Exhibit 10.12


 


OFFICE
LEASE


 


THIS OFFICE LEASE (“Lease”) is made between SPIEKER PROPERTIES, L.P., a California
limited partnership (“Landlord”),
and BIOMEDICINES INC., a Delaware
corporation (“Tenant”), as of
February 21, 2001 (the “date of this Lease”).


 


BASIC
LEASE INFORMATION


 


PROJECT:           Watergate Office Towers


 


BUILDING:           2000 Powell Street, Tower 3


 


DESCRIPTION
OF PREMISES:  Suite
1666 (the Premises is as outlined in red on Exhibit B)


 


RENTABLE
AREA OF PREMISES: 
approximately 11,256 rentable square feet


 


PERMITTED
USE:  GENERAL OFFICE


 


SCHEDULED
TERM COMMENCEMENT DATE: 
March 1, 2001


 


SCHEDULED
INITIAL TERM:  48
months


 


SCHEDULED
EXPIRATION DATE:  February 28, 2005


 


BASE
RENT:


	
  (a) Initial Annual
  Base Rent $411,969.60

  
	
  (b) Initial
  Monthly Installment of Base Rent: $34,330.80

  
	
  (c) Subject to
  increase pursuant to Paragraph 3.1(b) as follows:

  
	
   

  	
  3/1/01
  – 2/28/02 $34,330.80 per month

  
	
   

  	
  3/1/02
  – 2/28/03 $35,681.52 per month

  
	
   

  	
  3/1/03
  – 2/29/04 $37,144.80 per month

  
	
   

  	
  3/1/04
  – 2/28/05 $38,608.08 per month

  



 


SECURITY
DEPOSIT:  $ 174,000.00


 


BASE
YEAR FOR OPERATING EXPENSES: 
Calendar Year 2001


 


TENANT’S
PROPORTIONATE SHARE OF BUILDING:  3.06%             OF PROJECT:  N/A%


 


PARKING
DENSITY:  3 spaces per
1,000 useable square feet of the Premises


 


OCCUPANCY
DENSITY:  4 persons per
1,000 rentable square feet of the Premises


 


	
  TENANT’S
  NAICS CODE:

  	
   

  	
   

  



 


	
  TENANT
  CONTACT:

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone Number:

  	
   

  	
   

  
	
   

  	
   

  	
  FAX:

  	
   

  	
   

  
						



 


	
  ADDRESSES
  FOR NOTICES:

  	
  To:  Tenant

  	
  To:  Landlord

  
	
   

  	
   

  	
   

  	
  Spieker Properties

  
	
   

  	
   

  	
   

  	
  2000 Powell Street,
  Suite 200

  
	
   

  	
  Attn:

  	
   

  	
   

  	
  Emeryville, CA 94608

  
	
   

  	
  FAX:

  	
   

  	
   

  	
  Attn: Vice President

  
	
   

  	
   

  	
  FAX: 510-594-5608

  
						



 


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  TENANT’S
  BILLING ADDRESS [If different from Notice Address]:

  	
   

  	
   

  



 


LANDLORD’S
REMITTANCE ADDRESS:  PO
Box 45587, San Francisco, CA 94123


 


GUARANTOR:    NONE


 


IN WITNESS WHEREOF,
the parties hereto have executed this Lease, consisting of the foregoing Basic
Lease Information, the following Standard Lease Provisions consisting of Paragraphs 1 through 22 (the “Standard Lease Provisions”) and Exhibits A, B, C, D, and E all of
which are incorporated herein by this reference (collectively, this “Lease”). 
In the event of any conflict between the provisions of the Basic Lease
Information and the provisions of the Standard Lease Provisions, the Standard
Lease Provisions shall control.


 


	
  “Landlord”

  	
  “Tenant”

  
	
   

  	
   

  
	
  SPIEKER
  PROPERTIES, L.P.,

  a California limited partnership,

  	
  BIOMEDICINES,
  INC.,

  a Delaware corporation

  



 


	
  By:

  	
  Spieker Properties,
  Inc.,

  a Maryland corporation, its general partner

  



 


	
  By:

  	
     /s/
  Christopher T. White

  	
   

  	
  By:

  	
     /s/
  James Ahlers

  
	
   

  	
   

  	
  Christopher T. White

  	
   

  	
   

  	
   

  
	
  Its:

  	
     Vice
  President

  	
   

  	
  Its:

  	
     Sr.
  Director Finance & Operations

  
	
   

  	
   

  	
  Vice President

  	
   

  
	
  Date:

  	
     2/23/01

  	
   

  	
  Date:

  	
   2/23/01

  
								



 


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STANDARD
LEASE PROVISIONS


 


1.             Premises.  Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord, subject to all
of the terms and conditions set forth herein, those certain premises (the “Premises”) described in the Basic Lease
Information and as outlined in red or as shown in the cross-hatched markings on
the floor plan attached hereto as Exhibit B.  The parties agree that for all purposes
hereunder the Premises shall be stipulated to contain the number of square feet
of rentable area described in the Basic Lease Information.  The Premises are located in that certain
office building (the “Building”)
whose street address is as shown in the Basic Lease Information.  The Building is located on that certain land
which is also improved with landscaping, parking facilities and other
improvements and appurtenances.  Such
land, together with all such improvements and appurtenances and the Building,
are all or part of a project which may consist of more than one building and
additional facilities, as described in the Basic Lease Information
(collectively referred to herein as the “Project”).  However, Landlord reserves the right to make
such changes, additions and/or deletions to such land, the Building and the
Project and/or the common areas and parking or other facilities thereof as it
shall determine from time to time.


 


2.             Term.


 


(a)           Unless
earlier terminated in accordance with the provisions hereof, the term of this
Lease (the “Term”) shall be as set
forth in the Basic Lease Information; provided,
however, in the event the Term Commencement Date (defined below)
occurs on a date other than the first day of a calendar month, there shall be
added to the Term the partial month (“Partial
Lease Month”) from the Term Commencement Date to (but not including)
the first day of the calendar month following the Term Commencement Date.


 


(b)           Subject
to the provisions of this Paragraph 2, the Term shall commence on the date
(the “Term Commencement Date”)
which is the earlier of the date Landlord delivers the Premises to Tenant or
the date Tenant takes possession or commences use of any portion of the
Premises for any business purpose (including moving in).  If this Lease contemplates the construction
of tenant improvements in the Premises by Landlord, Landlord shall be deemed to
have delivered the Premises to Tenant on the date determined by Landlord’s
space planner to be the date of substantial completion of the work to be
performed by Landlord (as described in the Improvement Agreement, if any,
attached hereto as Exhibit C)
(the “Improvement Agreement”).  Notwithstanding the foregoing, in the event
that Landlord is delayed in delivering the Premises by reason of any act or
omission of Tenant, the Term Commencement Date shall be (unless Tenant takes
possession or commences use of the Premises prior thereto) the date the
Premises would have been delivered by Landlord had such Tenant caused delay(s)
not occurred.  This Lease shall be a
binding contractual obligation effective upon execution hereof by Landlord and
Tenant, notwithstanding the later commencement of the Term.  Tenant acknowledges that Tenant has inspected
and accepts the Premises in their present condition, “as is”, except for tenant
improvements (if any) to be constructed by Landlord in the Premises pursuant to
the Improvement Agreement, if any.


 


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(c)           In
the event the Term Commencement Date is delayed or otherwise does not occur on
the Scheduled Term Commencement Date specified in the Basic Lease Information,
this Lease shall not be void or voidable, the Term shall not be extended
(except as provided in Paragraph 2(a)), and Landlord shall not be liable
to Tenant for any loss or damage resulting therefrom; provided that Tenant
shall not be liable for any Rent (defined below) for any period prior to the
Term Commencement Date except as may otherwise be provided in this Lease.  Landlord may deliver to Tenant Landlord’s
standard form “Start-Up Letter”
for Tenant’s acknowledgment and confirmation of the Term Commencement
Date.  Tenant shall execute and deliver
such Start-Up Letter to Landlord within five (5) days after receipt thereof,
but Tenant’s failure or refusal to do so shall not negate Tenant’s acceptance
of the Premises or affect determination of the Term Commencement Date.


 


3.             Rent and Operating Expenses.


 


3.1           Base Rent.


 


(a)           Subject
to the provisions of this Paragraph 3.1, Tenant agrees to pay during the
Term as Base Rent for the Premises the sums specified in the Basic Lease
Information (as increased from time to time as provided in the Basic Lease
Information or as may otherwise be provided in this Lease) (“Base Rent”).


 


(b)           Base
Rent shall increase as set forth in the Basic Lease Information or as may
otherwise be provided in this Lease.


 


(c)           Except
as expressly provided to the contrary herein, Base Rent shall be payable in
equal consecutive monthly installments, in advance, without deduction or
offset, commencing on the Term Commencement Date and continuing on the first
day of each calendar month thereafter. 
However, the first full monthly installment of Base Rent shall be
payable upon Tenant’s execution of this Lease. 
If the Term Commencement Date is a day other than the first day of a
calendar month, then the Rent for the Partial Lease Month (the “Partial Lease Month Rent”) shall be
prorated based on a month of 30 days. 
The Partial Lease Month Rent shall be payable by Tenant on the first day
of the calendar month next succeeding the Term Commencement Date.  Base Rent, all forms of additional rent
payable hereunder by Tenant and all other amounts, fees, payments or charges
payable hereunder by Tenant (collectively, “Additional
Rent”) shall (i) each constitute rent payable hereunder (and
shall sometimes collectively be referred to herein as “Rent”), (ii) be payable to Landlord in
lawful money of the United States when due without any prior demand therefor,
except as may be expressly provided to the contrary herein, and (iii) be
payable to Landlord at Landlord’s Remittance Address set forth in the Basic
Lease Information or to such other person or to such other place as Landlord
may from time to time designate in writing to Tenant.  Any Rent or other amounts payable to Landlord
by Tenant hereunder for any fractional month shall be prorated based on a month
of 30 days.


 


3.2           Operating Expenses.


 


(a)           Subject
to the provisions of this Lease, Tenant shall pay to Landlord pursuant to this
Paragraph 3.2 as Additional Rent an amount equal to Tenant’s Proportionate
Share (defined


 


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below) of the excess, if
any, of Operating Expenses (defined below) allocable to each Expense Year
(defined below) over Operating Expenses allocable to the Base Year (the “Base Year”) specified in the Basic Lease
Information (“Base Year Operating Expenses”).  Base Year Operating Expenses shall not
include market-wide labor-rate increases due to extraordinary circumstances,
including, but not limited to, boycotts and strikes, and utility rate increases
due to extraordinary circumstances including, but not limited to, conservation
surcharges, boycotts, embargoes or other shortages, or amortized costs relating
to capital improvements.  “Tenant’s Proportionate Share” is, subject
to the provisions of this Paragraph 3.2, the percentage number
(representing the Premises’ share of the Building and the Project) set forth in
the Basic Lease Information.  An “Expense Year” is any calendar year after
the Base Year any portion of which falls within the Term.


 


(b)           “Operating Expenses” means all costs,
expenses and obligations incurred or payable by Landlord because of or in
connection with the operation, ownership, repair, replacement, restoration,
management or maintenance of the Project during or allocable to the Base Year
or an Expense Year (as applicable) during the Term (other than costs, expenses
or obligations specifically attributable to Tenant or other tenants of the
Building or Project), all as determined by sound accounting principles
reasonably selected by Landlord and consistently applied, including without
limitation the following:


 


(i)            All
property taxes, assessments, charges or impositions and other similar
governmental ad valorem or other charges levied on or attributable to the
Project (including personal and real property contained therein) or its
ownership, operation or transfer, and all taxes, charges, assessments or
similar impositions imposed in lieu or substitution (partially or totally) of
the same (collectively, “Taxes”).  “Taxes”
shall also include (A) all taxes, assessments, levies, charges or
impositions on any interest of Landlord in the Project, the Premises or in this
Lease, or on the occupancy or use of space in the Project or the Premises; or
on the gross or net rentals or income from the Project, including, without
limitation, any gross income tax, excise tax, sales tax or gross receipts tax
levied by any federal, state or local governmental entity with respect to the
receipt of Rent; or (B) any possessory taxes charged or levied in lieu of
real estate taxes; and


 


(ii)           The
cost of all utilities, supplies, equipment, tools, materials, service
contracts, janitorial services, waste and refuse disposal, landscaping, and
insurance (with the nature and extent of such insurance to be carried by
Landlord to be determined by Landlord in its sole and absolute discretion);
insurance deductibles; compensation and benefits of all persons who perform
services connected with the operation, management, maintenance or repair of the
Project; personal property taxes on and maintenance and repair of equipment and
other personal property; costs and fees for administration and management of
the Project, whether by Landlord or by an independent contractor, and other
management office operational expenses; rental expenses for or a reasonable
allowance for depreciation of, personal property used in the operation,
management, maintenance or repair of the Project, license, permit and
inspection fees; and all inspections, activities, alterations, improvements or
other matters required by any governmental or quasi-governmental authority or
by Regulations (defined below), for any reason, including, without limitation,
capital improvements, whether capitalized or not; all capital additions,
repairs, replacements and improvements made to the Project or any portion
thereof by Landlord (A) of a personal property nature and related to the
operation, repair,


 


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maintenance or
replacement of systems, facilities, equipment or components of (or which
service) the Project or portions thereof, (B) required or provided in
connection with any existing or future applicable municipal, state, federal or
other governmental statutes, rules, requirements, regulations, laws, standards,
orders or ordinances including, without limitation, zoning ordinances and
regulations, and covenants, easements and restrictions of record (collectively,
“Regulations”), (C) which are
designed to improve the operating efficiency of the Project, or
(D) determined by Landlord to be required to keep pace or be consistent
with safety or health advances or improvements (with such capital costs to be
amortized over such periods as Landlord shall determine with a return on
capital at such rate as would have been paid by Landlord on funds borrowed for
the purpose of constructing such capital items); common area repair,
resurfacing, replacement, operation and maintenance; security systems or
services, if any, deemed appropriate by Landlord (but without obligation to
provide the same); and any other cost or expense incurred or payable by Landlord
in connection with the operation, ownership, repair, replacement, restoration,
management or maintenance of the Project.


 


(iii)          Notwithstanding
anything in this Lease to the contrary, in no event shall the component of
Operating Expenses for any Expense Year consisting of electrical costs be less
than the component of Base Year Operating Expenses consisting of electrical
costs.


 


(c)           Variable
items of Operating Expenses (e.g.,
expenses that are affected by variations in occupancy levels) for the Base Year
and each Expense Year during which actual occupancy of the Project is less than
ninety-five percent (95%) of the rentable area of the Project shall be
appropriately adjusted, in accordance with sound accounting principles, to
reflect ninety-five percent (95%) occupancy of the existing rentable area of
the Project during such period.


 


(d)           Prior
to or shortly following the commencement of (and from time to time during) each
Expense Year of the Term following the Term Commencement Date, Landlord shall have
the right to give to Tenant a written estimate of Tenant’s Proportionate Share
of the projected excess, if any, of the Operating Expenses for the Project for
such year over the Base Year Operating Expenses.  Commencing with the fast day of the calendar
month following the month in which such estimate was delivered to Tenant,
Tenant shall pay such estimated amount (less amounts, if any, previously paid
toward such excess for such year) to Landlord in equal monthly installments
over the remainder of such calendar year, in advance on the first day of each
month during such year (or remaining months, if less than all of the year
remains).  Subject to the provisions of
this Lease, Landlord shall endeavor to furnish to Tenant within a reasonable
period after the end of each Expense Year, a statement (a “Reconciliation Statement”) indicating in
reasonable detail the excess, if any, of Operating Expenses allocable to such
Expense Year over Base Year Operating Expenses and the parties shall, within
thirty (30) days thereafter, make any payment or allowance necessary to adjust
Tenant’s estimated payments to Tenant’s actual share of such excess as
indicated by such annual Reconciliation Statement.


 


(e)           Tenant
shall pay ten (10) days before delinquency all taxes and assessments levied
against any personal property or trade fixtures of Tenant in or about the
Premises.  If any such taxes or
assessments are levied against Landlord or Landlord’s property or if the
assessed value of the Project is increased by the inclusion therein of a value
placed upon such personal property or trade fixtures, Tenant shall, within ten
(10) days of demand, reimburse Landlord for


 


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the taxes and assessments
so levied against Landlord, or any such taxes, levies and assessments resulting
from such increase in assessed value.


 


(f)            Any
delay or failure of Landlord in (i) delivering any estimate or statement
described in this Paragraph 3.2, or (ii) computing or billing Tenant’s
Proportionate Share of excess Operating Expenses shall not (A) constitute
a waiver of its right to subsequently deliver such estimate or statement or
require any increase in Rent contemplated by this Paragraph 3.2, or
(B) in any way waive or impair the continuing obligations of Tenant under
this Paragraph 3.2.  Provided that
Tenant is not then in default under this Lease, subject to compliance with
Landlord’s standard procedures for the same, Tenant shall have the right, upon
the condition that Tenant shall first pay to Landlord the amount in dispute, to
have independent certified public accountants of national standing (who are not
compensated on a contingency basis) of Tenant’s selection (and subject to
Landlord’s reasonable approval) review Landlord’s Operating Expense books and
records relating to the Expense Year subject to a particular Reconciliation
Statement during the sixty-day period following delivery to Tenant of the
Reconciliation Statement for such Expense Year. 
If such review discloses a liability for a refund in excess of ten
percent (10%) of Tenant’s Proportionate Share of Operating Expenses previously
reported, the cost of such review shall be borne by Landlord; otherwise such
cost shall be borne by Tenant.  Tenant
waives the right to dispute or contest, and shall have no right to dispute or
contest, any matter relating to the calculation of Operating Expenses or other
forms of Rent under this Paragraph 3.2 with respect to each Expense Year
for which a Reconciliation Statement is given to Tenant if no claim or dispute
with respect thereto is asserted by Tenant in writing to Landlord within sixty
(60) days of delivery to Tenant of the original or most recent Reconciliation
Statement with respect thereto.


 


4.             Delinquent Payment: 
Handling Charges.  In
the event Tenant is more than three (3) days late in paying any amount of Rent
or any other payment due under this Lease, Tenant shall pay Landlord, within
ten (10) days of Landlord’s written demand therefor, a late charge equal to
five percent (5%) of the delinquent amount, or $150.00, whichever amount is
greater.  In addition,
any amount due from Tenant to Landlord hereunder which is not paid within ten
(10) days of the date due shall bear interest at an annual rate (the “Default
Rate”) equal to twelve percent (12%).


 


5.             Security Deposit. 
Contemporaneously with the execution of this Lease, Tenant
shall pay to Landlord the amount of Security Deposit (the “Security Deposit”) specified in the Basic
Lease Information, which shall be held by Landlord to secure Tenant’s performance
of its obligations under this Lease.  Landlord is hereby granted a
security interest in the Security Deposit in accordance with applicable
provisions of the California Commercial Code.  The Security Deposit is not an
advance payment of Rent or a measure or limit of Landlord’s damages upon a
default by Tenant or an Event of Default (defined below).  If
Tenant defaults with respect to any provision of this Lease, Landlord may, but
shall not be required to, use, apply or retain all or any part of the Security
Deposit (a) for the payment of any Rent or any other sum in default,
(b) for the payment of any other amount which Landlord may spend or become
obligated to spend by reason of such default by Tenant, and (c) to
compensate Landlord for any other loss or damage which Landlord may suffer by
reason of such default by Tenant.  If any portion of the Security
Deposit is so used or applied, Tenant shall, within ten (10) days after demand
therefor by Landlord, deposit with Landlord cash in an amount sufficient to
restore the Security Deposit to the amount required to be maintained by Tenant
hereunder.  Within a reasonable period


 


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following expiration or
the sooner termination of this Lease, provided that Tenant has performed all of
its obligations hereunder, Landlord shall return to Tenant the remaining
portion of the Security Deposit.  The Security Deposit may be
commingled by Landlord with Landlord’s other funds, and no interest shall be
paid thereon. 
If Landlord transfers its interest in the Premises, then
Landlord may assign the Security Deposit to the transferee and thereafter
Landlord shall have no further liability or obligation for the return of the
Security Deposit.  Tenant hereby waives the provisions
of Section 1950.7 of the California Civil Code, and all other provisions of any
Regulations, now or hereinafter in force, which restricts the amount or types
of claim that a landlord may make upon a security deposit or imposes upon a
landlord (or its successors) any obligation with respect to the handling or
return of security deposits.


 


A.            Letter of Credit.


 


(1)           Delivery of Letter of Credit.  Tenant may, within thirty (30)
days after execution of this Lease, replace the cash Security Deposit with an
unconditional, irrevocable letter
of credit (“LOC”) in the amount
specified for the Security Deposit in the Basic Lease Information, as it may be
increased as provided in this Lease (the “LOC
Amount”) for an initial term of the LOC of one (1) year and thereafter
shall renew automatically from year to year through the expiration date of this
Lease or any extension thereto.  The LOC
shall he in a form acceptable to Landlord and shall he issued by an LOC bank
selected by Tenant and acceptable to Landlord. 
The LOC shall survive termination of this Lease.  An LOC bank is a bank that accepts deposits,
maintains accounts, has a local office that will negotiate a letter of credit,
and the deposits of which are insured by the Federal Deposit Insurance
Corporation.  Tenant shall pay all
expenses, points, or fees incurred by Tenant in obtaining the LOC.  The LOC shall not he mortgaged, assigned or
encumbered in any manner whatsoever by Tenant without the prior written consent
of Landlord.  Tenant acknowledges that
Landlord has the right to transfer or mortgage its interest in the Project, the
Building and in this Lease and Tenant agrees that in the event of any such
transfer or mortgage, Landlord shall have the right to transfer or assign the
LOC and/or the LOC Security Deposit (as defined below) to the transferee or
mortgagee, and in the event of such transfer, Tenant shall look solely to such
transferee or mortgagee for the return of the LOC and/or the LOC Security
Deposit.  Tenant shall, within ten (10)
business days of request by Landlord, execute such further instruments or
assurances as Landlord may reasonably deem necessary to evidence or confirm
Landlord’s transfer or assignment of the LOC Security Deposit and/or the LOC to
such transferee or mortgagee.


 


(2)           Replacement of Letter of Credit.  Tenant may, from time to time,
replace any existing LOC with a new LOC if the new LOC (a) becomes
effective at least thirty (30) days before expiration of the LOC, that it
replaces; (b) is in the required LOC amount; (c) is issued by an LOC
bank acceptable to Landlord; and (d) otherwise complies with the
requirements of this Paragraph A.


 


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(3)           Landlord’s Right to Draw on Letter of Credit.  The LOC shall be held by
Landlord as security for the faithful performance by Tenant of all the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant
during the Tease Term.  The LOC shall not
he mortgaged, assigned or encumbered in any manner whatsoever by Tenant without
the prior written consent of Landlord. 
Landlord shall hold the LOC as security for the performance of Tenant’s
obligations under this Lease.  If, after
notice and failure to cure within any applicable period provided in this Lease,
Tenant defaults on any provision of this Lease, Landlord may, without prejudice
to any other remedy it has, draw on all or any portion of the LOC necessary to
(a) pay Rent or other sum in default; (b) pay or reimburse Landlord
for any amount that Landlord may spend or become obligated to spend in
exercising Landlord’s rights under Paragraph 17 (Remedies); and/or
(c) compensate Landlord for any expense, loss, or damage that Landlord may
suffer because of Tenant’s default.  The
use, application or retention of the LOC, or any portion thereof, by Landlord
shall not prevent Landlord from exercising any other right or remedy provided
by the Lease or by law, it being intended that Landlord shall not first be
required to proceed against the LOC and shall not operate as a limitation on any
recovery to which landlord may otherwise be entitled.  If Tenant fails to renew or replace the LOC
at least thirty (30) days before its expiration, Landlord may, without
prejudice to any other remedy it has, draw on the entire amount of the LOC.


 


(4)           LOC Security Deposit. 
Any amount of the LOC that is drawn on by Landlord but not
applied by Landlord shall be held by Landlord as a security deposit (the “LOC Security Deposit”) in accordance with
Paragraph 5 of this Lease.


 


(5)           Restoration of Letter of Credit and LOC Security
Deposit.  If Landlord draws
on all or any portion of the LOC and/or applies all or any portion of such
draw, Tenant shall, within five
(5) business days after demand by Landlord, either (a) deposit cash with
Landlord in an amount that, when added to the amount remaining under the LOC
and the amount of any LOC Security Deposit, shall equal the LOC Amount then
required under this Paragraph 5; or (b) reinstate the LOC to the full
LOC Amount, and Tenant’s failure to do so shall be a default under this Lease.


 


6.             Landlord’s Obligations.


 


6.1           Services.  Subject
to the provisions of this Lease, Landlord shall furnish to Tenant during the
Term (a) city or utility company water at those points of supply provided
for general use of the tenants of the Building; (b) subject to mandatory
and voluntary Regulations, heating and air conditioning during ordinary
business hours of generally recognized business days designated by Landlord
(which in any event shall not include Saturdays, Sundays or legal holidays) (“Business Hours”) for the Building at such
temperatures and in such amounts as Landlord reasonably determines is
appropriate for normal comfort for normal office use in the


 


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Premises;
(c) janitorial services to the Premises on weekdays, other than on legal
holidays, for Building-standard installations; (d) nonexclusive passenger
elevator service; and (e) adequate electrical current during such Business
Hours for equipment that does not require more than 110 volts and whose
electrical energy consumption does not exceed normal office usage in a premises
of the size of the Premises, as determined by Landlord. 
If Tenant desires any of the services specified in
this Paragraph 6.1 at any time other than during Business Hours, then
subject to such nondiscriminatory conditions and standards as Landlord shall
apply to the same, upon the written request of Tenant, such services shall be
supplied to Tenant in accordance with Landlord’s customary procedures for the
Building, including such advance request deadlines as Landlord shall require
from time to time, and Tenant shall pay to Landlord Landlord’s then customary
charge for such services within ten (10) days after Landlord has delivered to
Tenant an invoice therefor.  Landlord
reserves the right to change the supplier or provider of any such service from
time to time.  Tenant shall
not have the right to obtain any such service for the Premises directly from a
supplier or provider of such service except as provided in Paragraph 6.4
below.


 


6.2           Excess Utility Use. 
Landlord shall not be required to furnish electrical current
for, and Tenant shall not install or use, without Landlord’s prior written
consent, any equipment (a) that requires more than 110 volts, (b) whose
operation is in excess of, or inconsistent with, the capacity of the Building
(or existing feeders and risers to, or wiring in, the Premises) or
(c) whose electrical energy consumption exceeds normal office usage of up
to three (3) watts of connected load per usable square foot (“Standard Usage”).  Subject to the
provisions of this Paragraph 6.2, if Tenant’s consumption of electricity
exceeds the electricity to be provided by Landlord above or Standard Usage
(which shall be determined by separate metering to be installed at Tenant’s
expense or by such other method as Landlord shall reasonably select), Tenant
shall pay to Landlord Landlord’s then customary charge for such excess
consumption within ten (10) days after Landlord has delivered to Tenant an
invoice therefor.


 


6.3           Restoration of Services.  Following receipt of Tenant’s
request to do so, Landlord shall use good faith efforts to restore any service
specifically to be provided under Paragraph 6.1 that becomes unavailable
and which is in Landlord’s reasonable control to restore; provided, however, that in no case shall
the unavailability of such services or any other service (or any diminution in
the quality or quantity thereof) or any interference in Tenant’s business
operations within the Premises render Landlord liable to Tenant or any person
using or occupying the Premises under or through Tenant (including, without
limitation, any contractor, employee, agent, invitee or visitor of Tenant)
(each, a “Tenant Party”) for any
damages of any nature whatsoever caused thereby, constitute a constructive
eviction of Tenant, constitute a breach of any implied warranty by Landlord, or
entitle Tenant to any abatement of Tenant’s rental obligations hereunder.


 


6.4           Telecommunications Services.  Tenant may contract separately
with providers of telecommunications or cellular products, systems or services
for the Premises.  Even
though such products, systems or services may be installed or provided by such
providers in the Building, in consideration for Landlord’s permitting such
providers to provide such services to Tenant, Tenant agrees that Landlord and
the Landlord Indemnitees (defined below) shall in no event be liable to Tenant
or any Tenant Party for any damages of any nature whatsoever arising out of or relating
to the products, systems or services provided by such providers (or any
failure,


 


8





















 


interruption, defect in
or loss of the same) or any acts or omissions of such providers in connection
with the same or any interference in Tenant’s business caused thereby.  Tenant
waives and releases all rights and remedies against Landlord and the Landlord
Indemnitees that are inconsistent with the foregoing.


 


7.             Improvements, Alterations, Repairs and Maintenance.


 


7.1           Improvements; Alterations.  Any alterations, additions,
deletions, modifications or utility installations in, of or to the improvements
contained within the Premises (collectively, “Alteration”)
shall be installed at Tenant’s expense and only in accordance with detailed
plans and specifications, construction methods, and all appropriate permits and
licenses, all of which have been previously submitted to and approved in
writing by Landlord, and by a professionally qualified and licensed contractor
and subcontractors approved by Landlord.  No
Alterations in or to the Premises may be made without (a) Landlord’s prior
written consent and (b) compliance with such nondiscriminatory
requirements and construction regulations concerning such Alterations as
Landlord may impose from time to time. 
Landlord will not be deemed to unreasonably withhold its consent to any
Alteration that violates Regulations, may affect or be incompatible with the
Building’s structure or its HVAC, plumbing, telecommunications, elevator, life-safety,
electrical, mechanical or other basic systems, or the appearance of the
interior common areas or exterior of the Project, or which may interfere with
the use or occupancy of any other portion of the Project.  All Alterations made in or upon the Premises
shall, (i) at Landlord’s option, either be removed by Tenant prior to the
end of the Term (and Tenant shall restore the portion of the Premises affected
to its condition existing immediately prior to such Alteration), or shall
remain on the Premises at the end of the Term, (ii) be constructed,
maintained, insured and used by Tenant, at its risk and expense, in a
first-class, good and workmanlike manner, and in accordance with all
Regulations, and (iii) shall be subject to payment of Landlord’s standard
alterations supervision fee.  If any
Alteration made or initiated by Tenant or the removal thereof shall cause,
trigger or result in any portion of the Project outside of the Premises, any
portion of the Building’s shell and core improvements (including restrooms, if
any) within the Premises, or any Building system inside or outside of the
Premises being required by any governmental authority to be altered, improved
or removed, or may otherwise potentially affect such portions of the Project or
any other tenants of the Project, Landlord shall have the option (but not the
obligation) of performing the same at Tenant’s expense, in which case Tenant
shall pay to Landlord (within ten (10) days of Landlord’s written demand) in
advance Landlord’s reasonable estimate of the cost of such work, and any actual
costs of such work in excess of Landlord’s estimate, plus an administrative
charge of fifteen percent (15%) thereof. 
At least ten (10) days before beginning construction of any Alteration,
Tenant shall give Landlord written notice of the expected commencement date of
that construction to permit Landlord to post and record a notice of
non-responsibility.  Upon substantial
completion of construction, if the law so provides, Tenant shall cause a timely
notice of completion to be recorded in the office of the recorder of the county
in which the Building is located.


 


7.2           Repairs and Maintenance.  Tenant shall maintain at all times
during the Term the Premises and all portions and components of the
improvements and systems contained therein in a first-class, good, clean, safe,
and operable condition, and shall not permit or allow to remain any waste or
damage to any portion of the Premises.  Tenant
shall repair or replace, as


 


9





















 


needed, subject to
Landlord’s direction and supervision, any damage to the Building or the Project
caused by Tenant or any Tenant Party.  If
any such damage occurs outside of the Premises or relates to any Building
system, or if Tenant fails to perform Tenant’s obligations under this
Paragraph 7.2 or under any other paragraph of this Lease within ten (10)
days after written notice from Landlord (except in the case of an emergency, in
which case no notice shall be required), then Landlord may elect to perform
such obligations and repair such damage itself at Tenant’s expense.  The cost of all repair or
replacement work performed by Landlord under this Paragraph 7.2, plus an
administrative charge of fifteen percent (15%) of such cost, shall be paid by
Tenant to Landlord within ten (10) days of receipt of Landlord’s invoice
therefor as Additional Rent.  Tenant
hereby waives all common law and statutory rights or provisions inconsistent
herewith, whether now or hereinafter in effect (including, without limitation,
Sections 1941, 1941.1, and 1941.2 of the California Civil Code, as amended from
time to time).  Landlord
shall use reasonable efforts to maintain the common areas of the Project at all
times during the Term with the cost thereof constituting an Operating Expense
under Paragraph 3.2.


 


7.3           Mechanic’s Liens. 
Tenant shall not cause, suffer or permit any mechanic’s or
materialman’s lien, claim, or stop notice to be filed or asserted against the
Premises, the Building or any funds of Landlord for any work performed,
materials furnished, or obligation incurred by or at the request of Tenant or
any Tenant Party.  If
any such lien, claim or notice is filed or asserted, then Tenant shall, within
ten (10) days after Landlord has delivered notice of the same to Tenant, either
(a) pay and satisfy in full the amount of (and eliminate of record) the
lien, claim or notice or (b) diligently contest the same and deliver to
Landlord a bond or other security therefor in substance and amount (and issued
by an issuer) satisfactory to Landlord.


 


8.             Use.  Tenant
shall continuously occupy and use the Premises only for general office use or
uses incidental thereto, all of which shall be consistent with the standards of
a first class office project (the “Permitted
Use”) and shall comply, at Tenant’s expense, with all Regulations
relating to the use, condition, alteration, improvement, access to, and
occupancy of the Premises, including without limitation, Regulations relating
to Hazardous Materials (defined below).  Should
any Regulation now or hereafter be imposed on Tenant or Landlord by any
governmental body relating to the use or occupancy of the Premises or the
Project common areas by Tenant or any Tenant Party or concerning occupational,
health or safety standards for employers, employees, or tenants, then Tenant
agrees, at its sole cost and expense, to comply promptly with such Regulations
if such Regulations relate to anything within the Premises or if compliance
with such Regulations is within the control of Tenant and applies to an area
outside of the Premises.  Tenant
shall conduct its business and shall cause each Tenant Party to act in such a
manner as to (a) not release or permit the release of any Hazardous
Material in, under, on or about the Project in violation of any Regulations,
(b) use or store any Hazardous Materials (other than incidental amounts of
cleaning and office supplies) in or about the Premises or (c) not create
or permit any nuisance or unreasonable interference with or disturbance of
other tenants of the Project or Landlord in its management of the Project or
(d) not create any occupancy density in the Premises or parking density
with respect to Tenant and any Tenant Party at the Project greater than those
specified in the Basic Lease Information.  “Hazardous Material” means any hazardous,
explosive, radioactive or toxic substance, material or waste which is or
becomes regulated by any local, state or federal governmental authority or
agency, including, without limitation, any material or substance which is
(i) defined or listed as a “hazardous waste,” “extremely hazardous waste,”
“restricted hazardous waste,” “hazardous substance,” “hazardous


 


10


















 


material,” “pollutant” or
“contaminant” under any Regulation, (ii) a flammable explosive,
(iii) a radioactive material, (iv) a polychlorinated biphenyl,
(v) asbestos or asbestos containing material, or (vi) a carcinogen.


 


9.             Assignment and Subletting.


 


9.1           Transfers; Consent. 
Tenant shall not, without the prior written consent of
Landlord, (a) assign, transfer, mortgage, hypothecate, or encumber this
Lease or any estate or interest herein, whether directly, indirectly or by
operation of law, (b) permit any other entity to become a Tenant hereunder
by merger, consolidation, or other reorganization, (c) if Tenant is a
corporation, partnership, limited liability company, limited liability
partnership, trust, association or other business entity (other than a corporation
whose stock is publicly traded), permit, directly or indirectly, the transfer
of any ownership interest in Tenant so as to result in (i) a change in the
current control of Tenant, (ii) a transfer of twenty-five percent (25%) or
more in the aggregate in any twelve (12) month period in the beneficial
ownership of such entity or (iii) a transfer of all or substantially all
of the assets of Tenant, (d) sublet any portion of the Premises, or
(e) grant any license, concession, or other right of occupancy of or with
respect to any portion of the Premises, or (f) permit the use of the
Premises by any party other than Tenant or a Tenant Party (each of the events
listed in this Paragraph 9.1 being referred to herein as a “Transfer”). 
If Tenant requests Landlord’s consent to any Transfer,
then at least twenty (20) business days prior to the effective date of the
proposed Transfer, Tenant shall provide Landlord with a written description of
all terms and conditions of the proposed Transfer and all consideration
therefor (including a calculation of the Transfer Profits described below),
copies of the proposed documentation, and the following information relating to
the proposed transferee:  name and address; information
reasonably satisfactory to Landlord concerning the proposed transferee’s
business and business history; its proposed use of the Premises; banking,
financial, and other credit information; and general references sufficient to
enable Landlord to determine the proposed transferee’s creditworthiness and
character.  Landlord shall
not unreasonably withhold its consent to any assignment or subletting of the
Premises, provided that the parties agree that it shall be reasonable for
Landlord to withhold any such consent if, without limitation, Landlord determines
in good faith that (A) the proposed transferee is not of a reasonable
financial standing or is not creditworthy, (B) the proposed transferee is
a governmental agency, (C) the proposed transferee, or any affiliate
thereof, is then an occupant in the Project or has engaged in discussions with
Landlord concerning a lease of direct space in the Project, (D) the
proposed Transfer would result in a breach of any obligation of Landlord or
permit any other tenant in the Project to terminate or modify its lease,
(E) there is then in effect an uncured Event of Default, (F) the
Transfer would increase the occupancy density or parking density of the Project
or any portion thereof, (G) the Transfer would result in an undesirable
tenant mix for the Project, as determined in good faith by Landlord,
(H) the proposed transferee does not enjoy a good reputation, as a
business or as a tenant; or (I) any guarantor of the Lease does not
consent to such Transfer in a form satisfactory to Landlord.  Any Transfer made without
Landlord’s consent shall be void and, at Landlord’s election, shall constitute
an Event of Default by Tenant.  Tenant
shall also, within ten (10) days of written demand therefor, pay to Landlord
$500 as a review fee for each Transfer request, and reimburse Landlord for its
reasonable attorneys’ fees and all other costs incurred in connection with
considering any request for consent to a proposed Transfer.  If Landlord consents to a
proposed Transfer, then the proposed transferee shall deliver to Landlord
Landlord’s standard form transfer consent and agreement whereby the proposed
transferee


 


11





















 


expressly assumes the
Tenant’s obligations hereunder.  Landlord’s
consent to a Transfer shall not release Tenant from its obligations under this
Lease (or any guarantor of this Lease of its obligations with respect thereto),
but rather Tenant and its transferee shall be jointly and severally liable for
all obligations under this Lease allocable to the space subject to such
Transfer.  Landlord’s
consent to any Transfer shall not waive Landlord’s rights as to any subsequent
Transfers.  In the event of
any claim by Tenant that Landlord has breached its obligations under this
Paragraph 9.1, Tenant’s remedies shall be limited to recovery of its
out-of-pocket damages and injunctive relief.


 


9.2           Cancellation and Recapture.  Notwithstanding
Paragraph 9.1, Landlord may (but shall not be obligated to), within ten
(10) business days after submission of Tenant’s written request for Landlord’s
consent to an assignment or subletting, cancel this Lease as to the portion of
the Premises proposed to be sublet or subject to an assignment of this Lease (“Transfer Space’) as of the date such
proposed Transfer is proposed to be effective and, thereafter, Landlord may
lease such portion of the Premises to the prospective transferee (or to any
other person or entity or not at all) without liability to Tenant.  If Landlord shall not
cancel this Lease within such ten (10) business day period and notwithstanding
any Landlord consent to the proposed Transfer, Tenant shall pay to Landlord,
immediately upon receipt thereof, the entire excess (“Transfer Profits”) of all compensation and
other consideration paid to or for the benefit of Tenant (or any affiliate
thereof) for the Transfer in excess of Base Rent and Additional Rent payable by
Tenant hereunder (with respect to the Transfer Space) during the remainder of
the Term (after straight-line amortization of any reasonable brokerage
commissions and tenant improvement costs paid by Tenant in connection with the
Transfer over the term of the Transfer).  In
any assignment or subletting undertaken by Tenant, Tenant shall diligently seek
to obtain the maximum rental amount available in the marketplace for comparable
space available for primary leasing.


 


10.           Insurance, Waivers, Subrogation and Indemnity.


 


10.1         Insurance.  Tenant
shall maintain throughout the Term each of the insurance policies described on Exhibit D attached hereto and shall
otherwise comply with the obligations and requirements provided on Exhibit D.


 


10.2         Waiver of Subrogation. 
Landlord and Tenant each waives any claim, loss or cost it
might have against the other for any injury to or death of any person or
persons, or damage to or theft, destruction, loss, or loss of use of any
property (a “Loss”), to the extent
the same is insured against (or is required to be insured against under the
terms hereof) under any “all risk” property damage insurance policy covering
the Building, the Premises, Landlord’s or Tenant’s fixtures, personal property,
leasehold improvements, or business, regardless of whether the negligence of
the other party caused such Loss.


 


10.3         Indemnity.  Subject
to Paragraph 10.2, Tenant shall indemnify, defend and hold Landlord,
Spieker Properties, Inc., and each of their respective directors, shareholders,
partners, lenders, members, managers, contractors, affiliates and employees
(collectively, “Landlord Indemnitees”)
from and against all claims, demands, proceedings, losses, obligations,
liabilities, causes of action, suits, judgments, damages, penalties, costs and
expenses (including, without limitation, reasonable attorneys’ fees and court
costs) arising from or asserted in connection with


 


12





















 


the use or occupancy of
the Premises by Tenant or any Tenant Party, including, without limitation, by
reason of any release of any Hazardous Materials by Tenant or any Tenant Party
in, under, on, or about the Project, or any negligence or misconduct of Tenant
or of any Tenant Party in or about the Premises, or Tenants breach of any of
its covenants under this Lease, except in each case to the extent arising from
the gross negligence or willful misconduct of Landlord or any Landlord Indemnitee.  Except to the extent
expressly provided in this Lease, Tenant hereby waives all claims against and
releases Landlord and each Landlord Indemnitee for any injury to or death of
persons, damage to property or business loss in any manner related to (i) Tenant’s
use and occupancy of the Premises, (ii) acts of God, (iii) acts of
third parties, or (iv) any matter outside of the reasonable control of
Landlord.  This
Paragraph 10.3 shall survive termination or expiration of this Lease.


 


11.           Subordination; Attornment.


 


11.1         Subordination.  This
Lease is subject and subordinate to all present and future ground or master
leases of the Project and to the lien of all mortgages or deeds of trust
(collectively, “Security Instruments”)
now or hereafter encumbering the Project, if any, and to all renewals,
extensions, modifications, consolidations and replacements thereof, and to all
advances made or hereafter to be made upon the security of any such Security
Instruments, unless the holders of any such mortgages or deeds of trust, or the
lessors under such ground or master leases (such holders and lessors are
sometimes collectively referred to herein as “Holders”)
require in writing that this Lease be superior thereto. 
Notwithstanding any provision of this Paragraph 11
to the contrary, any Holder of any Security Instrument may at any time
subordinate the lien of its Security Instrument to this Lease without obtaining
Tenants consent by giving Tenant written notice of such subordination, in which
event this Lease shall be deemed to be senior to the Security Instrument in
question.  Tenant shall,
within fifteen (15) days of request to do so by Landlord, execute, acknowledge
and deliver to Landlord such further instruments or assurances as Landlord may
deem necessary or appropriate to evidence or confirm the subordination or
superiority of this Lease to any such Security Instrument; provided, however, that at the request of
Tenant made within five (5) days of any such Landlord request, Landlord shall
use commercially reasonable efforts to obtain for the benefit of Tenant such
Holder’s standard nondisturbance agreement. 
Tenant hereby irrevocably authorizes Landlord to
execute and deliver in the name of Tenant any such instrument or instruments if
Tenant fails to do so within said fifteen (15) day period.


 


11.2         Attornment.  Tenant
covenants and agrees that in the event that any proceedings are brought for the
foreclosure of any mortgage or deed of trust, or if any ground or master lease
is terminated, it shall attorn, without any deductions or set-offs whatsoever,
to the purchaser upon any such foreclosure sale, or to the lessor of such
ground or master lease, as the case may be, if so requested to do so by such
purchaser or lessor, and to recognize such purchaser or lessor as “Landlord”
under this Lease.  If
requested, Tenant shall enter into a new lease with that successor on the same
terms and conditions as are contained in this Lease (for the unexpired portion
of the Term then remaining).


 


12.           Rules and Regulations. 
Tenant shall comply, and shall cause each Tenant Party to
comply, with the Rules and Regulations of the Building which are attached
hereto as Exhibit A,


 


13





















 


and all such
nondiscriminatory modifications, additions, deletions and amendments thereto as
Landlord shall adopt in good faith from time to time.


 


13.           Condemnation.  If
the entire Project or Premises are taken by right of eminent domain or conveyed
by Landlord in lieu thereof (a “Taking”),
this Lease shall terminate as of the date of the Taking. 
If any part of the Project becomes subject to a Taking
and such Taking will prevent Tenant from conducting its business in the
Premises in a manner reasonably comparable to that conducted immediately before
such Taking for a period of more than one hundred eighty (180) days, then
Tenant may terminate this Lease as of the date of such Taking by giving written
notice to Landlord within thirty (30) days after the Taking, and all Rent paid
or payable hereunder shall be apportioned between Landlord and Tenant as of the
date of such Taking.  If
any material portion, but less than all, of the Project, Building or the
Premises becomes subject to a Taking, or if Landlord is required to pay any of
the proceeds received for a Taking to any Holder of any Security Instrument,
then Landlord may terminate this Lease by delivering written notice thereof to
Tenant within thirty (30) days after such Taking, and all Rent paid or payable
hereunder shall be apportioned between Landlord and Tenant as of the date of
such Taking.  If this Lease
is not so terminated, then Base Rent thereafter payable hereunder shall be
abated for the duration of the Taking in proportion to that portion of the
Premises rendered untenantable by such Taking. 
If any Taking occurs, then Landlord shall receive the
entire award or other compensation for the land on which the Project is
situated, the Project, and other improvements taken, and Tenant may separately
pursue a claim (to the extent it will not reduce Landlord’s award) against the
condemnor for the value of Tenant’s personal property which Tenant is entitled
to remove under this Lease and moving and relocation costs.  Landlord and Tenant agree
that the provisions of this Paragraph 13 and the remaining provisions of
this Lease shall exclusively govern the rights and obligations of the parties
with respect to any Taking of any portion of the Premises, the Building, the
Project or the land on which the Building is located, and Landlord and Tenant
hereby waive and release each and all of their respective common law and
statutory rights inconsistent herewith, whether now or hereinafter in effect
(including, without limitation, Section 1265.130 of the California Code of
Civil Procedure, as amended from time to time).


 


14.           Fire or Other Casualty.


 


14.1         Repair Estimate; Right to Terminate.  If all or any portion of the
Premises, the Building or the Project is damaged by fire or other casualty (a “Casualty”), Landlord shall, within ninety
(90) days after Landlord’s discovery of such damage, deliver to Tenant its good
faith estimate (the “Damage Notice”)
of the time period following such notice needed to repair the damage caused by
such Casualty.  Landlord
may elect to terminate this Lease in any case where (a) any portion of the
Premises or any material portion of the Project are damaged and (b) either
(i) Landlord estimates in good faith that the repair and restoration of
such damage under Paragraph 14.2 (“Restoration”)
cannot reasonably be completed (without the payment of overtime) within two
hundred (200) days of Landlord’s actual discovery of such damage, (ii) the
Holder of any Security Instrument requires the application of any insurance
proceeds with respect to such Casualty to be applied to the outstanding balance
of the obligation secured by such Security Instrument, (iii) the cost of
such Restoration is not fully covered by insurance proceeds available to
Landlord and/or payments received by Landlord from tenants, or (iv) Tenant
shall be entitled to an abatement of rent under this Paragraph 14 for any
period of time in excess of thirty-three percent (33%) of the remainder of the
Term.  Such right of


 


14





















 


termination shall be
exercisable by Landlord by delivery of written notice to Tenant at any time
following the Casualty until forty-five (45) days following the later of
(A) delivery of the Damage Notice or (B) Landlord’s discovery or
determination of any of the events described in clauses (i) through (iv)
of the preceding sentence, and shall be effective upon delivery of such notice
of termination (or if Tenant has not vacated the Premises, upon the expiration
of thirty (30) days thereafter).


 


14.2         Repair Obligation; Abatement of Rent.  Subject to the provisions of
Paragraph 14.1, Landlord shall, within a reasonable time after the
discovery by Landlord of any damage resulting from a Casualty, begin to repair
the damage to the Building and the Premises resulting from such Casualty and
shall proceed with reasonable diligence to restore the Building and Premises to
substantially the same condition as existed immediately before such Casualty,
except for modifications required by Regulations, and modifications to the
Building or the Project reasonably deemed desirable by Landlord; provided, however, that Landlord shall not
be required as part of the Restoration to repair or replace any of the
Alterations, furniture, equipment, fixtures, and other improvements which may
have been placed by, or at the request of, Tenant or other occupants in the
Building or the Premises.  Landlord
shall have no liability for any inconvenience or annoyance to Tenant or injury
to Tenant’s business as a result of any Casualty, regardless of the cause
therefor.  Base Rent, and
Additional Rent payable under Paragraph 3.2, shall abate if and to the
extent a Casualty damages the Premises or common areas in the Project required
and essential for access thereto and as a result thereof all or a material
portion of the Premises are rendered unfit for occupancy, and are not occupied
by Tenant, for the period of time commencing on the date Tenant vacates the
portion of the Premises affected on account thereof and continuing until the
date the Restoration to be performed by Landlord with respect to the Premises (and/or
required common areas) is substantially complete, as determined by Landlord’s
architect.  Landlord and
Tenant agree that the provisions of this Paragraph 14 and the remaining
provisions of this Lease shall exclusively govern the rights and obligations of
the parties with respect to any and all damage to, or destruction of all or any
portion of the Premises or the Project by Casualty, and Landlord and Tenant
hereby waive and release each and all of their respective common law and
statutory rights inconsistent herewith, whether now or hereinafter in effect
(including, without limitation, Sections 1932(2) and 1933(4) of the California
Civil Code, as amended from time to time).


 


15.           Parking.  Tenant
shall have the right to the nonexclusive use of such portion of the parking
facilities of the Project as are designated by Landlord from time to time for
such purpose for the parking of passenger-size motor vehicles used by Tenant
and Tenant Parties only and are not transferable without Landlord’s approval.  The use of such parking
facilities shall be subject to the parking rules and regulations attached
hereto as Exhibit E, as such
rules and regulations may be modified by Landlord from time to time, for the
use of such facilities.


 


16.           Events of Default. 
Each of the following occurrences shall be an “Event of Default” and shall constitute a
material default and breach of this Lease by Tenant:  (a) any failure by Tenant to pay any
installment of Base Rent, Additional Rent or to make any other payment required
to be made by Tenant hereunder when due; (b) the abandonment or vacation
of the Premises by Tenant, provided,
however, that unless Tenant is using the Premises for a retail use,
abandonment or vacation of the Premises shall not be an Event of Default so
long as no other Event of Default has occurred hereunder and provided Tenant
has given Landlord five (5) days’


 


15





















 


prior written notice of
its intent to vacate the Premises; (c) any failure by Tenant to execute and
deliver any estoppel certificate or other document or instrument described in
Paragraphs 10 (insurance), 11 (subordination) or 21.2 (estoppel certificates)
requested by Landlord, where such failure continues for five (5) days after
delivery of written notice of such failure by Landlord to Tenant; (d) any
failure by Tenant to fully perform any other obligation of Tenant under this
Lease, where such failure continues for thirty (30) days (except where a
shorter period of time is specified in this Lease, in which case such shorter
time period shall apply) after delivery of written notice of such failure by
Landlord to Tenant; (e) the voluntary or involuntary filing of a petition
by or against Tenant or any general partner of Tenant (i) in any bankruptcy
or other insolvency proceeding, (ii) seeking any relief under any state or
federal debtor relief law, (iii) for the appointment of a liquidator or
receiver for all or substantially all of Tenant’s property or for Tenant’s
interest in this Lease, or (iv) for the reorganization or modification of
Tenant’s capital structure (provided,
however, that if such a petition is filed against Tenant, then such
filing shall not be an Event of Default unless Tenant fails to have the
proceedings initiated by such petition dismissed within sixty (60) days after
the filing thereof); (f) the default of any guarantor of Tenant’s
obligations hereunder under any guaranty of this Lease, the attempted
repudiation or revocation of any such guaranty, or the participation by any
such guarantor in any other event described in this Paragraph 16 (as if
this Paragraph 16 referred to such guarantor in place of Tenant); or (g)
any other event, act or omission which any other provision of this Lease
identifies as an Event of Default.  Any
notice of any failure of Tenant required under this Paragraph 16 shall be
in lieu of, and not in addition to, any notice required under Section 1161 et seq. of the California Code of
Civil Procedure.


 


17.           Remedies.  Upon
the occurrence of any Event of Default by Tenant, Landlord shall have, in
addition to any other remedies available to Landlord at law or in equity (all
of which remedies shall be distinct, separate, and cumulative), the option to
pursue any one (1) or more of the following remedies, each and all of which
shall be cumulative and nonexclusive, without any notice or demand whatsoever:


 


(a)           Terminate
this Lease, and Landlord may recover from Tenant the following:  (i) the worth at the time of any unpaid
rent which has been earned at the time of such termination; plus (ii) the
worth at the time of award of the amount by which the unpaid rent which would
have been earned after termination until the time of award exceeds the amount
of such rental loss that Tenant proves could have been reasonably avoided; plus
(iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that Tenant proves could have been reasonably avoided; plus
(iv) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant’s failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom (specifically including, without limitation, brokerage
commissions and advertising expenses incurred, expenses of remodeling the
Premises or any portion thereof for a new tenant, whether for the same or a
different use, and any special concessions made to obtain a new tenant); and
(v) at Landlord’s election, such other amounts in addition to or in lieu
of the foregoing as may be permitted from time to time by applicable law.  The term “rent” as used in this Paragraph 17(a)
shall be deemed to be and to mean all sums of every nature required to be paid
by Tenant pursuant to the terms of this Lease, whether to Landlord or to others.  As used in Paragraphs
17(a)(i) and (ii), above, the “worth at the
time of award” shall be computed by allowing interest at the Default
Rate, but in


 


16





















 


no case greater than the
maximum amount of such interest permitted by law. 
As used in Paragraph 17(a)(iii) above, the “worth at the time of award” shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1% ).


 


(b)           Landlord
shall have the remedy described in California Civil Code Section 1951.4 (lessor
may continue lease in effect after lessee’s breach and abandonment and recover
rent as it becomes due, if lessee has the right to sublet or assign, subject
only to reasonable limitations).  Accordingly,
if Landlord does not elect to terminate this Lease on account of any Event of
Default by Tenant, Landlord may, from time to time, without terminating this
Lease, enforce all of its rights and remedies under this Lease, including the
right to recover all Rent as it becomes due.


 


(c)           Landlord
shall at all times have the rights and remedies (which shall be cumulative with
each other and cumulative and in addition to those rights and remedies
available under Paragraphs 17(a) and 17(b) above, or any law or other provision
of this Lease), without prior demand or notice except as required by applicable
law, to seek any declaratory, injunctive, or other equitable relief, and
specifically enforce this Lease, or restrain or enjoin a violation or breach of
any provision hereof.


 


(d)           Following
the occurrence of three instances of payment of Rent more than ten (10) days
late in any twelve (12) month period, the late charge set forth in
Paragraph 4 shall apply from the date payment was due and Landlord may,
without prejudice to any other rights or remedies available to it, upon written
notice to Tenant, require that all remaining monthly installments of Rent
payable under this Lease shall be payable by cashier’s check or electronic
funds transfer three (3) months in advance, and may require that Tenant
increase the Security Deposit to an amount equal to three times the current
month’s Rent at the time of the most recent default.  In addition, (i) upon the occurrence of
an Event of Default by Tenant, if the Premises or any portion thereof are
sublet, Landlord may, at its option and in addition and without prejudice to
any other remedies herein provided or provided by law, collect directly from
the sublessee(s) all rentals becoming due to the Tenant and apply such rentals
against other sums due hereunder to Landlord; (ii) without prejudice to
any other right or remedy of Landlord, if Tenant shall be in default under this
Lease, Landlord may cure the same at the expense of Tenant (A) immediately
and without notice in the case (1) of emergency, (2) where such
default unreasonably interferes with any other tenant in the Building, or
(3) where such default will result in the violation of any Regulation or
the cancellation of any insurance policy maintained by Landlord, and
(B) in any other case if such default continues for ten (10) days
following the receipt by Tenant of notice of such default from Landlord and all
costs incurred by Landlord in curing such default(s), including, without
limitation, attorneys’ fees, shall be reimbursable by Tenant as Rent hereunder
upon demand, together with interest thereon, from the date such costs were
incurred by Landlord, at the Default Rate; and (iii) Tenant hereby waives
for Tenant and for all those claiming under Tenant all rights now and hereafter
existing to redeem by order or judgment of any court or by any legal process or
writ, Tenant’s right of occupancy of the Premises after any termination of this
Lease.


 


18.           Surrender of Premises. 
No act by Landlord shall be deemed an acceptance of a
surrender of the Premises, and no agreement to accept a surrender of the
Premises shall be valid


 


17





















 


unless it is in writing
and signed by Landlord.  At
the expiration or earlier termination of this Lease, Tenant shall deliver to
Landlord all keys (including any electronic access devices and the like) to the
Premises, and Tenant shall deliver to Landlord the Premises in the same
condition as existed on the date Tenant originally took possession thereof,
ordinary wear and tear excepted, provided that ordinary wear and tear shall not
include repair and clean up items.  By
way of example, but without limitation, repair and clean up items shall include
cleaning of all interior walls, carpets and floors, replacement of damaged or
missing ceiling or floor tiles, window coverings or cover plates, removal of
any Tenant-introduced markings, and repair of all holes and gaps and repainting
required thereby, as well as the removal requirements below.  In addition, prior to the
expiration of the Term or any sooner termination thereof, (a) Tenant shall
remove such Alterations as Landlord shall request and shall restore the portion
of the Premises affected by such Alterations and such removal to its condition
existing immediately prior to the making of such Alterations, (b) Tenant
shall remove from the Premises all unattached trade fixtures, furniture, equipment
and personal property located in the Premises, including, without limitation,
phone equipment, wiring, cabling and all garbage, waste and debris, and
(c) Tenant shall repair all damage to the Premises or the Project caused
by any such removal including, without limitation, full restoration of all
holes and gaps resulting from any such removal and repainting required thereby.  All personal property and
fixtures of Tenant not so removed shall, to the extent permitted under
applicable Regulations, be deemed to have been abandoned by Tenant and may be
appropriated, sold, stored, destroyed, or otherwise disposed of by Landlord
without notice to Tenant and without any obligation to account for such items.


 


19.           Holding Over.  If
Tenant holds over after the expiration or earlier termination of the Term
hereof, with or without the express or implied consent of landlord, Tenant
shall become and be only a tenant at sufferance at a daily rent equal to
one-thirtieth of the greater of (a) the then prevailing monthly fair market
rental rate as determined by Landlord in its sole and absolute discretion, or
(b) two hundred percent (200%) of the monthly installment of Base Rent
(and estimated Additional Rent payable under Paragraph 3.2) payable by
Tenant immediately prior to such expiration or termination, and otherwise upon
the terms, covenants and conditions herein specified, so far as applicable, as
reasonably determined by Landlord.  Neither
any provision hereof nor any acceptance by Landlord of any Rent after any such
expiration or earlier termination (including, without limitation, through any “lockbox”)
shall be deemed a consent to any holdover hereunder or result in a renewal of
this Lease or an extension of the Term, or any waiver of any of Landlord’s
rights or remedies with respect to such holdover. 
Notwithstanding any provision to the contrary
contained herein, (i) Landlord expressly reserves the right to require
Tenant to surrender possession of the Premises upon the expiration of the Term
or upon the earlier termination hereof or at any time during any holdover, and
the right to assert any remedy at law or in equity to evict Tenant and collect
damages in connection with any such holdover, and (ii) Tenant shall
indemnity, defend and hold Landlord harmless from and against any and all
claims, demands, actions, proceedings, losses, damages, liabilities,
obligations, penalties, costs and expenses, including, without limitation, all
lost profits and other consequential damages, attorneys’ fees, consultants’
fees and court costs incurred or suffered by or asserted against Landlord by
reason of Tenant’s failure to surrender the Premises on the expiration or
earlier termination of this Lease in accordance with the provisions of this
Lease.


 


18





















 


20.


 


20.1         Deleted


 


20.2         Estoppel Certificates; Financial Statements.  At any time and from time to time
during the Term, Tenant shall, without charge, execute, acknowledge and deliver
to Landlord within ten (10) days after Landlord’s request therefor, an estoppel
certificate in recordable form containing such factual certifications and other
provisions as are found in the estoppel certificate forms requested by
institutional lenders and purchasers.  Tenant
agrees in any case that (a) the foregoing certificate may be relied on by
anyone holding or proposing to acquire any interest in the Project from or
through Landlord or by any mortgagee or lessor or prospective mortgagee or
lessor of the Project or of any interest therein and (b) the form of
estoppel certificate shall be in the form of, at Landlord’s election, the
standard form of such present or prospective lender, lessor or purchaser (or
any form substantially similar thereto), or any other form that Landlord shall
reasonably select.  At
the request of Landlord from time to time, Tenant shall provide to Landlord
within ten (10) days of Landlord’s request therefor Tenant’s and any guarantor’s
current financial statements.


 


20.3         Notices.  Notices,
requests, consents or other communications desired or required to be given by
or on behalf of Landlord or Tenant under this Lease shall be effective only if
given in writing and sent by (a) registered or certified United States
mail, postage prepaid, (b) nationally recognized express mail courier that
provides written evidence of delivery, fees prepaid, or (c) facsimile and
United States mail, postage prepaid, and addressed as set forth in the Basic
Lease Information, or at such other address in the State of California as may
be specified from time to time, in writing, or, if to Tenant, at the Premises.  Any such notice, request,
consent, or other communication shall only be deemed given (i) if sent by
registered or certified United States mail, on the day it is officially
delivered to or refused by the intended recipient, (ii) if sent by
nationally recognized express mail courier, on the date it is officially
recorded by such courier, (iii) if delivered by facsimile, on the date the
sender obtains written telephonic confirmation that the electronic transmission
was received, or (iv) if delivered personally, upon delivery or, if
refused by the intended recipient, upon attempted delivery.


 


20.4         Payment by Tenant; 
Non-Waiver.  Landlord’s
acceptance of Rent (including, without limitation, through any “lockbox”)
following an Event of Default shall not waive Landlord’s rights regarding such
Event of Default.  No
waiver by Landlord of any violation or breach of any of the terms contained
herein shall waive Landlord’s rights regarding any future violation of such
terms.  Landlord’s acceptance of
any partial payment of Rent shall not waive


 


19





















 


Landlord’s rights with
regard to the remaining portion of the Rent that is due, regardless of any
endorsement or other statement on any instrument delivered in payment of Rent
or any writing delivered in connection therewith; accordingly, Landlord’s
acceptance of a partial payment of Rent shall not constitute an accord and
satisfaction of the full amount of the Rent that is due.


 


20.5         Certain Rights Reserved by Landlord.  Landlord hereby reserves and shall
have the following rights with respect to the Premises and the Project:  (a) to decorate and to make inspections,
repairs, alterations, additions, changes, or improvements, whether structural
or otherwise, in and about the Project, the Building, the Premises or any part
thereof; to enter upon the Premises and, during the continuance of any such
work, to temporarily close doors, entryways, public space, and corridors in the
Project or the Building; to interrupt or suspend temporarily Building services
and facilities; to change the name of the Building or the Project; and to
change the arrangement and location of entrances or passageways, doors, and
doorways, corridors, elevators, stairs, restrooms, common areas, or other
public parts of the Building or the Project; (b) to take such measures as
Landlord deems advisable in good faith for the security of the Building and its
occupants; to temporarily deny access to the Building to any person; and to
close the Building after ordinary business hours and on Sundays and Holidays,
subject, however, to Tenant’s right to enter when the Building is closed after
ordinary business hours under such rules and regulations as Landlord may
reasonably prescribe from time to time during the Term; and (c) to enter
the Premises at reasonable hours (or at any time in an emergency) to perform
repairs, to take any action authorized hereunder, or to show the Premises to
prospective purchasers or lenders, or, during the last six (6) months of the
Term, prospective tenants.


 


20.6         Miscellaneous.  If
any clause or provision of this Lease is illegal, invalid, or unenforceable
under present or future laws, then the remainder of this Lease shall not be
affected thereby.  This
Lease may not be amended except by instrument in writing signed by Landlord and
Tenant.  No provision of this Lease shall
be deemed to have been waived by Landlord unless such waiver is in writing
signed by Landlord.  The
terms and conditions contained in this Lease shall inure to the benefit of and
be binding upon the parties hereto, and upon their respective successors in
interest and legal representatives, except as otherwise herein expressly
provided.  This Lease
constitutes the entire agreement between Landlord and Tenant regarding the
subject matter hereof and supersedes all oral statements and prior writings
relating thereto.  Tenant
and the person or persons signing on behalf of Tenant represent and warrant
that Tenant has full right and authority to enter into this Lease, and that all
persons signing this Lease on its behalf are authorized to do so.  If Tenant is comprised of
more than one party, each such party shall be jointly and severally liable for
Tenants obligations under this Lease.  All
exhibits and attachments attached hereto are incorporated herein by this
reference.  This Lease
shall be governed by and construed in accordance with the laws of the State of
California.  In any action which Landlord
or Tenant brings to enforce its respective rights hereunder, the unsuccessful
party shall pay all costs incurred by the prevailing party, including without
limitation, reasonable attorneys’ fees and court costs. 
Tenant shall not record this Lease or any memorandum
hereof.  TO THE MAXIMUM EXTENT PERMITTED
BY LAW, LANDLORD AND TENANT EACH WAIVE RIGHT TO TRIAL BY JURY IN ANY LITIGATION
ARISING OUT OF OR WITH RESPECT TO THIS LEASE. 
Submission of this Lease to Tenant does not constitute
an option or offer to lease and this Lease is not effective otherwise until
execution and delivery by both Landlord and Tenant. 
This Lease may be executed in any number of


 


20





















 


counterparts, each of
which shall be deemed an original.  Time
is of the essence as to the performance of each covenant hereunder in which
time of performance is a factor.


 


21.           Contingency.  Tenant
hereby acknowledges that the Premises is currently occupied by Intraware Inc.  The effectiveness of this
Lease is contingent upon Landlord and Tenant entering into a termination
agreement for the Premises.


 


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21





















 


EXHIBIT
A


 


RULES
AND REGULATIONS


 


1.             Driveways,
sidewalks, halls, passages, exits, entrances, elevators, escalators and
stairways shall not be obstructed by tenants or used by tenants for any purpose
other than for ingress to and egress from their respective premises.  The driveways, sidewalks,
halls, passages, exits, entrances, elevators and stairways are not for the use
of the general public and Landlord shall in all cases retain the right to
control and prevent access thereto by all persons whose presence, in the
judgment of Landlord, shall be prejudicial to the safety, character, reputation
and interests of the Building, the Project and its tenants, provided that
nothing herein contained shall be construed to prevent such access to persons
with whom any tenant normally deals in the ordinary course of such tenant’s
business unless such persons are engaged in illegal activities.  No tenant, and no employees or invitees of
any tenant, shall go upon the roof of any Building, except as authorized by
Landlord.  No tenant, and no employees or
invitees of any tenant shall move any common area furniture without Landlord’s
consent


 


2.             No sign,
placard, banner, picture, name, advertisement or notice, visible from the
exterior of the Premises or the Building or the common areas of the Building
shall be inscribed, painted, affixed, installed or otherwise displayed by
Tenant either on its Premises or any part of the Building or Project without
the prior written consent of Landlord in Landlord’s sole and absolute
discretion.  Landlord shall have the
right to remove any such sign, placard, banner, picture, name, advertisement,
or notice without notice to and at the expense of Tenant, which were installed
or displayed in violation of this rule. 
If Landlord shall have given such consent to Tenant at any time, whether
before or after the execution of Tenant’s Lease, such consent shall in no way
operate as a waiver or release of any of the provisions hereof or of the Lease,
and shall be deemed to relate only to the particular sign, placard, banner,
picture, name, advertisement or notice so consented to by Landlord and shall
not be construed as dispensing with the necessity of obtaining the specific
written consent of Landlord with respect to any other such sign, placard,
banner, picture, name, advertisement or notice.


 


All approved signs or lettering on doors and walls shall
be printed, painted, affixed or inscribed at the expense of Tenant by a person
or vendor approved by Landlord and shall be removed by Tenant at the time of
vacancy at Tenant’s expense.


 


3.             The
directory of the Building or Project will be provided exclusively for the
display of the name and location of tenants only and Landlord reserves the
right to charge for the use thereof and to exclude any other names therefrom


 


4.             No
curtains, draperies, blinds, shutters, shades, screens or other coverings,
awnings, hangings or decorations shall be attached to, hung or placed in, or
used in connection with, any window or door on the Premises without the prior
written consent of Landlord.  In any
event with the prior written consent of Landlord, all such items shall be
installed inboard of landlord’s standard window covering and shall in no way be
visible from the


 


1


















 


exterior of the Building.  All electrical ceiling fixtures hung in
offices or spaces along the perimeter of the Building must be fluorescent or of
a quality, type, design, and bulb color approved by Landlord.  No articles shall be placed or kept on the window
sills so as to be visible from the exterior of the Building.  No articles shall be placed against glass
partitions or doors which Landlord considers unsightly from outside Tenant’s
Premises.


 


5.             Landlord
reserves the right to exclude from the Building and the Project, between the
hours of 6 p.m. and 8 a.m. and at all hours on Saturdays, Sundays and legal
holidays, all persons who are not tenants or their accompanied guests in the
Building.  Each tenant shall be responsible
for all persons for whom it allows to enter the Building or the Project and
shall be liable to Landlord for all acts of such persons.


 


Landlord and its agents shall not be liable for
damages for any error concerning the admission to, or exclusion from, the
Building or the Project of any person.


 


During the continuance of any invasion, mob, riot,
public excitement or other circumstance rendering such action advisable in
Landlord’s opinion, Landlord reserves the right (but shall not be obligated) to
prevent arras to the Building and the Project during the continuance of that
event by any means it considers appropriate for the safety of tenants and
protection of the Building, property in the Building and the Project.


 


6.             All
cleaning and janitorial services for the Building and the Premises shall be
provided exclusively through Landlord. 
Except with the written consent of Landlord, no person or persons other
than those approved by Landlord shall be permitted to enter the Building for
the purpose of cleaning the same.  Tenant
shall not cause any unnecessary labor by reason of Tenant’s carelessness or
indifference in the preservation of good order and cleanliness of its
Premises.  Landlord shall in no way be
responsible to Tenant for any loss of property on the Premises, however
occurring, or for any damage done to Tenant’s property by the janitor or any
other employee or any other person.


 


7.             Tenant
shall see that all doors of its Premises are closed and securely locked and
must observe strict care and caution that all water faucets or water apparatus,
coffee pots or other heat-generating devices are entirely shut off before
Tenant or its employees leave the Premises, and that all utilities shall
likewise be carefully shut off, so as to prevent waste or damage.  Tenant shall be responsible for any damage or
injuries sustained by other tenants or occupants of the Building or Project or
by Landlord for noncompliance with this rule. 
On multiple-tenancy floors, all tenants shall keep the door or doors to
the Building corridors closed at all times except for ingress and egress.


 


8.             Tenant
shall not use any method of heating or air-conditioning other than that
supplied by Landlord.  As more
specifically provided in Tenant’s lease of the Premises, Tenant shall not waste
electricity, water or air-conditioning and agrees to cooperate fully with
Landlord to assure the most effective operation of the Building’s heating and
air-conditioning, and shall refrain from attempting to adjust any controls
other than room thermostats installed for Tenant’s use.


 


2





















 


9.             Landlord
will furnish Tenant free of charge with two keys to each door in the
Premises.  Landlord may make a reasonable
charge for any additional keys, and Tenant shall not make or have made
additional keys.  Tenant shall not alter
any lock or access device or install a new or additional lock or access device
or bolt on any door of its Premises, without the prior written consent of
Landlord.  If Landlord shall give its
consent, Tenant shall in each case furnish Landlord with a key for any such
lock.  Tenant, upon the termination of
its tenancy, shall deliver to Landlord the keys for all doors which have been
furnished to Tenant, and in the event of loss of any keys so furnished, shall
pay Landlord therefor.


 


10.           The
restrooms, toilets, urinals, wash bowls and other apparatus shall not be used
for any purpose other than that for which they were constructed and no foreign
substance of any kind whatsoever shall be thrown into them.  The expense of any breakage, stoppage, or
damage resulting from violation of this rule shall be borne by the tenant who,
or whose employees or invitees, shall have caused the breakage, stoppage, or
damage.


 


11.           Tenant
shall not use or keep in or on the Premises, the Building or the Project any
kerosene, gasoline, or inflammable or combustible fluid or material.


 


12.           Tenant
shall not use, keep or permit to be used or kept in its Premises any foul or
noxious gas or substance.  Tenant shall
not allow the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Building by reason of
noise, odors and/or vibrations or interfere in any way with other tenants or
those having business therein, nor shall any animals or birds be brought or kept
in or about the Premises, the Building, or the Project.


 


13.           No cooking
shall be done or permitted by any tenant on the Premises, except that use by
the tenant of Underwriters’ Laboratory (UL) approved equipment, refrigerators
and microwave ovens may be used in the Premises for the preparation of coffee,
tea, hot chocolate and similar beverages, storing and heating food for tenants
and their employees shall be permitted. 
All uses must be in accordance with all applicable federal, state and
city laws, codes, ordinances, rules and regulations and the Lease.


 


14.           Except
with the prior written consent of Landlord, Tenant shall not sell, or permit
the sale, at retail, of newspapers, magazines, periodicals, theater tickets or
any other goods or merchandise in or on the Premises, nor shall Tenant carry
on, or permit or allow any employee or other person to carry on, the business
of stenography, typewriting or any similar business in or from the Premises for
the service or accommodation of occupants of any other portion of the Building,
nor shall the Premises be used for the storage of merchandise or for
manufacturing of any kind, or the business of a public barber shop, beauty
parlor, nor shall the Premises be used for any illegal, improper, immoral or
objectionable purpose, or any business or activity other than that specifically
provided for in such Tenant’s Lease. 
Tenant shall not accept hairstyling, barbering, shoeshine, nail, massage
or similar services in the Premises or common areas except as authorized by Landlord.


 


3





















 


15.           If Tenant
requires telegraphic, telephonic, telecommunications, data processing, burglar
alarm or similar services, it shall first obtain, and comply with, Landlord’s
instructions in their installation.  The
cost of purchasing, installation and maintenance of such services shall be
borne solely by Tenant.


 


16.           Landlord
will direct electricians as to where and how telephone, telegraph and
electrical wires are to be introduced or installed.  No boring or cutting for wires will be
allowed without the prior written consent of Landlord.  The location of burglar alarms, telephones,
call boxes and other office equipment affixed to the Premises shall be subject to
the prior written approval of Landlord.


 


17.           Tenant
shall not install any radio or television antenna, satellite dish, loudspeaker
or any other device on the exterior walls or the roof of the Building, without
Landlord’s consent.  Tenant shall not
interfere with radio or television broadcasting or reception from or in the
Building, the Project or elsewhere.


 


18.           Tenant
shall not mark, or drive nails, screws or drill into the partitions, woodwork
or drywall or in any way deface the Premises or any part thereof without
Landlord’s consent.  Tenant may install
nails and screws in areas of the Premises that have been identified for those
purposes to Landlord by Tenant at the time those walls or partitions were
installed in the Premises.  Tenant shall
not lay linoleum, tile, carpet or any other floor covering so that the same
shall be affixed to the floor of its Premises in any manner except as approved
in writing by Landlord.  The expense of
repairing any damage resulting from a violation of this rule or the removal of
any floor covering shall be borne by the tenant by whom, or by whose
contractors, employees or invitees, the damage shall have been caused.


 


19.           No
furniture, freight, equipment, materials, supplies, packages, merchandise or
other property will be received in the Building or carried up or down the
elevators except between such hours and in such elevators as shall be
designated by Landlord.


 


Tenant shall not place a load upon any floor of its
Premises which exceeds the load per square foot which such floor was designed
to carry or which is allowed by law. 
Landlord shall have the right to prescribe the weight, size and position
of all safes, furniture or other heavy equipment brought into the
Building.  Safes or other heavy objects
shall, if considered necessary by Landlord, stand on wood strips of such
thickness as determined by Landlord to be necessary to properly distribute the
weight thereof.  Landlord will not be
responsible for loss of or damage to any such safe, equipment or property from
any cause, and all damage done to the Building by moving or maintaining any
such safe, equipment or other property shall be repaired at the expense of
Tenant.


 


Business machines and mechanical equipment belonging
to Tenant which cause noise or vibration that may be transmitted to the
structure of the Building or to any space therein to such a degree as to be
objectionable to Landlord or to any tenants in the Building shall be placed and
maintained by Tenant, at Tenant’s expense, on vibration eliminators or other
devices sufficient to eliminate noise or vibration.  The persons employed to move such equipment
in or out of the Building must be acceptable to Landlord.


 


4





















 


20.           Tenant
shall not install, maintain or operate upon its Premises any vending machine without
the written consent of Landlord.


 


21.           There
shall not be used in any space, or in the public areas of the Project either by
Tenant or others, any hand trucks except those equipped with rubber tires and
side guards or such other material handling equipment as Landlord may
approve.  Tenants using hand trucks shall
be required to use the freight elevator, or such elevator as Landlord shall
designate.  No other vehicles of any kind
shall be brought by Tenant into or kept in or about its Premises.


 


22.           Each
tenant shall store all its trash and garbage within the interior of the
Premises.  Tenant shall not place in the
trash boxes or receptacles any personal trash or any material that may not or
cannot be disposed of in the ordinary and customary manner of removing and
disposing of trash and garbage in the city, without violation of any law or
ordinance governing such disposal.  All
trash, garbage and refuse disposal shall be made only through entry-ways and
elevators provided for such purposes and at such times as Landlord shall
designate.  If the Building has
implemented a building-wide recycling program for tenants, Tenant shall use
good faith efforts to participate in said program.


 


23.           Canvassing,
soliciting, distribution of handbills or any other written material and
peddling in the Building and the Project are prohibited and each tenant shall
cooperate to prevent the same.  No tenant
shall make room-to-room solicitation of business from other tenants in the
Building or the Project, without the written consent of Landlord.


 


24.           Landlord
shall have the right, exercisable without notice and without liability to any
tenant, to change the name and address of the Building and the Project.


 


25.           Landlord
reserves the right to exclude or expel from the Project any person who, in
Landlord’s judgment, is under the influence of alcohol or drugs or who commits
any act in violation of any of these Rules and Regulations.


 


26.           Without
the prior written consent of Landlord, Tenant shall not use the name of the
Building or the Project or any photograph or other likeness of the Building or
the Project in connection with, or in promoting or advertising, Tenant’s
business except that Tenant may include the Building’s or Project’s name in
Tenant’s address.


 


27.           Tenant
shall comply with all safety, fire protection and evacuation procedures and
regulations established by Landlord or any governmental agency.


 


28.           Tenant
assumes any and all responsibility for protecting its Premises from theft,
robbery and pilferage, which includes keeping doors locked and other means of
entry to the Premises closed.


 


29.           The
requirements of Tenant will be attended to only upon appropriate application at
the office of the Building by an authorized individual.  Employees of Landlord shall not perform any
work or do anything outside of their regular duties unless under special
instructions from Landlord, and no employees of Landlord will admit any person
(tenant or otherwise) to any office without specific instructions from
Landlord.


 


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30.           Landlord
reserves the right to designate the use of the parking spaces on the Project
Tenant or Tenant’s guests shall park between designated parking lines only, and
shall not occupy two parking spaces with one car.  Parking spaces shall be for passenger
vehicles only; no boats, trucks, trailers, recreational vehicles or other types
of vehicles may be parked in the parking areas (except that trucks may be
loaded and unloaded in designated loading areas).  Vehicles in violation of the above shall be
subject to tow-away, at vehicle owner’s expense.  Vehicles parked on the Project overnight
without prior written consent of the Landlord shall be deemed abandoned and
shall be subject to tow-away at vehicle owner’s expense.  No tenant of the Building shall park in
visitor or reserved parking areas.  Any
tenant found parking in such designated visitor or reserved parking areas or
unauthorized areas shall be subject to tow-away at vehicle owner’s
expense.  The parking areas shall not be
used to provide car wash, oil changes, detailing, automotive repair or other
services unless otherwise approved or furnished by Landlord.  Tenant will from time to time, upon the
request of Landlord, supply Landlord with a list of license plate numbers of
vehicles owned or operated by its employees or agents.


 


31.           No smoking
of any kind shall be permitted anywhere within the Building, including, without
limitation, the Premises and those areas immediately adjacent to the entrances
and exits to the Building, or any other area as Landlord elects.  Smoking in the Project is only permitted in
smoking areas identified by Landlord, which may be relocated from time to time.


 


32.           If the
Building furnishes common area conferences rooms for tenant usage, Landlord
shall have the right to control each tenant’s usage of the conference rooms,
including limiting tenant usage so that the rooms are equally available to all
tenants in the Building.  Any common area
amenities or facilities shall be provided from time to time at Landlord’s
discretion.


 


33.           Tenant
shall not swap or exchange building keys or cardkeys with other employees or
tenants in the Building or the Project.


 


34.           Tenant
shall be responsible for the observance of all of the foregoing Rules and
Regulations by Tenant’s employees, agents, clients, customers, invitees and
guests.


 


35.           These
Rules and Regulations are in addition to, and shall not be construed to in any
way modify, alter or amend, in whole or in part, the terms, covenants,
agreements and conditions of any lease of any premises in the Project.


 


36.           Landlord
may waive any one or more of these Rules and Regulations for the benefit of any
particular tenant or tenants, but no such waiver by Landlord shall be construed
as a waiver of such Rules and Regulations in favor of any other tenant or
tenants, nor prevent Landlord from thereafter enforcing any such Rules and
Regulations against any or all tenants of the Building.


 


37.           Landlord
reserves the right to make such other and reasonable rules and regulations as
in its judgment may from time to time be needed for safety and security, for
care and cleanliness of the Building and the Project and for the preservation
of good order therein.


 


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Tenant agrees to abide by all such Rules and
Regulations herein stated and any additional rules and regulations which are
adopted.


 


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EXHIBIT
C


 


IMPROVEMENT
AGREEMENT


 


In consideration of the mutual covenants contained in
the Lease of which this Exhibit C
is a part, Landlord agrees to perform the following initial tenant improvement
work in the Premises (“Tenant Improvements”):


 


NONE


 


1.             All the
Tenant Improvements described above shall be performed by Landlord at its cost
and expense using Building Standard materials and in the Building Standard
manner.  As used herein, “Building
Standard” shall mean the standards for a particular item selected from time to
time by Landlord for the Building or such other standards as may be mutually
agreed upon between Landlord and Tenant in writing.


 


2.             Without
limiting the “as-is” provisions of the Lease, Tenant accepts the Premises in
its “as-is” condition and acknowledges that Landlord has no obligation to make
any changes or improvements to the Premises or to pay any costs expended or to
be expended in connection with any such changes or improvements, other than the
Tenant Improvements specified in Paragraph 1 of this Exhibit C.


 


3.             Tenant
shall not perform any work in the Premises (including, without limitation,
cabling, wiring, fixturization, painting, carpeting, replacements or repairs)
except in accordance with Paragraphs 7.1 and 7.3 of the Lease.


 


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EXHIBIT
D


 


INSURANCE


 


Tenant’s Insurance.  Tenant shall, at Tenant’s
sole cost and expense, procure and keep in effect from the date of this Lease
and at all times until the end of the Term, the following insurance coverage:


 


1.             Property
Insurance.  Insurance on all personal
property and fixtures of Tenant and all improvements made by or for Tenant to
the Premises on an “All Risk” or “Special Form” basis, for the full replacement
value of such property.


 


2.             Liability
Insurance.  Commercial General
Liability insurance written on an ISO CG 00 01 10 93 or equivalent form, on an
occurrence basis, with a per occurrence limit of at least $2,000,000, and a
minimum general aggregate limit of at least $3,000,000, covering bodily injury
and property damage liability occurring in or about the Premises or arising out
of the use and occupancy of the Premises or the Project by Tenant or any Tenant
Party.  Such insurance shall include
contractual liability coverage insuring Tenant’s indemnity obligations under
this Lease, and shall be endorsed to name Landlord, any Holder of a Security
Instrument and any other party specified by Landlord as an additional insured
with regard to liability arising out of the ownership, maintenance or use of
the Premises.


 


3.             Worker’s
Compensation and Employer’s Liability Insurance.  (a) Worker’s Compensation Insurance
as required by any Regulation, and (b) Employer’s Liability Insurance in
amounts not less than $1,000,000 each accident for bodily injury by accident
and for bodily injury by disease, and for each employee for bodily injury by
disease.


 


4.             Commercial
Auto Liability Insurance.  Commercial
auto liability insurance with a combined limit of not less than One Million
Dollars ($1,000,000) for bodily injury and property damage for each
accident.  Such insurance shall cover
liability relating to any auto (including owned, hired and non-owned autos).


 


5.             Alterations
Requirements.  In the event Tenant
shall desire to perform any Alterations, Tenant shall deliver to Landlord,
prior to commencing such Alterations (i) evidence satisfactory to Landlord
that Tenant carries “Builder’s Risk” insurance covering construction of such
Alterations in an amount and form approved by Landlord, (ii) such other
insurance as Landlord shall nondiscriminatorily require, and (iii) a lien
and completion bond or other security in form and amount satisfactory to
Landlord.


 


6.             General
Insurance Requirements.  All Tenant’s
coverages described in this Exhibit D
shall be endorsed to (i) provide Landlord with thirty (30) days’ notice of
cancellation or change in terms; (ii) waive all rights of subrogation by
the insurance carrier against Landlord; and (iii) be primary and
non-contributing with Landlord’s insurance. 
If at any time during the Term the amount or coverage
of insurance which Tenant is required to carry under this Exhibit D is, in Landlord’s reasonable
judgment, materially less than the amount or type of insurance coverage
typically carried by owners or tenants of properties


 


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located in the general area in which the Premises are
located which are similar to and operated for similar purposes as the Premises
or if Tenant’s use of the Premises should change with or without Landlord’s
consent, Landlord shall have the right to require Tenant to increase the amount
or change the types of insurance coverage required under this Exhibit D. 
All insurance policies required to be carried by
Tenant under this Lease shall be written by companies rated AVII or better in “Best’s
Insurance Guide” and authorized to do business in the State of California.  Deductible amounts under all insurance
policies required to be carried by Tenant under this Lease shall not exceed
$10,000 per occurrence.  Tenant
shall deliver to Landlord on or before the Term Commencement Date, and
thereafter at least thirty (30) days before the expiration dates of the expired
policies, certified copies of Tenant’s insurance policies, or a certificate
evidencing the same issued by the insurer thereunder, and, if Tenant shall fail
to procure such insurance, or to deliver such policies or certificates,
Landlord may, at Landlord’s option and in addition to Landlord’s other remedies
in the event of a default by Tenant under the Lease, procure the same for the
account of Tenant, and the cost thereof (with interest thereon at the Default
Rate) shall be paid to Landlord as Additional Rent.


 


Landlord’s Insurance.  All insurance maintained by
Landlord shall be for the sole benefit of Landlord and under Landlord’s sole
control.


 


1.             Property
Insurance.  Landlord agrees to
maintain property insurance insuring the Building against damage or destruction
due to risk including fire, vandalism, and malicious mischief in an amount not
less than the replacement cost thereof in the form and with deductibles and
endorsements as selected by Landlord.  At
its election, Landlord may instead (but shall have no obligation to) obtain “All
Risk” coverage, and may also obtain earthquake, pollution, and/or flood
insurance in amounts selected by Landlord.


 


2.             Optional
Insurance.  Landlord, at Landlord’s
option, may also (but shall have no obligation to) carry (i) insurance
against loss of rent, in an amount equal to the amount of Base Rent and
Additional Rent that Landlord could be required to abate to all Building
tenants in the event of condemnation or casualty damage for a period of twelve
(12) months; and (ii) liability insurance and such other insurance as
Landlord may deem prudent or advisable, including, without limitation,
liability insurance in such amounts and on such terms as Landlord shall
determine.  Landlord shall
not be obligated to insure, and shall have no responsibility whatsoever for any
damage to, any furniture, machinery, goods, inventory or supplies, or other
personal property or fixtures which Tenant may keep or maintain in the
Premises, or any leasehold improvements, additions or alterations within the
Premises.


 


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EXHIBIT
E


 


PARKING
RULES AND REGULATIONS


 


1.             Cars
must be parked entirely within painted stall lines.


 


2.             All
directional signs and arrows must be observed.


 


3.             All
posted speed limits for the parking areas shall be observed.  If no speed limit is posted for an area, the
speed limit shall be five (5) miles per hour.


 


4.             Parking
is prohibited:


 


(a)           in areas
not striped for parking;


 


(b)           in aisles;


 


(c)           where “no
parking” signs are posted;


 


(d)           on ramps;


 


(e)           in cross
hatched areas; and


 


(f)            in such
other areas as may be designated by Landlord.


 


5.             Handicap
and visitor stalls shall be used only by handicapped persons or visitors, as
applicable.


 


6.             Parking
stickers or any other device or form of identification supplied by Landlord
from time to time (if any) shall remain the property of Landlord.  Such parking identification device must be
displayed as requested and may not be mutilated in any manner.  The serial number of the parking
identification device may not be obliterated. 
Devices are not transferable and any device may not be obliterated.  Devices are not transferable and any device
in possession of any unauthorized holder will be void.  There will be a replacement charge payable by
the parker and such parker’s appropriate tenant equal to the amount posted from
time to time by Landlord for loss of any magnetic parking card or any parking
sticker.


 


7.             Every
parker is required to park and lock his or her own car.  All responsibility for damage to cars or
persons is assumed by the parker.


 


8.             Loss or
theft of parking identification devices must be reported to Landlord, and a
report of such loss or theft must be filed by the parker at that time.  Any parking identification devices reported
lost or stolen found on any unauthorized car will be confiscated and the
illegal holder will be subject to prosecution. 
Lost or stolen devices found by the parker must be reported to Landlord
immediately to avoid confusion.


 


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9.             Parking
spaces are for the express purpose of parking one automobile per space.  Washing, waxing, cleaning, or servicing of
any vehicle by the parker and/or such person’s agents is prohibited.  The parking areas shall not be used for
overnight or other storage for vehicles of any type.


 


10.           Landlord
reserves the right to refuse the issuance of parking identification or access
devices to any tenant and/or such tenant’s employees, agents, visitors or
representatives who willfully refuse to comply with the Parking Rules and
Regulations and/or all applicable governmental ordinances, laws, or agreements.


 


11.           Tenant
shall acquaint its employees, agents, visitors or representatives with the
Parking Rules and Regulations, as they may be in effect from time to time.


 


12.           Any
monthly rental for parking shall be paid one month in advance prior to the first
day of such month.  Failure to do so will
automatically cancel parking privileges, and a charge of the prevailing daily
rate will be due.  No deductions or
allowances from the monthly rental for parking will be made for days a parker
does not use the parking facilities.


 


13.           Each
parker shall pay a reasonable deposit for any parking card issued to such a
person.  Such deposit shall be paid at
the time the parking card is issued and shall be forfeited if the parking card
is lost.  Such deposit shall be returned
without interest, at the time such person ceases to utilize the parking
facilities, upon surrender of the parking card. 
A reasonable replacement charge shall be paid to replace a lost card and
an amount in excess of the initial deposit may be charged as the replacement
fee.


 


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