Exhibit 10.19


SEAVIEW CORPORATE CENTER


OFFICE LEASE


AGRRI SEAVIEW, L.L.C.,

a Delaware limited liability company,


as Landlord,


and


ACCELRYS INC.,

a Delaware corporation


as Tenant.


 





















SEAVIEW
CORPORATE CENTER

SUMMARY
OF BASIC LEASE INFORMATION


This Summary of Basic Lease Information (the “Summary”) is hereby incorporated by
reference into and made a part of the attached Office Lease.  Each reference in the Office Lease to any
term of this Summary shall have the meaning as set forth in this Summary for
such term.  In the event of a conflict
between the terms of this Summary and the Office Lease, the terms of the Office
Lease shall prevail.  Any initially
capitalized terms used herein and not otherwise defined herein shall have the
meaning as set forth in the Office Lease.




	
  TERMS OF LEASE

  	
   

  	
   

  	
   

  
	
  (References are to the Office Lease)

  	
   

  	
  DESCRIPTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Dated as of:

  	
   

  	
  March     ,
  2004 (the “Effective Date”)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Landlord:

  	
   

  	
  AGRRI
  SEAVIEW, L.L.C.,

  a Delaware limited liability company

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Address of
  Landlord 

  (Section 25.15):

  	
   

  	
  c/o The
  Shidler Group 

  10188 Telesis Court, Suite 222

  San Diego, CA 92121 

  Attn: Mr. Matt Root

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  and

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Teel, Palmer
  & Roeper, LLP 

  11455 El Camino Real, Suite 300 

  San Diego, CA 92130 

  Attn: Dean E. Roeper, Esq.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Tenant:

  	
   

  	
  ACCELRYS
  INC., 

  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Address of
  Tenant (Section 25.15):

  	
   

  	
  [PLEASE
  PROVIDE]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attn: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Prior to
  Lease Commencement Date)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  and

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  10188 Telesis Court, Suite 100 

  San Diego,
  California 92121 

  	
   

  
	
   

  	
   

  	
   

  	
  Attn: 

  	
  [PLEASE
  PROVIDE]

  	
   

  
	
   

  	
   

  	
   

  	
  (After Lease
  Commencement Date)

  	
   

  
	
  6.

  	
  Premises
  (Article 1):

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1     Premises:

  	
   

  	
  Approximately 7,225 rentable square feet
  of space located on the first (1st) floor of the Building (as defined below),
  as set forth in Exhibit A
  attached hereto, known as Suites 100 and 110.

  	
   

  






 


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  6.2     Building:

  	
   

  	
  The Premises are located in the “Building” whose address is 10188 Telesis Court, San Diego,
  California 92121.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Term
  (Article 2):

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1     Lease
  Term:

  	
   

  	
  Approximately
  one hundred eight (108) months

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2     Option
  Term(s):

  	
   

  	
  One (1)
  Option for five (5) years

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3     Lease
  Commencement Date:

  	
   

  	
  The date on which the Premises is Ready for
  Occupancy (as defined in Exhibit D
  attached hereto), which is anticipated to be July 1, 2004.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.4     Lease
  Expiration Date:

  	
   

  	
  July 31,
  2013

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.5     Lease
  Amendment:

  	
   

  	
  Landlord and Tenant shall confirm the Lease
  Commencement Date and the Lease Expiration Date in an Amendment to the Lease
  (Exhibit C) to be executed
  pursuant to Article 2 of the Office Lease.

  	
   

  
	
  8.

  	
  Base
  Rent (Article 3):

  	
   

  	
   

  	
   

  






 




	
  Lease Months

  	
   

  	
  Annual
  Base Rent

  	
   

  	
  Monthly
  Installment of Base Rent

  	
   

  	
  Annual
  Base Rental 

  Rate per

  Rentable Square Foot

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1–6

  	
   

  	
  $104,040.00

  	
   

  	
  $17,340.00

  	
   

  	
  $2.40

  	
   

  
	
  7–18

  	
   

  	
  $208,080.00

  	
   

  	
  $17,340.00

  	
   

  	
  $2.40

  	
   

  
	
  19–30

  	
   

  	
  $214,149.00

  	
   

  	
  $17,845.75

  	
   

  	
  $2.47

  	
   

  
	
  31–42

  	
   

  	
  $221,085.00

  	
   

  	
  $18,423.75

  	
   

  	
  $2.55

  	
   

  
	
  43–54

  	
   

  	
  $227,154.00

  	
   

  	
  $18,929.50

  	
   

  	
  $2.62

  	
   

  
	
  55–66

  	
   

  	
  $234,090.00

  	
   

  	
  $19,507.50

  	
   

  	
  $2.70

  	
   

  
	
  67–78

  	
   

  	
  $241,026.00

  	
   

  	
  $20,085.50

  	
   

  	
  $2.78

  	
   

  
	
  79–90

  	
   

  	
  $248,829.00

  	
   

  	
  $20,735.75

  	
   

  	
  $2.87

  	
   

  
	
  91–102

  	
   

  	
  $255,765.00

  	
   

  	
  $21,313.75

  	
   

  	
  $2.95

  	
   

  
	
  103–108

  	
   

  	
  $263,568.00

  	
   

  	
  $21,964.00

  	
   

  	
  $3.04

  	
   

  






 




	
  9.

  	
  Additional
  Rent (Article 4):

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Base Year
  (for determining Direct Expenses):

  	
   

  	
  Calendar year
  2004

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2

  	
  Tenant’s
  Share of Direct Expenses (and Utilities Costs):

  	
   

  	
  5.88% (7,225
  rentable square feet within the Premises/122,798 rentable square feet within the Building) (See
  Section 4.2.7 of Office Lease).

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.3

  	
  Building’s
  Share of Direct Expenses (and Utilities Costs):

  	
   

  	
  34.52% (122,798 rentable square feet within
  the Building/355,736 rentable square feet within the Building Complex) (See
  Section 4.2.7 of Office Lease).

  	
   

  






 


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  10.

  	
  Number of
  Parking Passes(Article 24):

  	
   

  	
  Four (4) unreserved
  parking passes for each 1,000 rentable square feet of the Premises.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Brokers
  (Section 25.19):

  	
   

  	
  Colliers
  International (Landlord’s Broker) and CB Richard Ellis (Tenant’s Broker)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Tenant
  Improvement Allowance

  (Exhibit D):

  	
   

  	
  One–time allowance
  up to $40.00 per rentable square foot in the Premises.

  	
   

  






 


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  The foregoing terms of this Summary are hereby
  agreed to by Landlord and Tenant.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Landlord”

  	
   

  	
  AGRRI
  SEAVIEW, L.L.C.,

  
	
   

  	
   

  	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  RRI Seaview,
  LLC,

  
	
   

  	
   

  	
   

  	
   

  	
  a Delaware
  limited liability company

  
	
   

  	
   

  	
   

  	
  Its:

  	
  Authorized
  Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  JCR
  Manager, LLC,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  Managing
  Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Tenant”

  	
   

  	
  ACCELRYS
  INC.,

  
	
   

  	
   

  	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  
										






 


 


– iv –





















SEAVIEW CORPORATE CENTER


TABLE OF CONTENTS




	
  ARTICLE
  1

  	
  BUILDING
  COMPLEX, BUILDING AND PREMISES

  	
   

  
	
  ARTICLE
  2

  	
  LEASE
  TERM

  	
   

  
	
  ARTICLE
  3

  	
  BASE
  RENT

  	
   

  
	
  ARTICLE 4

  	
  ADDITIONAL RENT

  	
   

  
	
  ARTICLE 5

  	
  USE OF PREMISES

  	
   

  
	
  ARTICLE 6

  	
  SERVICES AND UTILITIES

  	
   

  
	
  ARTICLE
  7

  	
  REPAIRS

  	
   

  
	
  ARTICLE 8

  	
  ADDITIONS AND
  ALTERATIONS

  	
   

  
	
  ARTICLE 9

  	
  COVENANT AGAINST LIENS

  	
   

  
	
  ARTICLE
  10

  	
  INSURANCE

  	
   

  
	
  ARTICLE 11

  	
  DAMAGE AND
  DESTRUCTION

  	
   

  
	
  ARTICLE 12

  	
  CONDEMNATION

  	
   

  
	
  ARTICLE 13

  	
  COVENANT OF
  QUIET ENJOYMENT

  	
   

  
	
  ARTICLE 14

  	
  ASSIGNMENT AND
  SUBLETTING

  	
   

  
	
  ARTICLE
  15

  	
  SURRENDER
  OF PREMISES; REMOVAL OF TRADE FIXTURES

  	
   

  
	
  ARTICLE 16

  	
  HOLDING OVER

  	
   

  
	
  ARTICLE 17

  	
  ESTOPPEL CERTIFICATES

  	
   

  
	
  ARTICLE 18

  	
  SUBORDINATION

  	
   

  
	
  ARTICLE 19

  	
  DEFAULTS; REMEDIES

  	
   

  
	
  ARTICLE 20

  	
  INTENTIONALLY DELETED

  	
   

  
	
  ARTICLE
  21

  	
  SIGNS

  	
   

  
	
  ARTICLE 22

  	
  COMPLIANCE WITH LAW

  	
   

  
	
  ARTICLE 23

  	
  ENTRY BY LANDLORD

  	
   

  
	
  ARTICLE 24

  	
  TENANT PARKING

  	
   

  






 


– v –





















 


	
  ARTICLE 25

  	
  MISCELLANEOUS
  PROVISIONS

  	
   

  



 


 


	
  EXHIBITS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  A

  	
  FLOOR
  PLAN OF PREMISES

  	
   

  
	
  B

  	
  RULES
  AND REGULATIONS

  	
   

  
	
  C

  	
  AMENDMENT
  TO LEASE

  	
   

  
	
  D

  	
  TENANT
  WORK LETTER

  	
   

  
	
  E

  	
  ESTOPPEL
  CERTIFICATE

  	
   

  
	
  F

  	
  GUARANTY OF LEASE

  	
   

  
	
   

  	
   

  	
   

  



 


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SEAVIEW CORPORATE CENTER


INDEX OF DEFINED TERMS


	
  “Tenant’s
  Parties

  	
  32

  
	
  Affiliate

  	
  21

  
	
  Alterations

  	
  13

  
	
  Amendment

  	
  Exhibit
  C

  
	
  Approved
  Working Drawings

  	
  Exhibit
  D

  
	
  Architect

  	
  Exhibit
  D

  
	
  Base
  Rent

  	
  4

  
	
  Base
  Year

  	
  5

  
	
  Base,
  Shell, and Core

  	
  Exhibit
  D

  
	
  BOMA

  	
  1

  
	
  Brokers

  	
  31

  
	
  Building

  	
  Summary

  
	
  Building
  Complex

  	
  1

  
	
  Building
  Complex Parking Area

  	
  1

  
	
  Building
  Hours

  	
  11

  
	
  Child
  Care Facilities

  	
  29

  
	
  Child
  Care Provider

  	
  29

  
	
  Claims

  	
  15

  
	
  Code

  	
  Exhibit
  D

  
	
  Construction
  Drawings

  	
  Exhibit
  D

  
	
  Contractor

  	
  Exhibit
  D

  
	
  Control

  	
  21

  
	
  Cost
  Pools

  	
  6

  
	
  Cost
  Proposal

  	
  Exhibit
  D

  
	
  Cost
  Proposal Delivery Date

  	
  Exhibit
  D

  
	
  Direct
  Expenses

  	
  5

  
	
  Effective
  Date

  	
  Summary

  
	
  Engineers

  	
  Exhibit
  D

  
	
  Environmental
  Claims

  	
  32

  
	
  Environmental
  Law

  	
  31

  
	
  Environmental
  Permits

  	
  31

  
	
  Estimate

  	
  9

  
	
  Estimate
  Statement

  	
  9

  
	
  Estimated
  Excess

  	
  9

  
	
  Estimated
  Utilities Costs

  	
  9

  
	
  Excess

  	
  9

  
	
  Excluded
  Changes

  	
  27

  
	
  Expense
  Year

  	
  5

  
	
  Final
  Space Plan

  	
  Exhibit
  D

  
	
  Final
  Working Drawings

  	
  Exhibit
  D

  
	
  Force
  Majeure

  	
  30

  
	
  Holidays

  	
  11

  
	
  HVAC

  	
  11

  
	
  Insurance
  Start Date

  	
  15

  
	
  Interest
  Notice

  	
  3

  
	
  Interest
  Rate

  	
  5

  
	
  Landlord

  	
  1

  
	
  Landlord
  Indemnified Parties

  	
  32

  



 


– vii –





















 


	
  Landlord
  Parties

  	
  15

  
	
  Landlord
  Supervision Fee

  	
  Exhibit
  D

  
	
  Lease

  	
  1

  
	
  Lease
  Commencement Date

  	
  2

  
	
  Lease
  Expiration Date

  	
  2

  
	
  Lease
  Term

  	
  2

  
	
  Lease
  Year

  	
  2

  
	
  Notices

  	
  30

  
	
  number
  of days

  	
  Exhibit
  D

  
	
  Operating
  Expenses

  	
  5

  
	
  Option
  Notice

  	
  2

  
	
  Option
  Rent

  	
  2

  
	
  Option
  Rent Notice

  	
  3

  
	
  Option
  Term

  	
  2

  
	
  Original
  Tenant

  	
  2

  
	
  Other
  Buildings

  	
  1

  
	
  Other
  Improvements

  	
  33

  
	
  Outside
  Agreement Date

  	
  3

  
	
  Over–Allowance
  Amount

  	
  Exhibit
  D

  
	
  Partial
  Cost Proposal

  	
  Exhibit
  D

  
	
  PCBs

  	
  32

  
	
  Permits

  	
  Exhibit
  D

  
	
  personal
  goods or services vendors

  	
  Exhibit
  B

  
	
  Premises

  	
  1

  
	
  Proposition
  13

  	
  7

  
	
  Ready
  for Occupancy

  	
  Exhibit
  D

  
	
  Real
  Property

  	
  1

  
	
  Renovations

  	
  33

  
	
  rent

  	
  25

  
	
  rentable
  square feet

  	
  1

  
	
  Restricted
  Areas

  	
  27

  
	
  Review
  Period

  	
  10

  
	
  Rules
  and Regulations

  	
  1

  
	
  Statement

  	
  9

  
	
  Subject
  Space

  	
  18

  
	
  Subleasing
  Costs

  	
  20

  
	
  Substantial
  Completion

  	
  2, Exhibit
  D

  
	
  Summary

  	
  Summary

  
	
  Tax
  Expenses

  	
  7

  
	
  Tenant

  	
  1

  
	
  Tenant
  Delays

  	
  Exhibit
  D

  
	
  Tenant
  Improvement Allowance

  	
  Exhibit
  D

  
	
  Tenant
  Improvement Allowance Items

  	
  Exhibit
  D

  
	
  Tenant
  Improvements

  	
  Exhibit
  D

  
	
  Tenant
  Indemnified Parties

  	
  32

  
	
  Tenant
  Work

  	
  2

  
	
  Tenant
  Work Letter

  	
  Exhibit
  D

  
	
  Tenant’s
  Project Manager

  	
  Exhibit
  D

  
	
  Tenant’s
  Utilities

  	
  8

  
	
  Tenant’s
  Share

  	
  9

  
	
  Time
  Deadlines

  	
  Exhibit
  D

  
	
  Transfer
  Notice

  	
  18

  
	
  Transfer
  Premium

  	
  20

  



 


– viii –





















 


	
   

  	
   

  
	
  Transferee

  	
  18

  
	
  Transfers

  	
  18

  
	
  Utilities
  Costs

  	
  8

  



 


– ix –





















SEAVIEW
CORPORATE CENTER

OFFICE LEASE


This Office Lease, which includes the preceding
Summary attached hereto and incorporated herein by this reference (the Office
Lease and Summary to be known sometimes collectively hereafter as the “Lease”),
dated as of the date set forth in Section 1 of the Summary, is made by and
between AGRRI SEAVIEW, L.L.C., a Delaware limited liability company (“Landlord”)
and ACCELRYS INC., a Delaware corporation (“Tenant”).


ARTICLE 1

BUILDING COMPLEX, BUILDING AND PREMISES


1.1           Building Complex, Building and Premises.  Upon and subject to the terms set forth in
this Lease, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
the premises set forth in Section 6.1 of the Summary (the “Premises”),
which Premises are located in the Building defined in Section 6.2 of the
Summary.  The outline of the Premises is
set forth in Exhibit A
attached hereto.  The Building, which is
the first phase of a multiple–building office building complex commonly known
as Seaview Corporate Center, is located at 10188
Telesis Court, San Diego, California 92121. 
The complex also includes the buildings located at 10180, 10182, 10184, and 10190 Telesis
Court, San Diego, California and such other buildings as may be constructed in
the complex, if and when such buildings are constructed in such complex
(collectively, the “Other Buildings”).  The Building, the Other Buildings, the
parking facilities (which currently consist of a surface parking area and may
subsequently consist of either and/or both surface parking area(s) and/or
parking structure(s), as determined by Landlord) located within such complex
(the “Building Complex Parking Area”),
any outside plaza areas, land and other improvements surrounding the Building
and such other future buildings (if any), and the land upon which all of the
foregoing are situated, are herein sometimes collectively referred to herein as
the “Building Complex”
or “Real Property.”  Tenant acknowledges that Landlord has made no
representation or warranty that other office buildings will be constructed in
the Complex, and Landlord may at its sole discretion, elect to construct or not
construct any such additional office buildings or phases within the
Complex.  Tenant further acknowledges
that Landlord has made no representation or warranty regarding the condition of
the Real Property except as specifically set forth in this Lease or the Tenant
Work Letter.  Tenant is hereby granted
the right to the nonexclusive use of the common corridors and hallways, stairwells,
elevators, restrooms and other public or common areas located on the Real
Property (including the existing pool, workout facilities and tennis facility
as long as Landlord, in its sole discretion, maintains same); provided,
however, that the manner in which such public and common areas are maintained
and operated shall be at the sole discretion of Landlord and the use thereof
shall be subject to the rules, regulations and restrictions attached hereto as Exhibit B
(the “Rules and Regulations”),
as the same may be modified by Landlord from time to time.  Landlord reserves the right to make
alterations or additions to or to change the location of elements of the
Building Complex and the common areas thereof.


1.2           Condition of Premises.  Except as expressly set forth in this Lease
and in the Tenant Work Letter attached hereto as Exhibit D,
Landlord shall not be obligated to provide or pay for any improvements, work or
services related to the improvement, remodeling or refurbishment of the
Premises, and Tenant shall accept the Premises in its “AS IS” condition on the
Lease Commencement Date.  Tenant also
acknowledges that Landlord has made no representation or warranty regarding the
condition of the Premises or the Building Complex, except as specifically set
forth in this Lease and the Tenant Work Letter.


1.3           Rentable Square Feet.  The rentable square feet of the Premises are
approximately as set forth in Section 6.1 of the Summary.  For purposes hereof, the “rentable square feet”
of the Premises and the Building and other buildings in the Building Complex
shall be calculated by Landlord pursuant to the Standard Method for Measuring
Floor Area in Office Buildings, ANSI Z65.1–1996 (“BOMA”).  The rentable square feet of the Premises and
the rentable square feet of the Building and other buildings constructed in the
Building Complex are subject to verification from time to time by Landlord’s
planner/designer and such verification shall be made in accordance with the
provisions of this Section 1.3. 
Tenant’s architect may


 





















consult
with Landlord’s planner/ designer regarding such verification, except to the
extent it relates to the rentable square feet of the Building and other
buildings in the Building Complex; provided, however, the determination of
Landlord’s planner/designer shall be conclusive and binding upon the
parties.  In the event that Landlord’s
planner/designer determines that the rentable square footage shall be different
from those set forth in this Lease, all amounts, percentages and figures
appearing or referred to in this Lease based upon such incorrect rentable
square feet (including, without limitation, the amount of the Base Rent and
Tenant’s Share) shall be modified in accordance with such determination.  If such determination is made, it will be
confirmed in writing by Landlord to Tenant.


1.4           Right of First Offer.  In the event those 6,000 rentable square feet
of space on the first (1st) floor of the Building known as
Suite 130 shall become available for lease to third parties during the
Term, Landlord shall notify Tenant of such availability, the anticipated date
on which such space shall be vacated and the fair market rental rate for such
space.  For a period of ten (10) days
following receipt of Landlord’s written notice containing such information,
Tenant shall have, on a one–time basis only, the right of first offer to lease
such space at the fair market rental rate and on fair market terms and
conditions.  If Tenant fails to elect to
lease the space within the ten (10) day period, then Landlord shall be entitled
to place the space on the open market for lease by third parties and this right
of first offer shall be of no further force and effect.


ARTICLE 2

LEASE TERM


2.1           Lease Term.  The terms and provisions of this Lease shall
be effective as of the date of this Lease. 
The term of this Lease (the “Lease
Term”)
shall be as set forth in Section 5.1 of the Summary, shall commence on the
date which is the earlier to occur of (i) the date Tenant occupies the
Premises, or (ii)  the date the Premises is Ready for Occupancy, as that
term is defined in this Article 2, of the Premises by Landlord (“Lease Commencement Date”),
and shall terminate on the date set forth in Section 7.4 of the Summary
(the “Lease Expiration Date”)
unless this Lease is sooner terminated as hereinafter provided.  For purposes of this Lease, the term “Lease Year”
shall mean each consecutive twelve (12) month period during the Lease Term;
provided, however, that the first Lease Year shall commence on the Lease
Commencement Date and end on the last day of the eleventh month thereafter and
the second and each succeeding Lease Year shall commence on the first day of
the next calendar month; and further provided that the last Lease Year shall
end on the Lease Expiration Date.  For
purposes of this Lease, and if applicable, “Substantial
Completion”
of the Premises shall occur upon the completion of construction, as reasonably
determined by Landlord, of the “Tenant Improvements,” as that term is defined
in the Tenant Work Letter, in the Premises pursuant to the plans and drawings
which are prepared pursuant to the terms of the Tenant Work Letter, with the
exception of any punch list items and any tenant fixtures, work–stations, built–in
furniture, or equipment to be installed by Tenant in the Premises pursuant to
the terms of the Tenant Work Letter or to be installed under the supervision of
“Contractor” as that term is defined in the Tenant Work Letter (the “Tenant Work”).  At any time during the Lease Term, Landlord
may deliver to Tenant a notice in the form as set forth in Exhibit C, attached hereto which
notice Tenant shall execute and return to Landlord within five (5) days of
receipt thereof.


2.2           Option Term.  Landlord hereby grants to the Tenant
originally named in the Lease and any Affiliate to which this Lease has been
assigned pursuant to Section 14.7 (collectively, “Original Tenant”)
the number of options to extend the Lease Term for the period of years set
forth in the Summary of Basic Lease Information (the “Option Term”),
which option shall be exercisable only by written notice (“Option Notice”)
delivered by Tenant to Landlord as provided in Section 2.2.2 below,
provided that, as of the date of delivery of such notice and, at Landlord’s
option, as of the last day of the initial Lease Term, Tenant is not in default
under this Lease after expiration of applicable cure periods.  The right contained in this Section 2.2
shall be personal to the Original Tenant and may only be exercised by the
Original Tenant (and not any assignee, sublessee or other transferee of the
Original Tenant’s interest in this Lease) if the Original Tenant occupies the
entire Premises as of the date of the Option Notice.


2.2.1        Option Rent.  The Rent payable by Tenant during the Option
Term (the “Option Rent”)
shall be equal to the then prevailing fair market rent for the Premises as of
the commencement date of


2





















the
Option Term.  The then prevailing fair
market rent shall be the rental rate, including all escalations, at which new,
non–renewal tenants, as of the commencement of the Option Term, are leasing non–sublease,
non–encumbered space comparable in size, location and quality to the Premises
for a comparable term, which comparable space is located in comparable
buildings in the Sorrento Mesa submarket, taking into consideration only the
following concessions:  tenant
improvements or allowances provided or to be provided for such comparable
space, taking into account, and deducting the cost of the existing improvements
in the Premises, and based upon the fact that the precise tenant improvements
existing in the Premises are specifically suitable to Tenant.


2.2.2        Exercise of Option.  The option contained in this Section 2.2
shall be exercised by Tenant, if at all, only in the following manner:  (i) Tenant shall deliver written notice (“Interest Notice”)
to Landlord on or before the date which is nine (9) months prior to the
expiration of the initial Lease Term, stating that Tenant is interested in
exercising its option; (ii) Landlord, after receipt of Tenant’s notice,
shall deliver notice (the “Option Rent Notice”)
to Tenant not less than seven (7) months prior to the expiration of the initial
Lease Term, setting forth the Option Rent; and (iii) if Tenant wishes to
exercise such option, Tenant shall, on or before the earlier of (A) the
date occurring six (6) months prior to the expiration of the initial Lease
Term, and (B) the date occurring thirty (30) days after Tenant’s receipt
of the Option Rent Notice, exercise the option by delivering the Option Notice
to Landlord and upon, and concurrent with, such exercise, Tenant may, at its
option, object to the Option Rent determined by Landlord.  Failure of Tenant to deliver the Interest
Notice to Landlord on or before the date specified in (i) above or to
deliver the Option Notice to Landlord on or before the date specified in (iii)
above shall be deemed to constitute Tenant’s failure to exercise its option to
extend.  If Tenant timely and properly
exercises its option to extend, the Lease Term shall be extended for the Option
Term upon all of the terms and conditions set forth in this Lease, except that
the Rent shall be as indicated in the Option Rent Notice unless Tenant,
concurrently with its exercise, objects to the Option Rent contained in the
Option Rent Notice, in which case the parties shall follow the procedure as set
forth in Section 2.2.3 below.


2.2.3        Determination of Option Rent.  In the event Tenant exercises its option to
extend but objects to Landlord’s determination of the Option Rent concurrently
with its exercise of the option to extend, Landlord and Tenant shall attempt to
agree in good faith upon the Option Rent. 
If Landlord and Tenant fail to reach agreement within thirty (30) days
following Tenant’s delivery of the Option Notice (the “Outside Agreement Date”),
then each party shall make a separate determination of the Option Rent within
five (5) business days after the Outside Agreement Date, concurrently exchange
such determinations and such determinations shall be submitted to arbitration
in accordance with Sections 2.2.3.1 through 2.2.3.7 below.


2.2.3.1         Landlord
and Tenant shall each appoint one arbitrator who shall by profession be a real
estate broker or appraiser who shall have been active over the five (5) year
period ending on the date of such appointment in the leasing (or appraisal, as
the case may be) of commercial high–rise properties in the Pasadena, California
area.  The determination of the
arbitrators shall be limited solely to the issue of whether Landlord’s or
Tenant’s submitted Option Rent is the closest to the actual Option Rent, as
determined by the arbitrators, taking into account the requirements of
Section 2.2.1 of this Lease (i.e., the arbitrators may only select
Landlord’s or Tenant’s determination and shall not be entitled to make a
compromise determination).  Each such
arbitrator shall be appointed within fifteen (15) business days after the
applicable Outside Agreement Date.


2.2.3.2         The
two (2) arbitrators so appointed shall within five (5) days of the date of the
appointment of the last appointed arbitrator agree upon and appoint a third
arbitrator who shall be qualified under the same criteria set forth hereinabove
for qualification of the initial two (2) arbitrators.


2.2.3.3         The
three (3) arbitrators shall within five (5) days of the appointment of the
third arbitrator reach a decision as to whether the parties shall use Landlord’s
or Tenant’s submitted Option Rent and shall notify Landlord and Tenant thereof.


2.2.3.4         The
decision of the majority of the three (3) arbitrators shall be binding upon
Landlord and Tenant.


3





















2.2.3.5         If
either Landlord or Tenant fails to appoint an arbitrator within fifteen (15)
business days after the applicable Outside Agreement Date, the arbitrator
appointed by one of them shall reach a decision, notify Landlord and Tenant
thereof, and such arbitrator’s decision shall be binding upon Landlord and
Tenant.


2.2.3.6         If
the two (2) arbitrators fail to agree upon and appoint a third arbitrator, or
both parties fail to appoint an arbitrator, then the appointment of the third
arbitrator or any arbitrator shall be dismissed and the Option Rent be decided
shall be forthwith submitted to arbitration under the provisions of the
American Arbitration Association, but subject to the instruction set forth in
this Section 2.2.3.


2.2.3.7         The
cost of arbitration shall be paid by Landlord and Tenant equally.


ARTICLE 3

BASE RENT


3.1           Base Rent. 
Tenant shall pay, without notice or demand, to Landlord at the
management office of the Building Complex, or, at Landlord’s option, such other
place as Landlord may from time to time designate in writing, in currency or a
check for currency which, at the time of payment, is legal tender for private
or public debts in the United States of America, base rent ( “Base Rent”)
as set forth in Section 8 of the Summary, payable in equal monthly
installments as set forth in Section 8 of the Summary in advance on or
before the first day of each and every calendar month during the Lease Term,
without any setoff or deduction whatsoever. 
The Base Rent for the first full calendar month of the Lease Term shall
be paid at the time of Tenant’s execution of this Lease.  If any rental payment date (including the Lease
Commencement Date) falls on a day of a calendar month other than the first day
of such calendar month or if any Rent payment is for a period which is shorter
than one calendar month (such as during the last month of the Lease Term), the
Rent for any fractional calendar month shall be the proportionate amount of a
full calendar month’s rental based on the proportion that the number of days in
such fractional month bears to the number of days in the calendar month during
which such fractional month occurs.  All
other payments or adjustments required to be made under the terms of this Lease
that require proration on a time basis shall be prorated on the same basis.


3.2           Rent Abatement.  Provided Tenant is not in default under the
Lease (or would be in default under the Lease but for the passage of time or
giving of notice, or both), Landlord hereby agrees to abate Tenant’s obligation
to pay Monthly Base Rent for the first (1st) month through and
including the sixth (6th) month of the Lease Term (such total amount
of abated Monthly Base Rent being hereinafter referred to as the “Abated Amount”).  During such abatement period, Tenant shall
still be responsible for the payment of all of its other monetary obligations
under the Lease, including, without limitation, Tenant’s Percentage of
Operating Expenses and any expenses relative to Tenant’s use and occupancy of
the Premises.  In the event of a default
by Tenant under the terms of this Lease which results in early termination of
this Lease, then as a part of the recovery elsewhere expressly permitted under
this Lease, Landlord shall be entitled to a pro–rata recovery of the Abated
Amount.  The formula for determining the
percentage of the Abated Amount recoverable is (X–Y) ÷X, where X equals
the number of months in the Lease Term and Y equals the number of months the
Premises was leased prior to termination. 
By way of illustration only (but not as a limitation of the foregoing),
if a default by Tenant resulted in termination of this Lease at the end of
month fifteen (15) of the Lease Term, and the Lease Term was sixty (60) months,
then Landlord would be entitled to recover (60–15) ÷60 or seventy–five
percent (75%) of the Abated Amount.  Any
such amount which Landlord is entitled to recover hereinabove shall become immediately
due and payable as unpaid rent which had been earned at the date of Lease
termination.


ARTICLE 4

ADDITIONAL RENT


4.1           Additional Rent.  In addition to paying the Base Rent specified
in Article 3 of this Lease, Tenant shall pay as additional rent:


4





















(i)            Tenant’s
Share of the annual “Direct Expenses,” as those terms are defined in
Sections 4.2.7 and 4.2.2 of this Lease, respectively, which are in excess
of the amount of Direct Expenses applicable to the “Base Year,” as that term is
defined in Section 4.2.1 of this Lease; and


(ii)           Tenant’s
Share of the annual Utilities Costs, as that term is defined in
Section 4.2.6 of this Lease.


4.2           Definitions.  As used in this Article 4, the following
terms shall have the meanings hereinafter set forth:


4.2.1  “Base Year”
shall mean the year set forth in Section 9.1 of the Summary.


4.2.2  “Direct Expenses”
shall mean “Operating Expenses” and “Tax Expenses.”


4.2.3  “Expense Year”
shall mean each calendar year in which any portion of the Lease Term falls,
through and including the calendar year in which the Lease Term expires;
provided, that Landlord, upon notice to Tenant, may change the Expense Year
from time to time to any twelve (12) consecutive month period, and, in the
event of any such change, Tenant’s Share of the Direct Expenses and Tenant’s
Share of the Utilities Costs shall be equitably adjusted for any Expense Year
involved in any such change.


4.2.4  “Operating Expenses”
shall mean all expenses, costs and amounts of every kind and nature which
Landlord shall pay or incur during any Expense Year because of or in connection
with the ownership, management, maintenance, repair, replacement, restoration
or operation of the Real Property, including, without limitation, any amounts
paid or incurred for:  (i) all
Utilities Costs; (ii) the cost of janitorial service, alarm and security
service, window cleaning, and trash removal, the cost of operating,
maintaining, repairing, replacing, renovating, managing and complying with
conservation measures in connection with the utility systems, mechanical
systems, sanitary and storm drainage systems, and escalator and elevator
systems, and the cost of supplies, tools, and equipment and maintenance and
service contracts in connection therewith; (iii) the cost of licenses,
certificates, permits and inspections and the cost of contesting the validity
or applicability of any governmental enactments which may affect Operating
Expenses, and the costs incurred in connection with the implementation and
operation of a transportation system management program or similar program;
(iv) the cost of insurance carried by Landlord in connection with the Real
Property, in such amounts as Landlord may reasonably determine, or as may be
required by any mortgagees, or the lessor of any underlying or ground lease
affecting the Real Property; (v) the cost of landscaping, relamping,
supplies, tools, equipment (including equipment rental agreements) and materials,
and all fees, charges and other costs, including management fees (or amounts in
lieu thereof), consulting fees, legal fees and accounting fees, incurred in
connection with the management, operation, administration, maintenance and
repair of the Real Property; (vi) the cost of parking area repair,
restoration and maintenance, including, but not limited to, resurfacing,
repainting, restriping, and cleaning; (vii) fees, charges and other costs,
including consulting fees, legal fees and accounting fees, of all contractors
and consultants; (viii) payments under any equipment rental agreements or
management agreements (including the cost of any management fee and the fair
rental value of any office space provided thereunder); (ix) wages,
salaries and other compensation and benefits of all persons engaged in the
operation, management, maintenance or security of the Real Property, and
employer’s Social Security taxes, unemployment taxes or insurance, and any
other taxes which may be levied on such wages, salaries, compensation and
benefits; (x) payments under any easement, license, operating agreement,
declaration, restrictive covenant, or instrument pertaining to the sharing of
costs by the Real Property; (xi) amortization (including interest on the
unamortized cost at a rate equal to the floating commercial loan rate announced
from time to time by Bank of America, a national banking association, or its
successor, as its prime rate, plus 2% per annum (the “Interest Rate”))
of the cost of acquiring or the rental expense of personal property used in the
maintenance, operation and repair of the Real Property; (xii) the cost
(including rent) of Landlord’s property management office for the Real Property
and all utilities, supplies and materials used in connection therewith; and
(xiii) the cost of any capital alterations, capital additions, or capital
improvements made to the Real Property or any portion thereof (A) which
relate to the operation, repair, maintenance and replacement of all systems, equipment
or facilities which serve the Real Property in the whole or in part (including
replacement of wall and floor coverings, ceiling tiles and fixtures in lobbies,


 


5





















 


corridors,
restrooms and other common or public areas or facilities, maintenance and
replacement of curbs, walkways and parking areas, and repairs to roofs and
reroofing of improvements), (B) which are intended as a labor–saving
device or to effect other economies in the operation or maintenance of the Real
Property, or any portion thereof, or (C) that are required under any
governmental law or regulation that is then being enforced by a federal, state
or local governmental agency; provided, however, that each such permitted
capital expenditure shall be amortized (including interest on the unamortized
cost at the Interest Rate in effect at the time such expenditure is placed in
service) over its useful life as Landlord shall reasonably determine.  If Landlord is not furnishing any particular
work or service (the cost of which, if performed or provided by Landlord, would
be included in Operating Expenses) to a tenant who has undertaken to perform
such work or service in lieu of the performance thereof by Landlord, Operating
Expenses shall be deemed to be increased by an amount equal to the additional
Operating Expenses which would reasonably have been incurred during such period
by Landlord if it had at its own expense furnished such work or service to such
tenant.  If the Building (and any
additional buildings constructed in the Building Complex) are not one hundred
percent (100%) occupied during all or a portion of any Expense Year (including
the Base Year), Landlord shall make an appropriate adjustment to the variable
components of Operating Expenses for such Expense Year (including the Base
Year) as reasonably determined by Landlord employing sound accounting and
management principles, to determine the amount of Operating Expenses that would
have been paid had such building(s) been one hundred percent (100%) occupied,
and the amount so determined shall be deemed to have been the amount of
Operating Expenses for such Expense Year. 
Notwithstanding anything to the contrary set forth in this
Article 4, when calculating Direct Expenses for the Base Year, Operating
Expenses shall exclude market–wide labor–rate increases due to extraordinary
circumstances, including, but not limited to, boycotts and strikes, utility
rate increases due to extraordinary circumstances, including, without
limitation, conservation surcharges, boycotts, embargoes or other shortages,
and costs relating to capital improvements or expenditures.


Landlord shall have the right, from time to
time, to equitably allocate and prorate some or all of the Direct Expenses
and/or Utilities Costs among different tenants and/or different buildings of
the Building Complex and/or on a building–by–building basis (the “Cost Pools”).  Such Cost Pools may include, without
limitation, the office space tenants and retail space tenants of the buildings
in the Building Complex and may be modified to take into account the addition
of any additional office buildings within the Building Complex.


Notwithstanding the
foregoing, Operating Expenses shall not, however, include (A) costs of
repairs or other work occasioned by fire, windstorm or other casualty to the
extent Landlord is reimbursed by insurance proceeds (other than those amounts
within the deductible limits of insurance policies actually carried by
Landlord, which amounts shall be includable as Operating Expenses so long as such
deductibles are within the generally prevailing range of deductibles to
policies carried by landlords of comparable first class office buildings
located in the vicinity of the Building, but specifically excluding as
Operating Expenses the amount within the deductible limits of any earthquake or
flood damage insurance policies); (B) costs of leasing commissions,
attorneys’ fees and other costs and expenses incurred in connection with
negotiations or disputes with present or prospective tenants or other occupants
of the Building; (C) except as otherwise specifically provided in this
Section, costs incurred by Landlord in the repairs, capital additions,
alterations or replacements made or incurred to rectify or correct defects in
design, materials or workmanship in connection with any portion of the
Building; (D) costs (including permit, license and inspection costs)
incurred in renovating or otherwise improving, decorating or redecorating
rentable space for other tenants or vacant rentable space; (E) cost of utilities
or services sold to Tenant or others for which Landlord is entitled to and
actually receives reimbursement (other than through any operating cost
reimbursement provision identical or substantially similar to the provisions
set forth in this Lease); (F) except as otherwise specifically provided in
this Section, costs incurred by Landlord for alterations to the Project which
are considered capital improvements and replacements under generally accepted
accounting principles, consistently applied; (G) costs of depreciation and
amortization, except on materials, small tools and supplies purchased by
Landlord to enable Landlord to supply services Landlord might otherwise
contract for with a third party, where such depreciation and amortization would
otherwise have been included in the charge for such third party services, all
as determined in accordance with generally accepted accounting principles,
consistently applied; (H) costs of services or other benefits which are
not available to Tenant but which are provided to other tenants of the
Building; (I) costs incurred due to the violation by Landlord or any other
tenant of the terms and


6





















conditions of any lease
of space in the Building; (J) costs of overhead or profit increment paid
to Landlord or to subsidiaries or affiliates of Landlord for services in or in
connection with the Project to the extent the same exceeds the cost of such
services which could be obtained from third parties on a competitive basis;
(K) except as otherwise specifically provided in this Section, costs of
interest on debt or amortization on any mortgages, and rent and other charges,
costs and expenses payable under any mortgage, if any; (L) costs of
general overhead and general administrative expenses, not including management
fees and Project office expenses which are included in operating expenses by
Landlords of other comparable first class office buildings located in the
vicinity of the Building; (M) costs of advertising and promotion;
(N) costs of electrical power for which Tenant directly contracts with and
pays a local public service company; and (O) janitorial expenses for the
Premises, to the extent provided by Tenant.


4.2.5  “Tax Expenses”
shall mean all federal, state, county, or local governmental or municipal
taxes, fees, charges or other impositions of every kind and nature, whether
general, special, ordinary or extraordinary (including, without limitation,
real estate taxes, general and special assessments, transit taxes or charges,
business or license taxes or fees, annual or periodic license or use fees, open
space charges, housing fund assessments, leasehold taxes or taxes based upon
the receipt of rent, including gross receipts or sales taxes applicable to the
receipt of rent, personal property taxes imposed upon the fixtures, machinery,
equipment, apparatus, systems and equipment, appurtenances, furniture and other
personal property used in connection with the Building Complex), which Landlord
shall pay or incur during any Expense Year (without regard to any different
fiscal year used by such governmental or municipal authority) because of or in
connection with the ownership, leasing and operation of the Real Property or
Landlord’s interest therein.


4.2.5.1 
Tax Expenses shall include, without limitation:


(i)            any assessment, tax, fee, levy or
charge in addition to, or in substitution, partially or totally, of any
assessment, tax, fee, levy or charge previously included within the definition
of real property tax, it being acknowledged by Tenant and Landlord that
Proposition 13 was adopted by the voters of the State of California in the June
1978 election (“Proposition 13”)
and that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street, sidewalk
and road maintenance, conservation, refuse removal and for other governmental
services formerly provided without charge to property owners or occupants, and,
in further recognition of the decrease in the level and quality of governmental
services and amenities as a result of Proposition 13, Tax Expenses shall
also include any governmental or private assessments or the contribution of the
Building Complex towards a governmental or private cost–sharing agreement for
the purpose of augmenting or improving the quality of services and amenities
normally provided by governmental agencies. 
It is the intention of Tenant and Landlord that all such new and
increased assessments, taxes, fees, levies, and charges and all similar
assessments, taxes, fees, levies and charges be included within the definition
of Tax Expenses for purposes of this Lease;


(ii)           any assessment, tax, fee, levy, or
charge allocable to or measured by the area of the Premises or the Rent payable
hereunder, including, without limitation, any gross income tax with respect to
the receipt of such Rent, or upon or with respect to the possession, leasing,
operating, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises, or any portion thereof;


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


(iv)          any possessory taxes charged or levied
in lieu of real estate taxes; and


7





















(v)           any expenses incurred by Landlord in
attempting to protest, reduce or minimize Tax Expenses.


4.2.5.2 
In no event shall Tax Expenses for any Expense Year be less than the
component of Tax Expenses comprising a portion of the Base Year.


4.2.5.3 
Notwithstanding anything to the contrary contained in this
Section 4.2.5, there shall be excluded from Tax Expenses:  (i) all excess profits taxes, franchise
taxes, gift taxes, capital stock taxes, inheritance and succession taxes,
estate taxes, federal and state income taxes, and other taxes to the extent
applicable to Landlord’s general or net income (as opposed to rents, receipts
or income attributable to operations at the Building Complex); and
(ii) any items paid by Tenant under Section 4.4 of this Lease.


4.2.6  “Utilities Costs”
shall mean the cost of all utilities supplied for the Building Complex
(including, without limitation, water, sewer, electricity, telephone and HVAC),
other than those utilities which are paid directly by Tenant and other tenants
of the Building Complex for excess consumption and after–hours HVAC pursuant to
Section 6.2 of this Lease or similar provisions in other tenants’
leases.  Notwithstanding anything herein
to the contrary, and in addition to Tenant’s obligations to pay items of
Additional Rent as described in this Lease, throughout Tenant’s occupancy of
the Premises, whether prior to, during or after the Lease Term, Tenant shall
pay directly for all utilities and services supplied to the Premises, including
but not limited to electricity, telephone, water and/or gas, together with any
taxes thereon (“Tenant’s Utilities”).  If any of Tenant’s Utilities are not
separately metered or billed to the Premises, Tenant shall pay to Landlord, as
Additional Rent, a reasonable proportion to be determined by Landlord of all
such charges jointly metered or billed with other premises in the Building, in
the manner and within the time periods set forth above for Additional Rent.  The responsibility for providing and the cost
of any such Tenant’s Utilities delivered to or consumed on the Premises (except
for standard air conditioning and heating) shall be controlled by the terms and
conditions of this Article 4. 
Tenant agrees to provide all, and Landlord shall not provide any, of
such utilities to the Premises.


4.2.6.1 
To the extent possible at the Premises, Tenant, at its sole expense,
shall maintain separate meters for Tenant’s use of Tenant’s Utilities.  Tenant shall contract directly with the
appropriate utility companies and/or public entities for the provision of such
utilities, and shall pay directly such companies’ charges and any governmental
fees, taxes or other charges payable in connection with such utility service.


4.2.6.2 
Tenant agrees that the heating, ventilation and air conditioning systems
within the Premises are adequate for Tenant’s use.  Tenant shall use its best efforts to conserve
energy in the operation of its heating, ventilation and air conditioning systems,
and shall cooperate with Landlord in any energy conservation programs.


4.2.6.3 
Tenant agrees that the lighting systems within the Premises are adequate
for Tenant’s use.  Tenant shall use
commercially reasonable efforts to conserve energy in the operation of its
lighting systems, and shall cooperate with Landlord in any energy conservation
programs.


4.2.6.4 
If Tenant fails to provide any of the utility or other services as
required by this Section 4.2.6 or is, in Landlord’s reasonable judgment, about
to so fail, Landlord may, but shall not be required to, provide such services
on Tenant’s account.  Any costs incurred
by Landlord in providing such services shall be deemed Additional Rent
hereunder, and shall be billed as set forth in this Lease.  If Tenant fails to make any such payment of
Additional Rent that includes the cost of utility or other services, then
without prejudice to any other remedy that Landlord may have by reason of such
failure to pay, Landlord may discontinue any such utility service to the
Premises, without thereby incurring any liability to Tenant.  Any such discontinuance of utility or other
service shall not be deemed an eviction (constructive or otherwise), a
disturbance of possession, nor an election by Landlord to terminate the Lease.


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4.2.7  “Tenant’s Share”
shall mean the percentage set forth in Section 9.2 of the Summary.  Tenant’s Share was calculated by multiplying
the number of rentable square feet of the Premises by 100 and dividing the product
by the total rentable square feet in the Building.  Landlord shall have the right from time to
time, in its discretion, to include or exclude existing or future buildings in
the Building Complex in the calculation of the total rentable square feet of the
Building Complex, for purposes of determining the Building’s Share of Direct
Expenses, Utilities Costs and/or the provision of various services and
amenities thereto, including equitable allocation of Direct Expenses and/or
Utilities Costs in Cost Pools (as described in Section 4.2.4 above); in
such event, Tenant’s Share shall include such allocation of the Building’s
Share of Direct Expenses and Utilities Costs in the calculation of Tenant’s
Share.  In addition, in the event either
the rentable square feet of the Premises and/or the Building and other
buildings in the Building Complex is changed, Tenant’s Share and/or the
Building’s Share shall be appropriately adjusted, and, as to the Expense Year
in which such change occurs, Tenant’s Share and/or the Building’s Share for
such year shall be determined on the basis of the number of days during such
Expense Year that each such Tenant’s Share and/or the Building’s Share was in
effect.


4.3           Calculation
and Payment of Additional Rent.


4.3.1  Calculation of Excess.  For each Expense Year ending or commencing
within the Lease Term, Tenant shall pay to Landlord, in the manner set forth in
Section 4.3.2, below, and as Additional Rent:  (i) the amount by which Tenant’s Share
of Direct Expenses for such Expense Year exceeds Tenant’s Share of the Direct
Expenses for the Base Year (Tenant’s Share of such excess amount is hereinafter
referred to as the “Excess”);
and (ii) Tenant’s Share of the Utilities Costs incurred for such Expense
Year.


4.3.2  Statement of Actual Direct Expenses and
Utilities Costs and Payment by Tenant.  Following the end of each Expense Year,
Landlord shall give to Tenant a statement (the “Statement”),
which shall indicate:  (i) the
Direct Expenses incurred or accrued for such preceding Expense Year, and which
shall indicate the amount, if any, of any Excess; and (ii) the amount of
the Utilities Costs incurred for such preceding Expense Year.  Upon receipt of the Statement for each
Expense Year ending during the Lease Term, Tenant shall pay, with its next
installment of Base Rent due, but in no event later than thirty (30) days after
receipt of such Statement, (A) the full amount of any Excess for such
Expense Year, less the amounts, if any, paid during such Expense Year as “Estimated
Excess,” as that term is defined in Section 4.3.3, below, plus
(B) the full amount of Tenant’s Share of the Utilities Costs for such
Expense Year, less the amounts, if any, paid by Tenant during the Expense Year
as “Estimated Utilities Costs”, as that term is defined in Section 4.3.3
below.  The failure of Landlord to timely
furnish the Statement for any Expense Year shall not prejudice Landlord from
enforcing its rights under this Article 4; provided, however, that
Landlord agrees to use commercially reasonable efforts to furnish the Statement
by April 30 of the Lease Year.  Even
though the Lease Term has expired and Tenant has vacated the Premises, when the
final determination is made of the Direct Expenses and Utilities Costs for the
Expense Year in which this Lease terminates, taking into consideration that the
Lease Expiration Date may have occurred prior to the final day of the
applicable Expense Year, Tenant shall immediately pay to Landlord an amount as
calculated pursuant to the provisions of Section 4.3.1 of this Lease as
Tenant’s Share of the Excess and Utilities Costs for such final Expense
Year.  The provisions of this
Section 4.3.2 shall survive the expiration or earlier termination of the
Lease Term.


4.3.3  Statement of Estimated Direct Expenses and
Utilities Costs.  In addition, Landlord shall give Tenant a
yearly expense estimate statement (the “Estimate
Statement”)
which shall set forth Landlord’s reasonable estimate (the “Estimate”)
of (i) what the total amount of Direct Expenses for the then–current
Expense Year shall be and the estimated Excess (the “Estimated Excess”)
as calculated by comparing Tenant’s Share of Direct Expenses for such then–current
Expense Year, which shall be based upon the Estimate, to Tenant’s Share of
Direct Expenses for the Base Year, and (ii) what the total amount of
Tenant’s Share of the Utilities Costs for the then–current Expense Year shall
be (the “Estimated Utilities Costs”).  The Estimate Statement may be revised and
reissued by Landlord from time to time. 
The failure of Landlord to timely furnish the Estimate Statement for any
Expense Year shall not preclude Landlord from enforcing its rights to collect
any Estimated Excess or Estimated Utilities Costs under this Article 4;
provided, however, that Landlord agrees to use commercially reasonable efforts
to furnish the Estimated Statement by April 30 of the Lease Year.  Within thirty (30) days after receipt of such
Estimate Statement, Tenant shall pay


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to
Landlord an amount equal to (A) a fraction of the Estimated Excess (or the
increase in the Estimated Excess if pursuant to a revised Estimate Statement)
for the then–current Expense Year (reduced by any amounts paid as Estimated
Excess pursuant to the last sentence of this Section 4.3.3), plus
(B) a fraction of the Estimated Utilities Costs (or the increase in the
Estimated Utilities Costs if pursuant to a revised Estimate Statement) for the
then–current Expense Year (reduced by the amounts paid as Estimated Utilities
Costs pursuant to the last sentence of this Section 4.3.3).  Such fraction shall have as its numerator the
number of months which have elapsed in such current Expense Year to the month
of such payment, both months inclusive, and shall have twelve (12) as its
denominator.  Until a new Estimate
Statement is furnished, Tenant shall pay monthly, with the monthly Base Rent
installments, an amount equal to the sum of (x) one–twelfth (1/12) of the
total Estimated Excess plus (y) one–twelfth (1/12) of the total Estimated
Utilities Costs set forth in the previous Estimate Statement delivered by
Landlord to Tenant.


4.4           Taxes and Other Charges for Which Tenant Is
Directly Responsible.  Tenant shall reimburse Landlord, as
Additional Rent, within ten (10) days after demand, for any and all taxes
required to be paid by Landlord (except to the extent included in Tax Expenses
by Landlord), excluding state, local and federal personal or corporate income
taxes measured by the net income of Landlord from all sources and estate and
inheritance taxes, whether or not now customary or within the contemplation of
the parties hereto, when:


4.4.1 
said taxes are measured by or reasonably attributable to the cost or
value of Tenant’s equipment, furniture, fixtures and other personal property
located in the Premises, or by the cost or value of any leasehold improvements
made in or to the Premises by or for Tenant, to the extent the cost or value of
such leasehold improvements exceeds the cost or value of a building standard
build–out as determined by Landlord regardless of whether title to such
improvements shall be vested in Tenant or Landlord;


4.4.2 
said taxes are assessed upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises or any portion of the Building Complex; or


4.4.3 
said taxes are assessed upon this transaction or any document to which
Tenant is a party creating or transferring an interest or an estate in the
Premises.


4.5           Late Charges.  If any installment of Rent or any other sum
due from Tenant shall not be received by Landlord or Landlord’s designee within
three (3) days of the due date therefor, then Tenant shall pay to Landlord a
late charge equal to five percent (5%) of the amount due plus any attorneys’
fees incurred by Landlord by reason of Tenant’s failure to pay Rent and/or
other charges when due hereunder.  The
late charge shall be deemed Additional Rent and the right to require it shall
be in addition to all of Landlord’s other rights and remedies hereunder, at law
and/or in equity and shall not be construed as liquidated damages or as
limiting Landlord’s remedies in any manner. 
In addition to the late charge described above, any Rent or other
amounts owing hereunder which are not paid by the date they are due shall
thereafter bear interest until paid at a rate equal to the lesser of
(i) the Interest Rate set forth in Section 4.2.4 above, or (ii) the
highest rate permitted by applicable law.


4.6           Audit Right.  Within one hundred eighty (180) days after
receipt of a Statement by Tenant (“Review
Period”),
if Tenant disputes the amount set forth in the Statement, Tenant’s employees or
an independent certified public accountant (which accountant is a member of a
nationally or regionally recognized accounting firm) designated by Tenant, may,
after written notice to Landlord and at reasonable times, inspect Landlord’s
records (pertaining to Landlord’s calculation of Direct Expenses and/or
Utilities Costs) at Landlord’s offices, provided that Tenant is not then in
default after expiration of all applicable cure periods and provided further
that Tenant and such accountant or representative shall, and each of them shall
use their commercially reasonable efforts to cause their respective agents and
employees to, maintain all information contained in Landlord’s records in
strict confidence.  Notwithstanding the
foregoing, Tenant shall only have the right to review Landlord’s records one
(1) time during any twelve (12) month period. 
Tenant’s failure to dispute the amounts set forth in any Statement
within the Review Period shall be deemed to be Tenant’s approval of such
Statement and Tenant, thereafter, waives the right or ability to dispute the
amounts


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set forth in such Statement.  If after such inspection, but within thirty
(30) days after the Review Period, Tenant notifies Landlord in writing that
Tenant still disputes such amounts, a certification as to the proper amount
shall be made, at Tenant’s expense, by an independent certified public
accountant selected by Landlord, and reasonably acceptable to Tenant, who is a
member of a nationally or regionally recognized accounting firm.  However, if such certification by the
accountant proves that the total amount of Direct Expenses and/or Utilities
Costs, as applicable, set forth in the Statement were overstated by more than
five percent (5%), then the actual, documented and reasonable cost of the
review, the accountant and such certification shall be paid for by
Landlord.  Promptly following the parties
receipt of such certification, the parties shall make such appropriate payments
or reimbursements, as the case may be, to each other, as are determined to be
owing pursuant to such certification.  In
no event shall Landlord or its property manager be required to
(i) photocopy any accounting records or other items or contracts (but
Landlord will permit Tenant to make photocopies at Tenant’s own expense),
(ii) create any ledgers or schedules not already in existence,
(iii) incur any costs or expenses relative to such inspection (except as
provided above), or (iv) perform any other tasks other than making
available such accounting records as are described in this paragraph.  Landlord shall not be liable for the payment
of any contingency fee payments to any auditor or consultant of Tenant.


ARTICLE 5

USE OF PREMISES


Tenant shall use the Premises solely for general
office purposes (which shall include such activities as sales, software
engineering, data entry, small parcel shipping and related functions)
consistent with the character of the Building Complex as a first–class office
building project, and Tenant shall not use or permit the Premises to be used for
any other purpose or purposes whatsoever. 
Tenant further covenants and agrees that it shall not use, or suffer or
permit any person or persons to use, the Premises or any part thereof for any
use or purpose contrary to the Rules and Regulations, or in violation of the
laws of the United States of America, the State of California, or the
ordinances, regulations or requirements of the local municipal or county
governing body or other lawful authorities having jurisdiction over the
Building Complex (including laws pertaining to Hazardous Materials, as defined
below).  Tenant shall comply with the
Rules and Regulations.  Landlord shall
not be responsible to Tenant for the nonperformance of any of such Rules and
Regulations by or otherwise with respect to the acts or omissions of any other
tenants or occupants of the Building Complex. 
Tenant shall comply with all recorded covenants, conditions, and
restrictions now or hereafter affecting the Real Property.


ARTICLE 6

SERVICES AND UTILITIES


6.1           Standard Tenant Services.  Landlord shall provide the following services
on all days during the Lease Term, unless otherwise stated below.


6.1.1 
Subject to all governmental rules, regulations and guidelines applicable
thereto, Landlord shall provide heating, ventilation and air conditioning (“HVAC”)
for normal office use in the Premises, from Monday through Friday, during the
period from 7:00 a.m. to 6:00 p.m., and on Saturdays during the
period from 8:00 a.m. to 12:00 p.m. (collectively, the “Building Hours”),
except for nationally and locally recognized holidays as designated by Landlord
(collectively, the “Holidays”).


6.1.2 
Landlord shall provide adequate electrical wiring and facilities and
power for normal general office use. 
Tenant shall bear the cost of replacement of lamps, starters and
ballasts for non–Building standard lighting fixtures within the Premises.


6.1.3 
Landlord shall provide city water from the regular Building outlets for
drinking, lavatory and toilet purposes.


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6.1.4 
Landlord shall provide janitorial services five (5) days per week,
except the date of observation of the Holidays, in and about the Premises.


6.1.5 
Landlord shall provide nonexclusive automatic elevator service at all
times.


6.2           Overstandard Tenant Use.  Tenant shall not, without Landlord’s prior
written consent, use heat–generating machines, machines other than normal
fractional horsepower office machines, or equipment or lighting other than
building standard lights in the Premises, which may adversely affect the
temperature otherwise maintained by the air conditioning system or increase the
water normally furnished for the Premises by Landlord pursuant to the terms of
Section 6.1 of this Lease.  If
Tenant uses water or HVAC in excess of that typically supplied for office uses
in similar buildings, or if Tenant’s consumption of electricity shall exceed an
average of three (3) watts per useable square foot of the Premises, connected
load, calculated on a monthly basis during the Building Hours set forth in
Section 6.1.1 above, then Tenant shall pay to Landlord, within thirty (30)
days after billing, the cost of such excess consumption, the cost of the
installation, operation, and maintenance of equipment which is installed in
order to supply such excess consumption, administrative and overhead costs
incurred in connection with such excess consumption, and the cost of the
increased wear and tear on existing equipment caused by such excess
consumption; and Landlord may install devices to separately meter any increased
use and in such event Tenant shall pay the increased cost directly to Landlord,
within thirty (30) days after demand, including the cost of such additional
metering devices.  If Tenant desires to
use HVAC during hours other than the Building Hours, (i) Tenant shall give
Landlord such prior notice, as Landlord shall from time to time establish as
appropriate, of Tenant’s desired use, (ii) Landlord shall supply such
after–hours HVAC to Tenant at such hourly cost (which shall include, without
limitation, the cost of the use of such HVAC, administrative and overhead
charges, and the cost of maintenance and increased wear and tear on equipment
used to provide such after–hours HVAC) to Tenant as Landlord shall from time to
time establish, and (iii) Tenant shall pay such cost within thirty (30)
days after billing.


6.3           Interruption of Use.  Tenant agrees that Landlord shall not be
liable for damages, by abatement of Rent or otherwise, for failure to furnish
or delay in furnishing any service (including telephone and telecommunication
services), or for any diminution in the quality or quantity thereof, when such
failure or delay or diminution is occasioned, in whole or in part, by repairs,
replacements, or improvements, by any strike, lockout or other labor trouble,
by inability to secure electricity, gas, water, or other fuel at the Building
after reasonable effort to do so, by any accident or casualty whatsoever, by
act or default of Tenant or other parties, or by any other cause beyond
Landlord’s reasonable control; and such failures or delays or diminution shall
never be deemed to constitute an eviction or disturbance of Tenant’s use and
possession of the Premises or relieve Tenant from paying Rent or performing any
of its obligations under this Lease. 
Furthermore, Landlord shall not be liable under any circumstances for a
loss of, or injury to, property or for injury to, or interference with, Tenant’s
business, including, without limitation, loss of profits, however occurring,
through or in connection with or incidental to a failure to furnish any of the
services or utilities as set forth in this Article 6.


6.4           Additional Services.  Landlord shall also have the exclusive right,
but not the obligation, to provide any additional services which may be
required by Tenant, including, without limitation, locksmithing, additional
janitorial service, and additional repairs and maintenance, provided that
Tenant shall pay to Landlord, within thirty (30) days after billing, the sum of
all costs to Landlord of such additional services plus an administration
fee.  Charges for any utilities or
service for which Tenant is required to pay from time to time hereunder, shall
be deemed Additional Rent hereunder and shall be billed on a monthly basis.


ARTICLE 7

REPAIRS


7.1           Tenant’s Repairs.  Subject to Landlord’s repair obligations in
Sections 7.2 and 11.1 below, Tenant shall, at Tenant’s own expense, keep
the Premises, including all improvements, fixtures and furnishings therein, in
good order, repair and condition at all times during the Lease Term, which
repair obligations shall include, without limitation, the obligation to
promptly and adequately repair all damage to the Premises and replace or repair
all damaged or broken fixtures and appurtenances; provided however, that, at


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Landlord’s option, or if Tenant fails to make
such repairs, Landlord may, but need not, make such repairs and replacements,
and Tenant shall pay Landlord the cost thereof, including a percentage of the
cost thereof (to be uniformly established for the Building) sufficient to
reimburse Landlord for all overhead, general conditions, fees and other costs
or expenses arising from Landlord’s involvement with such repairs and
replacements forthwith within thirty (30) days of being billed for same.


7.2           Landlord’s Repairs.  Anything contained in Section 7.1 above
to the contrary notwithstanding, and subject to Articles 11 and 12 of this
Lease, Landlord shall repair and maintain the structural portions of the
Building and the basic plumbing, heating, ventilating, air conditioning and
electrical systems serving the Building and not located in the Premises;
provided, however, if such maintenance and repairs are caused in part or in
whole by the act, neglect, fault of or omission of any duty by Tenant, its
agents, contractors, employees, licenses or invitees, Tenant shall pay to
Landlord, as additional rent, the reasonable cost of such maintenance and
repairs.  Landlord shall not be liable to
Tenant for any failure to make any such repairs, or to perform any maintenance
hereunder, and there shall be no abatement of Rent and no liability of Landlord
by reason of any injury to or interference with Tenant’s business arising from
the making of a failure to make any repairs, alterations or improvements in or
to any portion of the Premises or Building Complex or in or to fixtures,
appurtenances and equipment therein. 
Landlord may, but shall not be required to, enter the Premises at all
reasonable times to make any repairs, alterations, improvements or additions to
the Premises or to the Building Complex or to any equipment located in the
Building Complex as Landlord shall desire or deem necessary or as Landlord may
be required to do by governmental or quasi–governmental authority or court
order or decree.  Tenant hereby waives
and releases its right to make repairs at Landlord’s expense under any law,
statute, or ordinance now or hereafter in effect.


ARTICLE 8

ADDITIONS AND ALTERATIONS


8.1           Landlord’s Consent to Alterations.  Tenant may not make any improvements,
alterations, additions or changes to the Premises (collectively, the “Alterations”)
without first procuring the prior written consent of Landlord to such
Alterations, which consent shall be requested by Tenant not less than thirty
(30) days prior to the commencement thereof, and which consent shall not be
unreasonably withheld by Landlord; provided, however, Landlord may withhold its
consent in its sole and absolute discretion with respect to any Alterations
which (i) may affect the structural components of the Building, or the
Building’s mechanical, electrical, heating, ventilating, air–conditioning, or
life safety systems, or (ii) are visible from outside the Premises.  Notwithstanding the foregoing, Tenant may
make strictly cosmetic changes to the finish work in the Premises, not
requiring any structural or other substantial modifications to the Premises,
upon ten (10) days prior written notice to Landlord.  The construction of the initial improvements
to the Premises shall be governed by the terms of the Tenant Work Letter,
attached hereto as Exhibit D,
and not the terms of this Article 8.


8.2           Manner of Construction.  Landlord may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or about the
Premises, such requirements as Landlord in its sole discretion (as to any
Alterations or repairs which may affect the Base, Shell and Core or the
structural elements of the Building) and otherwise in its reasonable discretion
may deem desirable, including, but not limited to, the requirement that upon
Landlord’s request, Tenant shall, at Tenant’s expense, remove such Alterations
upon the expiration or any early termination of the Lease Term (upon Tenant’s
request, Landlord shall specify, at the time of its consent, which Alteration,
if any, must be removed upon expiration or early termination of the Lease
Term), and/or the requirement that Tenant utilize for such purposes only
contractors, materials, mechanics and materialmen approved by Landlord, which
approval shall not be unreasonably withheld, conditioned or delayed.  Tenant shall construct such Alterations and
perform such repairs in conformance with any and all applicable rules and
regulations of any federal, state, county or municipal code or ordinance and
pursuant to a valid building permit, issued by the City of San Diego in
conformance with Landlord’s construction rules and regulations.  All work with respect to any Alterations must
be done in a good and workmanlike manner and diligently prosecuted to
completion to the end that the Premises shall at all times be a complete unit
except during the period of work.  In
performing the work of any such Alterations, Tenant shall have the work
performed in such manner as not to obstruct access to the Building or Building


13





















Complex or the common areas by any other tenant
of the Building Complex, and as not to obstruct the business of Landlord or
other tenants in the Building Complex, or interfere with the labor force
working in the Building Complex.  If
Tenant makes any Alterations, Tenant agrees to carry “Builder’s All Risk”
insurance in an amount approved by Landlord covering the construction of such
Alterations, and such other insurance as Landlord may require, it being
understood and agreed that all of such Alterations shall be insured by Tenant
pursuant to Article 10 of this Lease immediately upon completion
thereof.  In addition, Landlord may, in
its discretion, require Tenant to obtain a lien and completion bond or some
alternate form of security satisfactory to Landlord in an amount sufficient to
ensure the lien–free completion of such Alterations and naming Landlord as a co–obligee
if the cost of the proposed Alterations exceeds $500,000.  Upon completion of any Alterations, Tenant
shall (i) cause a timely Notice of Completion to be recorded in the office
of the Recorder of San Diego County in accordance with the terms of
Section 3093 of the Civil Code of the State of California or any successor
statute, (ii) deliver to the Building Complex management office a
reproducible copy of the “as built” drawings of the Alterations, and
(iii) deliver to Landlord evidence of payment, contractors’ affidavits and
full and final waivers of all liens for labor, services or materials.


8.3           Payment for Alterations.  If Tenant orders any Alterations or repair
work directly from Landlord, Tenant shall pay to Landlord, within thirty (30)
days after demand, all charges for such work, including a percentage of the
cost of such work (such percentage to be established on a uniform basis for the
Building) sufficient to compensate Landlord for all overhead, general
conditions, fees and other costs and expenses arising from Landlord’s
involvement with such work.  If Tenant
does not order any work directly from Landlord, Tenant shall reimburse
Landlord, within thirty (30) days after demand, for Landlord’s out–of–pocket
costs and expenses incurred in connection with Landlord’s review of such work,
plus a Landlord administrative fee equal to five percent (5%) of the total cost
of such work.


8.4           Landlord’s Property.  All Alterations, improvements and fixtures
which may be installed or placed in or about the Premises, and all signs
installed in, on or about the Premises, from time to time, shall be at the sole
cost of Tenant and shall be and become the property of Landlord.  Notwithstanding the following, Landlord may,
by written notice to Tenant given at the time Landlord consents to the
Alteration, require Tenant at Tenant’s expense to remove any Alterations from
the Premises and repair any damage to the Premises and Building caused by such
removal.  If Tenant fails to complete
such removal prior and/or to repair any damage caused by the removal of any
Alterations by the end of the Lease Term, Landlord may do so and may charge the
cost thereof to Tenant.


ARTICLE 9

COVENANT AGAINST LIENS


Tenant has no authority or power to cause or
permit any lien or encumbrance of any kind whatsoever, whether created by act
of Tenant, operation of law or otherwise, to attach to or be placed upon the
Real Property or any portion thereof, and any and all liens and encumbrances
created by Tenant shall attach to Tenant’s interest only.  Landlord shall have the right at all times to
post and keep posted on the Premises any notice which it deems necessary for
protection from such liens.  Tenant
covenants and agrees not to suffer or permit any lien of mechanics or
materialmen or others to be placed against the Real Property or any portion
thereof, with respect to work or services claimed to have been performed for or
materials claimed to have been furnished to Tenant or the Premises, and, in
case of any such lien attaching or notice of any lien, Tenant covenants and
agrees to cause it to be immediately released and removed of record.  Notwithstanding anything to the contrary set
forth in this Lease, in the event that such lien is not released and removed on
or before the date occurring ten (10) days after notice of such lien is
delivered by Landlord to Tenant, Landlord, at its sole option, may immediately take
all action necessary to release and remove such lien, without any duty to
investigate the validity thereof, and all sums, costs and expenses, including
reasonable attorneys’ fees and costs, incurred by Landlord in connection with
such lien shall be deemed Additional Rent under this Lease and shall
immediately be due and payable by Tenant.


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ARTICLE 10

INSURANCE


10.1         Indemnification and Waiver.  Tenant hereby assumes all risk of damage to
property and injury to persons in, on or about the Premises from any cause
whatsoever, and agrees that, to the extent not prohibited by law, Landlord, its
partners and subpartners, and their respective officers, directors,
shareholders, agents, property managers, employees and independent contractors
(collectively, the “Landlord Parties”)
shall not be liable for, and are hereby released from any responsibility for,
any damage either to person or property or resulting from the loss of use
thereof, which damage is sustained by Tenant or by other persons claiming
through Tenant.  Tenant shall indemnify,
defend, protect and hold harmless the Landlord Parties from and against any and
all loss, cost, damage, expense, cause of action, claims and liability, including
without limitation court costs and reasonable attorneys’ fees (collectively “Claims”)
incurred in connection with or arising from any cause in, on or about the
Premises, and/or any acts, omissions or negligence of Tenant or of any person
claiming by, through or under Tenant, or of the contractors, agents, employees,
licensees or invitees of Tenant or any such person in, on or about the Real
Property, provided that the terms of the foregoing indemnity shall not apply to
any Claims to the extent resulting from Landlord’s breach of this Lease or the
negligence or willful misconduct of Landlord or the Landlord Parties and not
insured (or required to be insured) by Tenant under this Lease.  Tenant’s agreement to indemnify Landlord
pursuant to this Section 10.1 is not intended and shall not relieve any
insurance carrier of its obligations under policies required to be carried by
Tenant pursuant to the provision of this Lease. 
The provisions of this Section 10.1 shall survive the expiration or
sooner termination of this Lease with respect to any Claims occurring prior to
such expiration or termination.


10.2         Tenant’s Compliance with Landlord’s Fire and
Casualty Insurance.  Tenant shall, at Tenant’s expense, comply
with all insurance company requirements pertaining to the use of the Premises.  If Tenant’s conduct or use of the Premises
causes any increase in the premium for any insurance policies carried by
Landlord, then Tenant shall reimburse Landlord for any such increase. Tenant,
at Tenant’s expense, shall comply with all rules, orders, regulations or
requirements of the American Insurance Association (formerly the National Board
of Fire Underwriters) and with any similar body.


10.3         Tenant’s Insurance.  Tenant shall maintain the following coverages
in the following amounts at all times following the date (the “Insurance Start Date”)
which is the earlier of (i) Tenant’s entry into the Premises to perform
any work therein, or (ii) the Lease Commencement Date, and continuing
thereafter throughout the Lease Term:


10.3.1 
Commercial General Liability Insurance covering the insured against
claims of bodily injury, personal injury and property damage arising out of
Tenant’s operations, assumed liabilities or use of the Premises, including a
Commercial General Liability endorsement covering the insuring provisions of
this Lease and the performance by Tenant of the indemnity agreements set forth
in Section 10.1 of this Lease, for limits of liability not less than:  (i) Bodily Injury and Property Damage
Liability — $5,000,000 each occurrence and $5,000,000 annual aggregate, and
(ii) Personal Injury Liability — $5,000,000 each occurrence and $5,000,000
annual aggregate.


10.3.2 
Physical Damage Insurance covering (i) all office furniture, trade
fixtures, office equipment, merchandise and all other items of Tenant’s
property on the Premises installed by, for, or at the expense of Tenant, and
(ii) all Alterations and other improvements and additions in and to the
Premises whether owned by Landlord or Tenant pursuant to this Lease.  Such insurance shall be written on an “all
risks” of physical loss or damage basis, for the guaranteed replacement cost
value new without deduction for depreciation of the covered items and in
amounts that meet any co–insurance clauses of the policies of insurance and
shall include a vandalism and malicious mischief endorsement, sprinkler leakage
coverage and earthquake sprinkler leakage coverage.


10.3.3 
Business interruption, loss–of–income and extra–expense insurance in
such amounts as will reimburse Tenant for direct or indirect loss of earnings
attributable to all perils commonly insured


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against
by prudent tenants or attributable to prevention of access to the Premises or
to the Building as a result of such perils.


10.3.4 
The minimum limits of policies of insurance required of Tenant under
this Lease shall in no event limit the liability of Tenant under this
Lease.  Such insurance shall:  (i) name Landlord, and any other party
it so specifies, as an additional insured; (ii) specifically cover the
liability assumed by Tenant under this Lease, including, but not limited to,
Tenant’s obligations under Section 10.1 of this Lease; (iii) be
issued by an insurance company having a rating of not less than A–X in Best’s
Insurance Guide or which is otherwise acceptable to Landlord and licensed to do
business in the State of California; (iv) be primary insurance as to all
claims thereunder and provide that any insurance carried by Landlord is excess
and is non–contributing with any insurance requirement of Tenant;
(v) provide that said insurance shall not be canceled or coverage changed
unless thirty (30) days’ prior written notice shall have been given to Landlord
and any mortgagee of Landlord; and (vi) contain a cross–liability
endorsement or severability of interest clause acceptable to Landlord.  Tenant shall deliver said policy or policies
or certificates thereof to Landlord on or before the Insurance Start Date and
at least thirty (30) days before the expiration dates thereof.  In the event Tenant shall fail to procure
such insurance, or to deliver such certificate, Landlord may, at its option,
procure such policies for the account of Tenant, and the costs of it shall be
paid to Landlord as Additional Rent within five (5) days after delivery to Tenant
of bills therefor.


10.4         Subrogation.  Tenant agrees to have its insurance company
issuing property damage, loss of income and/or rental interruption and extra
expense insurance waive any rights of subrogation that such company may have
against Landlord.  Tenant hereby waives
any right that Tenant may have against Landlord on account of any loss or
damage to its property.    If Tenant
fails to carry the amounts and types of insurance required to be carried by it
pursuant to this Article 10, in addition to any remedies Landlord may have
under this Lease, such failure shall be deemed to be a covenant and agreement
by Tenant to self–insure with respect to the type and amount of insurance which
Tenant so failed to carry, with full waiver of subrogation with respect
thereto.


10.5         Additional Insurance Obligations.  Tenant shall carry and maintain during the
entire Lease Term, at Tenant’s sole cost and expense, increased amounts of the
insurance required to be carried by Tenant pursuant to this Article 10,
and such other reasonable types of insurance coverage and in such reasonable
amounts covering the Premises and Tenant’s operations therein, as may be
reasonably requested by Landlord, but in no event shall such increased amounts
of insurance or such other reasonable types of insurance be in excess of that
required by landlords of comparable Class “A” buildings located in the
Sorrento Mesa area.


10.6         Landlord’s Insurance.  During the Term, Landlord shall maintain
casualty insurance covering the Building (excluding the property which Tenant
is obligated to insure pursuant to the terms hereof).  Such insurance shall provide protection
against any peril generally included within the classification “Fire and
Extended Coverage”.  Landlord shall also
maintain comprehensive general liability and property damage insurance with
respect to the operation of the Building. 
Such insurance shall be in such amounts and with such deductibles as
Landlord reasonably deems appropriate. 
Landlord may, but shall not be obligated to, obtain and carry any other
form or forms of insurance as it or Landlord’s mortgagees or deed of trust
beneficiaries may determine advisable. 
Notwithstanding any contribution by Tenant to the cost of insurance
premiums as provided in this Lease. Tenant acknowledges that it has no right to
receive any proceeds from any insurance policies maintained by Landlord and
will not be named as an additional insured thereunder.


ARTICLE 11

DAMAGE AND DESTRUCTION


11.1         Repair of Damage to Premises by Landlord.  Tenant shall promptly notify Landlord of any
damage to the Premises resulting from fire or any other casualty or any
condition existing in the Premises as a result of a fire or other casualty that
would give rise to the terms of this Article 11.  If the Premises or any common areas of the
Building Complex serving or providing access to the Premises shall be damaged
by fire


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or other casualty or be subject to a condition
existing as a result of a fire or other casualty, Landlord shall promptly and
diligently, subject to reasonable delays for insurance adjustment or other
matters beyond Landlord’s reasonable control, and subject to all other terms of
this Article 11, restore the base, shell, and core of the Premises and
such common areas to substantially the same condition as existed prior to the
casualty, except for modifications required by zoning and building codes and
other laws or by the holder of a mortgage on the Building Complex (or any
portion thereof) or any other modifications to the common areas deemed desirable
by Landlord, provided that access to the Premises and any common restrooms
serving the Premises shall not be materially impaired.  Notwithstanding any other provision of this
Lease, upon the occurrence of any damage to the Premises, Tenant shall assign to
Landlord (or to any party designated by Landlord) all insurance proceeds
payable to Tenant under Tenant’s insurance required under
Sections 10.3.2(ii) and 10.3.2(iii) of this Lease, and Landlord shall
repair any injury or damage to the Tenant Improvements and Alterations
installed in the Premises and shall return such Tenant Improvements and
Alterations to their original condition; provided that if the cost of such
repair by Landlord exceeds the amount of insurance proceeds received by
Landlord from Tenant’s insurance carrier, as assigned by Tenant, the cost of
such repairs shall be paid by Tenant to Landlord prior to Landlord’s repair of
the damage.  In connection with such
repairs and replacements, Tenant shall, prior to the commencement of
construction, submit to Landlord, for Landlord’s review and approval, all
plans, specifications and working drawings relating thereto, and Landlord shall
select the contractors to perform such improvement work.  Landlord shall not be liable for any
inconvenience or annoyance to Tenant or its visitors, or injury to Tenant’s
business resulting in any way from such damage or the repair thereof; provided
however, that if such fire or other casualty shall have damaged the Premises or
common areas necessary to Tenant’s occupancy, and if such damage is not the
result of the negligence or willful misconduct of Tenant or Tenant’s agents,
employees, contractors, licensees or invitees, Landlord shall allow Tenant a
proportionate abatement of Base Rent during the time and to the extent the
Premises are unfit for occupancy for the purposes permitted under this Lease,
and not occupied by Tenant as a result thereof.


11.2         Landlord’s Option to Repair.  Notwithstanding the terms of
Section 11.1 of this Lease, Landlord may elect not to rebuild and/or
restore the Premises and/or Building and/or any other portion of the Building
Complex and instead terminate this Lease by notifying Tenant in writing of such
termination within sixty (60) days after the date of damage, such notice to
include a termination date giving Tenant sixty (60) days to vacate the
Premises, but Landlord may so elect only if the Building Complex shall be
damaged by fire or other casualty or cause or be subject to a condition
existing as a result of such a fire or other casualty or cause, whether or not
the Premises are affected, and one or more of the following conditions is
present:  (i) repairs cannot
reasonably be completed within one hundred eighty (180) days of the date of damage
(when such repairs are made without the payment of overtime or other premiums);
(ii) the holder of any mortgage on the Real Property or ground lessor with
respect to the Real Property shall require that the insurance proceeds or any
portion thereof be used to retire the mortgage debt, or shall terminate the
ground lease, as the case may be; or (iii) the damage or condition arising
as a result of such damage is not fully covered, except for deductible amounts,
by Landlord’s insurance policies.  In
addition, if the Premises, the Building or any portion of the Building Complex
is destroyed or damaged to any substantial extent during the last eighteen (18)
months of the Lease Term, then notwithstanding anything contained in this
Article 11, Landlord shall have the option to terminate this Lease by giving
written notice to Tenant of the exercise of such option within thirty (30) days
after such damage or destruction, in which event this Lease shall cease and
terminate as of the date of such notice. 
Upon such termination of this Lease pursuant to this Section 11.2,
Tenant shall pay the Base Rent and Additional Rent, properly apportioned up to
such date of damage (subject to any abatement as provided in Section 11.1
above), and both parties hereto shall thereafter be freed and discharged of all
further obligations hereunder, except as provided for in provisions of this
Lease which by their terms survive the expiration or earlier termination of
this Lease Term.


11.3         Waiver of Statutory Provisions.  The provisions of this Lease, including this
Article 11, constitute an express agreement between Landlord and Tenant
with respect to any and all damage to, or destruction of, all or any part of
the Real Property, and any statute or regulation of the State of California,
including, without limitation, Sections 1932(2) and 1933(4) of the
California Civil Code, with respect to any rights or obligations concerning
damage or destruction in the absence of an express agreement between the


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parties, and any other statute or regulation,
now or hereafter in effect, shall have no application to this Lease or any
damage or destruction to all or any part of the Real Property.


ARTICLE 12

CONDEMNATION


If ten percent (10%) or more of the Premises or
Building shall be taken by power of eminent domain or condemned by any competent
authority for any public or quasi–public use or purpose, or if Landlord shall
grant a deed or other instrument in lieu of such taking by eminent domain or
condemnation, Landlord shall have the option to terminate this Lease upon
ninety (90) days’ notice to Tenant, provided such notice is given no later than
one hundred eighty (180) days after the date of such taking, condemnation,
reconfiguration, vacation, deed or other instrument.  If more than twenty–five percent (25%) of the
rentable square feet of the Premises is taken, or if access to the Premises is
substantially impaired as a result of any taking of all or any portion of the
Building Complex, Tenant shall have the option to terminate this Lease upon
ninety (90) days’ notice to Landlord, provided such notice is given no later
than one hundred eighty (180) days after the date of such taking.  Landlord shall be entitled to receive the
entire award or payment in connection therewith, except that Tenant shall have the
right to file any separate claim available to Tenant for any taking of Tenant’s
personal property and fixtures belonging to Tenant and removable by Tenant upon
expiration of the Lease Term pursuant to the terms of this Lease, and for
moving expenses, so long as such claim does not diminish the award available to
Landlord, its ground lessor with respect to the Real Property or its mortgagee,
and such claim is payable separately to Tenant. 
All Rent shall be apportioned as of the date of such termination, or the
date of such taking, whichever shall first occur.  If any part of the Premises shall be taken,
and this Lease shall not be so terminated, the Base Rent shall be
proportionately abated.  Tenant hereby
waives any and all rights it might otherwise have pursuant to
Section 1265.130 of the California Code of Civil Procedure.


ARTICLE 13

COVENANT OF QUIET ENJOYMENT


Landlord covenants that Tenant, on paying the
Rent, charges for services and other payments herein reserved and on keeping,
observing and performing all the other terms, covenants, conditions, provisions
and agreements herein contained on the part of Tenant to be kept, observed and
performed, shall, during the Lease Term, peaceably and quietly have, hold and
enjoy the Premises subject to the terms, covenants, conditions, provisions and
agreements hereof without interference by any persons lawfully claiming by or
through Landlord.  The foregoing covenant
is in lieu of any other covenant express or implied.


ARTICLE 14

ASSIGNMENT AND SUBLETTING


14.1         Transfers.  Except as permitted by Section 14.7 below,
Tenant shall not, without the prior written consent of Landlord, assign,
mortgage, pledge, hypothecate, encumber, or permit any lien to attach to, or
otherwise transfer, this Lease or any interest hereunder, permit any assignment
or other such foregoing transfer of this Lease or any interest hereunder by
operation of law, sublet the Premises or any part thereof, or permit the use of
the Premises by any persons other than Tenant and its employees (all of the
foregoing are hereinafter sometimes referred to collectively as “Transfers”
and any person to whom any Transfer is made or sought to be made is hereinafter
sometimes referred to as a “Transferee”).  If Tenant shall desire Landlord’s consent to
any Transfer, Tenant shall notify Landlord in writing, which notice (the “Transfer Notice”)
shall include (i) the proposed effective date of the Transfer, which shall
not be less than thirty (30) days nor more than one hundred eighty (180) days
after the date of delivery of the Transfer Notice, (ii) a description of
the portion of the Premises to be transferred (the “Subject Space”),
(iii) all of the terms of the proposed Transfer and the consideration
therefor, including a calculation of the “Transfer Premium,” as that term is
defined in Section 14.3, below, in connection with such Transfer, the name
and address of the proposed Transferee, and a copy of all existing and/or
proposed documentation pertaining to the proposed Transfer, including all
existing operative documents to be executed to evidence such Transfer or the
agreements incidental or related to such Transfer, (iv) current financial
statements of the proposed Transferee


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certified by an officer, partner or owner
thereof, and (v) such other information as Landlord may reasonably
require.  Any Transfer made without
Landlord’s prior written consent shall, at Landlord’s option, be null, void and
of no effect, and shall, at Landlord’s option, constitute a default by Tenant
under Section 19.1.7 of this Lease. 
Whether or not Landlord consents to any proposed Transfer, Tenant shall
pay Landlord’s review and processing fees, as well as any reasonable legal fees
incurred by Landlord, within thirty (30) days after written request by
Landlord.


14.2         Landlord’s Consent.  Landlord shall not unreasonably withhold or
delay its consent to any proposed Transfer of the Subject Space to the
Transferee on the terms specified in the Transfer Notice.  The parties hereby agree that it shall be
deemed to be reasonable under this Lease and under any applicable law for
Landlord to withhold consent to any proposed Transfer where one or more of the
following apply, without limitation as to other reasonable grounds for
withholding consent:


14.2.1 
The Transferee is of a character or reputation or engaged in a business
which is not consistent with the quality of the Building Complex;


14.2.2 
The Transferee’s intended use of the Subject Space is not permitted
under this Lease;


14.2.3 
The Transfer will result in more than a reasonable and safe number of
occupants per floor within the Subject Space;


14.2.4 
The Transferee is a governmental entity or agency;


14.2.5 
The Transferee is not a party of reasonable financial worth and/or
financial stability in light of the responsibilities involved under the Lease
on the date consent is requested;


14.2.6 
The proposed Transfer would cause Landlord to be in violation of another
lease or agreement to which Landlord is a party, or would give an occupant of the
Building Complex a right to cancel its lease;


14.2.7 
The terms of the proposed Transfer will allow the Transferee to exercise
a right of renewal, right of expansion, right of first offer, or other similar
right held by Tenant (or will allow the Transferee to occupy space leased by
Tenant pursuant to any such right); or


14.2.8 
Either the proposed Transferee, or any person or entity which directly
or indirectly, controls, is controlled by, or is under common control with, the
proposed Transferee, (i) occupies space in the Building Complex at the
time of the request for consent, (ii) is negotiating with Landlord to
lease space in the Building Complex at such time, or (iii) has negotiated
with Landlord during the twelve (12)–month period immediately preceding the
Transfer Notice.


If Landlord consents to any Transfer pursuant to
the terms of this Section 14.2, Tenant may within six (6) months after
Landlord’s consent, but not later than the expiration of said six (6)–month
period, enter into such Transfer of the Premises or portion thereof, upon
substantially the same terms and conditions as are set forth in the Transfer
Notice furnished by Tenant to Landlord pursuant to Section 14.1 of this
Lease, provided that if there are any changes in the terms and conditions from
those specified in the Transfer Notice (i) such that Landlord would
initially have been entitled to refuse its consent to such Transfer under this
Section 14.2, or (ii) which would cause the proposed Transfer to be
more favorable to the Transferee than the terms set forth in Tenant’s original
Transfer Notice, Tenant shall again submit the Transfer to Landlord for its
approval and other action under this Article 14.  Notwithstanding any contrary provisions of
this Lease, if Tenant or any proposed Transferee claims that Landlord has
unreasonably withheld or delayed its consent to a proposed Transfer or
otherwise has breached its obligations under this Article, Tenant’s and such
Transferee’s only remedy shall be to seek a declaratory judgment and/or injunctive
relief, and Tenant, on behalf of itself and, to the extent permitted by law,
such proposed Transferee, waives all other remedies against Landlord, including
without limitation, the right to seek monetary damages or terminate this Lease.


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14.3         Transfer
Premium.


14.3.1  Definition of Transfer Premium.  If Landlord consents to a Transfer, as a
condition thereto which the parties hereby agree is reasonable, Tenant shall
pay to Landlord fifty percent (50%) of the “Transfer Premium,” as that term is
defined in this Section 14.3, received by Tenant from such
Transferee.  “Transfer Premium”
shall mean all rent, additional rent or other consideration payable by such
Transferee in connection with the Transfer which is in excess of the Rent
payable by Tenant under this Lease during the term of the Transfer, on a per
rentable square foot basis if less than all of the Premises is transferred,
after deducting the reasonable expenses incurred by Tenant for (i) any
changes, alterations and improvements to the Premises in connection with the
Transfer, and (ii) any attorneys’ fees, brokerage commissions in
connection with the Transfer (collectively, the “Subleasing Costs”).  “Transfer Premium” shall also include, but
not be limited to, key money and bonus money paid by Transferee to Tenant in
connection with such Transfer, and any payment in excess of fair market value
for services rendered by Tenant to Transferee or for assets, fixtures,
inventory, equipment, or furniture transferred by Tenant to Transferee in
connection with such Transfer.


14.3.2  Payment of Transfer Premiums.  The determination of the amount of the
Transfer Premium shall be made on an annual basis in accordance with the terms
of this Section 14.3.2, but an estimate of the amount of the Transfer
Premium shall be made each month and, subject to Tenant’s
actual receipt of the consideration due from a Transferee, one–twelfth
of such estimated amount shall be paid to Landlord promptly, but in no event
later than the next date for payment of Base Rent hereunder, subject to an
annual reconciliation on each anniversary date of the Transfer.  If the payments to Landlord under this
Section 14.3.2 during the twelve (12) months preceding each annual
reconciliation exceed the amount of Transfer Premium determined on an annual
basis, then Landlord shall credit the overpayment against Tenant’s future
obligations under this Section 14.3.2 or if the overpayment occurs during
the last year of the Transfer in question, refund the excess to Tenant.  If Tenant has underpaid the Transfer Premium,
as determined by such annual reconciliation, Tenant shall pay the amount of
such deficiency to Landlord promptly, but in no event later than the next date
for payment of Basic Rent hereunder.  For
purposes of calculating the Transfer Premium on an annual basis, Tenant’s
Subleasing Costs shall be deemed to be offset against the first rent,
additional rent or other consideration payable by the Transferee, until such
Subleasing Costs are exhausted.


14.3.3  Calculations of Rent.  In the calculation of the Rent, as it relates
to the Transfer Premium calculated under Section 14.3.1 above, the Rent
paid during each annual period for the Subject Space by Tenant, shall be
computed after adjusting such rent to the actual effective rent to be paid,
taking into consideration any and all leasehold concessions granted in
connection therewith, including, but not limited to, any rent credit and tenant
improvement allowance.  For purposes of
calculating any such effective rent, all such concessions shall be amortized on
a straight–line basis over the relevant term.


14.4         Intentionally Deleted.


14.5         Effect of Transfer.  If Landlord consents to a Transfer,
(i) the terms and conditions of this Lease shall in no way be deemed to
have been waived or modified, (ii) such consent shall not be deemed
consent to any further Transfer by either Tenant or a Transferee,
(iii) Tenant shall deliver to Landlord, promptly after execution, an
original executed copy of all documentation pertaining to the Transfer in form
reasonably acceptable to Landlord, (iv) Tenant shall furnish upon Landlord’s
request a complete statement, certified by an independent certified public
accountant, or Tenant’s chief financial officer, setting forth in detail the
computation of any Transfer Premium Tenant has derived and shall derive from
such Transfer, and (v) no Transfer relating to this Lease or agreement
entered into with respect thereto, whether with or without Landlord’s consent,
shall relieve Tenant or any guarantor of the Lease from liability under this
Lease.  Landlord or its authorized
representatives shall have the right at all reasonable times to audit the
books, records and papers of Tenant relating to any Transfer, and shall have
the right to make copies thereof.  If the
Transfer Premium with respect to any Transfer shall be found understated,
Tenant shall, within thirty (30) days after demand, pay the deficiency and
Landlord’s costs of such audit and if understated by more than ten percent
(10%), Landlord shall have the right to cancel this Lease upon thirty (30) days’
notice to Tenant.


 


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14.6         Additional Transfers.  For purposes of this Lease, the term “Transfer”
shall also include (i) if Tenant is a partnership, the withdrawal or
change, voluntary, involuntary or by operation of law, of fifty–one percent
(51%) or more of the partners, or transfer of twenty–five percent or more of
partnership interests, within a twelve (12)–month period, or the dissolution of
the partnership without immediate reconstitution thereof, and (ii) if
Tenant is a closely held corporation (i.e., whose stock is not publicly held
and not traded through an exchange or over the counter), (A) the
dissolution, merger, consolidation or other reorganization of Tenant, or
(B) the sale or other transfer of more than an aggregate of fifty–one
percent (51%) of the voting shares of Tenant (other than to immediate family
members by reason of gift or death), within a twelve (12)–month period, or
(C) the sale, mortgage, hypothecation or pledge of more than an aggregate
of fifty–one percent (51%) of the value of the unencumbered assets of Tenant
within a twelve (12) month period.


14.7         Permitted Transfers.  An “Affiliate”
means any entity that (i) controls, is controlled by, or is under common
control with Tenant, (ii) results from the transfer of all or
substantially all of Tenant’s assets or stock, or (iii) results from the
merger or consolidation of Tenant with another entity.  “Control”
means the direct or indirect ownership of more than fifty percent (50%) of the
voting securities of an entity or possession of the right to vote more than
fifty (50%) of the voting interest in the ordinary direction of the entity’s
affairs.  Notwithstanding anything to the
contrary contained in the Lease, Landlord’s consent shall not be required for
any assignment of this Lease or sublease of all or a portion  of the Premises to an Affiliate so long as
the following conditions are met:  (a) at
least thirty (30) business days before any such assignment or sublease,
Landlord receives written notice of such assignment or sublease (as well as any
documents or information reasonably requested by Landlord regarding the
proposed intended transfer and the transferee); (b) Tenant is not then and
has not been in default under this Lease; (c) if the transfer is an
assignment or any other transfer to an Affiliate other than a sublease, the
intended assignee assumes in writing all of Tenant’s obligations under this Lease
relating to the Premises in form satisfactory to Landlord or, if the transfer
is a sublease, the intended sublessee accepts the sublease in form satisfactory
to Landlord; (d) the intended transferee has a tangible net worth, as
evidenced by financial statements delivered to Landlord and certified by an
independent certified public accountant in accordance with generally accepted
accounting principles that are consistently applied, at least equal to the net
worth of the original Tenant under the Lease as of the Effective Date ;
(e) the Premises shall continue to be operated solely for the use
specified in the Lease; and (f) Tenant shall pay to Landlord all costs
reasonably incurred by Landlord or any mortgagee or ground lessor for such
assignment or subletting, including, without limitation, reasonable attorneys’
fees.  No transfer to an Affiliate in
accordance with this subparagraph shall relieve Tenant named herein of any
obligation under this Lease or alter the primary liability of Tenant named
herein for the payment of Rent or for the performance of any other obligation
to be performed by Tenant, including the obligations contained in the Lease
with respect to any Affiliate.


ARTICLE 15

SURRENDER OF PREMISES; REMOVAL OF TRADE FIXTURES


15.1         Surrender of Premises.  No act or thing done by Landlord or any agent
or employee of Landlord during the Lease Term shall be deemed to constitute an
acceptance by Landlord of a surrender of the Premises unless such intent is
specifically acknowledged in a writing signed by Landlord.  The delivery of keys to the Premises to
Landlord or any agent or employee of Landlord shall not constitute a surrender
of the Premises or effect a termination of this Lease, whether or not the keys
are thereafter retained by Landlord, and notwithstanding such delivery Tenant
shall be entitled to the return of such keys at any reasonable time upon
request until this Lease shall have been terminated.  The voluntary or other surrender of this
Lease by Tenant, whether accepted by Landlord or not, or a mutual termination
hereof, shall not work a merger, and at the option of Landlord shall operate as
an assignment to Landlord of all subleases or subtenancies affecting the
Premises.


15.2         Removal of Tenant Property by Tenant.  All articles of personal property and all
business and trade fixtures, machinery and equipment, furniture and movable
partitions owned by Tenant or installed by Tenant at its expense in the
Premises, which items are not a part of the tenant improvements installed in
the Premises, shall remain the property of Tenant, and may be removed by Tenant
at any time during the Lease Term as long as Tenant is not in default under
this Lease with any applicable cure period having


 


21





















expired. 
Upon the expiration of the Lease Term, or upon any earlier termination
of this Lease, Tenant shall, subject to the provisions of this Article 15,
quit and surrender possession of the Premises to Landlord in as good order and
condition as when Tenant took possession and as thereafter improved by Landlord
and/or Tenant, reasonable wear and tear and repairs which are specifically made
the responsibility of Landlord hereunder excepted.  Upon such expiration or termination, Tenant
shall, without expense to Landlord, remove or cause to be removed from the Premises
all debris and rubbish, and such items of furniture, equipment, free–standing
cabinet work, and other articles of personal property owned by Tenant or
installed or placed by Tenant at its expense in the Premises, and such similar
articles of any other persons claiming under Tenant, as Landlord may, in its
sole discretion, require to be removed, and Tenant shall repair at its own
expense all damage to the Premises and Building resulting from such removal.


15.3         Removal of Tenant’s Property by Landlord.
 Whenever Landlord shall re–enter the
Premises as provided in this Lease, any personal property of Tenant not removed
by Tenant upon the expiration of the Lease Term, or within forty–eight (48)
hours after a termination by reason of Tenant’s default as provided in this
Lease, shall be deemed abandoned by Tenant and may be disposed of by Landlord
in accordance with Sections 1980 through 1991 of the California Civil Code
and Section 1174 of the California Code of Civil Procedure, or in
accordance with any laws or judicial decisions which may supplement or supplant
those provisions from time to time.


15.4         Landlord’s Actions on Premises.  Tenant hereby waives, and releases Landlord
from, all claims for damages or other liability in connection with Landlord’s
or its agents’ or representatives’ reentering and taking possession of the
Premises or removing, retaining, storing or selling the property of Tenant as
herein provided, and Tenant hereby indemnifies and holds Landlord harmless from
any such damages or other liability, and no such re–entry shall be considered
or construed to be a forcible entry.


ARTICLE 16

HOLDING OVER


Tenant may extend the Term for a period of up to
ninety (90) days at a rent equal to one hundred ten percent (110%) of the last
month’s rent and thereafter for an additional period of up to ninety (90) days
at a rent equal to one hundred twenty–five percent (125%) of the last month’s
rent by giving Landlord written notice thereof at least four (4) months prior
to the scheduled expiration of the Term, which notice shall specify the length
of time Tenant will extend the Term. 
Thereafter, Tenant will not be permitted to hold over possession of the
Premises without the express written consent of Landlord, which consent
Landlord may withhold in its sole and absolute discretion.  If Tenant holds over after the expiration or
earlier termination of the Lease Term (as the same may have been extended as
provided in the preceding sentence) without the express written consent of
Landlord, then, in addition to all other remedies available to Landlord, Tenant
shall become a tenant at sufferance only, upon the terms and conditions set
forth in this Lease so far as applicable (including Tenant’s obligation to pay
Tenant’s Share of Direct Expenses and Utilities Costs and any other additional
rent under this Lease), but at a Base Rent equal to one hundred fifty percent
(150%) of the Base Rent applicable to the Premises immediately prior to the
date of such expiration or earlier termination. 
Acceptance by Landlord of rent after such expiration or earlier
termination shall not constitute a consent to a hold over hereunder or result
in an extension of this Lease. 
Notwithstanding the foregoing, if Tenant remains in possession of the
Premises after the expiration or earlier termination of the Lease Term (as the
same may have been extended as provided above) with Landlord’s express written
consent, Tenant shall become a tenant from month–to–month upon the terms and
conditions set forth in this Lease (including Tenant’s obligation to pay Tenant’s
Share of Direct Expenses and Utilities Costs and any other additional rent
under this Lease), but at a Base Rent equal to one hundred fifty percent (150%)
of the Base Rent applicable to the Premises immediately prior to the date of such
expiration or earlier termination. 
Tenant shall pay an entire month’s Base Rent calculated in accordance
with this Article 16 for any portion of a month it holds over and remains
in possession of the Premises pursuant to this Article 16.  This Article 16 shall not be construed to
create any expressed or implied right to holdover beyond the expiration of the
Lease Term or any extension thereof.


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ARTICLE 17

ESTOPPEL CERTIFICATES


17.1         Tenant’s Estoppel Certificate.  Within ten (10) days following a request in
writing by Landlord, Tenant shall execute and deliver to Landlord an estoppel
certificate which, as submitted by Landlord, shall be substantially in the form
of Exhibit E,
attached hereto (or such other form as may be required by any prospective mortgagee
or purchaser of the Building Complex or any portion thereof), indicating
therein any exceptions thereto that may exist at that time, and shall also
contain any other information reasonably requested by Landlord or Landlord’s
mortgagee or prospective mortgagee or purchasers.  Tenant shall execute and deliver whatever
other instruments may be reasonably required for such purposes.  At any time during the Lease Term, Landlord
may require Tenant to provide Landlord with a current financial statement and
financial statements of the two (2) years prior to the current financial
statement year.  Such statements shall be
prepared in accordance with generally accepted accounting principles and, if
such is the normal practice of Tenant, shall be audited by an independent
certified public accountant.  Failure of
Tenant to timely execute and deliver such estoppel certificate or other
instruments shall constitute an acceptance of the Premises and an
acknowledgment by Tenant that statements included in the estoppel certificate
are true and correct, without exception.


17.2         Landlord’s Estoppel Certificate.  Landlord shall, at any time and from time to
time, within ten (10) days following written notice by Tenant, execute,
acknowledge and deliver to Tenant a commercially reasonable statement in
writing prepared by Tenant and edited by Landlord, as appropriate, certifying
that the Lease is unmodified and in full force and effect (or that there have
been modifications, that the same is in full force and effect as modified and
stating the modifications), the dates to which Tenant has paid rent,
adjustments to rent, and other charges paid in advance, if any, stating whether
or not to the best knowledge of Landlord, Tenant is in default in the
performance of any covenant, agreement or condition contained in the Lease and,
if so, specifying each such default of which Landlord may have knowledge, or
containing any other information and certifications which reasonably may be
requested by Tenant, any proposed assignee or sublessee of Tenant, or any
proposed lender of Tenant.  Any such
statement, delivered pursuant to this subsection, may be relied upon by any
proposed assignee or sublessee or any proposed lender of Tenant.


ARTICLE 18

SUBORDINATION


This Lease is subject and subordinate to all
present and future ground or underlying leases of the Real Property and to the
lien of any mortgages or trust deeds, now or hereafter in force against the
Real Property and the Building Complex, 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 such mortgages or
trust deeds, unless the holders of such mortgages or trust deeds, or the
lessors under such ground lease or underlying leases, require in writing that
this Lease be superior thereto.  Tenant
covenants and agrees in the event any proceedings are brought for the
foreclosure of any such mortgage, to attorn, without any deductions or set–offs
whatsoever, to the purchaser upon any such foreclosure sale if so requested to
do so by such purchaser, and to recognize such purchaser as the lessor under
this Lease.  Conditioned upon Tenant’s
receipt, upon request, of a nondisturbance agreement in a form and substance
reasonably satisfactory to it, Tenant shall, within five (5) days of request by
Landlord, execute such further instruments or assurances as Landlord may
reasonably deem necessary to evidence or confirm the subordination or
superiority of this Lease to any such mortgages, trust deeds, ground leases or
underlying leases.  In consideration of,
and as a condition precedent to, Tenant’s agreement to permit its interest
pursuant to this Lease to be subordinated to any particular further ground or
underlying lease of the Building Complex or the Real Property or to the lien of
any first mortgage or trust deed, hereafter enforced against the Building
Complex or the Real Property and to any renewals, extensions, modifications,
consolidations and replacements thereof, Landlord shall deliver to Tenant a
commercially reasonable non–disturbance agreement executed by the Landlord
under such ground lease or underlying lease or the holder of such mortgage or
trust deed.


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ARTICLE 19

DEFAULTS; REMEDIES


19.1         Defaults.  All covenants and agreements to be kept or
performed by Tenant under this Lease shall be performed by Tenant at Tenant’s
sole cost and expense and without any reduction of Rent.  The occurrence of any of the following shall
constitute a default of this Lease by Tenant:


19.1.1      Any
failure by Tenant to pay any Rent or any other charge required to be paid under
this Lease, or any part thereof, within three (3) days of when due; or


19.1.2 
Any failure by Tenant to observe or perform any other provision,
covenant or condition of this Lease to be observed or performed by Tenant where
such failure continues for thirty (30) days after written notice thereof from
Landlord to Tenant; provided however, that any such notice shall be in lieu of,
and not in addition to, any notice required under California Code of Civil
Procedure Section 1161 or any similar or successor law; and provided
further that if the nature of such default is such that the same cannot
reasonably be cured within a thirty (30) day period, Tenant shall not be deemed
to be in default if it diligently commences such cure within such period and
thereafter diligently proceeds to rectify and cure said default, as soon as
possible; or


19.1.3 
Abandonment of the Premises by Tenant; or


19.1.4  To
the extent permitted by law, a general assignment by Tenant or any guarantor of
the Lease for the benefit of creditors, or the filing by or against Tenant or
any guarantor of any proceeding under an insolvency or bankruptcy law, unless
in the case of a proceeding filed against Tenant or any guarantor the same is
dismissed within sixty (60) days, or the appointment of a trustee or receiver
to take possession of all or substantially all of the assets of Tenant or any
guarantor, unless possession is restored to Tenant or such guarantor within thirty
(30) days, or any execution or other judicially authorized seizure of all or
substantially all of Tenant’s assets located upon the Premises or of Tenant’s
interest in this Lease, unless such seizure is discharged within thirty (30)
days; or


19.1.5 
The hypothecation or assignment of this Lease or subletting of the
Premises, or attempts at such actions, in violation of Article 14 hereof.


19.2         Remedies Upon Default.  Upon the occurrence of such default by
Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity, the option to pursue any one or more of the
following remedies, each and all of which shall be cumulative and nonexclusive,
without any notice or demand whatsoever.


19.2.1 
Terminate this Lease, in which event Tenant shall immediately surrender
the Premises to Landlord, and if Tenant fails to do so, Landlord may, without
prejudice to any other remedy which it may have for possession or arrearages in
rent, enter upon and take possession of the Premises and expel or remove Tenant
and any other person who may be occupying the Premises or any part thereof,
without being liable for prosecution or any claim or damages therefor; and
Landlord may recover from Tenant the following:


(i)            The worth at the time of award 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


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(iii)          The worth at the time of award of the
amount by which the unpaid rent for the balance of the Lease 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
but not limited to, brokerage commissions and advertising expenses incurred,
expenses of remodeling the Premises or any portion thereof for a new tenant,
whether for the same or a different use, and any special concessions made to
obtain a new tenant; and


(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 Section 19.2 shall be deemed to be and to mean all sums of
every nature required to be paid by Tenant pursuant to the terms of this Lease,
whether to Landlord or to others.  As
used in Sections 19.2.1(i) and (ii), above, the “worth at the time of
award” shall be computed by allowing interest at the Interest Rate set forth in
Section 4.2.4 of this Lease, but in no case greater than the maximum
amount of such interest permitted by law. 
As used in Section 19.2.1(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%).


19.2.2 
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 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.


19.2.3 
Landlord may, but shall not be obligated to, make any such payment or
perform or otherwise cure any such obligation, provision, covenant or condition
on Tenant’s part to be observed or performed (and may enter the Premises for
such purposes), all at Tenant’s expense, without waiving its rights based upon
any default of Tenant and without releasing Tenant from any obligations
hereunder.  In the event of Tenant’s
failure to perform any of its obligations or covenants under this Lease, and
such failure to perform poses a material risk of injury or harm to persons or
damage to or loss of property, then Landlord shall have the right to cure or
otherwise perform such covenant or obligation at any time after such failure to
perform by Tenant, whether or not any such notice or cure period set forth in
Section 19.1 above has expired.  Any
such actions undertaken by Landlord pursuant to the foregoing provisions of
this Section 19.2.3 shall not be deemed a waiver of Landlord’s rights and
remedies as a result of Tenant’s failure to perform and shall not release Tenant
from any of its obligations under this Lease.


19.3         Payment by Tenant.  Tenant shall pay to Landlord, within thirty
(30) days after delivery by Landlord to Tenant of statements therefor:  (i) sums equal to expenditures
reasonably made and obligations incurred by Landlord in connection with
Landlord’s performance or cure of any of Tenant’s obligations pursuant to the
provisions of Section 19.2.3 above; and (ii) sums equal to all
expenditures made and obligations incurred by Landlord in collecting or attempting
to collect the Rent or in enforcing or attempting to enforce any rights of
Landlord under this Lease or pursuant to law, including, without limitation,
all legal fees and other amounts so expended. 
Tenant’s obligations under this Section 19.3 shall survive the
expiration or sooner termination of the Lease Term.


19.4         Subleases of Tenant.  Whether or not Landlord elects to terminate
this Lease on account of any default by Tenant which extends beyond any
applicable notice and cure period, as set forth in this Article 19,
following any such default by Tenant, Landlord shall have the right to
terminate any and all subleases, licenses, concessions or other consensual
arrangements for possession entered into by Tenant and affecting the Premises
or may, in Landlord’s sole discretion, succeed to Tenant’s interest in such


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subleases, licenses, concessions or
arrangements.  In the event of Landlord’s
election to succeed to Tenant’s interest in any such subleases, licenses,
concessions or arrangements, Tenant shall, as of the date of notice by Landlord
of such election, have no further right to or interest in the rent or other
consideration receivable thereunder.


19.5         Form
of Payment After Default.  Following the occurrence of an event of
default by Tenant, Landlord shall have the right to require that any or all
subsequent amounts paid by Tenant to Landlord hereunder, whether in the cure of
the default in question or otherwise, be paid in the form of cash, money order,
cashier’s or certified check drawn on an institution acceptable to Landlord, or
by other means approved by Landlord, notwithstanding any prior practice of
accepting payments in any different form.


19.6         Waiver of Default.  No waiver by Landlord of any violation or
breach by Tenant of any of the terms, provisions and covenants herein contained
shall be deemed or construed to constitute a waiver of any other or later
violation or breach by Tenant of the same or any other of the terms,
provisions, and covenants herein contained. 
Forbearance by Landlord in enforcement of one or more of the remedies
herein provided upon a default by Tenant shall not be deemed or construed to
constitute a waiver of such default.  The
acceptance of any Rent hereunder by Landlord following the occurrence of any
default, whether or not known to Landlord, shall not be deemed a waiver of any
such default, except only a default in the payment of the Rent so accepted.


19.7         Efforts to Relet.  For the purposes of this Article 19,
Tenant’s right to possession shall not be deemed to have been terminated by
efforts of Landlord to relet the Premises, by its acts of maintenance or
preservation with respect to the Premises, or by appointment of a receiver to
protect Landlord’s interests hereunder. 
The foregoing enumeration is not exhaustive, but merely illustrative of
acts which may be performed by Landlord without terminating Tenant’s right to
possession.


ARTICLE 20

INTENTIONALLY DELETED


 


ARTICLE 21

SIGNS


21.1         Full Floor Tenants.  Subject to Landlord’s prior written approval,
in its sole discretion, and provided all signs are in keeping with the quality,
design and style of the Building Complex, if the Premises or any portion
thereof comprise an entire floor of the Building, Tenant, at its sole cost and
expense, may install identification signage anywhere in the Premises including
in the elevator lobby of the Premises, provided that such signs must not be
visible from the exterior of the Building.


21.2         Multi–Tenant Floor Tenants.  If Tenant occupies less than the entire floor
on which the Premises is located, Tenant’s identifying signage shall be
provided by Landlord, at Tenant’s sole cost and expense, and such signage shall
be comparable to that used by Landlord for other similar floors in the Building
and shall comply with Landlord’s Building standard signage program.  Any additions, deletions or modifications to
such Building standard signage shall be at Tenant’s sole expense and subject to
the prior written approval of Landlord, in Landlord’s sole discretion.


21.3         Prohibited Signage and Other Items.  Any signs, notices, logos, pictures, names or
advertisements which are installed and that have not been separately approved
by Landlord may be removed without notice by Landlord at the sole expense of
Tenant.  Tenant may not install any signs
on the exterior or roof of the Building or the common areas of the Building or
the Real Property.  Any signs, window
coverings, or blinds (even if the same are located behind the Landlord approved
window coverings for the Building), or other items visible from the exterior of
the Premises or Building are subject to the prior written approval of Landlord,
in its sole discretion.


 


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21.4         Building Directory.  Tenant shall, at Tenant’s expense, be
entitled to one (1) line on the Building directory to display Tenant’s name and
suite number.


ARTICLE 22

COMPLIANCE WITH LAW


Tenant shall not do anything or suffer anything
to be done in or about the Premises which will in any way conflict with any
law, statute, ordinance or other governmental rule, regulation or requirement
now in force or which may hereafter be enacted or promulgated.  At its sole cost and expense, Tenant shall
promptly comply with all such governmental measures (including those pertaining
to Hazardous Materials), other than the making of structural changes to the
Building (collectively, the “Excluded Changes”),
except to the extent such Excluded Changes are required due to Tenant’s
alterations to or manner of use of the Premises.  Should any standard or regulation now or
hereafter be imposed on Landlord or Tenant by a state, federal or local
governmental body charged with the establishment, regulation and enforcement of
occupational, health or safety standards for employers, employees, landlords or
tenants, then Tenant agrees, at its sole cost and expense, to comply promptly
with such standards or regulations.  In
addition, Tenant shall fully comply with all present or future programs
intended to manage parking, transportation or traffic in and around the
Building, and in connection therewith, Tenant shall take responsible action for
the transportation planning and management of all employees located at the
Premises by working directly with Landlord, any governmental transportation
management organization or any other transportation–related committees or
entities.  The judgment of any court of
competent jurisdiction or the admission of Tenant in any judicial action,
regardless of whether Landlord is a party thereto, that Tenant has violated any
of said governmental measures, shall be conclusive of that fact as between
Landlord and Tenant.


ARTICLE 23

ENTRY BY LANDLORD


Landlord reserves the right at all reasonable
times and upon prior reasonable notice to Tenant of no less than twenty–four
(24) hours (except no such prior notice shall be required in emergencies) to
enter the Premises (provided Landlord is accompanied by a representative of
Tenant and does not enter the Restricted Areas, except in an emergency)
to:  (i) inspect them;
(ii) show the Premises to prospective purchasers, mortgagees or ground or
underlying lessors, or, during the last twelve (12) months of the Lease Term,
prospective tenants; (iii) post notices of nonresponsibility; or
(iv) alter, improve or repair the Premises or the Building if necessary to
comply with current building codes or other applicable laws, or for structural
alterations, repairs or improvements to the Building, or as Landlord may
otherwise reasonably desire or deem necessary. 
Notwithstanding anything to the contrary contained in this Article 27,
Landlord may enter the Premises at any time, without notice to Tenant, to
(A) perform janitorial and other services required of Landlord,
(B) take possession due to any breach of this Lease in the manner provided
herein; and (C) perform any covenants of Tenant which Tenant fails to
perform.  Any such entries shall be
without the abatement of Rent and shall include the right to take such
reasonable steps as required to accomplish the stated purposes; provided, however,
that any such entry shall be accomplished as expeditiously as reasonably
possible and in a manner so as to cause as little interference to Tenant as
reasonably possible.  Tenant hereby
waives any claims for damages or for any injuries or inconvenience to or
interference with Tenant’s business, lost profits, any loss of occupancy or
quiet enjoyment of the Premises, and any other loss occasioned by Landlord’s
entry into the Premises.  For each of the
above purposes, Landlord shall at all times have a key with which to unlock all
the doors in the Premises, excluding Tenant’s vaults, safes and special
security areas designated in advance by Tenant (“Restricted
Areas”).  In an emergency, Landlord shall have the
right to use any means that Landlord may deem proper to open the doors in and
to the Premises.  Any entry into the
Premises by Landlord in the manner hereinbefore described shall not be deemed
to be a forcible or unlawful entry into, or a detainer of, the Premises, or an
actual or constructive eviction of Tenant from any portion of the Premises.


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ARTICLE 24

TENANT PARKING


Tenant shall be entitled to use throughout the
Lease Term the number of unreserved parking passes set forth in Section 10
of the Summary, in a location in the Building Complex Parking Area as designated
by Landlord from time to time.  Tenant
shall not be required to pay to Landlord any parking fees for the use of such
parking passes during the initial term. 
After the initial term, Tenant shall pay to Landlord for the use of such
parking passes, on a monthly basis, the prevailing rate charged from time to
time by Landlord or Landlord’s parking operator for parking passes in the
Building Complex Parking Area where such parking passes are located.  Tenant’s continued right to use the parking
passes is conditioned upon Tenant abiding by all rules and regulations which
are prescribed from time to time for the orderly operation and use of the
Building Complex Parking Area and upon Tenant’s cooperation in seeing that
Tenant’s employees and visitors also comply with such rules and
regulations.  In addition, Landlord may
assign any parking spaces and/or make all or a portion of such spaces reserved
or institute an attendant–assisted tandem parking program and/or valet parking
program if Landlord determines in its sole discretion that such is necessary or
desirable for orderly and efficient parking. 
Landlord specifically reserves the right, from time to time, to change
the size, configuration, design, layout, location and all other aspects of the
Building Complex Parking Area, and Tenant acknowledges and agrees that
Landlord, from time to time, may, without incurring any liability to Tenant and
without any abatement of Rent under this Lease temporarily close–off or
restrict access to the Building Complex Parking Area, or temporarily relocate
Tenant’s parking spaces to other parking structures and/or surface parking
areas within a reasonable distance from the Building Complex Parking Area, for
purposes of permitting or facilitating any such construction, alteration or
improvements or to accommodate or facilitate renovation, alteration,
construction or other modification of other improvements or structures located
on the Real Property.  Landlord may
delegate its responsibilities hereunder to a parking operator in which case
such parking operator shall have all the rights of control attributed hereby to
Landlord.


ARTICLE 25

MISCELLANEOUS PROVISIONS


25.1         Binding Effect.  Each of the provisions of this Lease shall
extend to and shall, as the case may require, bind or inure to the benefit not
only of Landlord and of Tenant, but also of their respective successors or
assigns, provided this clause shall not permit any assignment by Tenant
contrary to the provisions of Article 14 of this Lease.


25.2         No Air Rights.  No rights to any view or to light or air over
any property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease.  If at any time any
windows of the Premises are temporarily darkened or the light or view therefrom
is obstructed by reason of any repairs, improvements, maintenance or cleaning
in or about the Building, the same shall be without liability to Landlord and
without any reduction or diminution of Tenant’s obligations under this Lease.


25.3         Modification of Lease.  Should any current or prospective mortgagee
or ground lessor for the Building Complex require a modification or
modifications of this Lease, which modification or modifications will not cause
an increased cost or expense to Tenant or in any other way materially and
adversely change the rights and obligations of Tenant hereunder, then and in
such event, Tenant agrees that this Lease may be so modified and agrees to
execute whatever documents are required therefor and deliver the same to
Landlord within thirty (30) days following the request therefor.  Should Landlord or any such prospective
mortgagee or ground lessor require execution of a short form of Lease for
recording, containing, among other customary provisions, the names of the
parties, a description of the Premises and the Lease Term, Tenant agrees to
execute such short form of Lease and to deliver the same to Landlord within
thirty (30) days following the request therefor.


25.4         Transfer of Landlord’s Interest.  Tenant acknowledges that Landlord has the right
to transfer all or any portion of its interest in the Real Property and in this
Lease, and Tenant agrees that in the event of any such transfer and a transfer
of the Security Deposit, Landlord shall automatically be released


28





















from all liability under this Lease and Tenant
agrees to look solely to such transferee for the performance of Landlord’s
obligations hereunder after the date of transfer.  Tenant further acknowledges that Landlord may
assign its interest in this Lease to the holder of any mortgage or deed of
trust as additional security, but agrees that such an assignment shall not
release Landlord from its obligations hereunder and that Tenant shall continue
to look to Landlord for the performance of its obligations hereunder.


25.5         Prohibition Against Recording.  Except as provided in Section 25.3 of
this Lease, neither this Lease, nor any memorandum, affidavit or other writing
with respect thereto, shall be recorded by Tenant or by anyone acting through,
under or on behalf of Tenant, and the recording thereof in violation of this
provision shall make this Lease null and void at Landlord’s election.


25.6         Captions.  The captions of Articles and Sections are for
convenience only and shall not be deemed to limit, construe, affect or alter
the meaning of such Articles and Sections.


25.7         Relationship of Parties.  Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venturer or any association
between Landlord and Tenant, it being expressly understood and agreed that
neither the method of computation of Rent nor any act of the parties hereto
shall be deemed to create any relationship between Landlord and Tenant other
than the relationship of landlord and tenant.


25.8         Time of Essence.  Time is of the essence of this Lease and each
of its provisions.


25.9         Partial Invalidity.  If any term, provision or condition contained
in this Lease shall, to any extent, be invalid or unenforceable, the remainder
of this Lease, or the application of such term, provision or condition to
persons or circumstances other than those with respect to which it is invalid
or unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.


25.10       Landlord Exculpation.  It is expressly understood and agreed that
notwithstanding anything in this Lease to the contrary, and notwithstanding any
applicable law to the contrary, the liability of Landlord and the Landlord
Parties hereunder (including any successor landlord) and any recourse by Tenant
against Landlord or the Landlord Parties (including any successor landlord)
shall be limited solely and exclusively to an amount which is equal to the
interest of Landlord in the Building Complex, and neither Landlord, nor any of
the Landlord Parties shall have any personal liability therefor, and Tenant
hereby expressly waives and releases such personal liability on behalf of
itself and all persons claiming by, through or under Tenant.


25.11       Child Care Facilities.  Tenant acknowledges that any child care
facilities located or which may be located in the Building Complex (the “Child Care Facilities”)
which are available to Tenant and Tenant’s employees are provided by a third
party (the “Child Care Provider”)
which is leasing space in the Building Complex, and not by Landlord.  If Tenant or its employees choose to use the
Child Care Facilities, Tenant acknowledges that Tenant and Tenant’s employees
are not relying upon any investigation which Landlord may have conducted
concerning the Child Care Provider or any warranties or representation with
respect thereto, it being the sole responsibility of Tenant and the individual
user of the Child Care Facilities to conduct any and all investigations of the
Child Care Facilities prior to making use thereof.  Accordingly, Landlord shall have no
responsibility with respect to the quality or care provided by the Child Care
Facilities, or for any acts or omissions of the Child Care Provider.  Furthermore, Tenant, for Tenant and for
Tenant’s employees, hereby agrees that Landlord, its partners, subpartners and
their respective officers, agents, servants, employees, and independent
contractors shall not be liable for, and are hereby released from any
responsibility for any loss, cost, damage, expense or liability, either to
person or property, arising from the use of the Child Care Facilities by Tenant
or Tenant’s employees.  Tenant hereby
covenants that Tenant shall inform all of Tenant’s employees of the provisions
of this Section prior to such employees’ use of the Child Care Facilities.  Nothing contained herein is intended to be a
representation nor warranty by Landlord that any Child Care Facilities will be
available during the Lease Term and Landlord shall have no obligation to
provide, or to make available, any such Child Care Facilities.


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25.12       Entire Agreement.  It is understood and acknowledged that there
are no oral agreements between the parties hereto affecting this Lease and this
Lease supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between the parties hereto or
displayed by Landlord to Tenant with respect to the subject matter thereof, and
none thereof shall be used to interpret or construe this Lease.  This Lease, the exhibits and schedules
attached hereto, and any side letter or separate agreement executed by Landlord
and Tenant in connection with this Lease and dated of even date herewith
contain all of the terms, covenants, conditions, warranties and agreements of
the parties relating in any manner to the rental, use and occupancy of the
Premises, shall be considered to be the only agreement between the parties
hereto and their representatives and agents, and none of the terms, covenants,
conditions or provisions of this Lease can be modified, deleted or added to
except in writing signed by the parties hereto.


25.13       Right to Lease.  Landlord reserves the absolute right to
effect such other tenancies in the Building Complex as Landlord in the exercise
of its sole business judgment shall determine to best promote the interests of
the Building Complex.  Tenant does not
rely on the fact, nor does Landlord represent, that any specific tenant or type
or number of tenants shall, during the Lease Term, occupy any space in the
Building Complex.


25.14       Force Majeure.  Any prevention, delay or stoppage due to
strikes, lockouts, labor disputes, acts of God, inability to obtain services,
labor, or materials or reasonable substitutes therefor, governmental actions,
civil commotions, fire or other casualty, and other causes beyond the
reasonable control of the party obligated to perform (collectively, the “Force Majeure”),
except with respect to the obligations imposed with regard to Rent and other
charges to be paid by Tenant pursuant to this Lease, and except as to Tenant’s obligations
under Exhibit D,
notwithstanding anything to the contrary contained in this Lease, shall excuse
the performance of such party for a period equal to any such prevention, delay
or stoppage and, therefore, if this Lease specifies a time period for
performance of an obligation of either party, that time period shall be
extended by the period of any delay in such party’s performance caused by a
Force Majeure.


25.15       Notices.  All notices, demands, statements, approvals
or communications (collectively, “Notices”)
given or required to be given by either party to the other hereunder shall be
in writing, shall be sent by United States certified or registered mail,
postage prepaid, return receipt requested, or delivered personally (i) to
Tenant at the appropriate address set forth in Section 5 of the Summary,
or to such other place as Tenant may from time to time designate in a Notice to
Landlord; or (ii) to Landlord at the addresses set forth in Section 3
of the Summary, or to such other firm or to such other place as Landlord may
from time to time designate in a Notice to Tenant.  Any Notice will be deemed given on the date
which is two (2) business days after it is mailed as provided in this Section 25.14
or upon the date personal delivery is made. 
If Tenant is notified of the identity and address of Landlord’s
mortgagee or ground or underlying lessor, Tenant shall give to such mortgagee
or ground or underlying lessor written notice of any default by Landlord under
the terms of this Lease by registered or certified mail, and such mortgagee or
ground or underlying lessor shall be given a reasonable opportunity to cure
such default prior to Tenant’s exercising any remedy available to Tenant.


25.16       Joint and Several.  If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.


25.17       Authority.  Tenant hereby represents and warrants that
Tenant is a duly formed and existing entity qualified to do business in
California and that Tenant has full right and authority to execute and deliver
this Lease and that each person signing on behalf of Tenant is authorized to do
so.  Landlord hereby represents and
warrants that Landlord is a duly formed and existing entity qualified to do
business in California and that Landlord has full right and authority to
execute and deliver this Lease and that each person signing on behalf of
Landlord is authorized to do so.


25.18       Governing Law.  This Lease shall be construed and enforced in
accordance with the laws of the State of California.


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25.19       Submission of Lease.  Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or an option for
lease, and it is not effective as a lease or otherwise until execution and delivery
by both Landlord and Tenant.


25.20       Brokers.  Landlord and Tenant hereby warrant to each
other that they have had no dealings with any real estate broker or agent in
connection with the negotiation of this Lease, excepting only the real estate
brokers or agents specified in Section 11 of the Summary and Landlord’s
designated representative (the “Brokers”),
and that they know of no other real estate broker or agent who is entitled to a
commission in connection with this Lease. 
Landlord shall pay the brokerage commissions owing to the Brokers in
connection with the transaction contemplated by this Lease pursuant to the
terms of a separate written agreement between Landlord and the Brokers.  Each party agrees to indemnify, defend, protect
and hold the other party harmless from and against any and all Claims with
respect to any leasing commission or equivalent compensation alleged to be
owing on account of the indemnifying party’s dealings with any real estate
broker or agent other than the Brokers. 
The terms of this Section 25.20 shall survive the expiration or
earlier termination of the Lease Term.


25.21       Independent Covenants.  This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not be entitled to make any repairs or perform any acts hereunder
at Landlord’s expense or to any setoff of the Rent or other amounts owing
hereunder against Landlord; provided, however, that the foregoing shall in no
way impair the right of Tenant to commence a separate action against Landlord
for any violation by Landlord of the provisions hereof so long as notice is
first given to Landlord and any holder of a mortgage or deed of trust covering
the Building, Real Property or any portion thereof, of whose address Tenant has
theretofore been notified, and an opportunity is granted to Landlord and such
holder to correct such violations as provided above.


25.22       Building Name and Signage.  Landlord shall have the right at any time to
designate and/or change the name of the Building Complex, the Building and/or
any other building in the Building Complex, and to install, affix and maintain
any and all signs on the exterior and on the interior of the Building Complex,
the Building and/or any other building in the Building Complex, as Landlord
may, in Landlord’s sole discretion, desire.  Tenant shall not use the name of the Building
Complex, the Building or any other building in the Building Complex, or use
pictures or illustrations of the Building Complex, the Building or any other
building in the Building Complex, in advertising or other publicity (except its
stationery, website and related materials), without the prior written consent
of Landlord.


25.23       Hazardous Materials.  Tenant will (i) obtain and maintain in
full force and effect all Environmental Permits that may be required from time
to time under any Environmental Laws applicable to Tenant or the Premises and
(ii) be and remain in compliance in all material respects with all terms
and conditions of all such Environmental Permits and with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in all Environmental Laws
applicable to Tenant or the Premises.  As
used in this Lease, the term “Environmental
Law”
means any past, present or future federal, state or local statutory or common
law, or any regulation, ordinance, code, plan, order, permit, grant, franchise,
concession, restriction or agreement issued, entered, promulgated or approved
thereunder, relating to (a) the environment, human health or safety,
including, without limitation, emissions, discharges, releases or threatened
releases of Hazardous Materials (as defined below) into the environment
(including, without limitation, air, surface water, groundwater or land), or (b) the
manufacture, generation, refining, processing, distribution, use, sale,
treatment, receipt, storage, disposal, transport, arranging for transport, or
handling of Hazardous Materials.  “Environmental Permits”
means, collectively, any and all permits, consents, licenses, approvals and
registrations of any nature at any time required pursuant to, or in order to
comply with, any Environmental Law. 
Tenant may use Hazardous Materials in the Premises in the course of
Tenant’s operations, provided that (x) such Hazardous Materials are,
limited in type and quantity to those customarily utilized by general office
tenants in first–class multi–tenant office buildings and (y) Tenant will
comply with all Environmental Laws in its use of such materials in the Building
and (z) Tenant provides Landlord with a list identifying the type and
quantities of such materials promptly following


31





















request therefor by Landlord.  Except as allowed by this Lease and
Environmental Laws, Tenant agrees not to cause or permit any Hazardous
Materials to be brought upon, stored, used, handled, generated, released or
disposed of on, in, under or about the Premises, the Building, the common areas
or any other portion of the Building Complex by Tenant, its agents, employees,
subtenants, assignees, licensees, contractors or invitees (collectively, “Tenant’s Parties”),
without the prior written consent of Landlord, which consent Landlord may
withhold in its reasonable discretion. 
Upon the expiration or earlier termination of this Lease, Tenant agrees
to promptly remove from the Premises, the Building and the Building Complex, at
its sole cost and expense, any and all Hazardous Materials, including any
equipment or systems containing Hazardous Materials which are installed,
brought upon, stored, used, generated or released upon, in, under or about the
Premises, the Building and/or the Building Complex or any portion thereof by
Tenant or any of Tenant’s Parties.  To
the fullest extent permitted by law, Tenant agrees to promptly indemnify,
protect, defend and hold harmless Landlord and Landlord’s, members, partners,
officers, shareholders, directors, employees, agents, successors and assigns
(collectively, “Landlord Indemnified Parties”)
from and against any and all claims, damages, judgments, suits, causes of
action, losses, liabilities, penalties, fines, expenses and costs (including,
without limitation, clean–up, removal, remediation and restoration costs, sums
paid in settlement of claims, attorneys’ fees, consultant fees and expert fees
and court costs) which arise or result from the presence of Hazardous Materials
on, in, under or about the Premises, the Building or any other portion of the
Building Complex and which are caused by the operations of Tenant or any of
Tenant’s Parties.  Notwithstanding the
foregoing, Tenant is not required to provide indemnification for or defense
against any claims to the extent that any requirement for response action, or
the cost of any response action, is caused or contributed to by Landlord,
Landlord Indemnified Parties, other tenants, or third–parties.  In addition, provided that Tenant has
complied with the provisions of clauses (x), and (y) above, Tenant is not required
to indemnify Landlord’s Indemnified Parties for any incidental or consequential
damages, including but not limited to, loss of sales or rental opportunities,
lost profits, lost employee time, increased material handling expenses,
increased transportation costs or interference with other tenant
occupancy.  If Tenant fails to comply
with the provisions of clauses (x) and/or (y) above, Tenant will indemnify
Landlord for incidental or consequential damages only after such damages are
awarded by a final judgment of a court of competent jurisdiction.  Tenant agrees to promptly notify Landlord of
any release of Hazardous Materials in the Premises, the Building or any other
portion of the Building Complex which Tenant becomes aware of during the Term
of this Lease, whether caused by Tenant or any other persons or entities.  In the event of any release of Hazardous
Materials caused or permitted by Tenant or any of Tenant’s Parties, Tenant
shall immediately take all steps necessary or appropriate to remediate such
release and prevent any similar future release in accordance with applicable
Environmental Law.  At all times during
the Term of this Lease, Landlord will have the right, but not the obligation,
to enter upon the Premises to inspect, investigate, sample and/or monitor the
Premises to determine if Tenant is in compliance with the terms of this Lease
regarding Hazardous Materials.  Tenant
will, upon the request of Landlord or any mortgagee at any time during which Tenant
is in default under this Lease, cause to be performed an environmental audit of
the Premises at Tenant’s expense by an established environmental consulting
firm reasonably acceptable to Tenant, Landlord and the mortgagee.  As used in this Lease, the term “Hazardous Materials” shall mean and include
any hazardous or toxic materials, substances or wastes as now or hereafter
designated under any law, statute, ordinance, rule, regulation, order or ruling
of any agency of the State, the United States Government or any local
governmental authority, including, without limitation, asbestos, petroleum,
petroleum hydrocarbons and petroleum based products, urea formaldehyde foam
insulation, polychlorinated biphenyls (“PCBs”),
and freon and other chlorofluorocarbons. 
The provisions of this Section 25.23 will survive the expiration or
earlier termination of this Lease. 
Landlord has provided Tenant, prior to execution of this Lease, with the
latest Phase I environmental report covering the Project.


To the fullest extent permitted by laws, Landlord
agrees to promptly indemnify, protect, defend and hold harmless Tenant and
Tenant’s members, partners, officers, shareholders, directors, employees,
agents, successors and assigns (collectively, “Tenant
Indemnified Parties”)
from and against any and all claims, damages, judgments, suits, causes of
action, losses, liabilities, penalties, fines, expenses and costs (including,
without limitation, clean–up, removal, remediation and restoration costs, sums
paid in settlement of claims, attorneys’ fees, consultant fees and expert fees
and court costs) (“Environmental Claims”)
which arise or result from the presence of Hazardous Materials on, in, under or
about the Premises, the Building or any other portion of the Building Complex
that (i) exist at the time of execution of this Lease or (ii) are
introduced by Landlord in violation of Environmental Law at the time of their
introduction.


32





















25.24       Transportation Management.  Tenant shall fully comply with all present or
future governmentally mandated programs intended to manage parking,
transportation or traffic in and around the Building Complex, and in connection
therewith, Tenant shall take responsible action for the transportation planning
and management of all employees located at the Premises by working directly
with Landlord, any governmental transportation management organization or any
other transportation–related committees or entities.  Such programs may include, without
limitation:  (i) restrictions on the
number of peak–hour vehicle trips generated by Tenant; (ii) increased
vehicle occupancy; (iii) implementation of an in–house ridesharing program
and an employee transportation coordinator; (iv) working with employees
and any Building Complex or area–wide ridesharing program manager;
(v) instituting employer–sponsored incentives (financial or in–kind) to
encourage employees to rideshare; and (vi) utilizing flexible work shifts
for employees.


25.25       No Discrimination.  Tenant covenants by and for itself, its
heirs, executors, administrators and assigns, and all persons claiming under or
through Tenant, and this Lease is made and accepted upon and subject to the
following conditions:  that there shall
be no discrimination against or segregation of any person or group of persons,
on account of race, color, creed, sex, religion, marital status, ancestry or
national origin in the leasing, subleasing, transferring, use, or enjoyment of
the Premises, nor shall Tenant itself, or any person claiming under or through
Tenant, establish or permit such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or
occupancy, of tenants, lessees, sublessees, subtenants or vendees in the
Premises.


25.26       Successors.  Except as otherwise expressly provided
herein, the obligations of this Lease shall bind and benefit the successors and
assigns of the parties hereto; provided, however, that no assignment, sublease
or other transfer in violation of the provisions of Article 14 shall
operate to vest any rights in any putative assignee, subtenant or transferee of
Tenant.


25.27       Development
of the Building Complex.


25.27.1  Subdivision.  Tenant acknowledges that the Building Complex
is comprised of separate legal lots. 
Landlord reserves the right to further subdivide or sell all or a
portion of the buildings and Common Areas in the Building Complex.  Tenant agrees to execute and deliver, upon
demand by Landlord and in the form requested by Landlord, any additional documents
needed to conform this Lease to the circumstances resulting from such a
subdivision or sale and any all ancillary transactions in connection therewith.


25.27.2  Other Improvements.  If portions of the Building Complex or
property adjacent to the Building Complex (collectively, the “Other Improvements”)
are owned by an entity other than Landlord, Landlord, at its option, may enter
into an agreement with the owner or owners of any of the Other Improvements to
provide (i) for reciprocal rights of access, use and/or enjoyment of the
Building Complex and the Other Improvements, (ii) for the common
management, operation, maintenance, improvement and/or repair of all or any
portion of the Building Complex and all or any portion of the Other
Improvements, (iii) for the allocation of a portion of the Project
Expenses to the Other Improvements and the allocation of a portion of the
operating expenses and taxes for the Other Improvements to the Building
Complex, (iv) for the use or improvement of the Other Improvements and/or
the Building Complex in connection with the improvement, construction, and/or
excavation of the Other Improvements and/or the Building Complex, and
(v) for any other matter which Landlord deems necessary.  Nothing contained herein shall be deemed or
construed to limit or otherwise affect Landlord’s right to sell all or any
portion of the Building Complex or any other of Landlord’s rights described in
this Lease.


25.27.3  Landlord Renovations.  It is specifically understood and agreed that
Landlord has made no representation or warranty to Tenant and has no obligation
to alter, remodel, improve, renovate, repair or decorate the Premises,
Building, Building Complex or any part thereof, or to add any additional phases
or office buildings to the Building Complex, and that no representations
respecting the condition of the Premises or the Building Complex have been made
by Landlord to Tenant except as specifically set forth herein or in the Tenant
Work Letter.  However, Tenant
acknowledges that Landlord may during the Lease Term renovate, improve, alter,
or modify (collectively, the “Renovations”)
the Building, Premises, and/or Real


33





















Property,
including without limitation the Building Complex Parking Area, common areas,
systems and equipment, roof, and structural portions of the same, which
Renovations may include, without limitation, (i) modifying the driveways
and other common areas and tenant spaces to comply with applicable laws and
regulations, including regulations relating to the physically disabled, seismic
conditions, and building safety and security, (ii) installing new floor
covering, lighting, and wall coverings in the common areas, and in connection
with any Renovations, Landlord may, among other things, erect scaffolding or
other necessary structures in the Building or Building Complex, limit or
eliminate access to portions of the Real Property, including portions of the
common areas, or perform work in the Building or Building Complex, which work
may create noise, dust or leave debris in the Building Complex,
(iii) renovation and/or expansion of the main entry to the Building
Complex and the main Building lobby area, (iv) renovation of the elevator,
lobbies, elevator doors and frames and restrooms, and (v) installations,
repairs or maintenance of telephone risers. 
Tenant hereby agrees that such Renovations and Landlord’s actions in
connection with such Renovations shall in no way constitute a constructive
eviction of Tenant nor entitle Tenant to any abatement of Rent.  Landlord shall have no responsibility or for
any reason be liable to Tenant for any direct or indirect injury to or
interference with Tenant’s business arising from the Renovations, nor shall
Tenant be entitled to any compensation or damages from Landlord for loss of the
use of the whole or any part of the Premises or of Tenant’s personal property
or improvements resulting from the Renovations or Landlord’s actions in
connection with such Renovations, or for any inconvenience or annoyance
occasioned by such Renovations or Landlord’s actions in connection with such
Renovations provided that Landlord shall use commercially reasonable efforts to
minimize impairment of Tenant’s use of and access to the Premises.


25.28       Landlord’s Title.  Landlord’s title is and always shall be
paramount to the title of Tenant. 
Nothing herein contained shall empower Tenant to do any act which can,
shall or may encumber the title of Landlord.


25.29       No Waiver.  No waiver of any provision of this Lease shall
be implied by any failure of a party to enforce any remedy on account of the
violation of such provision, even if such violation shall continue or be
repeated subsequently, any waiver by a party of any provision of this Lease may
only be in writing, and no express waiver shall affect any provision other than
the one specified in such waiver and that one only for the time and in the
manner specifically stated.  No receipt
of monies by Landlord from Tenant after the termination of this Lease shall in
any way alter the length of the Lease Term or of Tenant’s right of possession
hereunder or after the giving of any notice shall reinstate, continue or extend
the Lease Term or affect any notice given Tenant prior to the receipt of such
monies, it being agreed that after the service of notice or the commencement of
a suit or after final judgment for possession of the Premises, Landlord may
receive and collect any Rent due, and the payment of said Rent shall not waive
or affect said notice, suit or judgment.


25.30       Jury Trial; Attorneys’ Fees.  IF EITHER PARTY COMMENCES LITIGATION AGAINST
THE OTHER FOR THE SPECIFIC PERFORMANCE OF THIS LEASE, FOR DAMAGES FOR THE
BREACH HEREOF OR OTHERWISE FOR ENFORCEMENT OF ANY REMEDY HEREUNDER, THE PARTIES
HERETO AGREE TO AND HEREBY DO WAIVE ANY RIGHT TO A TRIAL BY JURY.  In the event of any such commencement of
litigation, the prevailing party shall be entitled to recover from the other
party such costs and reasonable attorneys’ fees as may have been incurred,
including any and all costs incurred in enforcing, perfecting and executing
such judgment.


25.31       Substitution of Other Premises.  Landlord shall have the right to move Tenant
to other space on the first (1st) floor of the Building comparable
in size to the Premises, and all terms hereof shall apply to the new space with
equal force.  In such event, Landlord
shall give Tenant at least thirty (30) days’ prior notice of Landlord’s
election to so relocate Tenant, and shall move Tenant’s effects to the new
space at Landlord’s sole cost and expense at such time and in such manner as to
inconvenience Tenant as little as reasonably practicable.  The new space shall be delivered to Tenant
with improvements substantially similar to those improvements existing in the
Premises at the time of Landlord’s notification to Tenant of the relocation,
which improvements shall be paid for by Landlord at Landlord’s cost.  Simultaneously with such relocation of the
Premises, the parties shall immediately execute an amendment to this Lease
stating the relocation of the Premises.


34





















IN WITNESS WHEREOF, Landlord and Tenant
have caused their duly authorized representatives to execute this Lease as of
the day and date first above written.


	
   

  	
  “Landlord”

  	
   

  	
  AGRRI
  SEAVIEW, L.L.C.,

  
	
   

  	
   

  	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  RRI Seaview,
  LLC,

  
	
   

  	
   

  	
   

  	
   

  	
  a Delaware
  limited liability company

  
	
   

  	
   

  	
   

  	
  Its:

  	
  Authorized
  Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  JCR
  Manager, LLC,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  Managing
  Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
                

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Tenant”

  	
   

  	
  ACCELRYS
  INC.,

  
	
   

  	
   

  	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  
										



 


35





















EXHIBIT
A

SEAVIEW CORPORATE CENTER

FLOOR PLAN OF PREMISES


 


EXHIBIT A – Page 1


 





















EXHIBIT
B

SEAVIEW CORPORATE CENTER

RULES AND REGULATIONS


Tenant shall faithfully observe and comply with
the following Rules and Regulations. 
Landlord shall not be responsible to Tenant for the nonperformance of
any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Building Complex, but shall
administer the Rules and Regulations in an equitable and non–discriminatory
manner.


1.             Tenant
shall not alter any lock or install any new or additional locks or bolts on any
doors or windows of the Premises without obtaining Landlord’s prior written
consent.  Tenant shall bear the cost of
any lock changes or repairs required by Tenant. 
Two keys will be furnished by Landlord for the Premises, and any
additional keys required by Tenant must be obtained from Landlord at a
reasonable cost to be established by Landlord.


2.             All
doors opening to public corridors shall be kept closed at all times except for
normal ingress and egress to the Premises, unless electrical hold backs have
been installed.


3.             Landlord
reserves the right to close and keep locked all entrance and exit doors of the
Building and to exclude from the Building between the hours of 6:00 p.m. and
7:00 a.m. and at all hours on Saturday, Sunday and Holidays (as defined in the
Lease) all persons who do not present a pass or card key to the Building
approved by Landlord.  Tenant, its
employees and agents must be sure that the doors to the Building are securely
closed and locked when leaving the Premises if it is after the normal hours of
business for the Building.  Any tenant,
its employees, agents or any other persons entering or leaving the Building at
any time when it is so locked, or any time when it is considered to be after
normal business hours for the Building or Building Complex may be required to
sign the Building register when so doing. 
Access to the Building may be refused unless the person seeking access
has proper identification or has a previously arranged pass for access.  Landlord and his agents shall in no case be
liable for damages for any error with regard to the admission to or exclusion
from the Building or Building Complex of any person.  In case of invasion, mob, riot, public
excitement, or other commotion, Landlord reserves the right to prevent access
to the Building and/or Building Complex during the continuance of same by any
means it deems appropriate for the safety and protection of life and property.


4.             Landlord
shall have the right to prescribe the weight, size and position of all safes
and other heavy property brought into the Building.  Safes and other heavy objects shall, if
considered necessary by Landlord, stand on supports of such thickness as is
necessary to properly distribute the weight. 
Landlord will not be responsible for loss of or damage to any such safe
or property in any case.  All damage done
to any part of the Building and/or Building Complex, its contents, occupants or
visitors by moving or maintaining any such safe or other property shall be the
sole responsibility of Tenant and any expense of said damage or injury shall be
borne by Tenant.


5.             No
furniture, freight, packages, supplies, equipment or merchandise will be
brought into or removed from the Building or carried up or down in the
elevators, except upon prior notice to Landlord, and in such manner, in such
specific elevator, and between such hours as shall be designated by
Landlord.  Tenant shall provide Landlord
with not less than 24 hours prior notice of the need to utilize an
elevator for any such purpose, so as to provide Landlord with a reasonable
period to schedule such use and to install such padding or take such other
actions or prescribe such procedures as are appropriate to protect against
damage to the elevators or other parts of the Building.


6.             Landlord
shall have the right to control and operate the public portions of the Building
and Building Complex, the public facilities, the heating and air conditioning,
and any other facilities furnished for


 


EXHIBIT B – Page 1





















the common use of tenants, in such manner
as is customary for comparable building projects in the vicinity of the
Building Complex.


7.             The
requirements of Tenant will be attended to only upon application at the
management office of the Building Complex or at such office location designated
by Landlord.  Employees of Landlord shall
not perform any work or do anything outside their regular duties unless under
special instructions from Landlord.


8.             Tenant
shall not disturb, solicit, or canvass any occupant of the Building Complex and
shall cooperate with Landlord or Landlord’s agents to prevent same.


9.             The
toilet rooms, 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 therein.  The expense of any breakage, stoppage or
damage resulting from the violation of this rule shall be borne by the tenant
who, or whose employees or agents, shall have caused it.


10.           Tenant
shall not overload the floor of the Premises, nor mark, drive nails or screws,
or drill into the partitions, woodwork or plaster or in any way deface the
Premises or any part thereof without Landlord’s consent first had and obtained.


11.           Except
for vending machines intended for the sole use of Tenant’s employees and
invitees, no vending machine or machines of any description other than
fractional horsepower office machines shall be installed, maintained or
operated upon the Premises without the written consent of Landlord.


12.           Tenant
shall not use any method of heating or air conditioning other than that which
may be supplied by Landlord, without the prior written consent of Landlord.


13.           Tenant
shall not use or keep in or on the Premises or the Building Complex any
kerosene, gasoline or other inflammable or combustible fluid or material.  Tenant shall not use, keep or permit to be
used or kept, any foul or noxious gas or substance in or on the Premises, or
permit or allow the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Building Complex by reason
of noise, odors, or vibrations, or interfere in any way with other Tenants or
those having business therein.


14.           Tenant
shall not bring into or keep within the Building Complex or the Premises any
animals except those assisting handicapped persons, birds, bicycles or other
vehicles.


15.           No
cooking shall be done or permitted by any tenant on the Premises, nor shall the
Premises be used for the storage of merchandise, for lodging or for any
improper, objectionable or immoral purposes. 
Notwithstanding the foregoing, Underwriters’ laboratory–approved
equipment and microwave ovens may be used in the Premises for heating food and
brewing coffee, tea, hot chocolate and similar beverages, provided that such
use is in accordance with all applicable federal, state and city laws, codes,
ordinances, rules and regulations, and does not cause odors which are
objectionable to Landlord and other Tenants.


16.           Landlord
will approve where and how telephone and telegraph wires are to be introduced
to the Premises.  No boring or cutting
for wires shall be allowed without the consent of Landlord.  The location of telephone, call boxes and
other office equipment affixed to the Premises shall be subject to the approval
of Landlord.


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


 


EXHIBIT B – Page 2





















18.           Tenant,
its employees and agents shall not loiter in the entrances or corridors, nor in
any way obstruct the sidewalks, lobby, halls, stairways or elevators, and shall
use the same only as a means of ingress and egress for the Premises.


19.           Tenant
shall not waste electricity, water or air conditioning and agrees to cooperate
fully with Landlord to ensure the most effective operation of the Building’s
heating and air conditioning system, and shall refrain from attempting to
adjust any controls.


20.           Tenant
shall store all its trash and garbage within the interior of the Premises.  No material shall be placed in the trash
boxes or receptacles if such material is of such nature that it may not be
disposed of in the ordinary and customary manner of removing and disposing of
trash and garbage in the city in which the Building is located 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 at
such times as Landlord shall designate.


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


22.           Tenant
shall assume any and all responsibility for protecting the Premises from theft,
robbery and pilferage, which includes keeping doors locked and other means of
entry to the Premises closed, when the Premises are not occupied.


23.           No
awnings or other projection shall be attached to the outside walls of the
Building without the prior written consent of Landlord.  No curtains, blinds, shades or screens shall
be attached to or hung in, or used in connection with, any window or door of
the Premises without the prior written consent of Landlord.  The sashes, sash doors, skylights, windows,
and doors that reflect or admit light and air into the halls, passageways or
other public places in the Building shall not be covered or obstructed by
Tenant, nor shall any bottles, parcels or other articles be placed on the
windowsills.  All electrical ceiling
fixtures hung in offices or spaces along the perimeter of the Building must be
fluorescent and/or of a quality, type, design and bulb color approved by
Landlord.


24.           The
washing and/or detailing of or, the installation of windshields, radios,
telephones in or general work on, automobiles shall not be allowed on the Real
Property.


25.           The
term “personal goods or services vendors”
as used herein means persons who periodically enter the Building of which the
Premises are a part for the purpose of selling goods or services to a tenant,
other than goods or services which are used by the Tenant only for the purpose
of conducting its business in the Premises. 
“Personal goods or services” include, but are not limited to, drinking
water and other beverages, food, barbering services and shoe shining
services.  Landlord reserves the right to
prohibit personal goods and services vendors from access to the Building except
upon Landlord’s prior written consent and upon such reasonable terms and
conditions, including, but not limited to, the payment of a reasonable fee and
provision for insurance coverage, as are related to the safety, care and
cleanliness of the Building, the preservation of good order thereon, and the
relief of any financial or other burden on Landlord or other tenants occasioned
by the presence of such vendors or the sale by them of personal goods or
services to Tenant or its employees. 
Under no circumstance shall the personal goods or services vendors
display their products in a public or common area, including corridors and
elevator lobbies.  If necessary for the
accomplishment of these purposes, Landlord may exclude a particular vendor
entirely or limit the number of vendors who may be present at any one time in
the Building.


26.           Tenant
must comply with requests by the Landlord concerning the informing of their
employees of items of importance to the Landlord.


27.           Tenant
shall comply with any non–smoking ordinance adopted by any applicable
governmental authority.


 


EXHIBIT B – Page 3





















28.           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 or
Regulations against any or all tenants of the Building Complex.  Landlord reserves the right at any time to
change or rescind any one or more of these Rules and Regulations, or to make
such other and further reasonable Rules and Regulations as in Landlord’s
reasonable judgment may from time to time be necessary for the management, safety,
care and cleanliness of the Premises and Building Complex, and for the
preservation of good order therein, as well as for the convenience of other
occupants and tenants therein.  Landlord
shall not be responsible to Tenant or to any other person for the nonobservance
of the Rules and Regulations by another tenant or other person.  Tenant shall be deemed to have read these
Rules and Regulations and to have agreed to abide by them as a condition of its
occupancy of the Premises.


 


EXHIBIT B – Page 4





















EXHIBIT
C

SEAVIEW CORPORATE CENTER

AMENDMENT TO LEASE


This AMENDMENT TO LEASE (“Amendment”)
is made and entered into effective as of                               ,
2004, by and between AGRRI SEAVIEW, L.L.C., a Delaware limited liability
company (“Landlord”), and ACCELRYS
INC., a Delaware corporation (“Tenant”)


R E C I T A L S:


A.            Landlord
and Tenant entered into that certain Office Lease dated as of March     ,
2004 (the “Lease”) pursuant to
which Landlord leased to Tenant and Tenant leased from Landlord certain “Premises”,
as described in the Lease, known as Suites 100 and 110 of the Building
located at 10188 Telesis Court, San Diego,
California 92121.


B.            Except
as otherwise set forth herein, all capitalized terms used in this Amendment
shall have the same meaning gives such terms in the Lease.


C.            Landlord
and Tenant desire to amend the Lease to confirm the commencement and expiration
dates of the Lease Term, as hereinafter provided.


NOW, THEREFORE, in consideration of the foregoing
Recitals and the mutual covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:


1.             Confirmation
of Dates.  The parties hereby confirm
that (a) the Premises are Ready for Occupancy and Landlord has performed
all work required to be performed by Landlord pursuant to the Tenant Work
Letter attached to the Lease, (b) the Lease Term for the Lease commenced
as of                                         
(the “Lease Commencement Date”)
for a term of                     
(        ) years ending on                                         
(the “Lease Expiration Date”)
(unless sooner terminated or extended as provided in the Lease) and (c) in
accordance with the Lease, Rent commenced to accrue on                                         .


2.             No
Further Modification.  Except as set
forth in this Amendment, all of the terms and provisions of the Lease shall
remain unmodified and in full force and effect.


 


EXHIBIT C – Page 1





















IN WITNESS WHEREOF, this Amendment has
been executed as of the day and year first above written.


	
   

  	
  “Landlord”

  	
   

  	
  AGRRI
  SEAVIEW, L.L.C.,

  
	
   

  	
   

  	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  RRI Seaview,
  LLC,

  
	
   

  	
   

  	
   

  	
   

  	
  a Delaware
  limited liability company

  
	
   

  	
   

  	
   

  	
  Its:

  	
  Authorized
  Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  JCR
  Manager, LLC,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  Managing
  Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Tenant”

  	
   

  	
  ACCELRYS
  INC.,

  
	
   

  	
   

  	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  
										



 


 


EXHIBIT C – Page 2





















EXHIBIT
D

SEAVIEW CORPORATE CENTER

TENANT WORK LETTER


This Tenant Work Letter (“Tenant Work Letter”)
shall set forth the terms and conditions relating to the construction of
improvements for the Premises.  All
references in this Tenant Work Letter to “the Lease” shall mean the relevant
portions of the Lease to which this Tenant Work Letter is attached as Exhibit D.


SECTION 1


GENERAL CONSTRUCTION OF THE PREMISES


Landlord shall deliver the base, shell, and core
(i) of the Premises and (ii) of the floor of the Building on which
the Premises is located (collectively, the “Base,
Shell, and Core”)
in its current as–is condition existing as of the date of the Lease.  Landlord shall thereafter install in the
Premises certain “Tenant Improvements” (as defined below) pursuant to the
provisions of this Tenant Work Letter. 
Except for the Tenant Improvement work described in this Tenant Work
Letter, Landlord shall not be obligated to make any other alterations or
improvements to the Premises or the Building.


SECTION 2


TENANT IMPROVEMENTS


2.1           Tenant Improvement Allowance.  Tenant shall be entitled to a one–time tenant
improvement allowance (the “Tenant
Improvement Allowance”)
in the amount of up to, but not exceeding $40.00 per rentable square foot of
the Premises, for the costs relating to the initial design, engineering and
construction of Tenant’s improvements which are permanently affixed to the
Premises (the “Tenant Improvements”).  In no event shall Landlord be obligated to
make disbursements pursuant to this Tenant Work Letter in a total amount which
exceeds the Tenant Improvement Allowance or obligated to make disbursements
after the twelfth (12th) month following the Effective Date of the
Lease.  Tenant shall not be entitled to
receive any cash payment or credit against Rent or otherwise for any portion of
the Tenant Improvement Allowance which is not used to pay for the Tenant
Improvement Allowance Items (as such term is defined below) or disbursed during
the twelve (12) months following the Effective Date of the Lease in accordance
with the terms of this Tenant Work Letter.


2.2           Disbursement of the Tenant Improvement Allowance.  Except as otherwise set forth in this Tenant
Work Letter, the Tenant Improvement Allowance shall be disbursed by Landlord
(each of which disbursement shall be made pursuant to Landlord’s standard
disbursement process), only for the following items and costs (collectively,
the “Tenant Improvement Allowance Items”):


2.2.1        Payment
of the fees of the “Architect” and the “Engineers,” as those terms are defined
in Section 3.1 of this Tenant Work Letter, and payment of Tenant’s Project
Manager (as defined in Section 6.2 of this Tenant Work Letter), and
payment of the fees incurred by, and the cost of documents and materials
supplied by, Landlord and Landlord’s consultants in connection with the
preparation and review of the “Construction Drawings,” as that term is defined
in Section 3.1 of this Tenant Work Letter;


2.2.2        The
payment of plan check, permit and license fees relating to construction of the
Tenant Improvements;


2.2.3        The
cost of construction of the Tenant Improvements, including, without limitation,
contractors’ fees and general conditions, testing and inspection costs, costs
of utilities, trash removal, parking and hoists, and the costs of after–hours
freight elevator usage;


 


EXHIBIT D – Page 1





















2.2.4        The
cost of any changes in the Base, Shell and Core when such changes are required
by the Construction Drawings (including if such changes are due to the fact
that such work is prepared on an unoccupied basis), such cost to include all
direct architectural and/or engineering fees and expenses incurred in
connection therewith;


2.2.5        The
cost of any changes to the Construction Drawings or Tenant Improvements
required by applicable laws and building codes (collectively, “Code”);


2.2.6        Sales
and use taxes and Title 24 fees;


2.2.7        “Landlord’s
Supervision Fee,” as that term is defined in Section 4.3.2 of this Tenant
Work Letter;


2.2.8        Signage,
security systems, telecommunications and data cabling and furniture up to a
maximum of $5.00 per rentable square foot; and


2.2.9        All
other costs to be expended by Landlord in connection with the construction of
the Tenant Improvements.


SECTION 3


CONSTRUCTION DRAWINGS


3.1           Selection of Architect/Construction Drawings.  Tenant shall retain an architect/space
planner (the “Architect”)
approved by Landlord, which approval shall not be unreasonably withheld, to
prepare the Construction Drawings. 
Tenant shall retain engineering consultants designated by Landlord (the “Engineers”)
to prepare all plans and engineering working drawings relating to the
structural, mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler
work in the Premises.  The plans and
drawings to be prepared by Architect and the Engineers hereunder shall be known
collectively as the “Construction Drawings.”  All Construction Drawings shall comply with
the drawing format and specifications determined by Landlord, and shall be
subject to Landlord’s approval which approval shall not be unreasonably
conditioned, withheld or delayed.  Tenant
and Architect shall verify, in the field, the dimensions and conditions as
shown on the relevant portions of the base building plans, and Tenant and
Architect shall be solely responsible for the same, and Landlord shall have no
responsibility in connection therewith. 
Landlord’s review of the Construction Drawings as set forth in this
Section 3, shall be for its sole purpose and shall not imply Landlord’s
review of the same, or obligate Landlord to review the same, for quality,
design, Code compliance or other like matters. 
Accordingly, notwithstanding that any Construction Drawings are reviewed
by Landlord or its space planner, architect, engineers and consultants, and
notwithstanding any advice or assistance which may be rendered to Tenant by
Landlord or Landlord’s space planner, architect, engineers, and consultants,
Landlord shall have no liability whatsoever in connection therewith and shall
not be responsible for any omissions or errors contained in the Construction
Drawings.


3.2           Final Space Plan.  On or before the date set forth in
Schedule 1, attached hereto, Tenant and Architect shall prepare the final
space plan for Tenant Improvements in the Premises (the “Final Space Plan”),
which Final Space Plan shall include a layout and designation of all offices,
rooms and other partitioning, their intended use, and equipment to be contained
therein, and shall deliver the Final Space Plan to Landlord for Landlord’s
approval which approval shall not be unreasonably conditioned, withheld or
delayed.


3.3           Final Working Drawings.  On or before the date set forth in
Schedule 1, Tenant, Architect and the Engineers shall complete the
architectural and engineering drawings for the Premises, and Architect shall
compile a fully coordinated set of architectural, structural, mechanical,
electrical and plumbing working drawings in a form which is complete to allow
subcontractors to bid on the work and to obtain all applicable permits
(collectively, the “Final Working Drawings”),
and shall submit the same to Landlord for Landlord’s approval which approval
shall not be unreasonably conditioned, withheld or delayed.


 


EXHIBIT D – Page 2





















3.4           Approved Working Drawings.  On or before the date set forth therefor in
Schedule 1, Tenant shall submit the Final Working Drawings approved by
Landlord (the “Approved Working Drawings”)
to the applicable local governmental agency for all applicable building permits
necessary to allow “Contractor,” as that term is defined in Section 4.1 of
this Tenant Work Letter, to commence and fully complete the construction of the
Tenant Improvements (collectively, the “Permits”),
and, in connection therewith, Tenant shall coordinate with Landlord in order to
allow Landlord, at Landlord’s option, to take part in all phases of the
permitting process, and shall supply Landlord, as soon as possible, with all
plan check numbers and dates of submittal. 
Notwithstanding the foregoing, Tenant hereby agrees that neither
Landlord nor Landlord’s consultants shall be responsible for obtaining any
building permit or certificate of occupancy for the Premises and that the
obtaining of the same shall be Tenant’s responsibility; provided, however, that
Landlord shall, in any event, cooperate with Tenant in executing permit
applications and performing other ministerial acts reasonably necessary to
enable Tenant to obtain any such permit or certificate of occupancy.  No changes, modifications or alterations in
the Approved Working Drawings may be made without the prior written consent of
Landlord, provided that Landlord may withhold its consent, in its sole
discretion, to any change in the Approved Working Drawings, if such change
would directly or indirectly delay the Substantial Completion of the Premises.


3.5           Time Deadlines.  Tenant shall cooperate with Architect, the
Engineer, and Landlord to complete all phases of the Construction Drawings and
the permitting process and to receive the permits, and with Contractor, for
approval of the “Cost Proposal,” as that term is defined in Section 4.2,
below, in accordance with the dates set forth in Schedule 1.  Tenant shall meet with Landlord on a weekly
basis to discuss Tenant’s progress in connection with the same.  Certain of applicable dates for approval of
items, plans and drawings as described in this Section 3, Section 4,
below, and in this Tenant Work Letter are set forth and further elaborated upon
in Schedule 1 (the “Time Deadlines”),
attached hereto.  Tenant agrees to comply
with the Time Deadlines.


SECTION 4


CONSTRUCTION OF THE
TENANT IMPROVEMENTS


4.1           Contractor. 
A contractor, under the supervision of and selected by Landlord, shall
construct the Tenant Improvements (the “Contractor”).


4.2           Cost Proposal.  After the Approved Working Drawings are
signed by Landlord and Tenant, Landlord shall provide Tenant with a cost
proposal in accordance with the Approved Working Drawings, which cost proposal
shall include, as nearly as possible, the cost of all Tenant Improvement
Allowance Items to be incurred by Tenant in connection with the construction of
the Tenant Improvements (the “Cost Proposal”).  Notwithstanding the foregoing, portions of
the cost of the Tenant Improvements may be delivered to Tenant as such portions
of the Tenant Improvements are priced by Contractor (on an individual item–by–item
or trade–by–trade basis), even before the Approved Working Drawings are
completed (the “Partial Cost Proposal”).  Tenant shall approve and deliver the Cost
Proposal to Landlord within five (5) business days of the receipt of the same
(or, as to a Partial Cost Proposal, within two (2) business days of receipt of
the same).  Landlord’s approval of the
same shall not be unreasonably withheld, conditioned or delayed.  The date by which Tenant must approve and
deliver the Cost Proposal, or the last Partial Cost Proposal to Landlord, as
the case may be, shall be known hereafter as the “Cost Proposal Delivery Date.”  The total of all Partial Cost Proposals, if
any, shall be known as the Cost Proposal.


4.3           Construction of Tenant Improvements by Landlord’s
Contractor under the Supervision of Landlord.


4.3.1        Over–Allowance Amount.  On the Cost Proposal Delivery Date, Tenant
shall deliver to Landlord cash in an amount (the “Over–Allowance Amount”)
equal to the difference between (i) the amount of the Cost Proposal and
(ii) the amount of the Tenant Improvement Allowance (less any portion
thereof already disbursed by Landlord, or in the process of being disbursed by
Landlord, on or before the Cost Proposal Delivery Date).  The Over–Allowance Amount shall be disbursed
by Landlord prior to the


 


EXHIBIT D – Page 3





















disbursement of any then remaining
portion of the Tenant Improvement Allowance, and such disbursement shall be
pursuant to the same procedure as the Tenant Improvement Allowance.  In the event that, after the Cost Proposal
Date, any revisions, changes, or substitutions shall be made to the
Construction Drawings or the Tenant Improvements, any additional costs which
arise in connection with such revisions, changes or substitutions shall be
added to the last Proposal and shall be paid by Tenant to Landlord immediately
upon Landlord’s request to the extent such additional costs increase any
existing Over–Allowance Amount or result in an Over–Allowance Amount.


4.3.2        Landlord Supervision.  After Landlord selects the Contractor,
Landlord shall independently retain Contractor to construct the Tenant
Improvements in accordance with the Approved Working Drawings and the Cost
Proposal and Landlord shall supervise the construction by Contractor, and
Tenant shall pay a construction supervision and management fee (the “Landlord Supervision Fee”)
to Landlord in an amount equal to the product of (i) two percent (2%) and
(ii) an amount equal to the Tenant Improvement Allowance plus the Over–Allowance
Amount (as such Over–Allowance Amount may increase pursuant to the terms of
this Tenant Work Letter), not to exceed Six Thousand Dollars ($6,000.00).


4.3.3        Contractor’s Warranties and Guaranties.  Landlord hereby assigns to Tenant all
warranties and guaranties by Contractor relating to the Tenant Improvements.


4.3.4        Tenant’s Covenants.  Tenant hereby indemnifies Landlord for any loss,
claims, damages or delays arising from the actions of Architect and the
Engineers on the Premises or in the Building. 
Within ten (10) days after completion of construction of the Tenant
Improvements, Tenant shall cause Contractor and Architect to cause a Notice of
Completion to be recorded in the office of the Recorder of the County in which
the Building is located in accordance with Section 3093 of the Civil Code
of the State of California or any successor statute and furnish a copy thereof
to Landlord upon recordation, failing which, Landlord may itself execute and
file the same on behalf of Tenant as Tenant’s agent for such purpose.  In addition, Tenant, immediately after the
Substantial Completion of the Premises, shall have prepared and delivered to
the Building management office a copy of the “as built” plans and
specifications (including all working drawings) for the Tenant Improvements.


SECTION 5


SUBSTANTIAL COMPLETION;
LEASE COMMENCEMENT DATE


5.1           Substantial Completion.  For purposes of the Lease, the Premises shall
be “Ready for Occupancy”
upon Substantial Completion of the Premises. 
For purposes of this Lease, “Substantial
Completion”
of the Premises shall occur upon the completion of construction of the Tenant
Improvements in the Premises in a good and workmanlike manner, in compliance
with all applicable laws (including issuance of an occupancy permit or its
equivalent) and pursuant to the Approved Working Drawings, with the exception
of any punch list items that do not materially impair Tenant’s use of the
Premises and any tenant fixtures, work–stations, built–in furniture, or
equipment to be installed by Tenant.


5.2           Tenant Delays.  If there shall be a delay or there are delays
in the Substantial Completion of the Premises, as a direct, indirect, partial,
or total result of any of the following (collectively, “Tenant Delays”):


5.2.1        Tenant’s
failure to comply with the Time Deadlines;


5.2.2        Tenant’s
failure to timely approve any matter requiring Tenant’s approval, including a
Partial Cost Proposal or the Cost Proposal;


5.2.3        A
breach by Tenant of the terms of this Tenant Work Letter or the Lease;


5.2.4        Changes
in any of the Construction Drawings after disapproval of the same by Landlord
or because the same do not comply with Code or other applicable laws;


 


EXHIBIT D – Page 4





















5.2.5        Tenant’s
request for changes in the Approved Working Drawings;


5.2.6        Tenant’s
requirement for materials, components, finishes or improvements which are not
available in a reasonable time (based upon the anticipated date of the Lease
Commencement Date); or


5.2.7        Any
other acts or omissions of Tenant, or its agents, or employees;


then, notwithstanding anything to the contrary
set forth in the Lease and regardless of the actual date of the Substantial
Completion of the Premises, the Lease Commencement Date (as set forth in
Section 7.3 of the Summary) shall be deemed to be the date the Lease Commencement
Date would have occurred if no Tenant Delay or Delays, as set forth above, had
occurred.


SECTION 6


MISCELLANEOUS


6.1           Tenant’s Entry Into the Premises Prior to Substantial
Completion.  Provided that
Tenant and its agents do not interfere with, or delay, Contractor’s work in the
Building and the Premises, Contractor shall allow Tenant access to the Premises
prior to the Substantial Completion of the Premises for the purpose of Tenant
installing overstandard equipment or fixtures (including Tenant’s data and
telephone equipment) in the Premises. 
Prior to Tenant’s entry into the Premises as permitted by the terms of
this Section 6.1, Tenant shall submit a schedule to Landlord and
Contractor, for their approval, which schedule shall detail the timing and purpose
of Tenant’s entry.  Tenant shall hold
Landlord harmless from and indemnify, protect and defend Landlord against any
loss or damage to the Building or Premises and against injury to any persons
caused by Tenant’s actions pursuant to this Section 6.1.


6.2           Tenant’s Representative.  Tenant has designated                                         
(“Tenant’s Project Manager”)
as its sole representative with respect to the matters set forth in this Tenant
Work Letter, who shall have full authority and responsibility to act on behalf
of the Tenant as required in this Tenant Work Letter.


6.3           Landlord’s Representative.  Landlord has designated Chris Sotelo as its
sole representative with respect to the matters set forth in this Tenant Work
Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Tenant Work
Letter.


6.4           Time of the Essence in This Tenant Work Letter.  Unless otherwise indicated, all references
herein to a “number of days”
shall mean and refer to calendar days. 
In all instances where Tenant is required to approve or deliver an item,
if no written notice of approval is given or the item is not delivered within
the stated time period, at Landlord’s sole option, at the end of said period
the item shall automatically be deemed approved or delivered by Tenant and the
next succeeding time period shall commence.


6.5           Tenant’s Lease Default.  Notwithstanding any provision to the contrary
contained in the Lease, if an event of default by Tenant as described in
Section 19.1 of the Lease or any default by Tenant under this Tenant Work
Letter has occurred at any time on or before the Substantial Completion of the
Premises, then (i) in addition to all other rights and remedies granted to
Landlord pursuant to the Lease, Landlord shall have the right to withhold
payment of all or any portion of the Tenant Improvement Allowance and/or
Landlord may cause Contractor to cease the construction of the Premises (in
which case, Tenant shall be responsible for any delay in the Substantial
Completion of the Premises caused by such work stoppage as set forth in
Section 5.2 of this Tenant Work Letter), and (ii) all other
obligations of Landlord under the terms of this Tenant Work Letter shall be
forgiven until such time as such default is cured pursuant to the terms of the
Lease.


 


EXHIBIT D – Page 5





















SCHEDULE 1


TIME DEADLINES


	
   

  	
   

  	
  Dates

  	
   

  	
  Actions to be Performed

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Ten (10)
  business days after the Effective Date.

  	
   

  	
  Final Space
  Plan to be completed by Tenant and delivered to Landlord.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Thirty (30)
  days after delivery of the Final Space Plan to Landlord.

  	
   

  	
  Tenant to
  deliver Final Working Drawings to Landlord.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Thirty (30)
  days after delivery of the Final Working Drawings to Landlord.

  	
   

  	
  Tenant to
  submit Approved Working Drawings to the City of San Diego for all applicable
  building permits.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Five (5)
  business days after the receipt of the Cost Proposal by Tenant.

  	
   

  	
  Tenant to
  approve Cost Proposal and deliver Cost Proposal to Landlord.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Two (2)
  business days after the receipt of a Partial Cost Proposal by Tenant.

  	
   

  	
  Tenant to
  approve Partial Cost Proposal and deliver same to Landlord.

  



 


 


SCHEDULE 1 – Page 1





















EXHIBIT
E

SEAVIEW CORPORATE CENTER

FORM OF TENANT’S ESTOPPEL CERTIFICATE


The undersigned, as Tenant under that certain
Office Lease (the “Lease”) made
and entered into as of March     , 2004 and between
AGRRI SEAVIEW, L.L.C., a Delaware limited liability company, as Landlord, and
the undersigned as Tenant, for Premises on the first (1st) floor of
the Building located at 10188 Telesis Court, San Diego,
California 92121 hereby certifies as follows:


1.             Attached
hereto as Exhibit A is a true
and correct copy of the Lease and all amendments and modifications
thereto.  The documents contained in Exhibit A represent the entire
agreement between the parties as to the Premises.


2.             The
undersigned has commenced occupancy of the Premises described in the Lease,
currently occupies the Premises, and the Lease Term commenced on                                         .


3.             The
Lease is in full force and effect and has not been modified, supplemented or
amended in any way except as provided in Exhibit A.


4.             Tenant
has not transferred, assigned, or sublet any portion of the Premises nor
entered into any license or concession agreements with respect thereto except
as follows:


5.             Tenant
shall not modify the documents contained in Exhibit A
or prepay any amounts owing under the Lease to Landlord in excess of thirty
(30) days without the prior written consent of Landlord’s mortgagee.


6.             Base
Rent became payable on                                         .


7.             The
Lease Term expires on                                         .


8.             All
conditions of the Lease to be performed by Landlord necessary to the
enforceability of the Lease have been satisfied and Landlord is not in default
thereunder.


9.             No
rental has been paid in advance and no security has been deposited with
Landlord except as provided in the Lease.


10.           As
of the date hereof, there are no existing defenses or offsets that the
undersigned has, which preclude enforcement of the Lease by Landlord.


11.           All
monthly installments of Base Rent, all Additional Rent and all monthly
installments of estimated Additional Rent have been paid when due through                                         .  The current monthly installment of Base Rent
is $                    .


12.           The
undersigned acknowledges that this Estoppel certificate may be delivered to
Landlord’s prospective mortgagee, or a prospective purchaser, and acknowledges
that it recognizes that if same is done, said mortgagee, prospective mortgagee,
or prospective purchaser will be relying upon the statements contained herein
in making the loan or acquiring the property of which the Premises are a part,
and in accepting an assignment of the Lease as collateral security, and that
receipt by it of this certificate is a condition of making of the loan or
acquisition of such property.


13.           If
Tenant is a corporation or partnership, each individual executing this Estoppel
Certificate on behalf of Tenant hereby represents and warrants that Tenant is a
duly formed and existing entity qualified to


 


EXHIBIT E – Page 1





















do business in California and that Tenant
has full right and authority to execute and deliver this Estoppel Certificate
and that each person signing on behalf of Tenant is authorized to do so.


	
   

  	
  Executed
  at                                         
  on the            day
  of                               ,
  2004.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Tenant”

  	
   

  	
  ACCELRYS
  INC.,

  
	
   

  	
   

  	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  



 


 


EXHIBIT E – Page 2