvances made or hereafter to be made upon the security thereof, and toall extensions, modifications and renewals thereunder. Tenant shall also,upon Landlord's request, subordinate its rights hereunder t0 any groundor underlying lease which may now exist or hereafter be executedaffecting the Building and/or the underlying land. Tenant shall have theright to condition its subordination upon the execution and delivery ofan attornment and nondisturbance agreement, as described in Paragraph12.2, between the Mortgagee or the lessor under any such ground orunderlying lease and Tenant Tenant shall not subordinate its rightshereunder to any lien other than that of a first mortgage or first deedof trust, except with the prior written consent of the Mortgagee holdingsuch first mortgage or deed of trust.
          12.2 Attornment. Upon the written request of the Landlord or anyMortgagee or any lessor under a ground or underlying lease, Tenant shallattorn to any Mortgagee or lessor, provided such Mortgagee or lessoragrees that if Tenant is not in default under this Lease, Tenant'spossession of the Premises in accordance with the terms of this Leaseshall not be disturbed, Such agreement shall provide, among other things,(a) that this Lease shall remain in full force and effect, (b) thatTenant pay rent to said Mortgagee or lessor from the date of saidattornment, (c) that said Mortgagee or lessor shall not be responsible toTenant under this Lease except for obligations accruing subsequent to thedate of such attornment, and (d) that Tenant, in the event of foreclosureor a deed in lieu thereof or a termination of the ground or underlyinglease, will enter into a new lease with the Mortgagee, lessor or otherperson having or acquiring title on the same terms and conditions as thisLease and for the balance of the Term.
          12.3 Nonmaterial Amendments. If any lender should require anymodification of this Lease as a condition of loans secured by a lien onthe Premises, the Building or the land underlying the Building, or if anysuch modification is required as a condition to a ground or underlyinglease, Tenant will not unreasonably withhold its approval or execution ofany such modifications, promptly after request by Landlord provided nosuch modification shall relate to the rent payable hereunder, the lengthof the Term or otherwise materially change the rights or obligations ofLandlord or Tenant.
**13.     DEFAULT BY TENANT**

          13.1 Acts Constituting Default. In addition to the events specifiedas a default elsewhere in this Lease, the failure of Tenant to performeach covenant made under this Lease, or any abandonment of the Premisesby Tenant, shall constitute a default hereunder. However, Landlord shallnot commence any action to terminate Tenant's right of possession as aconsequence of a default until any period of grace with respect theretohas elapsed; provided, that any such period of grace shall be in lieu ofand not in addition to the period during which Tenant may cure suchdefault following the delivery of notice pursuant to California Code ofCivil Procedure Section 1 161.
                         (a) Subject to the limitation expressed in Paragraph13.1(c), Tenant shall have a period of three (3) days from the date ofwritten notice from Landlord within which to cure any default in thepayment of any monetary obligations of Tenant under this Lease.
                         (b) Tenant shall have a period of fifteen (15) days fromthe date of written notice from Landlord within which to cure any otherdefault under this Lease which is capable of being cured; provided,however, that with respect to any default which cannot reasonably becured within fifteen (15) days, the default shall not be deemed to beuncured if Tenant commences to cure within five (5) days from Landlord'snotice and thereafter prosecutes diligently and continuously tocompletion all acts required to cure the default.
                         (c) There shall be no period of grace with respect toany default by Tenant which is not capable of being cured. Landlord andTenant stipulate that the following defaults are not capable of beingcured by Tenant: (i) any default which is specified in this Lease asbeing incurable; (ii) any unauthorized sale, assignment, mortgage,pledge, hypothecation, encumbrance or other transfer of this Lease or anyinterest herein, or any unauthorized subletting of all or any portion ofthe Premises; (iii) the commission of waste by Tenant; (iv) the failureof Tenant to pay rent or any other monetary obligation of Tenanthereunder on the due date thereof where such failure occurs on more thanthree (3) consecutive occasions or more than six (61 occasions during anytwelve (12) month period; and (v) any other default which is recognizedunder California law as being incurable.
          13.2 Landlord's Remedies. If Tenant fails to cure a default, or inthe event of a default which is not capable of being cured by Tenant,Landlord shall have the following rights and remedies in addition to anyother rights and remedies available to Landlord at law or in equity:
                         (a) Landlord shall have all rights and remediesprovided by California Civil Code Section 1951.2 (or any successorstatute), including but not limited to, recovery of the worth at thetime of award of the amount by which the unpaid rent for the balance ofthe Term after the time of award exceeds the amount of rental loss forthe same period that Tenant proves could be reasonably avoided, ascomputed pursuant to subsection (b) of said Section 1951.2;
                         (b) Landlord shall have rights and remedies provided byCalifornia Civil Code Section 1951,4 (or any successor statute), whichallows Landlord to continue this Lease in effect and to enforce all ofits rights and remedies under this Lease, including the right to recoverrent as it becomes due, for so long as Landlord does not terminateTenant's right to possession. Acts of maintenance or preservation,efforts to relet the Premises, or the appointment of a receiver upon theLandlord's initiative to protect its interest under this Lease shall notconstitute a termination of Tenant's right to possession; and
                         (c) Landlord shall have the right, but not theobligation, to make any payment or perform any act on Tenant's part asmay be required to cure Tenant's default, without waiving its rightsbased upon such default by Tenant and without releasing Tenant from anyof its obligations. All sums so paid and all costs incurred by Landlord,together with interest thereon at the Overdue Rate from the date of suchpayment or the incurrence of such cost by Landlord, whichever occursfirst, shall be paid to Landlord on demand.
**14.     DEFAULT BY LANDLORD**

          14.1 Existence of Default. Landlord shall not be deemed to be indefault in the performance of any obligation under this Lease unless anduntil it has failed to perform such obligation within twenty (20) daysafter receipt of written notice by Tenant to Landlord specifying suchfailure; provided, however, that if the nature of the Landlord's defaultis such that more than twenty (20) days are required for its cure, thenLandlord shall not be deemed to be in default if it commences such curewithin the twenty (20) day period and thereafter diligently prosecutessuch cure to completion,
          14.2 Mortagaee's Right To Cure. Tenant shall give any Mortgagee acopy, by registered mail, of any notice of default served upon Landlord,provided that Tenant previously has been notified in writing (by way ofNotice of Assignment of Rents and Leases, or otherwise), of the addressof such Mortgagee. If Landlord fails to cure such default within the timeprovided in this Lease, any such Mortgagee shall have an additionalforty-five (45) days within which to cure such default by Landlord, or ifsuch default cannot be cured within that time, then such additional timeas may be necessary if within that forty-five (45) day period theMortgagee has commenced and is pursuing the remedies necessary to curesuch default (including but not limited to commencement of foreclosureproceedings, if necessary to effect such cure), in which event this Leaseshall not be terminated while such remedies are being so pursued.
          14.3 Judgment Against Landlord. If Tenant recovers any judgmentagainst Landlord for a default by Landlord under this Lease, thejudgment shall be satisfied only out of the interest of Landlord in theBuilding and neither Landlord nor any of its partners, officers,employees or agents shall be personally liable for any such default orfor any deficiency.
**15.     CONDEMNATION**

          15.1 Termination Due To Taking. If ail or any part of the Premisesare the subject of a Taking, either Landlord or Tenant may, by writtennotice given to the other within thirty (30) days of receipt of notice ofsuch Taking, elect to terminate this Lease as of the date possession istransferred pursuant to the Taking; provided, however, that before Tenantmay terminate this Lease for a Taking, such 'faking must be of such anextent and nature as to substantially impede Tenant's use of thePremises, If any pan of the Building other than the Premises shall be thesubject of a Taking, Landlord may elect to Terminate this Lease. If thereis a Taking of all or a part of the Parking Facilities and the parkingrights granted to Tenant under Paragraph 2.4 are substantially reducedthereby, Landlord shall have the right to provide replacement parking tocompensate for such reduction within other parking areas serving theOffice Complex. 1f such replacement parking is not provided, then for aperiod of thirty (30) days after Landlord notifies Tenant that suchreplacement parking cannot be provided, Tenant shall have the right toterminate this Lease, effective at a time specified by Tenant not toexceed thirty (30) days from the date of the notice.
          15.2 No Termination Due To Taking. If a partial Taking of thePremises does not result in a termination of this Lease, Base Rent,Tenant's Share of Increased Operating Costs and Tenant's parking rightsshall be reduced in proportion to what the area of the Premises takenbears to the area of the Premises immediately prior to the Taking. Notemporary taking of the Premises or any part of the Building shallterminate this Lease, except at Landlord's election, or give Tenant anyright to any abatement of Base Rent or Increased Operating Costs, exceptthat Base Rent and Operating Costs shall be reduced in accordance withthe preceding sentence during that portion of any temporary Taking ofthe Premises lasting more than thirty (301 days. Each party heretowaives the provisions of California Code of Civil Procedure Section1265.130 (or any successor statute) allowing either party to file apetition to terminate this Lease for a partial Taking.
          15.3 Award For Taking. No award for any partial or entire Takingshall be apportioned, and Tenant hereby assigns to Landlord any and allrights of Tenant to any portion of the award for a Taking. However,nothing contained herein shall be deemed to give Landlord any interestin or to require Tenant to assign to Landlord any award made to Tenantfor taking of personal property belonging to Tenant.
**16.     DAMAGE AND DESTRUCTION**

          16.1 Partial Damage - Insured. If the Premises or the Building aredamaged by a risk covered under fire and extended coverage insuranceinsuring Landlord, then Landlord shall restore such damage providedinsurance proceeds are available to Landlord to pay ninety percent (90%)or more of the cost of restoration, and provided such restoration byLandlord can be completed within eight (8) months after the commencementof work in the opinion of a licensed architect or engineer appointed byLandlord. 1n such event this Lease shall continue in full force andeffect, except that Tenant shall, so long as the damage is not due to theact or omission of Tenant, be entitled to an equitable reduction of BassRent and Tenant's Share of Increased Operating Costs while suchrestoration takes place, such reduction to be based upon the extent towhich the damage or restoration efforts materially interfere withTenant's use of the Premises.
          16.2 Partial Damage - Uninsured. If the Premises or the Buildingare damaged by a risk not covered by such insurance or if the insuranceproceeds available to Landlord are less than eighty percent (80%) of thecost of restoration, or if the restoration cannot be completed withineight (8) months after the commencement of work in the opinion of thelicensed architect or engineer appointed by Landlord, then Landlord shallhave the option either to (a) repair or restore such damage, this Leasecontinuing in full force and effect, with the Base Rent and Tenant'sShare of Increased Operating Costs to be equitably reduced as provided inParagraph 16.1, or (b) give notice to Tenant at any time within ninety(90) days after such damage terminating this Lease as of a date to bespecified in such notice, which date shall be not less than thirty (30)nor more than sixty (60) days after the giving of such notice. If suchnotice is given, this Lease shall expire and any interest of Tenant inthe Premises shall terminate on the date specified in such notice. TheBase Rent and Tenant's Share of Increased Operating Costs during theperiod prior to the termination shall be reduced as provided in Paragraph16.1 and paid up through the date of termination.
          16.3 Total Destruction. if the Premises are totally destroyed or inLandlord's judgment the Premises cannot be restored as required hereinunder applicable laws and regulations, notwithstanding the availabilityof insurance proceeds, this Lease shall be terminated effective as of thedate of the damage.
          16.4 Landlord's Obligations. Any restoration by Landlord pursuantto Paragraphs 16.1 or 16.2 shall be commenced as soon as reasonablypossible after the date of damage and prosecuted diligently to completionat the earliest possible date. Landlord shall not be required to carryinsurance of any kind on Tenant's property and shall not be required torepair any injury or damage thereto by fire or other causes, or to makeany restoration or replacement of any paneling, decorations, partitions,ceilings, floor covering, office fixtures or any other improvements orproperty installed in the Premises by or at the direct or indirectexpense of Tenant and Tenant shall be required to restore or replace samein the event of damage. Tenant shall have no claim against Landlord forany loss suffered by reason of any such damage, destruction, repair orrestoration. Notwithstanding anything to the contrary contained in thissection, Landlord shall have no obligation to repair, reconstruct orrestore the Premises with respect to damage or destruction as describedin this section occurring during the last twelve (12) months of the Term.
          16.5 Waiver by Tenant. Tenant shall have no right to terminate thisLease as a result of any statutory provisions now or hereafter in effectpertaining to the damage and destruction of the Premises or the Building,except as expressly provided herein, and Tenant expressly waives theprovisions of California Civil Code Sections 1932(2) and 1933(4) withrespect to any damage or destruction of the Premises.
**17.     DEFINITIONS**

          17.1    "Rase Rent" means the monthly rent payable pursuant toParagraph 4.1, and as specified in the Basic Lease Provisions.
          17.2    "Base Year" means the calendar year specified in the BasicLease Provisions.
          17.3    "Basic Lease Provisions" means theprovisions contained in Paragraph 1.2 of this Lease.
          17.4 "Bonus Rent" means the excess of (a) all considerationreceived by Tenant from an assignment of this Lease or a sublease of allor any portion of the Premises over (b) the Base Rent, IncreasedOperating Costs and other charges payable by Tenant to Landlord underthis Lease (prorated, in the case of a sublease of less than all of thePremises, to reflect obligations allocable to only the portion of thePremises so sublet). In determining the total consideration under theforegoing clause la), Tenant shall be entitled to exclude therefromreasonable leasing commissions paid by Tenant to any unaffiliated thirdparty, payments attributable to the amortization of the cost ofimprovements Tenant must make to the Premises at its cost to ready samefor the assignee or sublessee, and other reasonable, out-of-pocket costspaid by Tenant which are directly related to Tenant's obtaining theassignment or sublease.
          17.5 "Building" means the highrise office building described in theBasic Lease Provisions, the parcels of land on which such office buildingis situated, all other improvements situated on the land, and all rightsand easements appurtenant thereto. Except where the context requiresotherwise, references to the "Building" shall include the Common Areasand the Parking Facilities serving the Building and other buildings inthe Office Complex.
          17.6  "Commencement Date" means the date determined pursuant toParagraph 3.2 of this Lease for the commencement of the Term.17.7 "Common Areas" means areas within the Building (includingcommon corridors and hallways, stairwells, elevators, restrooms, lobbiesand other public areas) and within the Office Complex which are availablefor nonexclusive use by Tenant and other tenants of the Building or theOffice Complex.
     17.7 "Common Areas" means areas within the Building (includingcommon corridors and hallways, stairwells, elevators, restrooms, lobbiesand other public areas) and within the Office Complex which are availablefor nonexclusive use by Tenant and other tenants of the Building or theoffice Complex.
          17.8 "Environmental Damages" means all claims, judgments, damages,losses, penalties, fines, liabilities, strict costs and expenses ofdefense of any claim and of any settlement or judgment, including withoutlimitation reasonable attorneys' fees and consultants' fees, any of whichare incurred at any time as a result of the existence of "HazardousMaterial" upon, about, beneath the Premises or migrating or threateningto migrate to or from the Premises, or the existence of a violation of"Environmental Requirements" pertaining to the Premises including,without limitation: (a) damages for personal injury, or injury toproperty or natural resources occurring upon or off of the Premises,foreseeable or unforeseeable, including, without limitation, lostprofits, consequential damages, interest and penalties including but notlimited to claims brought by or on behalf of employees of Tenant, withrespect to which Tenant waives any immunity to which it may be entitledunder any industrial or worker's compensation laws; (b) diminution in thevalue of the premises, and damages for the loss of or restriction on theuse of or adverse impact on the marketing of rentable or usable space ofany amenity of the Premises; (c) fees incurred for the services ofattorneys, consultants, contractors, experts, laboratories and all othercosts incurred in connection with the investigation or remediation ofsuch "Hazardous Materials" or violation of "Environmental Requirements"including, but not limited to, the preparation of any feasibility studiesor reports or the performance of any cleanup, remedial, removal,containment, restoration or monitoring work required by any federal,state or local governmental agency or political subdivision, orreasonably necessary to make full economic use of the Premises or anyother property or otherwise expended in connection with such conditions,and including without limitation any attorneys' fees, costs and expensesincurred in enforcing this agreement or collecting any sums duehereunder; and (d) liability to any third person or governmental agencyto indemnify such person or agency for costs expended in connection withthe items referenced in subparagraph (c) herein.
          17.9 "Environmental Requirements" means all applicable present andfuture statutes, regulations, rules, ordinances, codes, licenses,permits, orders, approvals, plans, authorizations, concessions,franchises and similar items, of all governmental agencies, departments,commissions, boards, bureaus or instrumentalities of the United States,states and political subdivisions thereof and all applicable judicial andadministrative and regulatory decrees, judgments and orders relating tothe protection of human health, or the environment, including, withoutlimitation: (a) all requirements, including but not limited to, thosepertaining to reporting, licensing, permitting, investigation andremediation of emissions, discharges, releases or threatened releases of"Hazardous Materials," chemical substances, pollutants, contaminants orhazardous or toxic substances, materials or wastes whether solid, liquidor gaseous in nature, into the air, surface water, groundwater or land,or relating to the manufacture, processing, distribution, use, treatment,storage, disposal, transport or handling of chemical substances,pollutants, contaminants or hazardous or toxic substances, materials, orwastes, whether solid, liquid or gaseous in nature; and (b) allrequirements pertaining to the protection of the health and safety ofemployees or the public.
          17.10 "Expiration Date" means the scheduled date on which the Termwill expire as determined pursuant to Paragraph 3.2 of this Lease.
          17.11 "Hazardous Materials" means any substance (a) the presence ofwhich requires investigation or remediation under any federal, state orlocal statute, regulation, ordinance, order, action or policy; or (b)which is or becomes defined as a "hazardous waste" or "hazardoussubstance" under any federal, state or local statute, regulation orordinance or amendments thereto; or (c) which is toxic, explosive,corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic,or otherwise hazardous and is or becomes regulated by any governmentalauthority, agency, department, commission, board, agency orinstrumentality of the United States, the State of California or anypolitical subdivision thereof; or (d) the presence of which on thePremises causes or threatens to cause a nuisance upon the Premises or toadjacent properties or poses or threatens to pose a hazard to thePremises or the health or safety of persons on or about the Premises; or(e) without limitation, which contains gasoline, diesel fuel or otherpetroleum hydrocarbons; or (f) which contains polychlorinated bipheynols(PCBs), asbestos or urea formaldehyde foam insulation.
          17.12 "Increased Operating Costs" means the amount by which theOperating Costs during any Subsequent Year exceed the Operating Costsfor the Base Year.
          17.13 "Landlord's Work" means the work, if any, to be performed byLandlord to ready the Premises for Tenant's occupancy, as specified inthe Scope of Work.
          17.14 "Lease Date" means the date specified in the Basic LeaseProvisions, which shall be the effective date of execution of this Leaseby Landlord and Tenant unless otherwise provided in this Lease.
          17.15 "Mortgagee" means the holder of any mortgage or deed of trustsecured by the Building or the Premises or any portion thereof.
          17.16 "Office Complex" means the development comprised of the threeoffice buildings commonly known as Watergate Towers I, II and III,addressed, respectively, as 1900 Powell Street, 2200 Powell Street and2000 Powell Street, Emeryville, California.
          17.17 "Operating Costs" means all actual costs of ownership,operation, maintenance, repair and management of the Building, includingthe Building's share of all such costs of the Parking Facilities and theCommon Areas which are shared with other buildings in the Office Complexto be based on Landlord's reasonable allocation among the buildings. Ifduring the Base Year or any Subsequent Year the Building is less thanninety-five percent (95%) occupied, those Operating Costs which varybased on the level of occupancy shall be adjusted upward to reflect, inLandlord's reasonable judgment, the Operating Costs that would applyduring such year if the Building were at least ninety-five percent (95%)occupied.
               17.17.1.        Operating Costs shall include:
                              (a) salaries, and other compensation, including payrolltaxes, vacation, holiday and other paid absences, and welfare, retirementand other fringe benefits, paid to employees, independent contractors oragents of Landlord engaged in the operation, repair, management ormaintenance of the Building, including (i) elevator operators, (ii)window cleaners, miscellaneous repair personnel, janitors, cleaningpersonnel and porters, (iii) security personnel and caretakers, and (iv)engineers, mechanics, electricians and plumbers;
                              (b) repairs and maintenance of the Building and thecosts of supplies, tools, materials and equipment for such repairs andmaintenance that are under generally accepted accounting principles notcapitalized;
                              (c) premiums and other charges incurred by Landlord forinsurance on the Building and for Landlord's employees, including (i)fire and extended coverage insurance, and earthquake, windstorm, floodand explosion insurance, (ii) public liability and property damageinsurance, (iii) worker's compensation insurance, (iv) boiler andmachinery insurance, sprinkler leakage, water damage and relatedliability insurance, and burglary, fidelity and pilferage insurance onequipment and materials, (v) health, accident and group life insurance,(vi) such other insurance as is customarily carried by operators ofcomparable first-class office buildings in the San Francisco Bay Area;
                              (d) costs incurred for inspection and servicing,including all outside maintenance contracts necessary for the maintenanceof the Building, such as janitorial and window cleaning, rubbish removal,exterminating, water treatment, elevator, electrical, plumbing andmechanical equipment, and the costs of materials, tools, supplies andequipment used for inspection and servicing of the Building;
                              (e)     costs incurred for electricity, water, gas, fueland' other utilities;
                              (f) payroll taxes, federal taxes, state and localunemployment taxes, and social security taxes paid for the employees ofLandlord engaged in the operation, maintenance and repair of theBuilding;
                              (g)     sales, use and excise taxes on goods and servicespurchased by Landlord for use in the Building;
                              (h)     license, permit and inspection fees;               (i)     accounting and legal  fees;
                              (j)     Customary management fees not to exceed fivepercent (5%) of the gross revenues of the Building;
                              (k) the annual amortization over its useful life, witha reasonable salvage value on a straightline basis, of the costs of anycapital improvements made by Landlord and required by any changes inapplicable laws, rules or regulations of any governmental authorityenacted after the Building was completed;
                              (l) the annual amortization over its useful life, witha reasonable salvage value on a straightline basis, of the costs of anyequipment or capital improvements made by Landlord after the Building wascompleted as a labor-saving measure or to accomplish other savings inoperating, repairing, managing or maintaining the Building, but only tothe extent of the savings;
                              (m) the annual amortization, over its useful life on astraight line basis, of the cost of any exterior window draperiesprovided by Landlord and the carpeting in the Common Areas;
                              (n) any costs for substituting work, labor, materialsor services in place of any of the above items, or for any additionalwork, labor, materials, services or improvements to comply with anygovernmental laws, rules, regulations or other requirements applicable tothe Building enacted after the Building was completed which areconsidered operating expenses under generally accepted accountingprinciples;
                              (o)     other costs reasonably necessary to maintain,operate, repair and manage the Building in a first-class mariner andcondition;
                              (p) all real property taxes on the Building, the landon which the Building is situated, and the various estates in theBuilding and a proportion of the real property taxes on the land andimprovements comprising the Parking Facilities and the Common Areasshared with other buildings in the Office Complex, based on Landlord'sreasonable allocation among the buildings using such facilities andareas;
                              (q)     all personal property taxes levied on property usedin the operation of the Building;
                              (r) all taxes of every kind and nature whatsoeverlevied or assessed in lieu of or in substitution for existing oradditional real or personal property taxes on the Building, land orpersonal property other than taxes covered by Paragraph 4.4, including,but not limited to, any charge, levy, excise or assessment uponLandlord's business of leasing the Premises or other portions of theBuilding or the Parking Facilities; and
                              (s)     the cost to Landlord of contesting the amount,validity or applicability of any of the foregoing items.
               17.17.2.        Operating Costs shall  exclude:
                              (a)     leasing commissions, costs, disbursements,attorneys' fees, accounting fees and other expenses incurred for leasing,renovating or improving space for tenants;
                              (b)     the cost of electricity or other services sold totenants for which Landlord is to be reimbursed as a charge over the rentpayable under the leases with such tenants;
                              (c)     costs incurred because Landlord or another tenantviolated the terms of any lease of the Building;
                              (d)    interest on debt or amortization payments onmortgages or deeds of trust or any other debt for borrowed money, exceptas herein expressly permitted;
                              (e) items and services for which Tenant reimbursesLandlord or pays third parties or that Landlord provides selectively toone or more tenants of the Building other than Tenant withoutreimbursement;
                              (f)     advertising and promotionalexpenses;
                              (g)     repairs or other work needed because of fire orother casualty insured against by Landlord;
                              (h)     costs incurred in operating the Parking Facilitiesexcept to the extent the cost of operating the Parking Facilities exceedsthe revenues generated from operation thereof;
                              (i)     nonrecurring costs incurred to remedy structuraldefects in the original construction materials or insulation; and
                              (j) costs incurred by Landlord for alterations that areconsidered capital improvements under generally accepted accountingprinciples except to the extent the same are expressly permitted underParagraph 17.17.1
          17.18 "Overdue Rate" means the lesser of; (a) eighteen percent(18%) per annum; or (b) the maximum rate permitted under applicableusury law.
          17.19 "Parking Charge" means the monthly amount to be paid byTenant for each parking permit issued to Tenant pursuant to Paragraph2.4, which amount is specified in the Basic Lease Provisions and subjectto increase.
          17.20 "Parking Facilities" means the parking lot(s) and parkingstructure(s) located within or adjacent to the Office Complex anddesignated by Landlord as serving the Building.
          17.21 "Premises" means the portion of the Building demised by thisLease, as designated by suite number in the Basic Lease Provisions andshown on Exhibit A to this Lease.
          17.22 "Rule and Regulations" means the rules and regulationsregulating the use of the Premises, the Common Areas, Parking Facilitiesand other portions of the Building promulgated by Landlord from time totime as provided in paragraph 5.6 of this Lease.
          17.23 "Security Deposit" means the amount specified in the BasicLease Provisions, which is to be held by Landlord to secure tenant'sperformance of its obligations under this Lease as provided in paragraph4.2
          17.24 "Scope of Work" means the Scope of Work Agreement if any,executed by Landlord and Tenant concurrently with their execution of theLease, which will de attached as Exhibit B to this Lease and willestablish the full extent of Landlord's Work in readying the Premises forTenant's occupancy hereunder.
          17.25 "Subsequent Year" means any calendaryear during the Term after the Base Year.
          17.26 "Substantial Completion" means (a) completion, as determinedin the event of a dispute by Landlord's architect in accordance with AIAstandards, of Landlord's Work except for such items a$ constitute a minordefect or deficiency which can be completed or corrected after occupancywithout causing any material interference with Tenant's use of thePremises, and (b) the issuance of a certificate of occupancy by the Cityof Emeryville or such other governmental authorization as may be requiredfor occupancy of the Premises.
          17.27 "Taking" means the taking of property or any interest thereinfor public or quasi public use by exercise of the power of eminent domainor otherwise, or a taking in the nature of inverse condemnation, with orwithout litigation, or a transfer of property or any interest thereinpursuant to an agreement entered into under threat of exercise of thepower of eminent domain.
          17.28 "Tenant Parking" means the number of permits to parkpassenger automobiles in the Parking Facilities which are to be issued toTenant pursuant to paragraph 2.4, and as specified in the Basic LeaseProvisions.
          17.29 "Tenant's Share" means the ratio that the rentable squarefootage of the Premises bears to the total rentable square footage of theBuilding. If the rentable square footage of the Premises and/or the totalrentable square footage of the Building changes, Tenant's Share shall beappropriately adjusted so that it at all times reflects the proportionwhich the rentable square footage of the Premises bears to the totalrentable square footage of the Building.
          17.30 "Term" means the term of this Lease, including any permittedextensions or renewals thereof.
**18.     MISCELLANEOUS PROVISIONS**

          18.1 Estoppel Certificates. Within ten (10) days following anywritten request Landlord may make from time to time, Tenant without anycharge therefor, shall execute, acknowledge and deliver a statementcertifying: (a) the Commencement bate of this Lease; (b) the fact thatthis Lease is unmodified and in full force and effect (or, if there havebeen modifications hereto, that this Lease is in full force and effect,as modified, and stating the date and nature of such modifications); (c)the date to which the rent and other sums payable under this Lease havebeen paid; (d) the fact that there are no current defaults under thisLease by either Landlord or Tenant except as specified in the statement;and (e) such other matters as may be reasonably requested by Landlord.Landlord and Tenant intend that any statement delivered pursuant to thisparagraph may be relied upon by a mortgagee, beneficiary, purchaser orprospective purchaser of the Building or any interest therein. Tenant'sfailure to deliver any such statement within said ten (10) day periodshall constitute a material default, arid Tenant shall indemnify and holdLandlord harmless from and against any and all liability, loss, cost,damage and expense which Landlord may sustain or incur as a result of orin connection with Tenant's failure or delay in delivering suchstatement. If Landlord elects to sell the Building or to obtain loanssecured by a lien on the Building, Tenant, promptly after demand, shallprovide to any such purchaser or lender financial statements of Tenantreasonably required by the purchaser or lender, The financial statementsso provided shall be kept confidential as to any parties other than thepurchaser or lender.
          18.2 Surrender of Premises. A voluntary or other surrender of thisLease by Tenant or the mutual cancellation of this Lease shall not work amerger and shall, at the option of Landlord, terminate all or anyexisting subleases or subtenancies, or may, at the option of Landlord,operate as an assignment to it of any or all such subleases orsubtenancies.
           18.3 Light and Air. No diminution of light, air or view by anystructure which may hereafter be erected (whether or not by Landlord)shall entitle Tenant to any reduction of rent under this Lease, result inany liability of Landlord to Tenant, or in any other way affect thisLease.
          18.4 Waiver. If either Landlord or Tenant waives the performance ofany term, covenant or condition contained in this Lease, such waivershall not be deemed to be a waiver of the term, covenant or conditionitself or a waiver of any subsequent breach of the same or any otherterm, covenant or condition contained herein. Furthermore, the acceptanceof rent by Landlord shall not constitute a waiver of any preceding breachby Tenant of any term, covenant or condition of this Lease, regardless ofLandlord's knowledge of such preceding breach at the time Landlordaccepts such rent. Failure by Landlord or Tenant to enforce any of theterms, covenants or conditions of this Lease for any length of time shallnot be deemed to waive or to decrease the right of Landlord or Tenant, asthe case may be, to insist thereafter upon strict performance by Tenantthe other party, Waiver by Landlord or Tenant of any term, covenant orcondition contained in this Lease may only be made by a written documentsigned by the party being bound.
          18.5 Attorneys' Fees, In the event that any action or proceeding(including arbitration) is brought to enforce or interpret any term,covenant or condition of this Lease on the part of Landlord or Tenant,the prevailing party in such action or proceeding (whether after trial orappeal) shall be entitled to recover from the party not prevailing itsexpenses therein, including reasonable attorneys' fees and all allowablecosts. If Landlord is made a party to any action or proceeding commencedby a third party due to any actual or alleged act or omission of Tenantor Tenant's agents, employees, contractors, invitees or subtenants,Tenant shall indemnify and hold Landlord harmless from all costs incurredin such action or proceeding, including reasonable attorneys' fees.Subject to the foregoing obligation of Tenant, if Tenant is made a partyto any action or proceeding commenced by a third party due to any actualor alleged act or omission of Landlord or Landlord's agents, employees,contractors or invitees, Landlord shall indemnify and hold Tenantharmless from all costs incurred in such action or proceeding, includingreasonable attorneys' fees. If Tenant requests Landlord's consent to,approval of or signature on any instrument or agreement which would alteror affect Landlord's legal rights and duties, Tenant shall reimburseLandlord upon demand for Landlord's reasonable attorneys' fees incurredin connection with the review and evaluation of the requested action.
          18.6 Notices. Any notice required or permitted under this Leaseshall be in writing and shall be delivered either personally or bydepositing same in the United States Mail, postage prepaid, registered orcertified, return receipt requested, addressed to the intended recipientat such party's address set forth in the Basic Lease Provisions or atsuch other address as such party has theretofore specified by writtennotice delivered in accordance with this paragraph. Any notice deliveredby mail in the manner specified in this paragraph shall be deemeddelivered on the earlier of the third day following deposit thereof inthe United States Mail or on the delivery date shown on the returnreceipt prepared in connection therewith; and any such notice specifyinga default by Tenant shall be deemed sufficient for all purposes underCalifornia Code of Civil Procedure Sections 1161 and 1162,notwithstanding the fact that such notice is not personally served onTenant or that such notice does not demand possession of the Premises asan alternative to Tenant's curing of such default.
          18.7 Merger.   Notwithstanding the acquisition (if same should occur)by the same party of the title and interests of both Landlord and Tenantunder this Lease, there shall never be a merger of the estates ofLandlord and Tenant under this Lease, but instead the separate estates,rights, duties and obligations of Landlord and Tenant, as existinghereunder, shall remain unextinguished and continue, separately, in fullforce and effect until this Lease expires or otherwise terminates inaccordance with the express provisions herein contained.
          18.8    Substituted Premises. [Intentionally deleted.]
          18.9 Headings. Words used in neuter gender include the feminine andmasculine, where applicable. If there is more than one Tenant, theobligations imposed under this Lease upon Tenant shall be joint andseveral. The headings and titles to the sections and paragraphs of thisLease are used for convenience only and shall have no effect upon theconstruction or interpretation of this Lease.
          18.10 Time And Applicable Law. Time is of the essence of this Leaseand all of its provisions. This Lease shall in all respects be governedby and interpreted in accordance with the laws of the State ofCalifornia.
          18.11 Successors And Assigns. Each conveyance by Landlord or itssuccessors in interest of Landlord's interest in the Building or thePremises prior to the expiration or termination of this Lease shall besubject to this Lease and shall relieve the grantor of all furtherliability or obligations as Landlord, except for such liability orobligations accruing prior to the date of such conveyance. If anySecurity Deposit has been given to Landlord, Landlord shall deliver suchSecurity Deposit to Landlord's successors in interest, whether suchinterest is acquired by sale, transfer, foreclosure, deed in lieu offoreclosure or otherwise. Subject to the foregoing and to the provisionsof Section 16, the terms, covenants and conditions contained herein shallbe binding upon and inure to the benefit of the heirs, successors,executors, administrators and assigns of the parties hereto.
          18.12 Entry by Landlord. Landlord and its authorized representativeshall have the right to enter the Premises: (a) to inspect the Premises;(b) to supply any service provided to Tenant hereunder: (c) to show thePremises to prospective brokers, agents, purchasers, lenders or tenants;(d) to post notices of non-responsibility, (e) to alter, improve orrepair the Premises and any other portion of the Building; and (f) toerect scaffolding and other necessary structures, where required by thework to be performed, all without reduction or abatement of rent. Tenanthereby waives any claim for damages for any injury to or interferencewith Tenant's business or quiet enjoyment of the Premises or any otherloss occasioned by such entry. Landlord shall at all times have a key tounlock all doors in and about the Premises, excluding Tenant's vaults andsafes, and Landlord shall have the right to use any means which Landlorddeems proper to open said doors in an emergency, and any such entry tothe Premises shall not under any circumstances be construed or deemed tobe a forcible or unlawful entry into the Premises or a detainer of thePremises or an eviction of Tenant from any portion of the Premises.
          18.13 Entire Agreement. This Lease, together with its exhibits,contains all the agreements of the parties hereto and supersedes anyprevious negotiations. There have been no representations made by theLandlord or understandings made between the parties other than those setforth in this Lease and its exhibits. This Lease may not be modifiedexcept by a written instrument duly executed by the parties hereto.
          18.14 Severability. If any provision of this Lease or theapplication of such provision to other persons or circumstances shall notbe affected thereby and shall be enforced to the greatest extentpermitted by law.
          18.15   Signs. Tenant shall not place or permit to be placed in orupon the Premises where visible from outside the Premises or any part ofthe Building, any signs, notices, drapes,  shutters, blinds or windowcoatings, or displays of any type without the prior written consent ofLandlord. Landlord shall consent to the location at the cost of Tenant ofa building standard sign on or near the entrance of the Premises andshall include Tenant in the Building directories located in the Building.Landlord reserves the right in Landlord's sole discretion to place andlocate on the roof and exterior of the Building and in any area of theBuilding not leased to Tenant, such signs, notices, displays and similaritems as Landlord deems appropriate in the proper operation of theBuilding,
          18.16 Execution By Landlord. The submission of this document forexamination and negotiation does not constitute an offer to lease, or areservation of, or option for, the Premises. This document becomeseffective and binding only upon execution and delivery hereof by Tenantand by Landlord, No act or omission of any employee or agent of Landlordor of Landlord's broker shall alter, change or modify any of theprovisions hereof.
          18.17 Brokers. Tenant shall hold Landlord harmless from all damages(including attorneys' fees and costs) resulting from any claims that maybe asserted against Landlord by any broker, finder, or other person withwhom Tenant has or purportedly has dealt, except the leasing agent forthe Building duly appointed by Landlord.
          18.18 Name of Building. Tenant shall not use the name of theBuilding for any purpose other than the address of the business to beconducted by Tenant in the Premises. Tenant shall not use any picture ofthe Building in its advertising, stationery or in any other manner, so asto imply that the entire Building is leased by Tenant. Landlord expresslyreserves the right at any time to change the name or street address ofthe Building without in any manner being liable to Tenant therefor.
          18.19 Nonrecordability of Lease. Tenant agrees that in no eventshall this Lease or a memorandum hereof be recorded without Landlord'sexpress prior written consent, which consent Landlord may withhold in itssole discretion.
          18.20 Construction. All provisions hereof, whether covenants orconditions, shall be deemed to be both covenants and conditions, Thedefinitions contained in this Lease shall be used to interpret the Lease.All rights and remedies of Landlord and Tenant shall, except as otherwiseexpressly provided, be cumulative and non-exclusive of any other remedyat law or in equity.
          18.21 Inability To Perform. This Lease and the obligations ofTenant hereunder shall not be affected or impaired because Landlord isunable to fulfill any of its obligations hereunder or is delayed in doingso, if such inability or delay is caused by reason of force majeure,strike, labor troubles, acts of God, acts of government, unavailabilityof materials or labor, or any other cause beyond the control of Landlord.
          18.22 Authority. If Tenant is a corporation, each individualexecuting this Lease on behalf of Tenant represents and warrants thatTenant is qualified to do business in California and that he is dulyauthorized to execute and deliver this Lease on behalf of Tenant andshall deliver appropriate certification to that effect if requested. IfTenant is a partnership, joint venture, or other unincorporatedassociation, each individual executing this Lease on behalf of Tenantrepresents and warrants that he is duly authorized to execute and deliverthis Lease on behalf of Tenant and that this Lease is binding on Tenant.Furthermore, Tenant agrees that the execution of any written consenthereunder, or any written modification or termination of this Lease, byany general partner of Tenant or any other authorized agent of Tenant,shall be binding on Tenant.
          18.23 Quiet Enjoyment. So long as Tenant is not in default underthis Lease, Tenant shall have quiet enjoyment of the Premises for theTerm, subject to all the terms and conditions of this Lease and all liensand encumbrances prior to this Lease.
**19. EXTRA PARKING PERMITS**

          Tenant, provided Tenant is not in default under this Lease, shallhave the right to utilize sixteen (1 fit extra parking permits at thethen current rate for monthly parking in the parking structure so long asthere is sufficient monthly parking available to reasonably provide forthe proportionate parking requirements of all the tenants within theBuilding. If, in Landlord's opinion, there is insufficient parking, thenLandlord reserves the right to revoke the extra parking permits issued.
**20.     LETTER OF CREDIT/SECURITY  DEPOSIT**

          Within ten (10) days after execution of this Lease, Tenant shalldeposit with Landlord cash in the amount of $1,780.35 to increase thecash portion of the Security Deposit held by Landlord to $13,233. 60, Inaddition, Tenant shall deliver to Landlord a clean, irrevocable letter ofcredit issued by a bank reasonably acceptable to Landlord in the amountof $19,209.65. Such letter of credit shall have an expiration date notless than one (1) year from the date of issuance and, should Tenant failto deliver to Landlord a renewal thereof or a new letter of credit withinthirty (30) days prior to such expiration date, Landlord shall have theright to draw down the entire letter of credit and retain the proceedsthereof as a cash Security Deposit. The letter of credit shall permitpartial drawings thereunder and shall be payable upon presentation of asight draft and a certificate from Landlord under the terms of the Leaseto draw down the funds requested in such sight draft.
**21.     RIGHT TO NEGOTIATE LEASE OF ADDITIONAL  SPACE**

          21.1 Grant of Right. During the Term of this Lease and providedTenant is not in material default under this Lease, Tenant shall have theright to negotiate (the "Negotiation Right") to lease additional officespace in the Building as such space becomes available. This NegotiationRight shall arise and may be exercised only in accordance with the termsof this section.
          21.2 Notice of Space Requirement. As Tenant requires additionalspace, Tenant shall notify Landlord in writing of its additional spacerequirements, which notice shall state the number of square feet requiredby Tenant (the "Requirement Notice"). Tenant's Negotiation Right shallbecome operative upon Landlord's receipt of Tenant's Requirement Notice;provided, however, that such Negotiation Right shell be subject to anypreexisting options, rights of refusal or rights to negotiate containedin leases with other tenants. For purposes hereof, a right of refusal orright to negotiate in another lease shall be deemed to preexist Tenant'sNegotiation Right where the same became operative prior to the dateTenant delivered its Requirement Notice for additional space as set forthin a previously delivered Requirement Notice; and such subsequent Noticeshall serve to terminate any previous Requirement Notice and Tenant'sNegotiation Right.
        27.3 Exercise of Negotiation Right. Where Tenant's Negotiation Rightis operative and not subject to any preexisting options, rights ofrefusal or rights to negotiate in other leases, the following procedureshall apply:
                         (a) At such time as office space in the Building encompassinga square footage equal to or greater than that specified in Tenant'sRequirement Notice is available for lease, Landlord shall give Tenantnotice thereof and shall specify in such notice the additional officespace which is available and the rent and other basic economic terms onwhich Landlord is willing to lease such additional office space to Tenant(the "Offer Notice"), The rent specified in the Offer Notice will beequal to the then fair market rental value for comparable premises in theBuilding.
                         (b) Tenant shall have a period of five (5) business daysafter receipt of the Offer Notice within which to notify Landlord inwriting of Tenant's exercise of the Negotiation Right. Should Tenant failto so notify Landlord within said five (5) business day period, Tenant'sNegotiation Right shall lapse and Landlord shall be free to deal with theoffice space described in the Offer Notice without regard thereto.
                         (c) if Tenant gives Landlord timely notice of Tenant'sexercise of the Negotiation Right (the "Exercise Notice"), Tenant shallspecify in its Exercise Notice (i) the amount of additional office spaceTenant desires to lease (which shall not be less than the amount statedin Tenant's Requirement Notice), (ii) whether the rent and other basiceconomic terms described in the Offer Notice are acceptable to Tenantand, if not, the rent or other basic economic terms Tenant proposes intheir place, and (iii) any additional terms or conditions Tenant desireswith respect to the lease of such additional office space. Promptlyfollowing Landlord's receipt of Tenant's Exercise Notice, the partiesshall meet to negotiate an amendment to this Lease to expand the Premisesto include the additional office space specified therein (the "ExpansionAmendment"). The Expansion Amendment shall incorporate the terms andprovisions of this Lease except insofar as the same are inconsistent withthe rent and other basic economic terms the parties have negotiatedpursuant to this section or are not reasonably applicable to suchexpansion.
                         (d) if the parties fail to mutually agree upon and execute adefinitive Expansion Amendment with in twenty (20) business days afterTenant's delivery of the Exercise Notice, Tenant's Negotiation Rightshall lapse and Landlord shall be free to deal with the office spacedescribed in Landlord's Offer Notice without regard thereto.
          21.4 Limitation of Right. Nothing in this section shall beconstrued to require Landlord to lease to Tenant any portion of any floorin the Building which would leave Landlord with a remainder of such floorthat was not commercially and economically rentable to third parties.
**22.     TERMINATION OF EXISTING LEASE**

As of the Commencement Date, Landlord shall terminate the entireexisting direct lease between Landlord and Tenant for a portion ofTenant's premises on the ninth (9th) floor of the Building dated December15, 1992, the Amendment to Lease dated April 30, 1993, the SecondAmendment to Lease dated December 21, 1993, and the Third Amendment toLease dated February 16, 1994 (collectively, "Existing Lease"),
 **TENANT:****TENANT:****WATERGATE TOWER ASSOCIATES,****SCOPUS TECHNOLOGY, INC.,**a California limitedpartnershipa CaliforniacorporationBy: /s/ F.P. Lathrop, by Sandra L. HydeBy: /s/ S. SassonIts: General Partner/Attorney-in-FactIts: Vice President, Operations
**Exhibit A**

**Drawing of Floor Plan**

**Exhibit B**

**Scope of  Work**

1. Landlord shall be responsible, at its sole cost and expense, forconstructing certain tenant improvements ("Landlord's Work") inaccordance with the final plans and specifications ("Final Plans")prepared by Carl Mehler & Associates dated as of August 9. 1994, withgeneral revisions dated August 15, 1994.
2. Any Changes to Landlord's Work from the Final Plans ("Change Orders")may be made only at Tenant's written request, approved by Landlord.Tenant shall be responsible for any delay in the Substantial Completionof Landlord's Work and any increase in the cost of Landlord's Work as aresult of such Change Orders.
3.  Tenant shall be responsible, at its sole cost and expense, for anytelephone and computer installation, including wiring, and for any othertenant improvements not included in the Final Plans.
 **WATERGATE TOWER ASSOCIATES,****SCOPUS TECHNOLOGY, INC.,**a California limitedpartnershipa CaliforniacorporationBy: /s/ F.P. Lathrop, by Sandra L. HydeBy: /s/ S. SassonIts: General Partner/Attorney-in-FactIts: Vice President, Operations