**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.**

 

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**SEAVIEWCORPORATE CENTER****SUMMARYOF BASIC LEASE INFORMATION**

This Summary of Basic Lease Information (the “**Summary**”) is hereby incorporated byreference into and made a part of the attached Office Lease.  Each reference in the Office Lease to anyterm of this Summary shall have the meaning as set forth in this Summary forsuch term.  In the event of a conflictbetween the terms of this Summary and the Office Lease, the terms of the OfficeLease shall prevail.  Any initiallycapitalized terms used herein and not otherwise defined herein shall have themeaning 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: |   |
|        |                                                                                   |  |  |  |  |  |  |  |  |

 

 

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**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                                    |   |

 

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| 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           |

 

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| 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              |

 

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|             |   |
|------------------|--------|
| Transferee       | 18     |
| Transfers        | 18     |
| Utilities  Costs | 8      |

 

## – ix –

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**SEAVIEWCORPORATE CENTEROFFICE LEASE**

This Office Lease, which includes the precedingSummary attached hereto and incorporated herein by this reference (the OfficeLease 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 andbetween 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 inthis Lease, Landlord hereby leases to Tenant and Tenant hereby leases from Landlordthe 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 theSummary.  The outline of the Premises isset forth in **Exhibit A**attached hereto.  The Building, which isthe first phase of a multiple–building office building complex commonly knownas Seaview Corporate Center, is located at****10188Telesis Court, San Diego, California 92121. The complex also includes the buildings located at 10180, 10182, 10184, and 10190 TelesisCourt, San Diego, California and such other buildings as may be constructed inthe complex, if and when such buildings are constructed in such complex(collectively, the “**Other Buildings**”).  The Building, the Other Buildings, theparking facilities (which currently consist of a surface parking area and maysubsequently consist of either and/or both surface parking area(s) and/orparking 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 Buildingand such other future buildings (if any), and the land upon which all of theforegoing are situated, are herein sometimes collectively referred to herein asthe “**Building Complex**”or “**Real Property**.”  Tenant acknowledges that Landlord has made norepresentation or warranty that other office buildings will be constructed inthe Complex, and Landlord may at its sole discretion, elect to construct or notconstruct any such additional office buildings or phases within theComplex.  Tenant further acknowledgesthat Landlord has made no representation or warranty regarding the condition ofthe Real Property except as specifically set forth in this Lease or the TenantWork Letter.  Tenant is hereby grantedthe right to the nonexclusive use of the common corridors and hallways, stairwells,elevators, restrooms and other public or common areas located on the RealProperty (including the existing pool, workout facilities and tennis facilityas long as Landlord, in its sole discretion, maintains same); provided,however, that the manner in which such public and common areas are maintainedand operated shall be at the sole discretion of Landlord and the use thereofshall 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 makealterations or additions to or to change the location of elements of theBuilding Complex and the common areas thereof.

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

## 1.3           **Rentable Square Feet**.  The rentable square feet of the Premises areapproximately 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 Complexshall be calculated by Landlord pursuant to the Standard Method for MeasuringFloor Area in Office Buildings, ANSI Z65.1–1996 (“**BOMA**”).  The rentable square feet of the Premises andthe rentable square feet of the Building and other buildings constructed in theBuilding Complex are subject to verification from time to time by Landlord’splanner/designer and such verification shall be made in accordance with theprovisions of this Section 1.3. Tenant’s architect may

##  

## 

## consultwith Landlord’s planner/ designer regarding such verification, except to theextent it relates to the rentable square feet of the Building and otherbuildings in the Building Complex; provided, however, the determination ofLandlord’s planner/designer shall be conclusive and binding upon theparties.  In the event that Landlord’splanner/designer determines that the rentable square footage shall be differentfrom those set forth in this Lease, all amounts, percentages and figuresappearing or referred to in this Lease based upon such incorrect rentablesquare feet (including, without limitation, the amount of the Base Rent andTenant’s Share) shall be modified in accordance with such determination.  If such determination is made, it will beconfirmed in writing by Landlord to Tenant.

## 1.4           **Right of First Offer**.  In the event those 6,000 rentable square feetof space on the first (1st) floor of the Building known asSuite 130 shall become available for lease to third parties during theTerm, Landlord shall notify Tenant of such availability, the anticipated dateon which such space shall be vacated and the fair market rental rate for suchspace.  For a period of ten (10) daysfollowing receipt of Landlord’s written notice containing such information,Tenant shall have, on a one–time basis only, the right of first offer to leasesuch space at the fair market rental rate and on fair market terms andconditions.  If Tenant fails to elect tolease the space within the ten (10) day period, then Landlord shall be entitledto place the space on the open market for lease by third parties and this rightof 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 shallbe effective as of the date of this Lease. The term of this Lease (the “**LeaseTerm**”)shall be as set forth in Section 5.1 of the Summary, shall commence on thedate which is the earlier to occur of (i) the date Tenant occupies thePremises, or (ii)  the date the Premises is Ready for Occupancy, as thatterm 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 LeaseCommencement Date and end on the last day of the eleventh month thereafter andthe second and each succeeding Lease Year shall commence on the first day ofthe next calendar month; and further provided that the last Lease Year shallend on the Lease Expiration Date.  Forpurposes of this Lease, and if applicable, “**SubstantialCompletion**”of the Premises shall occur upon the completion of construction, as reasonablydetermined by Landlord, of the “Tenant Improvements,” as that term is definedin the Tenant Work Letter, in the Premises pursuant to the plans and drawingswhich are prepared pursuant to the terms of the Tenant Work Letter, with theexception of any punch list items and any tenant fixtures, work–stations, built–infurniture, or equipment to be installed by Tenant in the Premises pursuant tothe 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, Landlordmay deliver to Tenant a notice in the form as set forth in **Exhibit C**, attached hereto whichnotice Tenant shall execute and return to Landlord within five (5) days ofreceipt thereof.

## 2.2           **Option Term**.  Landlord hereby grants to the Tenantoriginally named in the Lease and any Affiliate to which this Lease has beenassigned pursuant to Section 14.7 (collectively, “**Original Tenant**”)the number of options to extend the Lease Term for the period of years setforth 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’soption, as of the last day of the initial Lease Term, Tenant is not in defaultunder this Lease after expiration of applicable cure periods.  The right contained in this Section 2.2shall be personal to the Original Tenant and may only be exercised by theOriginal Tenant (and not any assignee, sublessee or other transferee of theOriginal Tenant’s interest in this Lease) if the Original Tenant occupies theentire Premises as of the date of the Option Notice.

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

## 2

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### theOption Term.  The then prevailing fairmarket 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 Premisesfor a comparable term, which comparable space is located in comparablebuildings in the Sorrento Mesa submarket, taking into consideration only thefollowing concessions:  tenantimprovements or allowances provided or to be provided for such comparablespace, taking into account, and deducting the cost of the existing improvementsin the Premises, and based upon the fact that the precise tenant improvementsexisting in the Premises are specifically suitable to Tenant.

### 2.2.2        **Exercise of Option**.  The option contained in this Section 2.2shall 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 theexpiration of the initial Lease Term, stating that Tenant is interested inexercising 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 initialLease Term, setting forth the Option Rent; and (iii) if Tenant wishes toexercise such option, Tenant shall, on or before the earlier of (A) thedate occurring six (6) months prior to the expiration of the initial LeaseTerm, and (B) the date occurring thirty (30) days after Tenant’s receiptof the Option Rent Notice, exercise the option by delivering the Option Noticeto Landlord and upon, and concurrent with, such exercise, Tenant may, at itsoption, object to the Option Rent determined by Landlord.  Failure of Tenant to deliver the InterestNotice to Landlord on or before the date specified in (i) above or todeliver 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 toextend.  If Tenant timely and properlyexercises its option to extend, the Lease Term shall be extended for the OptionTerm upon all of the terms and conditions set forth in this Lease, except thatthe Rent shall be as indicated in the Option Rent Notice unless Tenant,concurrently with its exercise, objects to the Option Rent contained in theOption Rent Notice, in which case the parties shall follow the procedure as setforth in Section 2.2.3 below.

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

2.2.3.1         Landlordand Tenant shall each appoint one arbitrator who shall by profession be a realestate broker or appraiser who shall have been active over the five (5) yearperiod ending on the date of such appointment in the leasing (or appraisal, asthe case may be) of commercial high–rise properties in the Pasadena, Californiaarea.  The determination of thearbitrators shall be limited solely to the issue of whether Landlord’s orTenant’s submitted Option Rent is the closest to the actual Option Rent, asdetermined by the arbitrators, taking into account the requirements ofSection 2.2.1 of this Lease (i.e., the arbitrators may only selectLandlord’s or Tenant’s determination and shall not be entitled to make acompromise determination).  Each sucharbitrator shall be appointed within fifteen (15) business days after theapplicable Outside Agreement Date.

2.2.3.2         Thetwo (2) arbitrators so appointed shall within five (5) days of the date of theappointment of the last appointed arbitrator agree upon and appoint a thirdarbitrator who shall be qualified under the same criteria set forth hereinabovefor qualification of the initial two (2) arbitrators.

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

2.2.3.4         Thedecision of the majority of the three (3) arbitrators shall be binding uponLandlord and Tenant.

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

2.2.3.6         Ifthe two (2) arbitrators fail to agree upon and appoint a third arbitrator, orboth parties fail to appoint an arbitrator, then the appointment of the thirdarbitrator or any arbitrator shall be dismissed and the Option Rent be decidedshall be forthwith submitted to arbitration under the provisions of theAmerican Arbitration Association, but subject to the instruction set forth inthis Section 2.2.3.

2.2.3.7         Thecost 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 themanagement office of the Building Complex, or, at Landlord’s option, such otherplace as Landlord may from time to time designate in writing, in currency or acheck for currency which, at the time of payment, is legal tender for privateor public debts in the United States of America, base rent ( “**Base Rent**”)as set forth in Section 8 of the Summary, payable in equal monthlyinstallments as set forth in Section 8 of the Summary in advance on orbefore 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 shallbe paid at the time of Tenant’s execution of this Lease.  If any rental payment date (including the LeaseCommencement Date) falls on a day of a calendar month other than the first dayof such calendar month or if any Rent payment is for a period which is shorterthan one calendar month (such as during the last month of the Lease Term), theRent for any fractional calendar month shall be the proportionate amount of afull calendar month’s rental based on the proportion that the number of days insuch fractional month bears to the number of days in the calendar month duringwhich such fractional month occurs.  Allother payments or adjustments required to be made under the terms of this Leasethat require proration on a time basis shall be prorated on the same basis.

## 3.2           **Rent Abatement**.  Provided Tenant is not in default under theLease (or would be in default under the Lease but for the passage of time orgiving of notice, or both), Landlord hereby agrees to abate Tenant’s obligationto pay Monthly Base Rent for the first (1st) month through andincluding the sixth (6th) month of the Lease Term (such total amountof abated Monthly Base Rent being hereinafter referred to as the “**Abated Amount**”).  During such abatement period, Tenant shallstill be responsible for the payment of all of its other monetary obligationsunder the Lease, including, without limitation, Tenant’s Percentage ofOperating Expenses and any expenses relative to Tenant’s use and occupancy ofthe Premises.  In the event of a defaultby Tenant under the terms of this Lease which results in early termination ofthis Lease, then as a part of the recovery elsewhere expressly permitted underthis Lease, Landlord shall be entitled to a pro–rata recovery of the AbatedAmount.  The formula for determining thepercentage of the Abated Amount recoverable is (X–Y) ÷X, where X equalsthe number of months in the Lease Term and Y equals the number of months thePremises 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 ofmonth 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–fivepercent (75%) of the Abated Amount.  Anysuch amount which Landlord is entitled to recover hereinabove shall become immediatelydue and payable as unpaid rent which had been earned at the date of Leasetermination.

# **ARTICLE 4**ADDITIONAL RENT

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

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

(ii)           Tenant’sShare of the annual Utilities Costs, as that term is defined inSection 4.2.6 of this Lease.

## 4.2           **Definitions**.  As used in this Article 4, the followingterms 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 Yearfrom time to time to any twelve (12) consecutive month period, and, in theevent of any such change, Tenant’s Share of the Direct Expenses and Tenant’sShare of the Utilities Costs shall be equitably adjusted for any Expense Yearinvolved in any such change.

### 4.2.4  “**Operating Expenses**”shall mean all expenses, costs and amounts of every kind and nature whichLandlord shall pay or incur during any Expense Year because of or in connectionwith the ownership, management, maintenance, repair, replacement, restorationor operation of the Real Property, including, without limitation, any amountspaid or incurred for:  (i) allUtilities Costs; (ii) the cost of janitorial service, alarm and securityservice, window cleaning, and trash removal, the cost of operating,maintaining, repairing, replacing, renovating, managing and complying withconservation measures in connection with the utility systems, mechanicalsystems, sanitary and storm drainage systems, and escalator and elevatorsystems, and the cost of supplies, tools, and equipment and maintenance andservice contracts in connection therewith; (iii) the cost of licenses,certificates, permits and inspections and the cost of contesting the validityor applicability of any governmental enactments which may affect OperatingExpenses, and the costs incurred in connection with the implementation andoperation of a transportation system management program or similar program;(iv) the cost of insurance carried by Landlord in connection with the RealProperty, in such amounts as Landlord may reasonably determine, or as may berequired by any mortgagees, or the lessor of any underlying or ground leaseaffecting 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 inlieu thereof), consulting fees, legal fees and accounting fees, incurred inconnection with the management, operation, administration, maintenance andrepair 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 contractorsand consultants; (viii) payments under any equipment rental agreements ormanagement agreements (including the cost of any management fee and the fairrental value of any office space provided thereunder); (ix) wages,salaries and other compensation and benefits of all persons engaged in theoperation, management, maintenance or security of the Real Property, andemployer’s Social Security taxes, unemployment taxes or insurance, and anyother taxes which may be levied on such wages, salaries, compensation andbenefits; (x) payments under any easement, license, operating agreement,declaration, restrictive covenant, or instrument pertaining to the sharing ofcosts by the Real Property; (xi) amortization (including interest on theunamortized cost at a rate equal to the floating commercial loan rate announcedfrom time to time by Bank of America, a national banking association, or itssuccessor, 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 themaintenance, operation and repair of the Real Property; (xii) the cost(including rent) of Landlord’s property management office for the Real Propertyand all utilities, supplies and materials used in connection therewith; and(xiii) the cost of any capital alterations, capital additions, or capitalimprovements made to the Real Property or any portion thereof (A) whichrelate to the operation, repair, maintenance and replacement of all systems, equipmentor facilities which serve the Real Property in the whole or in part (includingreplacement of wall and floor coverings, ceiling tiles and fixtures in lobbies,

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### corridors,restrooms and other common or public areas or facilities, maintenance andreplacement of curbs, walkways and parking areas, and repairs to roofs andreroofing of improvements), (B) which are intended as a labor–savingdevice or to effect other economies in the operation or maintenance of the RealProperty, or any portion thereof, or (C) that are required under anygovernmental law or regulation that is then being enforced by a federal, stateor local governmental agency; provided, however, that each such permittedcapital expenditure shall be amortized (including interest on the unamortizedcost at the Interest Rate in effect at the time such expenditure is placed inservice) over its useful life as Landlord shall reasonably determine.  If Landlord is not furnishing any particularwork or service (the cost of which, if performed or provided by Landlord, wouldbe included in Operating Expenses) to a tenant who has undertaken to performsuch work or service in lieu of the performance thereof by Landlord, OperatingExpenses shall be deemed to be increased by an amount equal to the additionalOperating Expenses which would reasonably have been incurred during such periodby Landlord if it had at its own expense furnished such work or service to suchtenant.  If the Building (and anyadditional buildings constructed in the Building Complex) are not one hundredpercent (100%) occupied during all or a portion of any Expense Year (includingthe Base Year), Landlord shall make an appropriate adjustment to the variablecomponents of Operating Expenses for such Expense Year (including the BaseYear) as reasonably determined by Landlord employing sound accounting andmanagement principles, to determine the amount of Operating Expenses that wouldhave 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 ofOperating Expenses for such Expense Year. Notwithstanding anything to the contrary set forth in thisArticle 4, when calculating Direct Expenses for the Base Year, OperatingExpenses shall exclude market–wide labor–rate increases due to extraordinarycircumstances, including, but not limited to, boycotts and strikes, utilityrate increases due to extraordinary circumstances, including, withoutlimitation, conservation surcharges, boycotts, embargoes or other shortages,and costs relating to capital improvements or expenditures.

Landlord shall have the right, from time totime, to equitably allocate and prorate some or all of the Direct Expensesand/or Utilities Costs among different tenants and/or different buildings ofthe Building Complex and/or on a building–by–building basis (the “**Cost Pools**”).  Such Cost Pools may include, withoutlimitation, the office space tenants and retail space tenants of the buildingsin the Building Complex and may be modified to take into account the additionof any additional office buildings within the Building Complex.

Notwithstanding theforegoing, Operating Expenses shall not, however, include (A) costs ofrepairs or other work occasioned by fire, windstorm or other casualty to theextent Landlord is reimbursed by insurance proceeds (other than those amountswithin the deductible limits of insurance policies actually carried byLandlord, which amounts shall be includable as Operating Expenses so long as suchdeductibles are within the generally prevailing range of deductibles topolicies carried by landlords of comparable first class office buildingslocated in the vicinity of the Building, but specifically excluding asOperating Expenses the amount within the deductible limits of any earthquake orflood damage insurance policies); (B) costs of leasing commissions,attorneys’ fees and other costs and expenses incurred in connection withnegotiations or disputes with present or prospective tenants or other occupantsof the Building; (C) except as otherwise specifically provided in thisSection, costs incurred by Landlord in the repairs, capital additions,alterations or replacements made or incurred to rectify or correct defects indesign, materials or workmanship in connection with any portion of theBuilding; (D) costs (including permit, license and inspection costs)incurred in renovating or otherwise improving, decorating or redecoratingrentable space for other tenants or vacant rentable space; (E) cost of utilitiesor services sold to Tenant or others for which Landlord is entitled to andactually receives reimbursement (other than through any operating costreimbursement provision identical or substantially similar to the provisionsset forth in this Lease); (F) except as otherwise specifically provided inthis Section, costs incurred by Landlord for alterations to the Project whichare considered capital improvements and replacements under generally acceptedaccounting principles, consistently applied; (G) costs of depreciation andamortization, except on materials, small tools and supplies purchased byLandlord to enable Landlord to supply services Landlord might otherwisecontract for with a third party, where such depreciation and amortization wouldotherwise have been included in the charge for such third party services, allas determined in accordance with generally accepted accounting principles,consistently applied; (H) costs of services or other benefits which arenot available to Tenant but which are provided to other tenants of theBuilding; (I) costs incurred due to the violation by Landlord or any othertenant of the terms and

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

### 4.2.5  “**Tax Expenses**”shall mean all federal, state, county, or local governmental or municipaltaxes, fees, charges or other impositions of every kind and nature, whethergeneral, 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, openspace charges, housing fund assessments, leasehold taxes or taxes based uponthe receipt of rent, including gross receipts or sales taxes applicable to thereceipt of rent, personal property taxes imposed upon the fixtures, machinery,equipment, apparatus, systems and equipment, appurtenances, furniture and otherpersonal property used in connection with the Building Complex), which Landlordshall pay or incur during any Expense Year (without regard to any differentfiscal year used by such governmental or municipal authority) because of or inconnection with the ownership, leasing and operation of the Real Property orLandlord’s interest therein.

#### 4.2.5.1 Tax Expenses shall include, without limitation:

##### (i)            any assessment, tax, fee, levy orcharge in addition to, or in substitution, partially or totally, of anyassessment, tax, fee, levy or charge previously included within the definitionof real property tax, it being acknowledged by Tenant and Landlord thatProposition 13 was adopted by the voters of the State of California in the June1978 election (“**Proposition 13**”)and that assessments, taxes, fees, levies and charges may be imposed bygovernmental agencies for such services as fire protection, street, sidewalkand road maintenance, conservation, refuse removal and for other governmentalservices formerly provided without charge to property owners or occupants, and,in further recognition of the decrease in the level and quality of governmentalservices and amenities as a result of Proposition 13, Tax Expenses shallalso include any governmental or private assessments or the contribution of theBuilding Complex towards a governmental or private cost–sharing agreement forthe purpose of augmenting or improving the quality of services and amenitiesnormally provided by governmental agencies. It is the intention of Tenant and Landlord that all such new andincreased assessments, taxes, fees, levies, and charges and all similarassessments, taxes, fees, levies and charges be included within the definitionof Tax Expenses for purposes of this Lease;

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

##### (iii)          any assessment, tax, fee, levy orcharge, 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 leviedin lieu of real estate taxes; and

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

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

#### 4.2.5.3 Notwithstanding anything to the contrary contained in thisSection 4.2.5, there shall be excluded from Tax Expenses:  (i) all excess profits taxes, franchisetaxes, gift taxes, capital stock taxes, inheritance and succession taxes,estate taxes, federal and state income taxes, and other taxes to the extentapplicable to Landlord’s general or net income (as opposed to rents, receiptsor 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 tenantsof the Building Complex for excess consumption and after–hours HVAC pursuant toSection 6.2 of this Lease or similar provisions in other tenants’leases.  Notwithstanding anything hereinto the contrary, and in addition to Tenant’s obligations to pay items ofAdditional Rent as described in this Lease, throughout Tenant’s occupancy ofthe Premises, whether prior to, during or after the Lease Term, Tenant shallpay directly for all utilities and services supplied to the Premises, includingbut not limited to electricity, telephone, water and/or gas, together with anytaxes thereon (“**Tenant’s Utilities**”).  If any of Tenant’s Utilities are notseparately metered or billed to the Premises, Tenant shall pay to Landlord, asAdditional Rent, a reasonable proportion to be determined by Landlord of allsuch charges jointly metered or billed with other premises in the Building, inthe manner and within the time periods set forth above for Additional Rent.  The responsibility for providing and the costof any such Tenant’s Utilities delivered to or consumed on the Premises (exceptfor standard air conditioning and heating) shall be controlled by the terms andconditions of this Article 4. Tenant agrees to provide all, and Landlord shall not provide any, ofsuch 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 theappropriate utility companies and/or public entities for the provision of suchutilities, and shall pay directly such companies’ charges and any governmentalfees, taxes or other charges payable in connection with such utility service.

#### 4.2.6.2 Tenant agrees that the heating, ventilation and air conditioning systemswithin the Premises are adequate for Tenant’s use.  Tenant shall use its best efforts to conserveenergy 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 adequatefor Tenant’s use.  Tenant shall usecommercially reasonable efforts to conserve energy in the operation of itslighting systems, and shall cooperate with Landlord in any energy conservationprograms.

#### 4.2.6.4 If Tenant fails to provide any of the utility or other services asrequired by this Section 4.2.6 or is, in Landlord’s reasonable judgment, aboutto so fail, Landlord may, but shall not be required to, provide such serviceson Tenant’s account.  Any costs incurredby Landlord in providing such services shall be deemed Additional Renthereunder, and shall be billed as set forth in this Lease.  If Tenant fails to make any such payment ofAdditional Rent that includes the cost of utility or other services, thenwithout prejudice to any other remedy that Landlord may have by reason of suchfailure to pay, Landlord may discontinue any such utility service to thePremises, without thereby incurring any liability to Tenant.  Any such discontinuance of utility or otherservice shall not be deemed an eviction (constructive or otherwise), adisturbance 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 multiplyingthe number of rentable square feet of the Premises by 100 and dividing the productby the total rentable square feet in the Building.  Landlord shall have the right from time totime, in its discretion, to include or exclude existing or future buildings inthe Building Complex in the calculation of the total rentable square feet of theBuilding Complex, for purposes of determining the Building’s Share of DirectExpenses, Utilities Costs and/or the provision of various services andamenities thereto, including equitable allocation of Direct Expenses and/orUtilities Costs in Cost Pools (as described in Section 4.2.4 above); insuch event, Tenant’s Share shall include such allocation of the Building’sShare of Direct Expenses and Utilities Costs in the calculation of Tenant’sShare.  In addition, in the event eitherthe rentable square feet of the Premises and/or the Building and otherbuildings in the Building Complex is changed, Tenant’s Share and/or theBuilding’s Share shall be appropriately adjusted, and, as to the Expense Yearin which such change occurs, Tenant’s Share and/or the Building’s Share forsuch year shall be determined on the basis of the number of days during suchExpense Year that each such Tenant’s Share and/or the Building’s Share was ineffect.

## 4.3           **Calculationand Payment of Additional Rent**.

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

### 4.3.2  **Statement of Actual Direct Expenses andUtilities 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) theDirect Expenses incurred or accrued for such preceding Expense Year, and whichshall indicate the amount, if any, of any Excess; and (ii) the amount ofthe Utilities Costs incurred for such preceding Expense Year.  Upon receipt of the Statement for eachExpense Year ending during the Lease Term, Tenant shall pay, with its nextinstallment of Base Rent due, but in no event later than thirty (30) days afterreceipt of such Statement, (A) the full amount of any Excess for suchExpense Year, less the amounts, if any, paid during such Expense Year as “EstimatedExcess,” 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 suchExpense Year, less the amounts, if any, paid by Tenant during the Expense Yearas “Estimated Utilities Costs”, as that term is defined in Section 4.3.3below.  The failure of Landlord to timelyfurnish the Statement for any Expense Year shall not prejudice Landlord fromenforcing its rights under this Article 4; provided, however, thatLandlord agrees to use commercially reasonable efforts to furnish the Statementby April 30 of the Lease Year.  Eventhough the Lease Term has expired and Tenant has vacated the Premises, when thefinal determination is made of the Direct Expenses and Utilities Costs for theExpense Year in which this Lease terminates, taking into consideration that theLease Expiration Date may have occurred prior to the final day of theapplicable Expense Year, Tenant shall immediately pay to Landlord an amount ascalculated pursuant to the provisions of Section 4.3.1 of this Lease asTenant’s Share of the Excess and Utilities Costs for such final ExpenseYear.  The provisions of thisSection 4.3.2 shall survive the expiration or earlier termination of theLease Term.

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

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### toLandlord an amount equal to (A) a fraction of the Estimated Excess (or theincrease in the Estimated Excess if pursuant to a revised Estimate Statement)for the then–current Expense Year (reduced by any amounts paid as EstimatedExcess pursuant to the last sentence of this Section 4.3.3), plus(B) a fraction of the Estimated Utilities Costs (or the increase in theEstimated Utilities Costs if pursuant to a revised Estimate Statement) for thethen–current Expense Year (reduced by the amounts paid as Estimated UtilitiesCosts pursuant to the last sentence of this Section 4.3.3).  Such fraction shall have as its numerator thenumber of months which have elapsed in such current Expense Year to the monthof such payment, both months inclusive, and shall have twelve (12) as itsdenominator.  Until a new EstimateStatement is furnished, Tenant shall pay monthly, with the monthly Base Rentinstallments, an amount equal to the sum of (x) one–twelfth (1/12) of thetotal Estimated Excess plus (y) one–twelfth (1/12) of the total EstimatedUtilities Costs set forth in the previous Estimate Statement delivered byLandlord to Tenant.

## 4.4           **Taxes and Other Charges for Which Tenant IsDirectly Responsible**.  Tenant shall reimburse Landlord, asAdditional Rent, within ten (10) days after demand, for any and all taxesrequired to be paid by Landlord (except to the extent included in Tax Expensesby Landlord), excluding state, local and federal personal or corporate incometaxes measured by the net income of Landlord from all sources and estate andinheritance taxes, whether or not now customary or within the contemplation ofthe parties hereto, when:

### 4.4.1 said taxes are measured by or reasonably attributable to the cost orvalue of Tenant’s equipment, furniture, fixtures and other personal propertylocated in the Premises, or by the cost or value of any leasehold improvementsmade in or to the Premises by or for Tenant, to the extent the cost or value ofsuch leasehold improvements exceeds the cost or value of a building standardbuild–out as determined by Landlord regardless of whether title to suchimprovements 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 byTenant 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 whichTenant is a party creating or transferring an interest or an estate in thePremises.

## 4.5           **Late Charges**.  If any installment of Rent or any other sumdue from Tenant shall not be received by Landlord or Landlord’s designee withinthree (3) days of the due date therefor, then Tenant shall pay to Landlord alate 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/orother charges when due hereunder.  Thelate charge shall be deemed Additional Rent and the right to require it shallbe in addition to all of Landlord’s other rights and remedies hereunder, at lawand/or in equity and shall not be construed as liquidated damages or aslimiting Landlord’s remedies in any manner. In addition to the late charge described above, any Rent or otheramounts owing hereunder which are not paid by the date they are due shallthereafter 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) thehighest rate permitted by applicable law.

## 4.6           **Audit Right**.  Within one hundred eighty (180) days afterreceipt of a Statement by Tenant (“**ReviewPeriod**”),if Tenant disputes the amount set forth in the Statement, Tenant’s employees oran independent certified public accountant (which accountant is a member of anationally or regionally recognized accounting firm) designated by Tenant, may,after written notice to Landlord and at reasonable times, inspect Landlord’srecords (pertaining to Landlord’s calculation of Direct Expenses and/orUtilities Costs) at Landlord’s offices, provided that Tenant is not then indefault after expiration of all applicable cure periods and provided furtherthat Tenant and such accountant or representative shall, and each of them shalluse their commercially reasonable efforts to cause their respective agents andemployees to, maintain all information contained in Landlord’s records instrict confidence.  Notwithstanding theforegoing, 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 Statementwithin the Review Period shall be deemed to be Tenant’s approval of suchStatement and Tenant, thereafter, waives the right or ability to dispute theamounts

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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 thatTenant still disputes such amounts, a certification as to the proper amountshall be made, at Tenant’s expense, by an independent certified publicaccountant selected by Landlord, and reasonably acceptable to Tenant, who is amember of a nationally or regionally recognized accounting firm.  However, if such certification by theaccountant proves that the total amount of Direct Expenses and/or UtilitiesCosts, as applicable, set forth in the Statement were overstated by more thanfive percent (5%), then the actual, documented and reasonable cost of thereview, the accountant and such certification shall be paid for byLandlord.  Promptly following the partiesreceipt of such certification, the parties shall make such appropriate paymentsor reimbursements, as the case may be, to each other, as are determined to beowing pursuant to such certification.  Inno event shall Landlord or its property manager be required to(i) photocopy any accounting records or other items or contracts (butLandlord 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 asprovided above), or (iv) perform any other tasks other than makingavailable such accounting records as are described in this paragraph.  Landlord shall not be liable for the paymentof any contingency fee payments to any auditor or consultant of Tenant.

# **ARTICLE 5**USE OF PREMISES

Tenant shall use the Premises solely for generaloffice purposes (which shall include such activities as sales, softwareengineering, data entry, small parcel shipping and related functions)consistent with the character of the Building Complex as a first–class officebuilding project, and Tenant shall not use or permit the Premises to be used forany other purpose or purposes whatsoever. Tenant further covenants and agrees that it shall not use, or suffer orpermit any person or persons to use, the Premises or any part thereof for anyuse or purpose contrary to the Rules and Regulations, or in violation of thelaws of the United States of America, the State of California, or theordinances, regulations or requirements of the local municipal or countygoverning body or other lawful authorities having jurisdiction over theBuilding Complex (including laws pertaining to Hazardous Materials, as definedbelow).  Tenant shall comply with theRules and Regulations.  Landlord shallnot be responsible to Tenant for the nonperformance of any of such Rules andRegulations by or otherwise with respect to the acts or omissions of any othertenants or occupants of the Building Complex. Tenant shall comply with all recorded covenants, conditions, andrestrictions now or hereafter affecting the Real Property.

# **ARTICLE 6**SERVICES AND UTILITIES

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

### 6.1.1 Subject to all governmental rules, regulations and guidelines applicablethereto, Landlord shall provide heating, ventilation and air conditioning (“**HVAC**”)for normal office use in the Premises, from Monday through Friday, during theperiod from 7:00 a.m. to 6:00 p.m., and on Saturdays during theperiod 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 andpower for normal general office use. Tenant shall bear the cost of replacement of lamps, starters andballasts for non–Building standard lighting fixtures within the Premises.

### 6.1.3 Landlord shall provide city water from the regular Building outlets fordrinking, 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 alltimes.

## 6.2           **Overstandard Tenant Use**.  Tenant shall not, without Landlord’s priorwritten consent, use heat–generating machines, machines other than normalfractional horsepower office machines, or equipment or lighting other thanbuilding standard lights in the Premises, which may adversely affect thetemperature otherwise maintained by the air conditioning system or increase thewater normally furnished for the Premises by Landlord pursuant to the terms ofSection 6.1 of this Lease.  IfTenant uses water or HVAC in excess of that typically supplied for office usesin similar buildings, or if Tenant’s consumption of electricity shall exceed anaverage of three (3) watts per useable square foot of the Premises, connectedload, calculated on a monthly basis during the Building Hours set forth inSection 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 theinstallation, operation, and maintenance of equipment which is installed inorder to supply such excess consumption, administrative and overhead costsincurred in connection with such excess consumption, and the cost of theincreased wear and tear on existing equipment caused by such excessconsumption; and Landlord may install devices to separately meter any increaseduse and in such event Tenant shall pay the increased cost directly to Landlord,within thirty (30) days after demand, including the cost of such additionalmetering devices.  If Tenant desires touse HVAC during hours other than the Building Hours, (i) Tenant shall giveLandlord such prior notice, as Landlord shall from time to time establish asappropriate, of Tenant’s desired use, (ii) Landlord shall supply suchafter–hours HVAC to Tenant at such hourly cost (which shall include, withoutlimitation, the cost of the use of such HVAC, administrative and overheadcharges, and the cost of maintenance and increased wear and tear on equipmentused to provide such after–hours HVAC) to Tenant as Landlord shall from time totime 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 beliable for damages, by abatement of Rent or otherwise, for failure to furnishor delay in furnishing any service (including telephone and telecommunicationservices), or for any diminution in the quality or quantity thereof, when suchfailure 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 Buildingafter reasonable effort to do so, by any accident or casualty whatsoever, byact or default of Tenant or other parties, or by any other cause beyondLandlord’s reasonable control; and such failures or delays or diminution shallnever be deemed to constitute an eviction or disturbance of Tenant’s use andpossession of the Premises or relieve Tenant from paying Rent or performing anyof its obligations under this Lease. Furthermore, Landlord shall not be liable under any circumstances for aloss of, or injury to, property or for injury to, or interference with, Tenant’sbusiness, including, without limitation, loss of profits, however occurring,through or in connection with or incidental to a failure to furnish any of theservices 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 berequired by Tenant, including, without limitation, locksmithing, additionaljanitorial service, and additional repairs and maintenance, provided thatTenant shall pay to Landlord, within thirty (30) days after billing, the sum ofall costs to Landlord of such additional services plus an administrationfee.  Charges for any utilities orservice for which Tenant is required to pay from time to time hereunder, shallbe 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 inSections 7.2 and 11.1 below, Tenant shall, at Tenant’s own expense, keepthe Premises, including all improvements, fixtures and furnishings therein, ingood order, repair and condition at all times during the Lease Term, whichrepair obligations shall include, without limitation, the obligation topromptly and adequately repair all damage to the Premises and replace or repairall damaged or broken fixtures and appurtenances; provided however, that, at

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

## 7.2           **Landlord’s Repairs**.  Anything contained in Section 7.1 aboveto the contrary notwithstanding, and subject to Articles 11 and 12 of thisLease, Landlord shall repair and maintain the structural portions of theBuilding and the basic plumbing, heating, ventilating, air conditioning andelectrical systems serving the Building and not located in the Premises;provided, however, if such maintenance and repairs are caused in part or inwhole by the act, neglect, fault of or omission of any duty by Tenant, itsagents, contractors, employees, licenses or invitees, Tenant shall pay toLandlord, as additional rent, the reasonable cost of such maintenance andrepairs.  Landlord shall not be liable toTenant for any failure to make any such repairs, or to perform any maintenancehereunder, and there shall be no abatement of Rent and no liability of Landlordby reason of any injury to or interference with Tenant’s business arising fromthe making of a failure to make any repairs, alterations or improvements in orto 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 allreasonable times to make any repairs, alterations, improvements or additions tothe Premises or to the Building Complex or to any equipment located in theBuilding Complex as Landlord shall desire or deem necessary or as Landlord maybe required to do by governmental or quasi–governmental authority or courtorder or decree.  Tenant hereby waivesand 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 suchAlterations, which consent shall be requested by Tenant not less than thirty(30) days prior to the commencement thereof, and which consent shall not beunreasonably withheld by Landlord; provided, however, Landlord may withhold itsconsent in its sole and absolute discretion with respect to any Alterationswhich (i) may affect the structural components of the Building, or theBuilding’s mechanical, electrical, heating, ventilating, air–conditioning, orlife safety systems, or (ii) are visible from outside the Premises.  Notwithstanding the foregoing, Tenant maymake strictly cosmetic changes to the finish work in the Premises, notrequiring any structural or other substantial modifications to the Premises,upon ten (10) days prior written notice to Landlord.  The construction of the initial improvementsto 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 itsconsent to any and all Alterations or repairs of the Premises or about thePremises, such requirements as Landlord in its sole discretion (as to anyAlterations or repairs which may affect the Base, Shell and Core or thestructural elements of the Building) and otherwise in its reasonable discretionmay deem desirable, including, but not limited to, the requirement that uponLandlord’s request, Tenant shall, at Tenant’s expense, remove such Alterationsupon the expiration or any early termination of the Lease Term (upon Tenant’srequest, Landlord shall specify, at the time of its consent, which Alteration,if any, must be removed upon expiration or early termination of the LeaseTerm), and/or the requirement that Tenant utilize for such purposes onlycontractors, materials, mechanics and materialmen approved by Landlord, whichapproval shall not be unreasonably withheld, conditioned or delayed.  Tenant shall construct such Alterations andperform such repairs in conformance with any and all applicable rules andregulations of any federal, state, county or municipal code or ordinance andpursuant to a valid building permit, issued by the City of San Diego inconformance with Landlord’s construction rules and regulations.  All work with respect to any Alterations mustbe done in a good and workmanlike manner and diligently prosecuted tocompletion to the end that the Premises shall at all times be a complete unitexcept during the period of work.  Inperforming the work of any such Alterations, Tenant shall have the workperformed in such manner as not to obstruct access to the Building or Building

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## Complex or the common areas by any other tenantof the Building Complex, and as not to obstruct the business of Landlord orother tenants in the Building Complex, or interfere with the labor forceworking in the Building Complex.  IfTenant makes any Alterations, Tenant agrees to carry “Builder’s All Risk”insurance in an amount approved by Landlord covering the construction of suchAlterations, and such other insurance as Landlord may require, it beingunderstood and agreed that all of such Alterations shall be insured by Tenantpursuant to Article 10 of this Lease immediately upon completionthereof.  In addition, Landlord may, inits discretion, require Tenant to obtain a lien and completion bond or somealternate form of security satisfactory to Landlord in an amount sufficient toensure the lien–free completion of such Alterations and naming Landlord as a co–obligeeif the cost of the proposed Alterations exceeds $500,000.  Upon completion of any Alterations, Tenantshall (i) cause a timely Notice of Completion to be recorded in the officeof the Recorder of San Diego County in accordance with the terms ofSection 3093 of the Civil Code of the State of California or any successorstatute, (ii) deliver to the Building Complex management office areproducible copy of the “as built” drawings of the Alterations, and(iii) deliver to Landlord evidence of payment, contractors’ affidavits andfull and final waivers of all liens for labor, services or materials.

## 8.3           **Payment for Alterations**.  If Tenant orders any Alterations or repairwork directly from Landlord, Tenant shall pay to Landlord, within thirty (30)days after demand, all charges for such work, including a percentage of thecost of such work (such percentage to be established on a uniform basis for theBuilding) sufficient to compensate Landlord for all overhead, generalconditions, fees and other costs and expenses arising from Landlord’sinvolvement with such work.  If Tenantdoes not order any work directly from Landlord, Tenant shall reimburseLandlord, within thirty (30) days after demand, for Landlord’s out–of–pocketcosts 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 costof such work.

## 8.4           **Landlord’s Property**.  All Alterations, improvements and fixtureswhich may be installed or placed in or about the Premises, and all signsinstalled in, on or about the Premises, from time to time, shall be at the solecost 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 theAlteration, require Tenant at Tenant’s expense to remove any Alterations fromthe Premises and repair any damage to the Premises and Building caused by suchremoval.  If Tenant fails to completesuch removal prior and/or to repair any damage caused by the removal of anyAlterations by the end of the Lease Term, Landlord may do so and may charge thecost thereof to Tenant.

# **ARTICLE 9**COVENANT AGAINST LIENS

Tenant has no authority or power to cause orpermit any lien or encumbrance of any kind whatsoever, whether created by actof Tenant, operation of law or otherwise, to attach to or be placed upon theReal Property or any portion thereof, and any and all liens and encumbrancescreated by Tenant shall attach to Tenant’s interest only.  Landlord shall have the right at all times topost and keep posted on the Premises any notice which it deems necessary forprotection from such liens.  Tenantcovenants and agrees not to suffer or permit any lien of mechanics ormaterialmen or others to be placed against the Real Property or any portionthereof, with respect to work or services claimed to have been performed for ormaterials claimed to have been furnished to Tenant or the Premises, and, incase of any such lien attaching or notice of any lien, Tenant covenants andagrees to cause it to be immediately released and removed of record.  Notwithstanding anything to the contrary setforth in this Lease, in the event that such lien is not released and removed onor before the date occurring ten (10) days after notice of such lien isdelivered by Landlord to Tenant, Landlord, at its sole option, may immediately takeall action necessary to release and remove such lien, without any duty toinvestigate the validity thereof, and all sums, costs and expenses, includingreasonable attorneys’ fees and costs, incurred by Landlord in connection withsuch lien shall be deemed Additional Rent under this Lease and shallimmediately 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 toproperty and injury to persons in, on or about the Premises from any causewhatsoever, and agrees that, to the extent not prohibited by law, Landlord, itspartners 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 usethereof, which damage is sustained by Tenant or by other persons claimingthrough Tenant.  Tenant shall indemnify,defend, protect and hold harmless the Landlord Parties from and against any andall loss, cost, damage, expense, cause of action, claims and liability, includingwithout limitation court costs and reasonable attorneys’ fees (collectively “**Claims**”)incurred in connection with or arising from any cause in, on or about thePremises, and/or any acts, omissions or negligence of Tenant or of any personclaiming 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 RealProperty, provided that the terms of the foregoing indemnity shall not apply toany Claims to the extent resulting from Landlord’s breach of this Lease or thenegligence or willful misconduct of Landlord or the Landlord Parties and notinsured (or required to be insured) by Tenant under this Lease.  Tenant’s agreement to indemnify Landlordpursuant to this Section 10.1 is not intended and shall not relieve anyinsurance carrier of its obligations under policies required to be carried byTenant pursuant to the provision of this Lease. The provisions of this Section 10.1 shall survive the expiration orsooner termination of this Lease with respect to any Claims occurring prior tosuch expiration or termination.

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

## 10.3         **Tenant’s Insurance**.  Tenant shall maintain the following coveragesin 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 performany work therein, or (ii) the Lease Commencement Date, and continuingthereafter throughout the Lease Term:

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

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

### 10.3.3 Business interruption, loss–of–income and extra–expense insurance insuch amounts as will reimburse Tenant for direct or indirect loss of earningsattributable to all perils commonly insured

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### againstby prudent tenants or attributable to prevention of access to the Premises orto the Building as a result of such perils.

### 10.3.4 The minimum limits of policies of insurance required of Tenant underthis Lease shall in no event limit the liability of Tenant under thisLease.  Such insurance shall:  (i) name Landlord, and any other partyit so specifies, as an additional insured; (ii) specifically cover theliability assumed by Tenant under this Lease, including, but not limited to,Tenant’s obligations under Section 10.1 of this Lease; (iii) beissued by an insurance company having a rating of not less than A–X in Best’sInsurance Guide or which is otherwise acceptable to Landlord and licensed to dobusiness in the State of California; (iv) be primary insurance as to allclaims thereunder and provide that any insurance carried by Landlord is excessand is non–contributing with any insurance requirement of Tenant;(v) provide that said insurance shall not be canceled or coverage changedunless thirty (30) days’ prior written notice shall have been given to Landlordand any mortgagee of Landlord; and (vi) contain a cross–liabilityendorsement or severability of interest clause acceptable to Landlord.  Tenant shall deliver said policy or policiesor certificates thereof to Landlord on or before the Insurance Start Date andat least thirty (30) days before the expiration dates thereof.  In the event Tenant shall fail to procuresuch 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 bepaid to Landlord as Additional Rent within five (5) days after delivery to Tenantof bills therefor.

## 10.4         **Subrogation**.  Tenant agrees to have its insurance companyissuing property damage, loss of income and/or rental interruption and extraexpense insurance waive any rights of subrogation that such company may haveagainst Landlord.  Tenant hereby waivesany right that Tenant may have against Landlord on account of any loss ordamage to its property.    If Tenantfails to carry the amounts and types of insurance required to be carried by itpursuant to this Article 10, in addition to any remedies Landlord may haveunder this Lease, such failure shall be deemed to be a covenant and agreementby Tenant to self–insure with respect to the type and amount of insurance whichTenant so failed to carry, with full waiver of subrogation with respectthereto.

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

## 10.6         **Landlord’s Insurance**.  During the Term, Landlord shall maintaincasualty insurance covering the Building (excluding the property which Tenantis obligated to insure pursuant to the terms hereof).  Such insurance shall provide protectionagainst any peril generally included within the classification “Fire andExtended Coverage”.  Landlord shall alsomaintain comprehensive general liability and property damage insurance withrespect to the operation of the Building. Such insurance shall be in such amounts and with such deductibles asLandlord reasonably deems appropriate. Landlord may, but shall not be obligated to, obtain and carry any otherform or forms of insurance as it or Landlord’s mortgagees or deed of trustbeneficiaries may determine advisable. Notwithstanding any contribution by Tenant to the cost of insurancepremiums as provided in this Lease. Tenant acknowledges that it has no right toreceive any proceeds from any insurance policies maintained by Landlord andwill 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 anydamage to the Premises resulting from fire or any other casualty or anycondition existing in the Premises as a result of a fire or other casualty thatwould give rise to the terms of this Article 11.  If the Premises or any common areas of theBuilding Complex serving or providing access to the Premises shall be damagedby fire

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## or other casualty or be subject to a conditionexisting as a result of a fire or other casualty, Landlord shall promptly anddiligently, subject to reasonable delays for insurance adjustment or othermatters beyond Landlord’s reasonable control, and subject to all other terms ofthis Article 11, restore the base, shell, and core of the Premises andsuch common areas to substantially the same condition as existed prior to thecasualty, except for modifications required by zoning and building codes andother laws or by the holder of a mortgage on the Building Complex (or anyportion thereof) or any other modifications to the common areas deemed desirableby Landlord, provided that access to the Premises and any common restroomsserving the Premises shall not be materially impaired.  Notwithstanding any other provision of thisLease, upon the occurrence of any damage to the Premises, Tenant shall assign toLandlord (or to any party designated by Landlord) all insurance proceedspayable to Tenant under Tenant’s insurance required underSections 10.3.2(ii) and 10.3.2(iii) of this Lease, and Landlord shallrepair any injury or damage to the Tenant Improvements and Alterationsinstalled in the Premises and shall return such Tenant Improvements andAlterations to their original condition; provided that if the cost of suchrepair by Landlord exceeds the amount of insurance proceeds received byLandlord from Tenant’s insurance carrier, as assigned by Tenant, the cost ofsuch repairs shall be paid by Tenant to Landlord prior to Landlord’s repair ofthe damage.  In connection with suchrepairs and replacements, Tenant shall, prior to the commencement ofconstruction, submit to Landlord, for Landlord’s review and approval, allplans, specifications and working drawings relating thereto, and Landlord shallselect the contractors to perform such improvement work.  Landlord shall not be liable for anyinconvenience or annoyance to Tenant or its visitors, or injury to Tenant’sbusiness resulting in any way from such damage or the repair thereof; providedhowever, that if such fire or other casualty shall have damaged the Premises orcommon areas necessary to Tenant’s occupancy, and if such damage is not theresult of the negligence or willful misconduct of Tenant or Tenant’s agents,employees, contractors, licensees or invitees, Landlord shall allow Tenant aproportionate abatement of Base Rent during the time and to the extent thePremises 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 ofSection 11.1 of this Lease, Landlord may elect not to rebuild and/orrestore the Premises and/or Building and/or any other portion of the BuildingComplex and instead terminate this Lease by notifying Tenant in writing of suchtermination within sixty (60) days after the date of damage, such notice toinclude a termination date giving Tenant sixty (60) days to vacate thePremises, but Landlord may so elect only if the Building Complex shall bedamaged by fire or other casualty or cause or be subject to a conditionexisting as a result of such a fire or other casualty or cause, whether or notthe Premises are affected, and one or more of the following conditions ispresent:  (i) repairs cannotreasonably 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 withrespect to the Real Property shall require that the insurance proceeds or anyportion thereof be used to retire the mortgage debt, or shall terminate theground lease, as the case may be; or (iii) the damage or condition arisingas a result of such damage is not fully covered, except for deductible amounts,by Landlord’s insurance policies.  Inaddition, if the Premises, the Building or any portion of the Building Complexis destroyed or damaged to any substantial extent during the last eighteen (18)months of the Lease Term, then notwithstanding anything contained in thisArticle 11, Landlord shall have the option to terminate this Lease by givingwritten notice to Tenant of the exercise of such option within thirty (30) daysafter such damage or destruction, in which event this Lease shall cease andterminate 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 tosuch date of damage (subject to any abatement as provided in Section 11.1above), and both parties hereto shall thereafter be freed and discharged of allfurther obligations hereunder, except as provided for in provisions of thisLease which by their terms survive the expiration or earlier termination ofthis Lease Term.

## 11.3         **Waiver of Statutory Provisions**.  The provisions of this Lease, including thisArticle 11, constitute an express agreement between Landlord and Tenantwith respect to any and all damage to, or destruction of, all or any part ofthe Real Property, and any statute or regulation of the State of California,including, without limitation, Sections 1932(2) and 1933(4) of theCalifornia Civil Code, with respect to any rights or obligations concerningdamage 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 anydamage or destruction to all or any part of the Real Property.

# **ARTICLE 12**CONDEMNATION

If ten percent (10%) or more of the Premises orBuilding shall be taken by power of eminent domain or condemned by any competentauthority for any public or quasi–public use or purpose, or if Landlord shallgrant a deed or other instrument in lieu of such taking by eminent domain orcondemnation, Landlord shall have the option to terminate this Lease uponninety (90) days’ notice to Tenant, provided such notice is given no later thanone 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 therentable square feet of the Premises is taken, or if access to the Premises issubstantially impaired as a result of any taking of all or any portion of theBuilding Complex, Tenant shall have the option to terminate this Lease uponninety (90) days’ notice to Landlord, provided such notice is given no laterthan one hundred eighty (180) days after the date of such taking.  Landlord shall be entitled to receive theentire award or payment in connection therewith, except that Tenant shall have theright to file any separate claim available to Tenant for any taking of Tenant’spersonal property and fixtures belonging to Tenant and removable by Tenant uponexpiration of the Lease Term pursuant to the terms of this Lease, and formoving expenses, so long as such claim does not diminish the award available toLandlord, 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 thedate 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 beproportionately abated.  Tenant herebywaives any and all rights it might otherwise have pursuant toSection 1265.130 of the California Code of Civil Procedure.

# **ARTICLE 13**COVENANT OF QUIET ENJOYMENT

Landlord covenants that Tenant, on paying theRent, charges for services and other payments herein reserved and on keeping,observing and performing all the other terms, covenants, conditions, provisionsand agreements herein contained on the part of Tenant to be kept, observed andperformed, shall, during the Lease Term, peaceably and quietly have, hold andenjoy the Premises subject to the terms, covenants, conditions, provisions andagreements hereof without interference by any persons lawfully claiming by orthrough Landlord.  The foregoing covenantis 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, orotherwise transfer, this Lease or any interest hereunder, permit any assignmentor other such foregoing transfer of this Lease or any interest hereunder byoperation of law, sublet the Premises or any part thereof, or permit the use ofthe Premises by any persons other than Tenant and its employees (all of theforegoing are hereinafter sometimes referred to collectively as “**Transfers**”and any person to whom any Transfer is made or sought to be made is hereinaftersometimes referred to as a “**Transferee**”).  If Tenant shall desire Landlord’s consent toany Transfer, Tenant shall notify Landlord in writing, which notice (the “**Transfer Notice**”)shall include (i) the proposed effective date of the Transfer, which shallnot be less than thirty (30) days nor more than one hundred eighty (180) daysafter the date of delivery of the Transfer Notice, (ii) a description ofthe portion of the Premises to be transferred (the “**Subject Space**”),(iii) all of the terms of the proposed Transfer and the considerationtherefor, including a calculation of the “Transfer Premium,” as that term isdefined in Section 14.3, below, in connection with such Transfer, the nameand address of the proposed Transferee, and a copy of all existing and/orproposed documentation pertaining to the proposed Transfer, including allexisting operative documents to be executed to evidence such Transfer or theagreements incidental or related to such Transfer, (iv) current financialstatements of the proposed Transferee

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## certified by an officer, partner or ownerthereof, and (v) such other information as Landlord may reasonablyrequire.  Any Transfer made withoutLandlord’s prior written consent shall, at Landlord’s option, be null, void andof no effect, and shall, at Landlord’s option, constitute a default by Tenantunder Section 19.1.7 of this Lease. Whether or not Landlord consents to any proposed Transfer, Tenant shallpay Landlord’s review and processing fees, as well as any reasonable legal feesincurred by Landlord, within thirty (30) days after written request byLandlord.

## 14.2         **Landlord’s Consent**.  Landlord shall not unreasonably withhold ordelay its consent to any proposed Transfer of the Subject Space to theTransferee on the terms specified in the Transfer Notice.  The parties hereby agree that it shall bedeemed to be reasonable under this Lease and under any applicable law forLandlord to withhold consent to any proposed Transfer where one or more of thefollowing apply, without limitation as to other reasonable grounds forwithholding consent:

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

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

### 14.2.3 The Transfer will result in more than a reasonable and safe number ofoccupants 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/orfinancial stability in light of the responsibilities involved under the Leaseon the date consent is requested;

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

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

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

If Landlord consents to any Transfer pursuant tothe terms of this Section 14.2, Tenant may within six (6) months afterLandlord’s consent, but not later than the expiration of said six (6)–monthperiod, enter into such Transfer of the Premises or portion thereof, uponsubstantially the same terms and conditions as are set forth in the TransferNotice furnished by Tenant to Landlord pursuant to Section 14.1 of thisLease, provided that if there are any changes in the terms and conditions fromthose specified in the Transfer Notice (i) such that Landlord wouldinitially have been entitled to refuse its consent to such Transfer under thisSection 14.2, or (ii) which would cause the proposed Transfer to bemore favorable to the Transferee than the terms set forth in Tenant’s originalTransfer Notice, Tenant shall again submit the Transfer to Landlord for itsapproval and other action under this Article 14.  Notwithstanding any contrary provisions ofthis Lease, if Tenant or any proposed Transferee claims that Landlord hasunreasonably withheld or delayed its consent to a proposed Transfer orotherwise has breached its obligations under this Article, Tenant’s and suchTransferee’s only remedy shall be to seek a declaratory judgment and/or injunctiverelief, and Tenant, on behalf of itself and, to the extent permitted by law,such proposed Transferee, waives all other remedies against Landlord, includingwithout limitation, the right to seek monetary damages or terminate this Lease.

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## 14.3         **TransferPremium**.

### 14.3.1  **Definition of Transfer Premium**.  If Landlord consents to a Transfer, as acondition thereto which the parties hereby agree is reasonable, Tenant shallpay to Landlord fifty percent (50%) of the “Transfer Premium,” as that term isdefined in this Section 14.3, received by Tenant from suchTransferee.  “**Transfer Premium**”shall mean all rent, additional rent or other consideration payable by suchTransferee in connection with the Transfer which is in excess of the Rentpayable by Tenant under this Lease during the term of the Transfer, on a perrentable square foot basis if less than all of the Premises is transferred,after deducting the reasonable expenses incurred by Tenant for (i) anychanges, alterations and improvements to the Premises in connection with theTransfer, and (ii) any attorneys’ fees, brokerage commissions inconnection with the Transfer (collectively, the “**Subleasing Costs**”).  “Transfer Premium” shall also include, butnot be limited to, key money and bonus money paid by Transferee to Tenant inconnection with such Transfer, and any payment in excess of fair market valuefor services rendered by Tenant to Transferee or for assets, fixtures,inventory, equipment, or furniture transferred by Tenant to Transferee inconnection with such Transfer.

### 14.3.2  **Payment of Transfer Premiums**.  The determination of the amount of theTransfer Premium shall be made on an annual basis in accordance with the termsof this Section 14.3.2, but an estimate of the amount of the TransferPremium shall be made each month and, subject toTenant’sactual receipt of the consideration due from a Transferee, one–twelfthof such estimated amount shall be paid to Landlord promptly, but in no eventlater than the next date for payment of Base Rent hereunder, subject to anannual reconciliation on each anniversary date of the Transfer.  If the payments to Landlord under thisSection 14.3.2 during the twelve (12) months preceding each annualreconciliation exceed the amount of Transfer Premium determined on an annualbasis, then Landlord shall credit the overpayment against Tenant’s futureobligations under this Section 14.3.2 or if the overpayment occurs duringthe 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 ofsuch deficiency to Landlord promptly, but in no event later than the next datefor payment of Basic Rent hereunder.  Forpurposes of calculating the Transfer Premium on an annual basis, Tenant’sSubleasing Costs shall be deemed to be offset against the first rent,additional rent or other consideration payable by the Transferee, until suchSubleasing Costs are exhausted.

### 14.3.3  **Calculations of Rent**.  In the calculation of the Rent, as it relatesto the Transfer Premium calculated under Section 14.3.1 above, the Rentpaid during each annual period for the Subject Space by Tenant, shall becomputed after adjusting such rent to the actual effective rent to be paid,taking into consideration any and all leasehold concessions granted inconnection therewith, including, but not limited to, any rent credit and tenantimprovement allowance.  For purposes ofcalculating any such effective rent, all such concessions shall be amortized ona 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 tohave been waived or modified, (ii) such consent shall not be deemedconsent to any further Transfer by either Tenant or a Transferee,(iii) Tenant shall deliver to Landlord, promptly after execution, anoriginal executed copy of all documentation pertaining to the Transfer in formreasonably acceptable to Landlord, (iv) Tenant shall furnish upon Landlord’srequest a complete statement, certified by an independent certified publicaccountant, or Tenant’s chief financial officer, setting forth in detail thecomputation of any Transfer Premium Tenant has derived and shall derive fromsuch Transfer, and (v) no Transfer relating to this Lease or agreemententered into with respect thereto, whether with or without Landlord’s consent,shall relieve Tenant or any guarantor of the Lease from liability under thisLease.  Landlord or its authorizedrepresentatives shall have the right at all reasonable times to audit thebooks, records and papers of Tenant relating to any Transfer, and shall havethe right to make copies thereof.  If theTransfer Premium with respect to any Transfer shall be found understated,Tenant shall, within thirty (30) days after demand, pay the deficiency andLandlord’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 orchange, 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 ofpartnership interests, within a twelve (12)–month period, or the dissolution ofthe partnership without immediate reconstitution thereof, and (ii) ifTenant is a closely held corporation (i.e., whose stock is not publicly heldand not traded through an exchange or over the counter), (A) thedissolution, merger, consolidation or other reorganization of Tenant, or(B) the sale or other transfer of more than an aggregate of fifty–onepercent (51%) of the voting shares of Tenant (other than to immediate familymembers by reason of gift or death), within a twelve (12)–month period, or(C) the sale, mortgage, hypothecation or pledge of more than an aggregateof fifty–one percent (51%) of the value of the unencumbered assets of Tenantwithin a twelve (12) month period.

## 14.7         **Permitted Transfers**.  An “**Affiliate**”means any entity that (i) controls, is controlled by, or is under commoncontrol with Tenant, (ii) results from the transfer of all orsubstantially all of Tenant’s assets or stock, or (iii) results from themerger or consolidation of Tenant with another entity.  “**Control**”means the direct or indirect ownership of more than fifty percent (50%) of thevoting securities of an entity or possession of the right to vote more thanfifty (50%) of the voting interest in the ordinary direction of the entity’saffairs.  Notwithstanding anything to thecontrary contained in the Lease, Landlord’s consent shall not be required forany assignment of this Lease or sublease of all or a portion  of the Premises to an Affiliate so long asthe following conditions are met:  (a) atleast thirty (30) business days before any such assignment or sublease,Landlord receives written notice of such assignment or sublease (as well as anydocuments or information reasonably requested by Landlord regarding theproposed intended transfer and the transferee); (b) Tenant is not then andhas not been in default under this Lease; (c) if the transfer is anassignment or any other transfer to an Affiliate other than a sublease, theintended assignee assumes in writing all of Tenant’s obligations under this Leaserelating to the Premises in form satisfactory to Landlord or, if the transferis a sublease, the intended sublessee accepts the sublease in form satisfactoryto Landlord; (d) the intended transferee has a tangible net worth, asevidenced by financial statements delivered to Landlord and certified by anindependent certified public accountant in accordance with generally acceptedaccounting principles that are consistently applied, at least equal to the networth of the original Tenant under the Lease as of the Effective Date ;(e) the Premises shall continue to be operated solely for the usespecified in the Lease; and (f) Tenant shall pay to Landlord all costsreasonably incurred by Landlord or any mortgagee or ground lessor for suchassignment or subletting, including, without limitation, reasonable attorneys’fees.  No transfer to an Affiliate inaccordance with this subparagraph shall relieve Tenant named herein of anyobligation under this Lease or alter the primary liability of Tenant namedherein for the payment of Rent or for the performance of any other obligationto be performed by Tenant, including the obligations contained in the Leasewith 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 agentor employee of Landlord during the Lease Term shall be deemed to constitute anacceptance by Landlord of a surrender of the Premises unless such intent isspecifically acknowledged in a writing signed by Landlord.  The delivery of keys to the Premises toLandlord or any agent or employee of Landlord shall not constitute a surrenderof the Premises or effect a termination of this Lease, whether or not the keysare thereafter retained by Landlord, and notwithstanding such delivery Tenantshall be entitled to the return of such keys at any reasonable time uponrequest until this Lease shall have been terminated.  The voluntary or other surrender of thisLease by Tenant, whether accepted by Landlord or not, or a mutual terminationhereof, shall not work a merger, and at the option of Landlord shall operate asan assignment to Landlord of all subleases or subtenancies affecting thePremises.

## 15.2         **Removal of Tenant Property by Tenant**.  All articles of personal property and allbusiness and trade fixtures, machinery and equipment, furniture and movablepartitions owned by Tenant or installed by Tenant at its expense in thePremises, which items are not a part of the tenant improvements installed inthe Premises, shall remain the property of Tenant, and may be removed by Tenantat any time during the Lease Term as long as Tenant is not in default underthis Lease with any applicable cure period having

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## expired. Upon the expiration of the Lease Term, or upon any earlier terminationof 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 andcondition as when Tenant took possession and as thereafter improved by Landlordand/or Tenant, reasonable wear and tear and repairs which are specifically madethe responsibility of Landlord hereunder excepted.  Upon such expiration or termination, Tenantshall, without expense to Landlord, remove or cause to be removed from the Premisesall debris and rubbish, and such items of furniture, equipment, free–standingcabinet work, and other articles of personal property owned by Tenant orinstalled or placed by Tenant at its expense in the Premises, and such similararticles of any other persons claiming under Tenant, as Landlord may, in itssole discretion, require to be removed, and Tenant shall repair at its ownexpense 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 thePremises as provided in this Lease, any personal property of Tenant not removedby 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 thisLease, shall be deemed abandoned by Tenant and may be disposed of by Landlordin accordance with Sections 1980 through 1991 of the California Civil Codeand Section 1174 of the California Code of Civil Procedure, or inaccordance with any laws or judicial decisions which may supplement or supplantthose provisions from time to time.

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

# **ARTICLE 16**HOLDING OVER

Tenant may extend the Term for a period of up toninety (90) days at a rent equal to one hundred ten percent (110%) of the lastmonth’s rent and thereafter for an additional period of up to ninety (90) daysat a rent equal to one hundred twenty–five percent (125%) of the last month’srent by giving Landlord written notice thereof at least four (4) months priorto the scheduled expiration of the Term, which notice shall specify the lengthof time Tenant will extend the Term. Thereafter, Tenant will not be permitted to hold over possession of thePremises without the express written consent of Landlord, which consentLandlord may withhold in its sole and absolute discretion.  If Tenant holds over after the expiration orearlier termination of the Lease Term (as the same may have been extended asprovided in the preceding sentence) without the express written consent ofLandlord, then, in addition to all other remedies available to Landlord, Tenantshall become a tenant at sufferance only, upon the terms and conditions setforth in this Lease so far as applicable (including Tenant’s obligation to payTenant’s Share of Direct Expenses and Utilities Costs and any other additionalrent 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 thedate of such expiration or earlier termination. Acceptance by Landlord of rent after such expiration or earliertermination shall not constitute a consent to a hold over hereunder or resultin an extension of this Lease. Notwithstanding the foregoing, if Tenant remains in possession of thePremises after the expiration or earlier termination of the Lease Term (as thesame may have been extended as provided above) with Landlord’s express writtenconsent, Tenant shall become a tenant from month–to–month upon the terms andconditions set forth in this Lease (including Tenant’s obligation to pay Tenant’sShare of Direct Expenses and Utilities Costs and any other additional rentunder 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 suchexpiration or earlier termination. Tenant shall pay an entire month’s Base Rent calculated in accordancewith this Article 16 for any portion of a month it holds over and remainsin possession of the Premises pursuant to this Article 16.  This Article 16 shall not be construed tocreate any expressed or implied right to holdover beyond the expiration of theLease 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 inwriting by Landlord, Tenant shall execute and deliver to Landlord an estoppelcertificate which, as submitted by Landlord, shall be substantially in the formof **Exhibit E**,attached hereto (or such other form as may be required by any prospective mortgageeor purchaser of the Building Complex or any portion thereof), indicatingtherein any exceptions thereto that may exist at that time, and shall alsocontain any other information reasonably requested by Landlord or Landlord’smortgagee or prospective mortgagee or purchasers.  Tenant shall execute and deliver whateverother instruments may be reasonably required for such purposes.  At any time during the Lease Term, Landlordmay require Tenant to provide Landlord with a current financial statement andfinancial statements of the two (2) years prior to the current financialstatement year.  Such statements shall beprepared in accordance with generally accepted accounting principles and, ifsuch is the normal practice of Tenant, shall be audited by an independentcertified public accountant.  Failure ofTenant to timely execute and deliver such estoppel certificate or otherinstruments shall constitute an acceptance of the Premises and anacknowledgment by Tenant that statements included in the estoppel certificateare true and correct, without exception.

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

# **ARTICLE 18**SUBORDINATION

This Lease is subject and subordinate to allpresent and future ground or underlying leases of the Real Property and to thelien of any mortgages or trust deeds, now or hereafter in force against theReal Property and the Building Complex, if any, and to all renewals,extensions, modifications, consolidations and replacements thereof, and to alladvances made or hereafter to be made upon the security of such mortgages ortrust deeds, unless the holders of such mortgages or trust deeds, or thelessors under such ground lease or underlying leases, require in writing thatthis Lease be superior thereto.  Tenantcovenants and agrees in the event any proceedings are brought for theforeclosure of any such mortgage, to attorn, without any deductions or set–offswhatsoever, to the purchaser upon any such foreclosure sale if so requested todo so by such purchaser, and to recognize such purchaser as the lessor underthis Lease.  Conditioned upon Tenant’sreceipt, upon request, of a nondisturbance agreement in a form and substancereasonably satisfactory to it, Tenant shall, within five (5) days of request byLandlord, execute such further instruments or assurances as Landlord mayreasonably deem necessary to evidence or confirm the subordination orsuperiority of this Lease to any such mortgages, trust deeds, ground leases orunderlying leases.  In consideration of,and as a condition precedent to, Tenant’s agreement to permit its interestpursuant to this Lease to be subordinated to any particular further ground orunderlying lease of the Building Complex or the Real Property or to the lien ofany first mortgage or trust deed, hereafter enforced against the BuildingComplex or the Real Property and to any renewals, extensions, modifications,consolidations and replacements thereof, Landlord shall deliver to Tenant acommercially reasonable non–disturbance agreement executed by the Landlordunder such ground lease or underlying lease or the holder of such mortgage ortrust deed.

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# **ARTICLE 19**DEFAULTS; REMEDIES

## 19.1         **Defaults**.  All covenants and agreements to be kept orperformed by Tenant under this Lease shall be performed by Tenant at Tenant’ssole cost and expense and without any reduction of Rent.  The occurrence of any of the following shallconstitute a default of this Lease by Tenant:

### 19.1.1      Anyfailure by Tenant to pay any Rent or any other charge required to be paid underthis 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 wheresuch failure continues for thirty (30) days after written notice thereof fromLandlord 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 CivilProcedure Section 1161 or any similar or successor law; and providedfurther that if the nature of such default is such that the same cannotreasonably be cured within a thirty (30) day period, Tenant shall not be deemedto be in default if it diligently commences such cure within such period andthereafter diligently proceeds to rectify and cure said default, as soon aspossible; or

### 19.1.3 Abandonment of the Premises by Tenant; or

### 19.1.4  Tothe extent permitted by law, a general assignment by Tenant or any guarantor ofthe Lease for the benefit of creditors, or the filing by or against Tenant orany guarantor of any proceeding under an insolvency or bankruptcy law, unlessin the case of a proceeding filed against Tenant or any guarantor the same isdismissed within sixty (60) days, or the appointment of a trustee or receiverto take possession of all or substantially all of the assets of Tenant or anyguarantor, unless possession is restored to Tenant or such guarantor within thirty(30) days, or any execution or other judicially authorized seizure of all orsubstantially all of Tenant’s assets located upon the Premises or of Tenant’sinterest 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 thePremises, or attempts at such actions, in violation of Article 14 hereof.

## 19.2         **Remedies Upon Default**.  Upon the occurrence of such default byTenant, Landlord shall have, in addition to any other remedies available toLandlord at law or in equity, the option to pursue any one or more of thefollowing 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 surrenderthe Premises to Landlord, and if Tenant fails to do so, Landlord may, withoutprejudice to any other remedy which it may have for possession or arrearages inrent, enter upon and take possession of the Premises and expel or remove Tenantand any other person who may be occupying the Premises or any part thereof,without being liable for prosecution or any claim or damages therefor; andLandlord may recover from Tenant the following:

##### (i)            The worth at the time of award ofany unpaid rent which has been earned at the time of such termination; plus

##### (ii)           The worth at the time of award of theamount by which the unpaid rent which would have been earned after terminationuntil the time of award exceeds the amount of such rental loss that Tenantproves could have been reasonably avoided; plus

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##### (iii)          The worth at the time of award of theamount by which the unpaid rent for the balance of the Lease Term after thetime of award exceeds the amount of such rental loss that Tenant proves couldhave been reasonably avoided; plus

##### (iv)          Any other amount necessary tocompensate Landlord for all the detriment proximately caused by Tenant’sfailure to perform its obligations under this Lease or which in the ordinarycourse of things would be likely to result therefrom, specifically includingbut 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 toobtain a new tenant; and

##### (v)           At Landlord’s election, such otheramounts in addition to or in lieu of the foregoing as may be permitted fromtime 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 ofevery nature required to be paid by Tenant pursuant to the terms of this Lease,whether to Landlord or to others.  Asused in Sections 19.2.1(i) and (ii), above, the “worth at the time ofaward” shall be computed by allowing interest at the Interest Rate set forth inSection 4.2.4 of this Lease, but in no case greater than the maximumamount of such interest permitted by law. As used in Section 19.2.1(iii) above, the “worth at the time ofaward” shall be computed by discounting such amount at the discount rate of theFederal 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 CodeSection 1951.4 (lessor may continue lease in effect after lessee’s breachand abandonment and recover rent as it becomes due, if lessee has the right tosublet or assign, subject only to reasonable limitations).  Accordingly, if Landlord does not elect toterminate this Lease on account of any default by Tenant, Landlord may, fromtime to time, without terminating this Lease, enforce all of its rights andremedies under this Lease, including the right to recover all rent as itbecomes due.

### 19.2.3 Landlord may, but shall not be obligated to, make any such payment orperform or otherwise cure any such obligation, provision, covenant or conditionon Tenant’s part to be observed or performed (and may enter the Premises forsuch purposes), all at Tenant’s expense, without waiving its rights based uponany default of Tenant and without releasing Tenant from any obligationshereunder.  In the event of Tenant’sfailure to perform any of its obligations or covenants under this Lease, andsuch failure to perform poses a material risk of injury or harm to persons ordamage to or loss of property, then Landlord shall have the right to cure orotherwise perform such covenant or obligation at any time after such failure toperform by Tenant, whether or not any such notice or cure period set forth inSection 19.1 above has expired.  Anysuch actions undertaken by Landlord pursuant to the foregoing provisions ofthis Section 19.2.3 shall not be deemed a waiver of Landlord’s rights andremedies as a result of Tenant’s failure to perform and shall not release Tenantfrom 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 expendituresreasonably made and obligations incurred by Landlord in connection withLandlord’s performance or cure of any of Tenant’s obligations pursuant to theprovisions of Section 19.2.3 above; and (ii) sums equal to allexpenditures made and obligations incurred by Landlord in collecting or attemptingto collect the Rent or in enforcing or attempting to enforce any rights ofLandlord 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 theexpiration or sooner termination of the Lease Term.

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

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

## 19.5         **Formof Payment After Default**.  Following the occurrence of an event ofdefault by Tenant, Landlord shall have the right to require that any or allsubsequent amounts paid by Tenant to Landlord hereunder, whether in the cure ofthe 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, orby other means approved by Landlord, notwithstanding any prior practice ofaccepting payments in any different form.

## 19.6         **Waiver of Default**.  No waiver by Landlord of any violation orbreach by Tenant of any of the terms, provisions and covenants herein containedshall be deemed or construed to constitute a waiver of any other or laterviolation 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 remediesherein provided upon a default by Tenant shall not be deemed or construed toconstitute a waiver of such default.  Theacceptance of any Rent hereunder by Landlord following the occurrence of anydefault, whether or not known to Landlord, shall not be deemed a waiver of anysuch 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 byefforts of Landlord to relet the Premises, by its acts of maintenance orpreservation with respect to the Premises, or by appointment of a receiver toprotect Landlord’s interests hereunder. The foregoing enumeration is not exhaustive, but merely illustrative ofacts which may be performed by Landlord without terminating Tenant’s right topossession.

# **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 portionthereof comprise an entire floor of the Building, Tenant, at its sole cost andexpense, may install identification signage anywhere in the Premises includingin the elevator lobby of the Premises, provided that such signs must not bevisible from the exterior of the Building.

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

## 21.3         **Prohibited Signage and Other Items**.  Any signs, notices, logos, pictures, names oradvertisements which are installed and that have not been separately approvedby Landlord may be removed without notice by Landlord at the sole expense ofTenant.  Tenant may not install any signson the exterior or roof of the Building or the common areas of the Building orthe Real Property.  Any signs, windowcoverings, or blinds (even if the same are located behind the Landlord approvedwindow coverings for the Building), or other items visible from the exterior ofthe 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, beentitled to one (1) line on the Building directory to display Tenant’s name andsuite number.

# **ARTICLE 22**COMPLIANCE WITH LAW

Tenant shall not do anything or suffer anythingto be done in or about the Premises which will in any way conflict with anylaw, statute, ordinance or other governmental rule, regulation or requirementnow in force or which may hereafter be enacted or promulgated.  At its sole cost and expense, Tenant shallpromptly comply with all such governmental measures (including those pertainingto Hazardous Materials), other than the making of structural changes to theBuilding (collectively, the “**Excluded Changes**”),except to the extent such Excluded Changes are required due to Tenant’salterations to or manner of use of the Premises.  Should any standard or regulation now orhereafter be imposed on Landlord or Tenant by a state, federal or localgovernmental body charged with the establishment, regulation and enforcement ofoccupational, health or safety standards for employers, employees, landlords ortenants, then Tenant agrees, at its sole cost and expense, to comply promptlywith such standards or regulations.  Inaddition, Tenant shall fully comply with all present or future programsintended to manage parking, transportation or traffic in and around theBuilding, and in connection therewith, Tenant shall take responsible action forthe transportation planning and management of all employees located at thePremises by working directly with Landlord, any governmental transportationmanagement organization or any other transportation–related committees orentities.  The judgment of any court ofcompetent jurisdiction or the admission of Tenant in any judicial action,regardless of whether Landlord is a party thereto, that Tenant has violated anyof said governmental measures, shall be conclusive of that fact as betweenLandlord and Tenant.

# **ARTICLE 23**ENTRY BY LANDLORD

Landlord reserves the right at all reasonabletimes 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) toenter the Premises (provided Landlord is accompanied by a representative ofTenant 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 orunderlying 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 tocomply with current building codes or other applicable laws, or for structuralalterations, repairs or improvements to the Building, or as Landlord mayotherwise 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 providedherein; and (C) perform any covenants of Tenant which Tenant fails toperform.  Any such entries shall bewithout the abatement of Rent and shall include the right to take suchreasonable steps as required to accomplish the stated purposes; provided, however,that any such entry shall be accomplished as expeditiously as reasonablypossible and in a manner so as to cause as little interference to Tenant asreasonably possible.  Tenant herebywaives any claims for damages or for any injuries or inconvenience to orinterference with Tenant’s business, lost profits, any loss of occupancy orquiet enjoyment of the Premises, and any other loss occasioned by Landlord’sentry into the Premises.  For each of theabove purposes, Landlord shall at all times have a key with which to unlock allthe doors in the Premises, excluding Tenant’s vaults, safes and specialsecurity areas designated in advance by Tenant (“**RestrictedAreas**”).  In an emergency, Landlord shall have theright to use any means that Landlord may deem proper to open the doors in andto the Premises.  Any entry into thePremises by Landlord in the manner hereinbefore described shall not be deemedto be a forcible or unlawful entry into, or a detainer of, the Premises, or anactual 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 theLease Term the number of unreserved parking passes set forth in Section 10of the Summary, in a location in the Building Complex Parking Area as designatedby Landlord from time to time.  Tenantshall not be required to pay to Landlord any parking fees for the use of suchparking passes during the initial term. After the initial term, Tenant shall pay to Landlord for the use of suchparking passes, on a monthly basis, the prevailing rate charged from time totime by Landlord or Landlord’s parking operator for parking passes in theBuilding Complex Parking Area where such parking passes are located.  Tenant’s continued right to use the parkingpasses is conditioned upon Tenant abiding by all rules and regulations whichare prescribed from time to time for the orderly operation and use of theBuilding Complex Parking Area and upon Tenant’s cooperation in seeing thatTenant’s employees and visitors also comply with such rules andregulations.  In addition, Landlord mayassign any parking spaces and/or make all or a portion of such spaces reservedor institute an attendant–assisted tandem parking program and/or valet parkingprogram if Landlord determines in its sole discretion that such is necessary ordesirable for orderly and efficient parking. Landlord specifically reserves the right, from time to time, to changethe size, configuration, design, layout, location and all other aspects of theBuilding Complex Parking Area, and Tenant acknowledges and agrees thatLandlord, from time to time, may, without incurring any liability to Tenant andwithout any abatement of Rent under this Lease temporarily close–off orrestrict access to the Building Complex Parking Area, or temporarily relocateTenant’s parking spaces to other parking structures and/or surface parkingareas within a reasonable distance from the Building Complex Parking Area, forpurposes of permitting or facilitating any such construction, alteration orimprovements or to accommodate or facilitate renovation, alteration,construction or other modification of other improvements or structures locatedon the Real Property.  Landlord maydelegate its responsibilities hereunder to a parking operator in which casesuch parking operator shall have all the rights of control attributed hereby toLandlord.

# **ARTICLE 25**MISCELLANEOUS PROVISIONS

## 25.1         **Binding Effect**.  Each of the provisions of this Lease shallextend to and shall, as the case may require, bind or inure to the benefit notonly of Landlord and of Tenant, but also of their respective successors orassigns, provided this clause shall not permit any assignment by Tenantcontrary to the provisions of Article 14 of this Lease.

## 25.2         **No Air Rights**.  No rights to any view or to light or air overany property, whether belonging to Landlord or any other person, are granted toTenant by this Lease.  If at any time anywindows of the Premises are temporarily darkened or the light or view therefromis obstructed by reason of any repairs, improvements, maintenance or cleaningin or about the Building, the same shall be without liability to Landlord andwithout any reduction or diminution of Tenant’s obligations under this Lease.

## 25.3         **Modification of Lease**.  Should any current or prospective mortgageeor ground lessor for the Building Complex require a modification ormodifications of this Lease, which modification or modifications will not causean increased cost or expense to Tenant or in any other way materially andadversely change the rights and obligations of Tenant hereunder, then and insuch event, Tenant agrees that this Lease may be so modified and agrees toexecute whatever documents are required therefor and deliver the same toLandlord within thirty (30) days following the request therefor.  Should Landlord or any such prospectivemortgagee or ground lessor require execution of a short form of Lease forrecording, containing, among other customary provisions, the names of theparties, a description of the Premises and the Lease Term, Tenant agrees toexecute such short form of Lease and to deliver the same to Landlord withinthirty (30) days following the request therefor.

## 25.4         **Transfer of Landlord’s Interest**.  Tenant acknowledges that Landlord has the rightto transfer all or any portion of its interest in the Real Property and in thisLease, and Tenant agrees that in the event of any such transfer and a transferof the Security Deposit, Landlord shall automatically be released

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## from all liability under this Lease and Tenantagrees to look solely to such transferee for the performance of Landlord’sobligations hereunder after the date of transfer.  Tenant further acknowledges that Landlord mayassign its interest in this Lease to the holder of any mortgage or deed oftrust as additional security, but agrees that such an assignment shall notrelease Landlord from its obligations hereunder and that Tenant shall continueto look to Landlord for the performance of its obligations hereunder.

## 25.5         **Prohibition Against Recording**.  Except as provided in Section 25.3 ofthis Lease, neither this Lease, nor any memorandum, affidavit or other writingwith 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 thisprovision shall make this Lease null and void at Landlord’s election.

## 25.6         **Captions**.  The captions of Articles and Sections are forconvenience only and shall not be deemed to limit, construe, affect or alterthe meaning of such Articles and Sections.

## 25.7         **Relationship of Parties**.  Nothing contained in this Lease shall bedeemed or construed by the parties hereto or by any third party to create therelationship of principal and agent, partnership, joint venturer or any associationbetween Landlord and Tenant, it being expressly understood and agreed thatneither the method of computation of Rent nor any act of the parties heretoshall be deemed to create any relationship between Landlord and Tenant otherthan the relationship of landlord and tenant.

## 25.8         **Time of Essence**.  Time is of the essence of this Lease and eachof its provisions.

## 25.9         **Partial Invalidity**.  If any term, provision or condition containedin this Lease shall, to any extent, be invalid or unenforceable, the remainderof this Lease, or the application of such term, provision or condition topersons or circumstances other than those with respect to which it is invalidor unenforceable, shall not be affected thereby, and each and every other term,provision and condition of this Lease shall be valid and enforceable to thefullest extent possible permitted by law.

## 25.10       **Landlord Exculpation**.  It is expressly understood and agreed thatnotwithstanding anything in this Lease to the contrary, and notwithstanding anyapplicable law to the contrary, the liability of Landlord and the LandlordParties hereunder (including any successor landlord) and any recourse by Tenantagainst Landlord or the Landlord Parties (including any successor landlord)shall be limited solely and exclusively to an amount which is equal to theinterest of Landlord in the Building Complex, and neither Landlord, nor any ofthe Landlord Parties shall have any personal liability therefor, and Tenanthereby expressly waives and releases such personal liability on behalf ofitself and all persons claiming by, through or under Tenant.

## 25.11       **Child Care Facilities**.  Tenant acknowledges that any child carefacilities 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 thirdparty (the “**Child Care Provider**”)which is leasing space in the Building Complex, and not by Landlord.  If Tenant or its employees choose to use theChild Care Facilities, Tenant acknowledges that Tenant and Tenant’s employeesare not relying upon any investigation which Landlord may have conductedconcerning the Child Care Provider or any warranties or representation withrespect thereto, it being the sole responsibility of Tenant and the individualuser of the Child Care Facilities to conduct any and all investigations of theChild Care Facilities prior to making use thereof.  Accordingly, Landlord shall have noresponsibility with respect to the quality or care provided by the Child CareFacilities, or for any acts or omissions of the Child Care Provider.  Furthermore, Tenant, for Tenant and forTenant’s employees, hereby agrees that Landlord, its partners, subpartners andtheir respective officers, agents, servants, employees, and independentcontractors shall not be liable for, and are hereby released from anyresponsibility for any loss, cost, damage, expense or liability, either toperson or property, arising from the use of the Child Care Facilities by Tenantor Tenant’s employees.  Tenant herebycovenants that Tenant shall inform all of Tenant’s employees of the provisionsof this Section prior to such employees’ use of the Child Care Facilities.  Nothing contained herein is intended to be arepresentation nor warranty by Landlord that any Child Care Facilities will beavailable during the Lease Term and Landlord shall have no obligation toprovide, or to make available, any such Child Care Facilities.

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## 25.12       **Entire Agreement**.  It is understood and acknowledged that thereare no oral agreements between the parties hereto affecting this Lease and thisLease supersedes and cancels any and all previous negotiations, arrangements,brochures, agreements and understandings, if any, between the parties hereto ordisplayed by Landlord to Tenant with respect to the subject matter thereof, andnone thereof shall be used to interpret or construe this Lease.  This Lease, the exhibits and schedulesattached hereto, and any side letter or separate agreement executed by Landlordand Tenant in connection with this Lease and dated of even date herewithcontain all of the terms, covenants, conditions, warranties and agreements ofthe parties relating in any manner to the rental, use and occupancy of thePremises, shall be considered to be the only agreement between the partieshereto and their representatives and agents, and none of the terms, covenants,conditions or provisions of this Lease can be modified, deleted or added toexcept in writing signed by the parties hereto.

## 25.13       **Right to Lease**.  Landlord reserves the absolute right toeffect such other tenancies in the Building Complex as Landlord in the exerciseof its sole business judgment shall determine to best promote the interests ofthe Building Complex.  Tenant does notrely on the fact, nor does Landlord represent, that any specific tenant or typeor number of tenants shall, during the Lease Term, occupy any space in theBuilding Complex.

## 25.14       **Force Majeure**.  Any prevention, delay or stoppage due tostrikes, 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 thereasonable control of the party obligated to perform (collectively, the “**Force Majeure**”),except with respect to the obligations imposed with regard to Rent and othercharges to be paid by Tenant pursuant to this Lease, and except as to Tenant’s obligationsunder **Exhibit D**,notwithstanding anything to the contrary contained in this Lease, shall excusethe performance of such party for a period equal to any such prevention, delayor stoppage and, therefore, if this Lease specifies a time period forperformance of an obligation of either party, that time period shall beextended by the period of any delay in such party’s performance caused by aForce Majeure.

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

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

## 25.17       **Authority**.  Tenant hereby represents and warrants thatTenant is a duly formed and existing entity qualified to do business inCalifornia and that Tenant has full right and authority to execute and deliverthis Lease and that each person signing on behalf of Tenant is authorized to doso.  Landlord hereby represents andwarrants that Landlord is a duly formed and existing entity qualified to dobusiness in California and that Landlord has full right and authority toexecute and deliver this Lease and that each person signing on behalf ofLandlord is authorized to do so.

## 25.18       **Governing Law**.  This Lease shall be construed and enforced inaccordance with the laws of the State of California.

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

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

## 25.21       **Independent Covenants**.  This Lease shall be construed as though thecovenants herein between Landlord and Tenant are independent and not dependentand Tenant hereby expressly waives the benefit of any statute to the contraryand 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 hereunderat Landlord’s expense or to any setoff of the Rent or other amounts owinghereunder against Landlord; provided, however, that the foregoing shall in noway impair the right of Tenant to commence a separate action against Landlordfor any violation by Landlord of the provisions hereof so long as notice isfirst given to Landlord and any holder of a mortgage or deed of trust coveringthe Building, Real Property or any portion thereof, of whose address Tenant hastheretofore been notified, and an opportunity is granted to Landlord and suchholder to correct such violations as provided above.

## 25.22       **Building Name and Signage**.  Landlord shall have the right at any time todesignate and/or change the name of the Building Complex, the Building and/orany other building in the Building Complex, and to install, affix and maintainany 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 Landlordmay, in Landlord’s sole discretion, desire.  Tenant shall not use the name of the BuildingComplex, the Building or any other building in the Building Complex, or usepictures or illustrations of the Building Complex, the Building or any otherbuilding in the Building Complex, in advertising or other publicity (except itsstationery, website and related materials), without the prior written consentof Landlord.

## 25.23       **Hazardous Materials**.  Tenant will (i) obtain and maintain infull force and effect all Environmental Permits that may be required from timeto time under any Environmental Laws applicable to Tenant or the Premises and(ii) be and remain in compliance in all material respects with all termsand conditions of all such Environmental Permits and with all otherlimitations, restrictions, conditions, standards, prohibitions, requirements,obligations, schedules and timetables contained in all Environmental Lawsapplicable to Tenant or the Premises.  Asused in this Lease, the term “**EnvironmentalLaw**”means any past, present or future federal, state or local statutory or commonlaw, or any regulation, ordinance, code, plan, order, permit, grant, franchise,concession, restriction or agreement issued, entered, promulgated or approvedthereunder, relating to (a) the environment, human health or safety,including, without limitation, emissions, discharges, releases or threatenedreleases of Hazardous Materials (as defined below) into the environment(including, without limitation, air, surface water, groundwater or land), or (b) themanufacture, generation, refining, processing, distribution, use, sale,treatment, receipt, storage, disposal, transport, arranging for transport, orhandling of Hazardous Materials.  “**Environmental Permits**”means, collectively, any and all permits, consents, licenses, approvals andregistrations of any nature at any time required pursuant to, or in order tocomply with, any Environmental Law. Tenant may use Hazardous Materials in the Premises in the course ofTenant’s operations, provided that (x) such Hazardous Materials are,limited in type and quantity to those customarily utilized by general officetenants in first–class multi–tenant office buildings and (y) Tenant willcomply with all Environmental Laws in its use of such materials in the Buildingand (z) Tenant provides Landlord with a list identifying the type andquantities of such materials promptly following

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## request therefor by Landlord.  Except as allowed by this Lease andEnvironmental Laws, Tenant agrees not to cause or permit any HazardousMaterials to be brought upon, stored, used, handled, generated, released ordisposed of on, in, under or about the Premises, the Building, the common areasor 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 maywithhold in its reasonable discretion. Upon the expiration or earlier termination of this Lease, Tenant agreesto promptly remove from the Premises, the Building and the Building Complex, atits sole cost and expense, any and all Hazardous Materials, including anyequipment or systems containing Hazardous Materials which are installed,brought upon, stored, used, generated or released upon, in, under or about thePremises, the Building and/or the Building Complex or any portion thereof byTenant or any of Tenant’s Parties.  Tothe 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 ofaction, losses, liabilities, penalties, fines, expenses and costs (including,without limitation, clean–up, removal, remediation and restoration costs, sumspaid in settlement of claims, attorneys’ fees, consultant fees and expert feesand court costs) which arise or result from the presence of Hazardous Materialson, in, under or about the Premises, the Building or any other portion of theBuilding Complex and which are caused by the operations of Tenant or any ofTenant’s Parties.  Notwithstanding theforegoing, Tenant is not required to provide indemnification for or defenseagainst any claims to the extent that any requirement for response action, orthe 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 hascomplied with the provisions of clauses (x), and (y) above, Tenant is not requiredto indemnify Landlord’s Indemnified Parties for any incidental or consequentialdamages, 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 tenantoccupancy.  If Tenant fails to complywith the provisions of clauses (x) and/or (y) above, Tenant will indemnifyLandlord for incidental or consequential damages only after such damages areawarded by a final judgment of a court of competent jurisdiction.  Tenant agrees to promptly notify Landlord ofany release of Hazardous Materials in the Premises, the Building or any otherportion of the Building Complex which Tenant becomes aware of during the Termof this Lease, whether caused by Tenant or any other persons or entities.  In the event of any release of HazardousMaterials caused or permitted by Tenant or any of Tenant’s Parties, Tenantshall immediately take all steps necessary or appropriate to remediate suchrelease and prevent any similar future release in accordance with applicableEnvironmental Law.  At all times duringthe 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 thePremises to determine if Tenant is in compliance with the terms of this Leaseregarding Hazardous Materials.  Tenantwill, upon the request of Landlord or any mortgagee at any time during which Tenantis in default under this Lease, cause to be performed an environmental audit ofthe Premises at Tenant’s expense by an established environmental consultingfirm reasonably acceptable to Tenant, Landlord and the mortgagee.  As used in this Lease, the term “**Hazardous Materials**” shall mean and includeany hazardous or toxic materials, substances or wastes as now or hereafterdesignated under any law, statute, ordinance, rule, regulation, order or rulingof any agency of the State, the United States Government or any localgovernmental authority, including, without limitation, asbestos, petroleum,petroleum hydrocarbons and petroleum based products, urea formaldehyde foaminsulation, polychlorinated biphenyls (“**PCBs**”),and freon and other chlorofluorocarbons. The provisions of this Section 25.23 will survive the expiration orearlier termination of this Lease. Landlord has provided Tenant, prior to execution of this Lease, with thelatest Phase I environmental report covering the Project.

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

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## 25.24       **Transportation Management**.  Tenant shall fully comply with all present orfuture governmentally mandated programs intended to manage parking,transportation or traffic in and around the Building Complex, and in connectiontherewith, Tenant shall take responsible action for the transportation planningand management of all employees located at the Premises by working directlywith Landlord, any governmental transportation management organization or anyother transportation–related committees or entities.  Such programs may include, withoutlimitation:  (i) restrictions on thenumber of peak–hour vehicle trips generated by Tenant; (ii) increasedvehicle occupancy; (iii) implementation of an in–house ridesharing programand an employee transportation coordinator; (iv) working with employeesand any Building Complex or area–wide ridesharing program manager;(v) instituting employer–sponsored incentives (financial or in–kind) toencourage employees to rideshare; and (vi) utilizing flexible work shiftsfor employees.

## 25.25       **No Discrimination**.  Tenant covenants by and for itself, itsheirs, executors, administrators and assigns, and all persons claiming under orthrough Tenant, and this Lease is made and accepted upon and subject to thefollowing conditions:  that there shallbe no discrimination against or segregation of any person or group of persons,on account of race, color, creed, sex, religion, marital status, ancestry ornational origin in the leasing, subleasing, transferring, use, or enjoyment ofthe Premises, nor shall Tenant itself, or any person claiming under or throughTenant, establish or permit such practice or practices of discrimination orsegregation with reference to the selection, location, number, use oroccupancy, of tenants, lessees, sublessees, subtenants or vendees in thePremises.

## 25.26       **Successors**.  Except as otherwise expressly providedherein, the obligations of this Lease shall bind and benefit the successors andassigns of the parties hereto; provided, however, that no assignment, subleaseor other transfer in violation of the provisions of Article 14 shalloperate to vest any rights in any putative assignee, subtenant or transferee ofTenant.

## 25.27       **Developmentof the Building Complex**.

### 25.27.1  **Subdivision**.  Tenant acknowledges that the Building Complexis comprised of separate legal lots. Landlord reserves the right to further subdivide or sell all or aportion of the buildings and Common Areas in the Building Complex.  Tenant agrees to execute and deliver, upondemand by Landlord and in the form requested by Landlord, any additional documentsneeded to conform this Lease to the circumstances resulting from such asubdivision or sale and any all ancillary transactions in connection therewith.

### 25.27.2  **Other Improvements**.  If portions of the Building Complex orproperty adjacent to the Building Complex (collectively, the “**Other Improvements**”)are owned by an entity other than Landlord, Landlord, at its option, may enterinto an agreement with the owner or owners of any of the Other Improvements toprovide (i) for reciprocal rights of access, use and/or enjoyment of theBuilding Complex and the Other Improvements, (ii) for the commonmanagement, operation, maintenance, improvement and/or repair of all or anyportion of the Building Complex and all or any portion of the OtherImprovements, (iii) for the allocation of a portion of the ProjectExpenses to the Other Improvements and the allocation of a portion of theoperating expenses and taxes for the Other Improvements to the BuildingComplex, (iv) for the use or improvement of the Other Improvements and/orthe Building Complex in connection with the improvement, construction, and/orexcavation 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 orconstrued to limit or otherwise affect Landlord’s right to sell all or anyportion of the Building Complex or any other of Landlord’s rights described inthis Lease.

### 25.27.3  **Landlord Renovations**.  It is specifically understood and agreed thatLandlord has made no representation or warranty to Tenant and has no obligationto alter, remodel, improve, renovate, repair or decorate the Premises,Building, Building Complex or any part thereof, or to add any additional phasesor office buildings to the Building Complex, and that no representationsrespecting the condition of the Premises or the Building Complex have been madeby Landlord to Tenant except as specifically set forth herein or in the TenantWork Letter.  However, Tenantacknowledges 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, whichRenovations may include, without limitation, (i) modifying the drivewaysand other common areas and tenant spaces to comply with applicable laws andregulations, including regulations relating to the physically disabled, seismicconditions, and building safety and security, (ii) installing new floorcovering, lighting, and wall coverings in the common areas, and in connectionwith any Renovations, Landlord may, among other things, erect scaffolding orother necessary structures in the Building or Building Complex, limit oreliminate access to portions of the Real Property, including portions of thecommon areas, or perform work in the Building or Building Complex, which workmay create noise, dust or leave debris in the Building Complex,(iii) renovation and/or expansion of the main entry to the BuildingComplex 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 inconnection with such Renovations shall in no way constitute a constructiveeviction of Tenant nor entitle Tenant to any abatement of Rent.  Landlord shall have no responsibility or forany reason be liable to Tenant for any direct or indirect injury to orinterference with Tenant’s business arising from the Renovations, nor shallTenant be entitled to any compensation or damages from Landlord for loss of theuse of the whole or any part of the Premises or of Tenant’s personal propertyor improvements resulting from the Renovations or Landlord’s actions inconnection with such Renovations, or for any inconvenience or annoyanceoccasioned by such Renovations or Landlord’s actions in connection with suchRenovations provided that Landlord shall use commercially reasonable efforts tominimize impairment of Tenant’s use of and access to the Premises.

## 25.28       **Landlord’s Title**.  Landlord’s title is and always shall beparamount 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 shallbe implied by any failure of a party to enforce any remedy on account of theviolation of such provision, even if such violation shall continue or berepeated subsequently, any waiver by a party of any provision of this Lease mayonly be in writing, and no express waiver shall affect any provision other thanthe one specified in such waiver and that one only for the time and in themanner specifically stated.  No receiptof monies by Landlord from Tenant after the termination of this Lease shall inany way alter the length of the Lease Term or of Tenant’s right of possessionhereunder or after the giving of any notice shall reinstate, continue or extendthe Lease Term or affect any notice given Tenant prior to the receipt of suchmonies, it being agreed that after the service of notice or the commencement ofa suit or after final judgment for possession of the Premises, Landlord mayreceive and collect any Rent due, and the payment of said Rent shall not waiveor affect said notice, suit or judgment.

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

## 25.31       **Substitution of Other Premises**.  Landlord shall have the right to move Tenantto other space on the first (1st) floor of the Building comparablein size to the Premises, and all terms hereof shall apply to the new space withequal force.  In such event, Landlordshall give Tenant at least thirty (30) days’ prior notice of Landlord’selection to so relocate Tenant, and shall move Tenant’s effects to the newspace at Landlord’s sole cost and expense at such time and in such manner as toinconvenience Tenant as little as reasonably practicable.  The new space shall be delivered to Tenantwith improvements substantially similar to those improvements existing in thePremises 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 thePremises, the parties shall immediately execute an amendment to this Leasestating the relocation of the Premises.

## 34

## 

IN WITNESS WHEREOF, Landlord and Tenanthave caused their duly authorized representatives to execute this Lease as ofthe 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

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**EXHIBITASEAVIEW CORPORATE CENTERFLOOR PLAN OF PREMISES**

 

EXHIBIT A – Page 1

 

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**EXHIBITBSEAVIEW CORPORATE CENTERRULES AND REGULATIONS**

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

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

2.             Alldoors opening to public corridors shall be kept closed at all times except fornormal ingress and egress to the Premises, unless electrical hold backs havebeen installed.

3.             Landlordreserves the right to close and keep locked all entrance and exit doors of theBuilding and to exclude from the Building between the hours of 6:00 p.m. and7:00 a.m. and at all hours on Saturday, Sunday and Holidays (as defined in theLease) all persons who do not present a pass or card key to the Buildingapproved by Landlord.  Tenant, itsemployees and agents must be sure that the doors to the Building are securelyclosed and locked when leaving the Premises if it is after the normal hours ofbusiness for the Building.  Any tenant,its employees, agents or any other persons entering or leaving the Building atany time when it is so locked, or any time when it is considered to be afternormal business hours for the Building or Building Complex may be required tosign the Building register when so doing. Access to the Building may be refused unless the person seeking accesshas proper identification or has a previously arranged pass for access.  Landlord and his agents shall in no case beliable for damages for any error with regard to the admission to or exclusionfrom the Building or Building Complex of any person.  In case of invasion, mob, riot, publicexcitement, or other commotion, Landlord reserves the right to prevent accessto the Building and/or Building Complex during the continuance of same by anymeans it deems appropriate for the safety and protection of life and property.

4.             Landlordshall have the right to prescribe the weight, size and position of all safesand other heavy property brought into the Building.  Safes and other heavy objects shall, ifconsidered necessary by Landlord, stand on supports of such thickness as isnecessary to properly distribute the weight. Landlord will not be responsible for loss of or damage to any such safeor property in any case.  All damage doneto any part of the Building and/or Building Complex, its contents, occupants orvisitors by moving or maintaining any such safe or other property shall be thesole responsibility of Tenant and any expense of said damage or injury shall beborne by Tenant.

5.             Nofurniture, freight, packages, supplies, equipment or merchandise will bebrought into or removed from the Building or carried up or down in theelevators, except upon prior notice to Landlord, and in such manner, in suchspecific elevator, and between such hours as shall be designated byLandlord.  Tenant shall provide Landlordwith not less than 24 hours prior notice of the need to utilize anelevator for any such purpose, so as to provide Landlord with a reasonableperiod to schedule such use and to install such padding or take such otheractions or prescribe such procedures as are appropriate to protect againstdamage to the elevators or other parts of the Building.

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

##  

EXHIBIT B – Page 1

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the common use of tenants, in such manneras is customary for comparable building projects in the vicinity of theBuilding Complex.

7.             Therequirements of Tenant will be attended to only upon application at themanagement office of the Building Complex or at such office location designatedby Landlord.  Employees of Landlord shallnot perform any work or do anything outside their regular duties unless underspecial instructions from Landlord.

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

9.             Thetoilet rooms, urinals, wash bowls and other apparatus shall not be used for anypurpose other than that for which they were constructed, and no foreignsubstance of any kind whatsoever shall be thrown therein.  The expense of any breakage, stoppage ordamage resulting from the violation of this rule shall be borne by the tenantwho, or whose employees or agents, shall have caused it.

10.           Tenantshall 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 thePremises or any part thereof without Landlord’s consent first had and obtained.

11.           Exceptfor vending machines intended for the sole use of Tenant’s employees andinvitees, no vending machine or machines of any description other thanfractional horsepower office machines shall be installed, maintained oroperated upon the Premises without the written consent of Landlord.

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

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

14.           Tenantshall not bring into or keep within the Building Complex or the Premises anyanimals except those assisting handicapped persons, birds, bicycles or othervehicles.

15.           Nocooking shall be done or permitted by any tenant on the Premises, nor shall thePremises be used for the storage of merchandise, for lodging or for anyimproper, objectionable or immoral purposes. Notwithstanding the foregoing, Underwriters’ laboratory–approvedequipment and microwave ovens may be used in the Premises for heating food andbrewing coffee, tea, hot chocolate and similar beverages, provided that suchuse is in accordance with all applicable federal, state and city laws, codes,ordinances, rules and regulations, and does not cause odors which areobjectionable to Landlord and other Tenants.

16.           Landlordwill approve where and how telephone and telegraph wires are to be introducedto the Premises.  No boring or cuttingfor wires shall be allowed without the consent of Landlord.  The location of telephone, call boxes andother office equipment affixed to the Premises shall be subject to the approvalof Landlord.

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

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EXHIBIT B – Page 2

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

19.           Tenantshall not waste electricity, water or air conditioning and agrees to cooperatefully with Landlord to ensure the most effective operation of the Building’sheating and air conditioning system, and shall refrain from attempting toadjust any controls.

20.           Tenantshall store all its trash and garbage within the interior of the Premises.  No material shall be placed in the trashboxes or receptacles if such material is of such nature that it may not bedisposed of in the ordinary and customary manner of removing and disposing oftrash and garbage in the city in which the Building is located withoutviolation of any law or ordinance governing such disposal.  All trash, garbage and refuse disposal shallbe made only through entry–ways and elevators provided for such purposes atsuch times as Landlord shall designate.

21.           Tenantshall comply with all safety, fire protection and evacuation procedures andregulations established by Landlord or any governmental agency.

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

23.           Noawnings or other projection shall be attached to the outside walls of theBuilding without the prior written consent of Landlord.  No curtains, blinds, shades or screens shallbe attached to or hung in, or used in connection with, any window or door ofthe 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 orother public places in the Building shall not be covered or obstructed byTenant, nor shall any bottles, parcels or other articles be placed on thewindowsills.  All electrical ceilingfixtures hung in offices or spaces along the perimeter of the Building must befluorescent and/or of a quality, type, design and bulb color approved byLandlord.

24.           Thewashing and/or detailing of or, the installation of windshields, radios,telephones in or general work on, automobiles shall not be allowed on the RealProperty.

25.           Theterm “**personal goods or services vendors**”as used herein means persons who periodically enter the Building of which thePremises 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 purposeof conducting its business in the Premises. “Personal goods or services” include, but are not limited to, drinkingwater and other beverages, food, barbering services and shoe shiningservices.  Landlord reserves the right toprohibit personal goods and services vendors from access to the Building exceptupon Landlord’s prior written consent and upon such reasonable terms andconditions, including, but not limited to, the payment of a reasonable fee andprovision for insurance coverage, as are related to the safety, care andcleanliness of the Building, the preservation of good order thereon, and therelief of any financial or other burden on Landlord or other tenants occasionedby the presence of such vendors or the sale by them of personal goods orservices to Tenant or its employees. Under no circumstance shall the personal goods or services vendorsdisplay their products in a public or common area, including corridors andelevator lobbies.  If necessary for theaccomplishment of these purposes, Landlord may exclude a particular vendorentirely or limit the number of vendors who may be present at any one time inthe Building.

26.           Tenantmust comply with requests by the Landlord concerning the informing of theiremployees of items of importance to the Landlord.

27.           Tenantshall comply with any non–smoking ordinance adopted by any applicablegovernmental authority.

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EXHIBIT B – Page 3

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28.           Landlordmay waive any one or more of these Rules and Regulations for the benefit of anyparticular tenant or tenants, but no such waiver by Landlord shall be construedas a waiver of such Rules and Regulations in favor of any other tenant ortenants, nor prevent Landlord from thereafter enforcing any such Rules orRegulations against any or all tenants of the Building Complex.  Landlord reserves the right at any time tochange or rescind any one or more of these Rules and Regulations, or to makesuch other and further reasonable Rules and Regulations as in Landlord’sreasonable judgment may from time to time be necessary for the management, safety,care and cleanliness of the Premises and Building Complex, and for thepreservation of good order therein, as well as for the convenience of otheroccupants and tenants therein.  Landlordshall not be responsible to Tenant or to any other person for the nonobservanceof the Rules and Regulations by another tenant or other person.  Tenant shall be deemed to have read theseRules and Regulations and to have agreed to abide by them as a condition of itsoccupancy of the Premises.

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EXHIBIT B – Page 4

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**EXHIBITCSEAVIEW CORPORATE CENTERAMENDMENT 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 liabilitycompany (“**Landlord**”), and ACCELRYSINC., a Delaware corporation (“**Tenant**”)

**R E C I T A L S****:**

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

B.            Exceptas otherwise set forth herein, all capitalized terms used in this Amendmentshall have the same meaning gives such terms in the Lease.

C.            Landlordand Tenant desire to amend the Lease to confirm the commencement and expirationdates of the Lease Term, as hereinafter provided.

NOW, THEREFORE, in consideration of the foregoingRecitals and the mutual covenants contained herein, and for other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto agree as follows:

1.             Confirmationof Dates.  The parties hereby confirmthat (a) the Premises are Ready for Occupancy and Landlord has performedall work required to be performed by Landlord pursuant to the Tenant WorkLetter attached to the Lease, (b) the Lease Term for the Lease commencedas 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) inaccordance with the Lease, Rent commenced to accrue on                                         .

2.             NoFurther Modification.  Except as setforth in this Amendment, all of the terms and provisions of the Lease shallremain unmodified and in full force and effect.

##  

EXHIBIT C – Page 1

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IN WITNESS WHEREOF, this Amendment hasbeen 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

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**EXHIBITDSEAVIEW CORPORATE CENTERTENANT WORK LETTER**

This Tenant Work Letter (“**Tenant Work Letter**”)shall set forth the terms and conditions relating to the construction ofimprovements for the Premises.  Allreferences in this Tenant Work Letter to “the Lease” shall mean the relevantportions 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 whichthe 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 thePremises certain “Tenant Improvements” (as defined below) pursuant to theprovisions of this Tenant Work Letter. Except for the Tenant Improvement work described in this Tenant WorkLetter, Landlord shall not be obligated to make any other alterations orimprovements to the Premises or the Building.

**SECTION 2**

**TENANT IMPROVEMENTS**

2.1           **Tenant Improvement Allowance**.  Tenant shall be entitled to a one–time tenantimprovement allowance (the “**TenantImprovement Allowance**”)in the amount of up to, but not exceeding $40.00 per rentable square foot ofthe Premises, for the costs relating to the initial design, engineering andconstruction of Tenant’s improvements which are permanently affixed to thePremises (the “**Tenant Improvements**”).  In no event shall Landlord be obligated tomake disbursements pursuant to this Tenant Work Letter in a total amount whichexceeds the Tenant Improvement Allowance or obligated to make disbursementsafter the twelfth (12th) month following the Effective Date of theLease.  Tenant shall not be entitled toreceive any cash payment or credit against Rent or otherwise for any portion ofthe Tenant Improvement Allowance which is not used to pay for the TenantImprovement Allowance Items (as such term is defined below) or disbursed duringthe twelve (12) months following the Effective Date of the Lease in accordancewith the terms of this Tenant Work Letter.

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

2.2.1        Paymentof the fees of the “Architect” and the “Engineers,” as those terms are definedin Section 3.1 of this Tenant Work Letter, and payment of Tenant’s ProjectManager (as defined in Section 6.2 of this Tenant Work Letter), andpayment of the fees incurred by, and the cost of documents and materialssupplied by, Landlord and Landlord’s consultants in connection with thepreparation and review of the “Construction Drawings,” as that term is definedin Section 3.1 of this Tenant Work Letter;

2.2.2        Thepayment of plan check, permit and license fees relating to construction of theTenant Improvements;

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

##  

EXHIBIT D – Page 1

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2.2.4        Thecost of any changes in the Base, Shell and Core when such changes are requiredby the Construction Drawings (including if such changes are due to the factthat such work is prepared on an unoccupied basis), such cost to include alldirect architectural and/or engineering fees and expenses incurred inconnection therewith;

2.2.5        Thecost of any changes to the Construction Drawings or Tenant Improvementsrequired by applicable laws and building codes (collectively, “**Code**”);

2.2.6        Salesand use taxes and Title 24 fees;

2.2.7        “Landlord’sSupervision Fee,” as that term is defined in Section 4.3.2 of this TenantWork Letter;

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

2.2.9        Allother costs to be expended by Landlord in connection with the construction ofthe Tenant Improvements.

**SECTION 3**

**CONSTRUCTION DRAWINGS**

3.1           **Selection of Architect/Construction Drawings**.  Tenant shall retain an architect/spaceplanner (the “**Architect**”)approved by Landlord, which approval shall not be unreasonably withheld, toprepare the Construction Drawings. Tenant shall retain engineering consultants designated by Landlord (the “**Engineers**”)to prepare all plans and engineering working drawings relating to thestructural, mechanical, electrical, plumbing, HVAC, lifesafety, and sprinklerwork in the Premises.  The plans anddrawings to be prepared by Architect and the Engineers hereunder shall be knowncollectively as the “**Construction Drawings**.”  All Construction Drawings shall comply withthe drawing format and specifications determined by Landlord, and shall besubject to Landlord’s approval which approval shall not be unreasonablyconditioned, withheld or delayed.  Tenantand Architect shall verify, in the field, the dimensions and conditions asshown on the relevant portions of the base building plans, and Tenant andArchitect shall be solely responsible for the same, and Landlord shall have noresponsibility in connection therewith. Landlord’s review of the Construction Drawings as set forth in thisSection 3, shall be for its sole purpose and shall not imply Landlord’sreview 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 reviewedby Landlord or its space planner, architect, engineers and consultants, andnotwithstanding any advice or assistance which may be rendered to Tenant byLandlord or Landlord’s space planner, architect, engineers, and consultants,Landlord shall have no liability whatsoever in connection therewith and shallnot be responsible for any omissions or errors contained in the ConstructionDrawings.

3.2           **Final Space Plan**.  On or before the date set forth inSchedule 1, attached hereto, Tenant and Architect shall prepare the finalspace 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 containedtherein, and shall deliver the Final Space Plan to Landlord for Landlord’sapproval which approval shall not be unreasonably conditioned, withheld ordelayed.

3.3           **Final Working Drawings**.  On or before the date set forth inSchedule 1, Tenant, Architect and the Engineers shall complete thearchitectural and engineering drawings for the Premises, and Architect shallcompile a fully coordinated set of architectural, structural, mechanical,electrical and plumbing working drawings in a form which is complete to allowsubcontractors 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 approvalshall not be unreasonably conditioned, withheld or delayed.

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3.4           **Approved Working Drawings**.  On or before the date set forth therefor inSchedule 1, Tenant shall submit the Final Working Drawings approved byLandlord (the “**Approved Working Drawings**”)to the applicable local governmental agency for all applicable building permitsnecessary to allow “Contractor,” as that term is defined in Section 4.1 ofthis Tenant Work Letter, to commence and fully complete the construction of theTenant Improvements (collectively, the “**Permits**”),and, in connection therewith, Tenant shall coordinate with Landlord in order toallow Landlord, at Landlord’s option, to take part in all phases of thepermitting process, and shall supply Landlord, as soon as possible, with allplan check numbers and dates of submittal. Notwithstanding the foregoing, Tenant hereby agrees that neitherLandlord nor Landlord’s consultants shall be responsible for obtaining anybuilding permit or certificate of occupancy for the Premises and that theobtaining of the same shall be Tenant’s responsibility; provided, however, thatLandlord shall, in any event, cooperate with Tenant in executing permitapplications and performing other ministerial acts reasonably necessary toenable Tenant to obtain any such permit or certificate of occupancy.  No changes, modifications or alterations inthe Approved Working Drawings may be made without the prior written consent ofLandlord, provided that Landlord may withhold its consent, in its solediscretion, to any change in the Approved Working Drawings, if such changewould directly or indirectly delay the Substantial Completion of the Premises.

3.5           **Time Deadlines**.  Tenant shall cooperate with Architect, theEngineer, and Landlord to complete all phases of the Construction Drawings andthe permitting process and to receive the permits, and with Contractor, forapproval 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 weeklybasis to discuss Tenant’s progress in connection with the same.  Certain of applicable dates for approval ofitems, plans and drawings as described in this Section 3, Section 4,below, and in this Tenant Work Letter are set forth and further elaborated uponin Schedule 1 (the “**Time Deadlines**”),attached hereto.  Tenant agrees to complywith the Time Deadlines.

**SECTION 4**

**CONSTRUCTION OF THETENANT IMPROVEMENTS**

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

4.2           **Cost Proposal**.  After the Approved Working Drawings aresigned by Landlord and Tenant, Landlord shall provide Tenant with a costproposal in accordance with the Approved Working Drawings, which cost proposalshall include, as nearly as possible, the cost of all Tenant ImprovementAllowance Items to be incurred by Tenant in connection with the construction ofthe Tenant Improvements (the “**Cost Proposal**”).  Notwithstanding the foregoing, portions ofthe cost of the Tenant Improvements may be delivered to Tenant as such portionsof the Tenant Improvements are priced by Contractor (on an individual item–by–itemor trade–by–trade basis), even before the Approved Working Drawings arecompleted (the “**Partial Cost Proposal**”).  Tenant shall approve and deliver the CostProposal 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 ofthe same).  Landlord’s approval of thesame shall not be unreasonably withheld, conditioned or delayed.  The date by which Tenant must approve anddeliver the Cost Proposal, or the last Partial Cost Proposal to Landlord, asthe case may be, shall be known hereafter as the “**Cost Proposal Delivery Date**.”  The total of all Partial Cost Proposals, ifany, shall be known as the Cost Proposal.

4.3           **Construction of Tenant Improvements by Landlord’sContractor under the Supervision of Landlord**.

4.3.1        **Over–Allowance Amount**.  On the Cost Proposal Delivery Date, Tenantshall 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 portionthereof already disbursed by Landlord, or in the process of being disbursed byLandlord, on or before the Cost Proposal Delivery Date).  The Over–Allowance Amount shall be disbursedby Landlord prior to the

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disbursement of any then remainingportion of the Tenant Improvement Allowance, and such disbursement shall bepursuant to the same procedure as the Tenant Improvement Allowance.  In the event that, after the Cost ProposalDate, any revisions, changes, or substitutions shall be made to theConstruction Drawings or the Tenant Improvements, any additional costs whicharise in connection with such revisions, changes or substitutions shall beadded to the last Proposal and shall be paid by Tenant to Landlord immediatelyupon Landlord’s request to the extent such additional costs increase anyexisting 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 TenantImprovements in accordance with the Approved Working Drawings and the CostProposal and Landlord shall supervise the construction by Contractor, andTenant 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–AllowanceAmount (as such Over–Allowance Amount may increase pursuant to the terms ofthis 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 allwarranties 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 theEngineers on the Premises or in the Building. Within ten (10) days after completion of construction of the TenantImprovements, Tenant shall cause Contractor and Architect to cause a Notice ofCompletion to be recorded in the office of the Recorder of the County in whichthe Building is located in accordance with Section 3093 of the Civil Codeof the State of California or any successor statute and furnish a copy thereofto Landlord upon recordation, failing which, Landlord may itself execute andfile the same on behalf of Tenant as Tenant’s agent for such purpose.  In addition, Tenant, immediately after theSubstantial Completion of the Premises, shall have prepared and delivered tothe Building management office a copy of the “as built” plans andspecifications (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 shallbe “**Ready for Occupancy**”upon Substantial Completion of the Premises. For purposes of this Lease, “**SubstantialCompletion**”of the Premises shall occur upon the completion of construction of the TenantImprovements in the Premises in a good and workmanlike manner, in compliancewith all applicable laws (including issuance of an occupancy permit or itsequivalent) and pursuant to the Approved Working Drawings, with the exceptionof any punch list items that do not materially impair Tenant’s use of thePremises and any tenant fixtures, work–stations, built–in furniture, orequipment to be installed by Tenant.

5.2           **Tenant Delays**.  If there shall be a delay or there are delaysin 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’sfailure to comply with the Time Deadlines;

5.2.2        Tenant’sfailure to timely approve any matter requiring Tenant’s approval, including aPartial Cost Proposal or the Cost Proposal;

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

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

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5.2.5        Tenant’srequest for changes in the Approved Working Drawings;

5.2.6        Tenant’srequirement for materials, components, finishes or improvements which are notavailable in a reasonable time (based upon the anticipated date of the LeaseCommencement Date); or

5.2.7        Anyother acts or omissions of Tenant, or its agents, or employees;

then, notwithstanding anything to the contraryset forth in the Lease and regardless of the actual date of the SubstantialCompletion of the Premises, the Lease Commencement Date (as set forth inSection 7.3 of the Summary) shall be deemed to be the date the Lease CommencementDate would have occurred if no Tenant Delay or Delays, as set forth above, hadoccurred.

**SECTION 6**

**MISCELLANEOUS**

6.1           **Tenant’s Entry Into the Premises Prior to SubstantialCompletion**.  Provided thatTenant and its agents do not interfere with, or delay, Contractor’s work in theBuilding and the Premises, Contractor shall allow Tenant access to the Premisesprior to the Substantial Completion of the Premises for the purpose of Tenantinstalling overstandard equipment or fixtures (including Tenant’s data andtelephone equipment) in the Premises. Prior to Tenant’s entry into the Premises as permitted by the terms ofthis Section 6.1, Tenant shall submit a schedule to Landlord andContractor, for their approval, which schedule shall detail the timing and purposeof Tenant’s entry.  Tenant shall holdLandlord harmless from and indemnify, protect and defend Landlord against anyloss or damage to the Building or Premises and against injury to any personscaused 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 TenantWork Letter, who shall have full authority and responsibility to act on behalfof the Tenant as required in this Tenant Work Letter.

6.3           **Landlord’s Representative**.  Landlord has designated Chris Sotelo as itssole representative with respect to the matters set forth in this Tenant WorkLetter, who, until further notice to Tenant, shall have full authority andresponsibility to act on behalf of the Landlord as required in this Tenant WorkLetter.

6.4           **Time of the Essence in This Tenant Work Letter**.  Unless otherwise indicated, all referencesherein 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 withinthe stated time period, at Landlord’s sole option, at the end of said periodthe item shall automatically be deemed approved or delivered by Tenant and thenext succeeding time period shall commence.

6.5           **Tenant’s Lease Default**.  Notwithstanding any provision to the contrarycontained in the Lease, if an event of default by Tenant as described inSection 19.1 of the Lease or any default by Tenant under this Tenant WorkLetter has occurred at any time on or before the Substantial Completion of thePremises, then (i) in addition to all other rights and remedies granted toLandlord pursuant to the Lease, Landlord shall have the right to withholdpayment of all or any portion of the Tenant Improvement Allowance and/orLandlord may cause Contractor to cease the construction of the Premises (inwhich case, Tenant shall be responsible for any delay in the SubstantialCompletion of the Premises caused by such work stoppage as set forth inSection 5.2 of this Tenant Work Letter), and (ii) all otherobligations of Landlord under the terms of this Tenant Work Letter shall beforgiven until such time as such default is cured pursuant to the terms of theLease.

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**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.                                     |

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**EXHIBITESEAVIEW CORPORATE CENTERFORM OF TENANT’S ESTOPPEL CERTIFICATE**

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

1.             Attachedhereto as **Exhibit A** is a trueand correct copy of the Lease and all amendments and modificationsthereto.  The documents contained in **Exhibit A** represent the entireagreement between the parties as to the Premises.

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

3.             TheLease is in full force and effect and has not been modified, supplemented oramended in any way except as provided in **Exhibit A**.

4.             Tenanthas not transferred, assigned, or sublet any portion of the Premises norentered into any license or concession agreements with respect thereto exceptas follows:

5.             Tenantshall 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.             BaseRent became payable on                                         .

7.             TheLease Term expires on                                         .

8.             Allconditions of the Lease to be performed by Landlord necessary to theenforceability of the Lease have been satisfied and Landlord is not in defaultthereunder.

9.             Norental has been paid in advance and no security has been deposited withLandlord except as provided in the Lease.

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

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

12.           Theundersigned acknowledges that this Estoppel certificate may be delivered toLandlord’s prospective mortgagee, or a prospective purchaser, and acknowledgesthat it recognizes that if same is done, said mortgagee, prospective mortgagee,or prospective purchaser will be relying upon the statements contained hereinin 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 thatreceipt by it of this certificate is a condition of making of the loan oracquisition of such property.

13.           IfTenant is a corporation or partnership, each individual executing this EstoppelCertificate on behalf of Tenant hereby represents and warrants that Tenant is aduly formed and existing entity qualified to

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do business in California and that Tenanthas full right and authority to execute and deliver this Estoppel Certificateand 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: |   |

 

 

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