**Exhibit 10.8**

**TABLEOF CONTENTS**
|            | ** ** | ** **                                                                                                     | ** ** | **Page** |
|------------|------------|----------------------------------------------------------------------------------------------------------------|------------|----------|
| ARTICLE 1  |       | - PREMISES                                                                                                     |       | 3        |
| ARTICLE 2  |       | - TERM                                                                                                         |       | 3        |
| ARTICLE 3  |       | - RENT; LATE CHARGES                                                                                           |       | 4        |
| ARTICLE 4  |       | - ADDITIONAL RENTAL                                                                                            |       | 4        |
| ARTICLE 5  |       | - ADDITIONAL TAXES                                                                                             |       | 8        |
| ARTICLE 6  |       | - SECURITY DEPOSIT                                                                                             |       | 9        |
| ARTICLE 7  |       | - USE OF PREMISES                                                                                              |       | 9        |
| ARTICLE 8  |       | - UTILITIES AND SERVICES                                                                                       |       | 10       |
| ARTICLE 9  |       | - MAINTENANCE AND REPAIRS                                                                                      |       | 11       |
| ARTICLE 10 |       | - ALTERATIONS, ADDITIONS AND IMPROVEMENTS                                                                      |       | 12       |
| ARTICLE 11 |       | - INDEMNIFICATION AND INSURANCE                                                                                |       | 13       |
| ARTICLE 12 |       | - DAMAGE OR DESTRUCTION                                                                                        |       | 15       |
| ARTICLE 13 |       | - CONDEMNATION                                                                                                 |       | 15       |
| ARTICLE 14 |       | - RELOCATION                                                                                                   |       | 16       |
| ARTICLE 15 |       | - ASSIGNMENT AND SUBLETTING                                                                                    |       | 16       |
| ARTICLE 16 |       | - DEFAULT AND REMEDIES                                                                                         |       | 18       |
| ARTICLE 17 |       | - ATTORNEYS FEES; COSTS OF SUIT                                                                                |       | 20       |
| ARTICLE 18 |       | - SUBORDINATION AND ATTORNMENT                                                                                 |       | 21       |
| ARTICLE 19 |       | - QUIET ENJOYMENT                                                                                              |       | 21       |
| ARTICLE 20 |       | - PARKING                                                                                                      |       | 21       |
| ARTICLE 21 |       | - RULES AND REGULATIONS                                                                                        |       | 22       |
| ARTICLE 22 |       | - ESTOPPEL CERTIFICATES                                                                                        |       | 22       |
| ARTICLE 23 |       | - ENTRY BY LANDLORD                                                                                            |       | 22       |
| ARTICLE 24 |       | - LANDLORD’S LEASE UNDERTAKINGS-EXCULPATION FROM  PERSONAL LIABILITY TRANSFER OF LANDLORD’S INTEREST |       | 22       |
| ARTICLE 25 |       | - HOLDOVER TENANCY                                                                                             |       | 23       |
| ARTICLE 26 |       | - NOTICES                                                                                                      |       | 23       |
| ARTICLE 27 |       | - BROKERS                                                                                                      |       | 23       |
| ARTICLE 28 |       | - SIGNAGE RIGHTS                                                                                               |       | 23       |
| ARTICLE 29 |       | - FINANCIAL STATEMENTS                                                                                         |       | 24       |
| ARTICLE 30 |       | - MISCELLANEOUS                                                                                                |       | 24       |

 
| EXHIBIT A |   | Depiction of the Premises           |
|-----------|--------|-------------------------------------|
| EXHIBIT B |   | Notice of Lease Term Dates          |
| EXHIBIT C |   | Work Letter Agreement               |
| EXHIBIT D |   | Rules and Regulations               |
| EXHIBIT E |   | Form of Tenant Estoppel Certificate |

 

i

----

**OFFICELEASE**

THIS OFFICE LEASE (“**Lease**”) is made and entered into by andbetween **FSP REGENTS SQUARE, LLC,** aDelaware limited liability company (“**Landlord**”)and the Tenant described in Item I of the Basic Lease Provisions as ofSeptember 17, 2004 (the “**Effective Date**”).

**BASICLEASE PROVISIONS**

1.                          **Tenant: 1ST PACIFIC BANK OF CALIFORNIA,** aCalifornia corporation (“**Tenant**”)

2.                          **Description of Premises/Building/Project:**

2.1                   **Premises:** 4275 Executive Square, Suite 650(the Premises is shown on Exhibit “A”)

2.2                    **Rentable Area:       **Approximately5,061 rentable square feet (approximately 4,307 usable square feet). (Section 1.3)

2.3                   **Building:****     **Thebuilding located at 4275 Executive Square, La Jolla, California

2.4                   **Project:****        **Thatcertain project, with all common areas and appurtenant parking facilities,commonly known as “Regents Square” and containing building improvements locatedat 4250, 4270 and 4275 Executive Square, La Jolla, California

3.                          **Term:**

3.1                   **Initial Term:**Thirty-six (36) months.

3.2                   **Option(s) to Extend the Term:**None.

3.3                   **Commencement Date:** February 1, 2005.(Section 2.2)

4.                          **Base Rent**(Article 3):
| Months  | ** ** | **Monthly  Base Rent** | ** ** | **Annual  Base Rent** | ** ** |
|---------|------------|-----------------------------|------------|----------------------------|------------|
| 1 - 12  |       | $                           | 13,411.65  |                       | $          | 160,939.80 |   |
| 13 - 24 |       | $                           | 13,814.00  |                       | $          | 165,768.00 |   |
| 25 - 36 |       | $                           | 14,228.42  |                       | $          | 170,741.04 |   |

5.                          **Additional Rent**(Article 4):

5.1                   **Base Year:**The calendar year 2005

5.2                   **Tenant’s Percentage Share:** 3.09% (Section4.2)

6.                          **Security Deposit:** $14,228.42. (Article 6)

7.                          **Parking Privileges:** Tenant shall lease fromLandlord: (i) Nine (9) Unreserved Parking Privileges (defined in Section 20.1,below) at the rate of Fifty Dollars ($50.00) per Unreserved Parking Privilegeper month during the first six (6) months of the Initial Term, (ii) Thirteen(13) Unreserved Parking Privileges at the rate of Fifty Dollars ($50.00) perUnreserved Parking Privilege per month commencing in month seven (7) of theInitial Term and continuing through the remainder of the Initial Term, and(iii) Four (4) Reserved Parking Privileges (defined in Section 20.1, below) atthe rate of One Hundred Dollars per Reserved Parking Privilege per month duringthe Initial Term. Subject to availability, Tenant shall have the right to leasefrom Landlord on a month-to-month basis additional Unreserved ParkingPrivileges and additional Reserved Parking Privileges at Landlord’s thenprevailing charge for such additional Parking Privileges. As of the EffectiveDate, Landlord’s prevailing charge for Unreserved Parking Privileges is FiftyDollars ($50.00) per Unreserved Parking Privilege per month and for ReservedParking Privileges is One Hundred Dollars ($100.00) per Reserved ParkingPrivilege per month. (Article 20)

8.                          **Broker(s):**Irving Hughes, representingTenant, and CommonWealth Partners Management Services, L.P., representingLandlord (Article 27)

9.                          **Permitted Use:** General office useconsistent with a first class high-rise office project. (Section 7.1)

1

----

10.                    **Addresses for Notices**(Article 26):

**To:Tenant**
| Prior to the Commencement Date:                                                                                      | After the Commencement Date               |
|----------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
|                                                                                                                 |                                      |
| 1st Pacific Bank of California   7728 Regents Road, Suite 503   San Diego, California 92122  Attn: Vincent Siciliano | At the Premises:  Attn: Vincent Siciliano |

**To:Landlord**

FSP Regents Square, LLCc/o CWP Capital Management, LLC633 West Fifth Street, 72nd FloorLos Angeles, California 90071Attn: Sharyl Gabriel, Senior Vice President

With a copy to:

Paul, Hastings, Janofsky& Walker, LLP515 South Flower Street25th FloorLos Angeles, CA 90071-2228Attn: Patrick A. Ramsey, Esq.FAX: (213) 627-0705

And with a copy to:

CommonWealth PartnersManagement Services, L.P. 4275 Executive Square, Suite 300La Jolla, California 92037Attn: Property Manager

11.                    **Address for Payments:**All payments payableto Landlord under this Lease shall be sent to the following address or to suchother address as Landlord may designate, or by wire transfer.

Regents Square, a property of Fifth Street Properties, LLCFile #56684Los Angeles, California 90074-6684

If by wire transfer:

Bank of America, Account Name: Fifth St. Properties LLC - RegentsSquare

Collection, Account No.: 004782289653, ABA#: 111000025

12.                    **Guarantor:**None.

This Lease shall consistof the foregoing Basic Lease Provisions, and the provisions of the StandardLease Provisions (the “**Standard LeaseProvisions**”) (consisting of Sections 1 through 30 which follow) and Exhibits“A” through “E”, inclusive, all of which areincorporated herein by this reference as of the Effective Date. In the event ofany conflict between the provisions of the Basic Lease Provisions and theprovisions of the Standard Lease Provisions, the Standard Lease Provisionsshall control. Any initially capitalized terms used herein and not otherwisedefined shall have the meanings set forth in the Standard Lease Provisions.

2

----

**STANDARD LEASE PROVISIONS**

**ARTICLE1 - PREMISES**

1.1 **Lease of Premises.** Landlord herebyleases the Premises to Tenant, and Tenant hereby leases the Premises fromLandlord, upon all of the terms, covenants and conditions contained in thisLease.

1.2 **Acceptance of Premises.** Tenantacknowledges that Landlord has not made any representation or warranty withrespect to the condition of the Premises, the Building or the Project withrespect to the suitability or fitness of any of the same for the conduct ofTenant’s Permitted Use, its business or for any other purpose.

1.3 **Measurement of the Rentable Area of Premises and theBuilding.**

1.3.1          Forpurposes of this Lease, subject to the provisions of Section 1.3.2, the partieshereby stipulate that the number of rentable square feet contained within thePremises is as set forth in Item 2.2 of the Basic Lease Provisions.

1.3.2          The“**Rentable Area**” or “**rentable square feet**” and “**Usable Area**” or “usable square feet” shallbe calculated by Landlord substantially in accordance with the Standard Methodfor Measuring Floor Area in Office Buildings, ANSI Z65.1 - 1996 (“**BOMA**”); provided, however, that in any casethe Rentable Area of the Building shall include all of, and the Rentable Areaof the Premises shall include a portion of, the square footage of the groundfloor common areas located within the Building and the common area and occupiedspace of the portion of the Building or Project dedicated to the service of theBuilding. Landlord reserves the right to modify (i) the standards utilizedhereunder for the measurement of Rentable Area and Usable Area (so long as anysuch modification is reasonably consistent with then prevailing InstitutionalOwner Practices (defined below)) and (ii) consistent with any suchmodifications of measurement standards, the totals of Rentable Area and UsableArea set forth or utilized herein with respect to the Premises, the Buildingand/or portions thereof and any economic terms set forth herein (such as AnnualBase Rent, Security Deposit and Tenant’s Percentage Share) (“**Economic Terms**”) calculated on the basisthereof; provided, however, that during the Initial Term, such modificationshall not cause any increase in the Annual Base Rent.

1.4 **Common Areas**. “**Common Areas**” shall mean the lobby, plazaand sidewalk areas, accessways, Garage, and the area on individual floors inthe Building devoted to corridors, fire vestibules, elevators, foyers, lobbies,electric and telephone closets, restrooms, mechanical rooms, janitor’s closets,and other similar facilities for the benefit of all tenants and invitees andshall also mean those areas of the Building devoted to mechanical and servicerooms servicing the Building. The Common Areas shall be subject to theexclusive management and control of Landlord, and Tenant shall comply with allRules and Regulations (defined in Section 21) pertaining to the Common Areas.Landlord shall have the right from time to time to designate, relocate andlimit the use of particular areas or portions of the Common Areas; providedthat any such designation, relocation or limitation shall not materiallyadversely affect Tenant’s use of and access to the Premises. Landlord shallalso have the right to close all or any portion of the Common Areas as may, inthe sole discretion of Landlord, be necessary to prevent a dedication thereofor the accrual of any rights in any person.

**ARTICLE2 - TERM**

2.1 **Term**. Unless earlier terminated inaccordance with the provisions hereof, the initial term of this Lease shall bethe period shown in Item 3.1 of the Basic Lease Provisions. For purposes ofthis 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 twelfth (12th) monththereafter and the second and each succeeding Lease Year shall commence on thefirst day of the next calendar month. At any time during the Lease Term,Landlord may deliver to Tenant a notice in the form as set in Exhibit “**B**” attached hereto, which Tenant shall execute andreturn to Landlord within five (5) business days of receipt thereof. As usedherein, “**Term**” shall refer to theinitial term described in Item 3.1 of the Basic Lease Provisions.

2.2 **Commencement**. The Term shall commenceon the Commencement Date as defined in Item 3.3 of the Basic Lease Provisions;provided, however, that in the event the Term shall commence on a day otherthan the first day of any calendar month, for purposes of calculating theExpiration Date and the timing of all scheduled increases in Base Rent duringthe Term, the Commencement Date shall be deemed to be the first day of thecalendar month following the Commencement Date. The term “**Ready for Occupancy**” means the datedetermined by Landlord’s architect or space planner to be the date ofsubstantial completion of the Tenant Improvements (defined in the Work Letterattached hereto as Exhibit “**C**”(the “**Work Letter**”)); provided,however, in the event that Landlord is delayed in achieving substantialcompletion of the Tenant Improvements by reason of any Tenant Delay (defined inthe Work Letter), the Premises shall be deemed Ready for Occupancy on the datesubstantial completion of the Tenant Improvements would have occurred had theTenant Delay(s) not occurred, as determined by Landlord’s architect or spaceplanner. This Lease shall be a binding contractual obligation effective uponexecution hereof by Landlord and Tenant notwithstanding the later commencementof the Term of this Lease.

2.3**Delay in Commencement; Beneficial Occupancy.**Landlord may deliver the Premises to Tenant prior to, on or after theCommencement Date specified in Item 3.3 of the Basic Lease Provisions;provided, however, that in the event the Commencement Date is delayed orotherwise does not occur on the Commencement Date this Lease shall not be voidor voidable, the Term of this Lease shall not be extended, and Landlord shallnot be liable to Tenant for any loss or damage resulting therefrom. Notwithstanding the foregoing.Landlord shall use commercially reasonable efforts to substantiallycomplete the Tenant Improvements (defined in the Work Letter) and deliver thePremises to Tenant on or about November 30, 2004 (the “**Target Delivery Date**”). If Tenant takespossession of the Premises before the Commencement Date, Tenant hereby agreesthat each and every provision of this Lease shall be in full force and effectfrom such date of possession; provided however, that Tenant shall have noobligation to pay to Landlord Monthly Base Rent for the period commencing on thedate the Premises is Ready for Occupancy through the Commencement Date (suchperiod, the “**Beneficial Occupancy Period**”).

3

----

**ARTICLE 3 - RENT; LATECHARGES**

3.1 **Base Rent; Rent**.

3.1.1          Tenantagrees to pay during each Lease Year of the Term of this Lease as Base Rent (“**Base Rent**”) for the Premises the sums shownfor such periods in Item 4 of the Basic Lease Provisions.

3.1.2          Exceptas expressly provided to the contrary herein, Annual Base Rent shall be payablein equal consecutive monthly installments, in advance, without abatement,deduction or offset, commencing on the Commencement Date and continuing on thefirst day of each calendar month thereafter. The first full monthly installmentof Annual Base Rent, described in Item 4 of the Basic Lease Provisions, shallbe payable upon Tenant’s execution of this Lease. If the Commencement Date is aday other than the first day of a calendar month, then the Base Rent for thePartial Lease Month (the “**Partial Lease MonthRent**”) shall be calculated on a per diem basis determined bydividing the initial Monthly Base Rent shown in Item 4 of the Basic LeaseProvisions by the number thirty (30) and by multiplying such amount by thenumber of remaining days of such month from and including the Commencement Date.The Partial Lease Month Rent shall be payable by Tenant prior to the date thatTenant takes possession or commences use of the Premises for any businesspurpose (including moving in). Annual Base Rent, all forms of Additional Rent(defined below) payable hereunder by Tenant and all other amounts, fees,payments or charges payable hereunder by Tenant shall (i) each constitute rentpayable hereunder (and shall sometimes collectively be referred to herein as “**Rent**”), (ii) be payable to Landlord whendue without any prior notice or demand therefor in lawful money of the UnitedStates and, except as may be expressly provided to the contrary herein, withoutany abatement, offset or deduction whatsoever and (iii) be payable to Landlordat the address of Landlord described in Item 10 of the Basic Lease Provisionsor to such other person or to such other place as Landlord may from time totime designate in writing to Tenant.

3.1.3          Nopayment by Tenant or receipt by Landlord of a lesser amount than the correctRent due hereunder shall be deemed to be other than a payment on account; norshall any endorsement or statement on any check or any letter accompanying anycheck or payment be deemed to effect or evidence an accord and satisfaction;and Landlord may accept such check or payment without prejudice to Landlord’sright to recover the balance or pursue any other remedy in this Lease or at lawor in equity provided.

3.2 **Late Charge; Interest**. Tenantacknowledges that the late payment of Base Rent, Additional Rent or any otheramounts payable by Tenant to Landlord hereunder will cause Landlord to incuradministrative costs and other damages, the exact amount of which would beimpracticable or extremely difficult to ascertain. Landlord and Tenant agreethat if Landlord does not receive any such payment on or before the date five(5) days after the date the payment is due, Tenant shall pay to Landlord, asAdditional Rent, (i) a late charge (“**LateCharge**”) equal to five percent (5%) of the overdue amount to coversuch additional administrative costs, and (ii) interest on all delinquentamounts at the lesser of (1) eighteen percent (18%) per annum or (2) themaximum amount allowed by Law, from the date due until the date paid.

3.3 **Additional Rent**. For purposes of thisLease, all amounts (other than Base Rent) payable by Tenant to Landlordpursuant to this Lease, whether or not denominated as such, shall constituteadditional rent (“**Additional Rent**”)hereunder.

**ARTICLE4 - ADDITIONAL RENTAL**

4.1 **Payment of Excess Operating Expenses and ExcessProperty Taxes**.

4.1.1          Subjectto the provisions of this Lease, in addition to paying Base Rent pursuant toArticle 3 of this Lease, with respect to each Expense Year (defined below)Tenant shall also pay as Additional Rent Tenant’s Percentage Share (definedbelow) of the positive excess, if any, of Operating Expenses (defined below)for the Building allocable hereunder to such Expense Year over OperatingExpenses for the Building allocable hereunder to the Base Year (defined below).

4.1.2          Subjectto the provisions of this Lease, in addition to paying Base Rent pursuant toArticle 3 of this Lease, with respect to each Expense Year Tenant shall alsopay as Additional Rent Tenant’s Percentage Share of the positive excess, ifany, of the Property Taxes (defined below) for the Building allocable hereunderto such Expense Year over the Property Taxes for the Building allocablehereunder to the Base Year.

4.2 **Definitions**.

4.2.1          “**Base Year**” shall mean the calendar yearspecified in Item 5.1 of the Basic Lease Provisions. “**Expense Year**” shall mean each calendar yearin which any portion of the Term of this Lease falls, through and including thecalendar year in which the Term of this Lease expires.

4.2.2          “**Property Taxes**” shall mean all realproperty taxes, assessments, fees, charges, or impositions and other similargovernmental or quasi-governmental ad valorem or other charges levied on orattributable to the Building or its ownership, operation or transfer of any andevery type, kind, category or nature, whether direct or indirect, general orspecial, ordinary or extraordinary and all taxes, assessments, fees, charges orsimilar impositions imposed in lieu or substitution (partially or totally) ofthe same including, without limitation, all taxes, assessments, levies, chargesor impositions (i) on any interest of Landlord or any mortgagee of Landlord inthe Project, the Building, the Premises or in this Lease, or on the occupancyor use of space in the Building or the Premises; (ii) on the gross or net rentalsor income from the Building, including, without limitation, any gross incometax, excise tax, sales tax or gross receipts tax levied by any federal, stateor local governmental entity with respect to the receipt of Rent; (iii) on anytransit taxes or charges, business or license fees or taxes, annual or periodiclicense or use fees, park and/or school fees, arts charges, parks charges,housing fund charges; (iv) imposed for street, refuse, police, sidewalks, fireprotection and/or similar services and/or maintenance, whether previouslyprovided without charge or for a different charge,

4

----

whether provided by governmental agencies or privateparties, and whether charged directly or indirectly through a funding mechanismdesigned to enhance or augment benefits and/or services provided bygovernmental or quasi-governmental agencies; (v) on any possessory taxescharged or levied in lieu of real estate taxes; and (vi) any costs or expensesincurred or expended by Landlord in investigating, calculating, protesting,appealing or otherwise attempting to reduce or minimize such taxes. There shallbe excluded from Property Taxes all income taxes, capital stock, inheritance,estate, gift, or any other taxes imposed upon or measured by Landlord’s grossincome or profits unless the same is specifically included within thedefinition of Property Taxes above or otherwise shall be imposed in lieu ofreal estate taxes or other ad valorem taxes. Notwithstanding the foregoing, atall times that the Project is owned by a state public retirement system, theState of California, any local public entity, or any entity in which any of thesame hold an interest (collectively, “**PublicEntity**”), (a) this Lease and the Tenant’s interest hereunder mayconstitute a possessory interest subject to property taxation and as a resultmay be subject to the payment of property taxes levied on such interest, (b)such property taxes shall be based upon the full cash value of the possessoryinterest which will equal the greater of (i) the full cash value of thepossessory interest or (ii) if Tenant has leased less than all of the Building,Tenant’s Percentage Share of the full cash value which would have been enrolledif the entire Building had been subject to property tax upon acquisition by theentity and (c) in the event possessory interest taxes are applicable, Landlordshall have the right to make such adjustments to the foregoing as Landlordshall determine in good faith from time to time are required to most closelyapproximate the amount of Property Taxes which would be payable hereunder undercircumstances where the Project is not owned by a Public Entity.

4.2.3          “**Operating Expenses**” shall mean all costs,fees, amounts, disbursements and expenses of every kind and nature paid orincurred by or on behalf of Landlord with respect to any Expense Year inconnection with the operation, ownership, maintenance, insurance, restoration,management, replacement or repair of the Building in a first class manner,including, without limitation, any amounts paid or incurred with respect to:

(i)          Premiumsfor property, casualty, liability, rent interruption, earthquake, flood orother types of insurance carried by Landlord from time to time, and anydeductibles thereunder actually paid by Landlord with respect to the Building.

(ii)         Salaries,wages and other amounts paid or payable for personnel (including, withoutlimitation, the Building manager, superintendent, operation and maintenancestaff, the Parking Facilities (defined below) manager, concierge (if any) andother employees of Landlord) involved in the maintenance and operation of theBuilding or the Project, including contributions and premiums towards fringebenefits, unemployment taxes and insurance, social security taxes, disabilityand worker’s compensation insurance, pension plan contributions and similarpremiums and contributions which may be levied on such salaries, wages,compensation and benefits and the total charges of any independent contractorsor property managers engaged in the operation, repair, care, maintenance andcleaning of any portion of the Building or the Project.

(iii)        Cleaningexpenses, including without limitation, janitorial services, window cleaning,and garbage and refuse removal.

(iv)       Landscapingand hardscape expenses, including without limitation, irrigating, trimming,mowing, fertilizing, seeding, and replacing plants, trees and hardscape.

(v)        Subjectto the provisions of Section 4.3.4, the cost of providing fuel, gas,electricity, water, sewer, telephone, steam and other utility services.

(vi)       Subjectto the provisions of Section 4.2.3(x) below, the cost of maintaining,operating, restoring, renovating, managing, repairing and replacing componentsof equipment or machinery, including, without limitation, heating, refrigeration,ventilation, electrical, plumbing, mechanical, elevator, escalator, sprinklers,fire/life safety, security and energy management systems, including servicecontracts, maintenance contracts, supplies and parts with respect thereto.

(vii)      Thecosts of security for, and supervision of, the Building.

(viii)     Rental,supplies and other costs with respect to the operation of the management officefor the Building.

(ix)        Allcost and fees for licenses, certificates, permits and inspections, and the costincurred in connection with the implementation of a transportation systemmanagement program or similar program.

(x)         Thecost of replacement, repair, acquisition, installation and modification of (A)carpeting and wallcoverings, ceiling systems and fixtures in the Common Areas,and other furnishings in the Common Areas, (B) materials, tools, supplies andequipment purchased by Landlord which are used in the maintenance, operationand repair of the Building, and (C) any other form of improvements, additions,repairs, or replacements to the Building or the systems, equipment or machineryoperated or used in connection with the Building; provided, however, that withrespect to the items described in clauses (A), (B) and (C) above whichconstitute a capital item, addition, repair or improvement (collectively “**Capital Items**”) under sound accounting andproperty management principles consistently applied and determined by Landlord,in each case the cost of such Capital Items shall be amortized (with interestat the Interest Rate) over the useful life (the “**Useful Life**”) of such Capital Item, as determined by theLandlord in accordance with sound accounting and property management principlesconsistently applied or such other period as shall be consistent withInstitutional Owner Practices.

(xi)        Attorneys’,accountants’ and consultants’ fees and expenses in connection with themanagement, operation, administration, maintenance and repair of the Building,including, but not limited to, such expenses that relate to seeking orobtaining reductions in or refunds of Property Taxes, or components thereof, orthe costs of contesting the validity of applicability of any governmentalenactments which may affect Operating Expenses.

 

5

----

(xii)       Feesfor the administration and management of the Building in an amount equal tothree percent (3%) of the gross revenues of the Building (which shall begrossed by Landlord up to one hundred percent (100%) occupancy on an annualbasis), without regard to whether actual fees so paid are greater or less thansuch amount.

(xiii)      Sales,use and excise taxes on goods and services purchased by Landlord for themanagement, maintenance, administration or operation of the Building or theProject.

(xiv)      Feesfor local civic organizations and dues for professional trade associations.

(xv)       Paymentsunder any covenants, conditions and restrictions pertaining to the Building orany easement, license or operating agreement or similar instrument whichaffects the Building.

(xvi)      Costsand expenses of investigating, testing, documenting, monitoring, responding to,abating and remediating Hazardous Materials (defined below), other thanabatement and remediation costs with respect to Hazardous Materials (a)actually known by Landlord (on the Effective Date) to require abatement and/orremediation under applicable Environmental Laws (defined below) and/or (b)caused at any time by Landlord, its agents or employees.

(xvii)     Thecosts of repairing, restoring and maintaining the Parking Facilities of theBuilding, including, without limitation, the resurfacing, restriping andcleaning of such facilities.

(xviii)    Anycosts, fees, amounts, disbursements and expenses which are generally includedin Operating Expenses under Institutional Owner Practices.

4.2.4          Thefollowing costs and expenses shall be excluded from Operating Expenses:

(i)          expensesrelating to leasing space in the Building (including tenant improvements,leasing and brokerage commissions and advertising expenses);

(ii)         legalfees and disbursements incurred for collection of tenant accounts ornegotiation of leases, or relating to disputes between Landlord and othertenants and occupants of the Building;

(iii)        CapitalItems unless specifically permitted by Section 4.2.3, parts (i) through(xviii), inclusive;

(iv)       PropertyTaxes;

(v)        amountsreceived by Landlord on account of proceeds of insurance to the extent theproceeds are reimbursement for expenses which were previously included inOperating Expenses;

(vi)       exceptto the extent specifically provided in Section 4.2.3, parts (i) through(xviii), inclusive, depreciation or payments of principal and interest on anymortgages upon the Building;

(vii)      paymentsof ground rent pursuant to any ground lease covering the Building;

(viii)     subjectto Section 4.3.1, the costs of gas, steam or other fuel; operation of elevatorsand security systems; heating, cooling, air conditioning and ventilating;chilled water, hot and cold domestic water, sewer and other utilities or anyother service work or facility, or level or amount thereof, provided to anyother tenant or occupant in the Building which either (a) is not required to besupplied or furnished by Landlord to Tenant under the provisions of this Leaseor (b) is supplied or furnished to Tenant pursuant to the terms of this Leasewith separate or additional charge;

(ix)        thecost of any Landlord Work (defined in the Work Letter); and

(x)         anycost expressly excluded from Operating Expenses in an express provisioncontained in this Lease.

4.2.5          “**Tenant’s Percentage Share**” shall mean thepercentage set forth in Item 5.2 of the Basic Lease Provisions; provided,however, that Landlord reserves the right from time to time during the Term ofthis Lease to recalculate Tenant’s Percentage Share, in which case Tenant’sPercentage Share shall be calculated by dividing the number of square feet ofRentable Area in the Premises by the number of square feet of Rentable Area inthe Building, and expressing such quotient in the form of a percentage.

4.3 **Calculation Methods and Adjustments.**

4.3.1          Thevariable components of Operating Expenses (“**VariableExpenses**”) for all or any portion of any Expense Year (including theBase Year) during which actual occupancy of the Building is less than onehundred percent (100%) of the Rentable Area of the Building shall be adjustedby Landlord, as determined in good faith by Landlord applying sound accountingand property management principles (and the provisions of this Lease) toreflect one hundred percent (100%) occupancy of the Rentable Area of theBuilding during such period. If during all or any part of any Expense Year,including the Base Year, Landlord does not provide any particular Item ofbenefit, work or service (the cost of which is a Variable Expense) to portionsof the Building due to the fact that such Item of benefit, work or service isnot required or desired by the tenant of such space, or such tenant is itselfobtaining and providing such Item of benefit, work or service, or for any otherreason, then for purposes of computing Variable Expenses for such Expense Year,Operating Expenses shall be increased by an amount equal to the additionalVariable Expenses

6

----

which would have been paid or incurred by Landlordduring such period if it had furnished such Item of benefit, work or service tosuch portions of the Building.

4.3.2          Subjectto the provisions of this Section 4.3, all calculations, determinations,allocations and decisions to be made hereunder with respect to OperatingExpenses or Property Taxes shall be made in accordance with the good faith determinationof Landlord applying sound accounting and property management principlesconsistently applied which are consistent with the practices of the majority ofthe institutional owners of institutional grade first-class office projects inSan Diego County, California (“**InstitutionalOwner Practices**”). Landlord shall have the right to equitablyallocate some or all of Operating Expenses among particular classes or groupsof tenants in the Building (for example, retail tenants) to reflect Landlord’sgood faith determination that measurably different amounts or types ofservices, work or benefits associated with Operating Expenses are beingprovided to or conferred upon such classes or groups. Subject to the provisionsof this Section 4.3, from time to time Landlord shall have the right to expandor contract the amount, scope, level or types of services, work, items orbenefits, the cost of which is included within Operating Expenses, so long asLandlord’s treatment of the same for purposes of the calculation of OperatingExpenses is (a) generally consistent with Institutional Owner Practices, and(b) does not materially adversely affect Tenant’s use of the Premises. Wheneverservices, benefits or work are provided to the Building and to additionalprojects (where allocation of the cost thereof among such projects is requiredfor calculation of Operating Expenses hereunder), in allocating the overallcost thereof (for all such projects) to Operating Expenses hereunder, thereshall be excluded from Operating Expenses Landlord’s good faith determinationof the additional overall cost comparison allocable to the provision of suchservices, benefits or work to the additional projects. All discounts,reimbursements, rebates, refunds, or credits (collectively, “**Reimbursements**”) attributable to OperatingExpenses or Property Taxes received by Landlord in a particular year shall bededucted from Operating Expenses or Property Taxes in the year the same arereceived; provided, however, if such practice is consistent with InstitutionalOwner Practices, Landlord may treat Reimbursements generally (or underparticular circumstances) on a different basis. Landlord shall have the rightto exclude from Base Year Operating Expenses the cost of items of service, workor benefits (i) not provided following the Base Year, (ii) incurred due tocircumstances not applicable following the Base Year or due to market-widelabor-rate increases in Operating Expenses due to extraordinary circumstances,including, without limitation, boycotts, embargoes and strikes, and utilityrate increases due to extraordinary circumstances, and (iii) amortized costsrelating to capital improvements. All assessments and premiums of OperatingExpenses or Property Taxes which can be paid by Landlord in periodicinstallments shall be paid by Landlord in the maximum number of periodicinstallments permitted by Law; provided, however, that if the then prevailingInstitutional Owner Practice is to pay such assessments or premiums on adifferent basis, Landlord may utilize such different basis of payment.

4.3.3          Ifin any one or more Expense Years following the Base Year (a “**Comparison Year**”), Property Taxes decreasebelow the amount of Property Taxes for the Base Year as a result of anyreassessment or any similar governmental act or Law, including, withoutlimitation, as the result of a Proposition 8 reduction (collectively, a “**Tax Reduction**”), for purposes ofcalculation of excess Property Taxes for such Comparison Year and allsubsequent Comparison Years, Property Taxes allocable to the Base Year shall bereduced to the amount of Property Taxes allocable to such Comparison Year (a “**Base Year Tax Reduction**”); provided,however, that if in any subsequent Comparison Year the amount of such TaxReduction is decreased (other than to the extent by virtue of the applicationof the annual percentage increase (presently 2.0%) in Property Taxes currentlyprovided by statute (or any substitute therefor hereafter adopted)), forpurposes of calculation of excess Property Taxes for such subsequent ComparisonYear, the Base Year Tax Reduction shall be correspondingly decreased. PropertyTaxes allocable to the Base Year shall not include any Property Taxes or anytaxes, assessments, costs charges or fees not applicable following the BaseYear.

4.3.4          Theparties acknowledge that Tenant shall pay, as Additional Rent, for its share ofall utility costs, including, without limitation, electricity, fuel, gas, waterand similar utility services for the Building (collectively, the “**Utility Services**”) directly to Landlord andthe costs of the same shall not be a part of Operating Expenses (allocable tothe Base Year or any Comparison Year). In connection with the foregoing,subject to the provisions of this Lease, in addition to paying Base Rent andTenant’s Percentage Share of the positive excess, if any, of Operating Expensesand Property Taxes above the Base Year, as set forth in Section 4.1, duringeach Comparison Year, Tenant shall, on a monthly basis commencing on theCommencement Date, pay to Landlord (for the Base Year and for each ComparisonYear, or any portion thereof) Tenant’s Percentage Share of the cost of theUtility Services (the “**Utility Costs**”)for the Building; provided, however that Utility Costs shall be adjusted foreach Expense Year during which actual occupancy of the Building is less thanone hundred percent (100%) of the Rentable Area of the Building in accordancewith sound accounting principles, to reflect one hundred percent (100%)occupancy of the existing Rentable Area of the Building during such period.Subject to applicable Laws, Landlord shall solely determine all decisions withrespect to the method and manner by which all Utility Services shall be billedand provided in the Building, which determinations shall be made by Landlord ingood faith and on a basis consistent with Institutional Owner Practices(including the right to allocate utility expenses based upon studies whichallocate utility usages among the tenants or occupants of the Building basedupon the estimated use by the respective tenants). On or prior to theCommencement Date (or within a reasonable period of time thereafter), Landlordshall deliver to Tenant its estimate of monthly Utility Costs payable by Tenantpursuant to this Section 4.3.4. Landlord may, from time to time during eachExpense Year, by written notice to Tenant, revise its estimate for such costs,and all subsequent payments under this Section 4.3.4 by Tenant during eachExpense Year shall be based on such revised estimate.

4.4 **Payment Procedure; Estimates.**Duringeach Comparison Year, Landlord may elect to give Tenant written notice of itsestimate of any increased amounts payable under Section 4.1 for that ComparisonYear. On or before the first day of each calendar month during such ComparisonYear, Tenant shall pay to Landlord one-twelfth (l/12th) of such estimatedamounts; provided, however, that, not more often than quarterly, Landlord may,by written notice to Tenant, revise its estimate for such Comparison Year, andall subsequent payments under this Section 4.4 by Tenant for such ComparisonYear shall be based upon such revised estimate. Landlord shall endeavor todeliver to Tenant within one hundred fifty (150) days after the close of eachComparison Year or as soon thereafter as is practicable, a statement of thatyear’s Property Taxes and Operating Expenses, and Tenant’s Percentage Share ofactual excess Property Taxes and actual excess Operating Expenses payable forsuch Comparison Year pursuant to Section 4.1, as determined by Landlord (the “**Landlord’s Statement**”) and such Landlord’sStatement shall be binding upon Landlord and Tenant, except as provided inSection 4.5. If the amount of Tenant’s Percentage Share of actual excessProperty Taxes and Operating Expenses for any Comparison Year is more than theestimated payments with

7

----

respect thereto made by Tenant, Tenant shall pay thedeficiency to Landlord upon receipt of Landlord’s Statement. If the amount ofTenant’s Percentage Share of actual excess Property Taxes and OperatingExpenses for any Comparison Year is less than the estimated payments for suchComparison Year made by Tenant, such excess payments shall be credited againstRent next payable by Tenant under this Lease or, if the Term of this Lease hasexpired, such excess shall be paid to Tenant. No delay in providing anyLandlord’s Statement described in this Section 4.4 shall act as a waiver ofLandlord’s right to receive payment from Tenant under Section 4.1 above withrespect to Tenant’s Percentage Share of excess Property Taxes and/or OperatingExpenses for the period covered thereby. If this Lease shall terminate on a dayother than the end of a calendar year, the amount of Tenant’s Percentage Shareof actual excess Property Taxes and actual excess Operating Expenses payableunder Section 4.1 that is applicable to the calendar year in which suchtermination occurs shall be prorated on the basis that the number of days fromJanuary 1 of such calendar year to the termination date bears to 365. Theexpiration or early termination of this Lease shall not affect the obligationsof Landlord and Tenant pursuant to this Section 4.4 to be performed after suchexpiration or early termination.

**4.5 Review of Landlord’s Statement.**

4.5.1          Providedthat Tenant is not then in default with respect to its obligations under thisLease and provided further that Tenant strictly complies with the provisions ofthis Section 4.5, Tenant shall have the right to reasonably review Landlord’ssupporting books and records for any portion of the Property Taxes or OperatingExpenses for a particular Comparison Year covered by Landlord’s Statement, inaccordance with the following procedure:

4.5.2          Tenantshall, within ninety (90) days after any such Landlord’s Statement is deliveredto Tenant, deliver a written notice (a “**DisputeNotice**”) to Landlord specifying the items described in the Landlord’sStatement that are claimed to be incorrect, and Tenant shall simultaneously payto Landlord all amounts remaining due from Tenant to Landlord as specified inthe Landlord’s Statement. Except as expressly set forth in Section 4.5.3, in noevent shall Tenant be entitled to withhold, deduct, or offset any monetaryobligation of Tenant to Landlord under this Lease (including withoutlimitation, Tenant’s obligation to make all payments of Base Rent and allpayments of Additional Rent pending the completion of and regardless of theresults of any review of records under this Section 4.5). The right of Tenantunder this Section 4.5 may only be exercised once for each Expense Year coveredby any Landlord’s Statement, and if Tenant fails to deliver a Dispute Noticewithin the ninety (90) day period described above or fails to meet any of theother above conditions of exercise of such right, the right of Tenant to audita particular Landlord’s Statement (and all of Tenant’s rights to make any claimrelating thereto) under this Section 4.5 shall automatically be deemed waivedby Tenant.

4.5.3          Tenantacknowledges that Landlord maintains its records for the Building at Landlord’smanager’s corporate offices and Tenant agrees that any review of records underthis Section 4.5 shall be at the sole expense of Tenant and shall be conductedby independent certified public accountants of national standing which are notcompensated on a contingency fee or similar basis relating to the results ofsuch audit. Tenant acknowledges and agrees that any records of Landlordreviewed under this Section 4.5 (and the information contained therein)constitute confidential information of Landlord, which Tenant shall notdisclose, nor permit to be disclosed by Tenant’s accountant, to anyone otherthan the Tenant’s accountants performing the review and the principals ofTenant who receive the results of the review. The disclosure of such informationby Tenant or any of Tenant’s employees or contractors (including, withoutlimitation, Tenant’s accountant) to any other person, whether or not caused bythe conduct of Tenant, shall constitute a material breach of this Lease.

4.5.4          IfLandlord disagrees with Tenant’s contention that an error exists with respectto Landlord’s Statement (and the Operating Expenses and Real Property Taxesdescribed therein) in dispute, Landlord shall have the right to cause anotherreview of that portion of Landlord’s Statement (and the Operating Expenses andReal Property Taxes stated therein) to be made by a firm of independentcertified public accountants of national standing selected by Landlord (“**Landlord’s Accountant**”). In the event of adisagreement between the two accounting firms, the review of Landlord’sAccountant shall be deemed to be correct and shall be conclusively binding onboth Landlord and Tenant. In the event that the results of Landlord’sAccountant’s review of a particular Landlord’s Statement indicates that totalOperating Expenses and Property Taxes for the period covered by the Landlord’sStatement in question have been overstated by more than five percent (5%), thenLandlord shall reimburse Tenant for the reasonable cost of Tenant’s accountantand the amount of any overpayment by Tenant of estimated excess OperatingExpenses and/or Property Taxes for the period in question shall be creditedagainst Tenant’s obligations to pay Additional Rent next coming due; in allother cases, Tenant shall be liable for Landlord’s Accountant’s actual fees andexpenses, and the amount of any underpayment shall be paid by Tenant toLandlord with the next succeeding installment of estimated excess PropertyTaxes and Operating Expenses.

**ARTICLE5 - ADDITIONAL TAXES**

In additionto the Base Rent and all other forms of Additional Rent payable by Tenanthereunder, Tenant shall reimburse Landlord upon demand as Additional Rent forany and all taxes, impositions or similar fees or charges (other than any ofthe same actually included by Landlord in Property Taxes with respect to theExpense Year in question) payable by or imposed or assessed upon Landlord uponor with respect to (or measured by or otherwise attributable to the cost orvalue of): (i) any fixtures, equipment or other personal property located in orabout the Premises; (ii) any leasehold improvements made in or to the Premisesby or for Tenant (without regard to ownership of such improvements) if and tothe extent the original cost, replacement cost or value thereof exceeds thecost of Landlord’s then effective “Building Standard” tenant improvements, asdetermined in good faith by Landlord; (iii) the Rent payable hereunder,including, without limitation, any gross receipts tax, license fee or excisetax levied by any governmental authority; (iv) the possession, leasing,operation, management, maintenance, alteration, repair, use or occupancy of anyportion of the Premises; or (v) this transaction or any document to whichTenant is a party creating or transferring an interest or an estate in thePremises.

8

----

**ARTICLE 6 - SECURITYDEPOSIT**

Uponthe execution of this Lease, Tenant shall deposit with Landlord the SecurityDeposit described in Item 6 of the Basic Lease Provisions. The Security Depositis made by Tenant to secure the faithful performance of all the terms,covenants and conditions of this Lease to be performed by Tenant. The SecurityDeposit is not an advance payment of Rent or a measure or limit of Landlord’sdamages upon an Event of Default by Tenant. If Tenant commits an Event ofDefault with respect to any provision of this Lease, Landlord may, but shallnot be required to, use, apply or retain all or any part of the SecurityDeposit (i) for the payment of any Rent or any other sum in default, (ii) forthe payment of any other amount which Landlord may spend or become obligated tospend by reason of such default by Tenant, and (iii) to compensate Landlord forany other loss or damage which Landlord may suffer by reason of such default byTenant. If any portion of the Security Deposit is so used or applied, Tenantshall, upon demand therefor by Landlord, deposit with Landlord cash in anamount sufficient to restore the Security Deposit to the amount required to bemaintained by Tenant hereunder. Upon expiration or the sooner termination ofthis Lease, provided that Tenant has performed all of its obligationshereunder, Landlord shall return to Tenant the remaining portion of theSecurity Deposit no later than two weeks after the date Landlord receivespossession of the Premises in accordance with the provisions of this Lease. TheSecurity Deposit may be commingled by Landlord with Landlord’s other funds, andno interest shall be paid thereon. If Landlord transfers its interest in thePremises, then Landlord may assign the Security Deposit to the transferee andthereafter Landlord shall have no further liability or obligation for thereturn of the Security Deposit. Tenant hereby waives the provisions of Section1950.7 of the California Civil Code, and all other provisions of Law, now orhereinafter in force, which restricts the amount or types of claim that alandlord may make upon a security deposit or imposes upon a landlord (or itssuccessors) any obligation with respect to the handling or return of securitydeposits.

**ARTICLE7 - USE OF PREMISES**

7.1 **Tenant’s Permitted Use.** Tenant shalluse the Premises only for Tenant’s Permitted Use as set forth in Item 9 of theBasic Lease Provisions and shall not use or permit the Premises to be used forany other purpose. Tenant shall, at its sole cost and expense, obtain andmaintain in full force and effect all governmental licenses, approvals andpermits required to allow Tenant to conduct Tenant’s Permitted Use. Landlorddisclaims any warranty that the Premises are suitable for Tenant’s use andTenant acknowledges that it has had a full opportunity to make its owndetermination in this regard. In no case shall Tenant use any portion of thePremises for (i) offices of any division, agency or bureau of the United Statesor any state or local government of any foreign government or subdivisionthereof, (ii) offices of any health care professionals or for the provision ofany health care services, (iii) any schools or other training facility, (iv)any retail or restaurant uses, (v) any residential use, or (vi) any communicationsuses such as broadcasting radio and/or television stations. Tenant shall notpermit any use of the Premises or any portion thereof for any occupancy densitywhich is greater than the average occupancy density associated with theoccupancies of the other tenants of the Project.

7.2 **Compliance With Laws and Other Requirements.**

7.2.1          Tenantshall timely take all action required to cause the Premises to comply in allrespects with all laws, ordinances, building codes, rules, regulations, ordersand directives of any governmental authority having jurisdiction (includingwithout limitation any certificate of occupancy) now or in the futureapplicable to the Premises (collectively, “**Laws**”),including, without limitation, any Law requiring any form of improvement oralteration to the Premises.

7.2.2          Tenantshall not use the Premises, or permit the Premises to be used, in any manner,or do or suffer any act in or about the Premises which: (i) violates orconflicts with any applicable Law; (ii) causes or is reasonably likely to causedamage to the Project, the Premises or the Building systems, including, withoutlimitation, the life safety, electrical, heating, ventilation and airconditioning (“**HVAC**”), plumbing orsprinkler systems (collectively, the “**BuildingSystems**”) for the Building and/or the Project; (iii) violates arequirement or condition of any policy of insurance covering the Project and/orthe Premises, or increases the cost of such policy; (iv) constitutes or isreasonably likely to constitute a nuisance, annoyance or inconvenience to othertenants or occupants of the Project or its equipment, facilities or systems;(v) interferes with, or is reasonably likely to interfere with, thetransmission or reception of microwave, television, radio, telephone, or othercommunication signals by antennae or other facilities located in the Project;or (vi) violates the Rules and Regulations. Should any federal, state or localgovernmental agency having jurisdiction with respect to the establishment,regulation or enforcement of occupational, health or safety standards foremployers, employees or tenants impose on Landlord or on Tenant at any time nowor in the future any requirement or Law relating in any manner to the Premisesor occupancy thereof, Tenant shall, at its sole cost and expense, complypromptly (or at Landlord’s election, bear the cost of such compliance aseffected by Landlord) with such requirement or Law.

7.3 **Hazardous Materials.** No HazardousMaterials (defined below) shall be Handled (defined below) upon, about, in,above or beneath the Premises or any portion of the Project by or on behalf ofTenant, its subtenants or its assignees, or their respective contractors,clients, officers, directors, employees, agents, or invitees (collectively, a “**Tenant Party**”). Notwithstanding theforegoing, normal quantities of those Hazardous Materials customarily used inthe conduct of general administrative and executive office activities (e.g.,copier fluids and cleaning supplies) may be used and stored at the Premiseswithout Landlord’s prior written consent, but only in compliance with allapplicable Environmental Laws (defined below), and with the highest prevailingindustry standards. Tenant shall, at its sole cost and expense, promptly takeall actions (or at Landlord’s election, reimburse Landlord for taking allactions) required by any Law or necessary for Landlord to make full economicuse of the Premises or any portion of the Project which arises in connectionwith the Handling (defined below) of Tenant’s Hazardous Materials upon, about,above or beneath the Premises or any portion of the Project. Such actions shallinclude, but not be limited to, the investigation of the environmentalcondition of the Premises or any portion of the Building, the preparation ofany feasibility studies or reports and the performance of any cleanup,remedial, removal or restoration work. Tenant shall take all actions (or atLandlord’s election, reimburse Landlord for taking all actions) necessary torestore the Premises or any portion of the Building to the condition existingprior to the introduction of Tenant’s Hazardous Materials, notwithstanding anyless stringent standards or remediation allowable under applicableEnvironmental Laws. “**Environmental Laws**”means

9

----

and includes all now and hereafter existing statutes,laws, ordinances, codes, regulations, rules, rulings, orders, decrees,directives, policies and requirements by any federal, state or localgovernmental authority regulating, relating to, or imposing liability orstandards of conduct concerning public health and safety or the environment “**Hazardous Materials**” means: (a) anymaterial or substance: (i) which is defined or becomes defined as a “**hazardous substance**”, “**hazardous waste**,” “**infectious waste**,” “**chemical mixture or substance**,” or “**air pollutant**” under Environmental Laws;(ii) containing petroleum, crude oil or any fraction thereof; (iii) containingpolychlorinated biphenyls (PCB’s); (iv) which constitutes asbestos orasbestos-containing material; (v) which is radioactive; (vi) which isinfectious; or (b) any other material or substance displaying toxic, reactive,ignitable or corrosive characteristics, as all such terms are used in theirbroadest sense. “**Handle**,” “**Handled**,” or “**Handling**” shall mean any installation, handling, generation,storage, treatment, use, disposal, discharge, release, manufacture, refinement,presence, migration, emission, abatement, removal, transportation, or any otheractivity of any type in connection with or involving Hazardous Materials.

**ARTICLE8 - UTILITIES AND SERVICES**

8.1 **Building Services.** As long as Tenant isnot committing an Event of Default under this Lease, Landlord agrees to furnishor cause to be furnished, subject to the provisions of this Lease, as part ofOperating Expenses to the Premises, the following utilities and services,subject to the conditions and standards set forth herein:

8.1.1          Non-attendedautomatic elevator service.

8.1.2          Subjectto all governmental Laws, rules, regulations and guidelines applicable thereto,HVAC to the Premises, which in Landlord’s good faith judgment, is required forthe comfortable use and occupancy of the Premises from 8:00 AM. to 6:00 P.M.Monday through Friday (collectively, the “**BusinessHours**”), and if Tenant delivers a written request to Landlordtwenty-four (24) hours in advance, 8:00 AM. to 1:00 P.M., Saturdays, except forthe date of observation of New Year’s Day, Independence Day, Labor Day,Memorial Day, Thanksgiving Day, and Christmas Day, and at Landlord’sdiscretion, other state and nationally recognized holidays selected by Landlordwhich are consistent with Institutional Owner Practices (collectively, the “**Holidays**”); provided, however, that ifTenant desires to use HVAC during hours (“**Non-BusinessHours**”) other than Business Hours (“**After Hours HVAC**”), Tenant shall provide Landlord with priorwritten notice (which at a minimum shall be 24 hours’ written notice forweekday use (and written notice prior to 12 Noon on Friday for weekend use) ofTenant’s desired After Hours HVAC use and upon such additional conditions asshall be determined by Landlord from time to time. Tenant shall pay to LandlordLandlord’s then prevailing charges (the “**AfterHours HVAC Rate**”) for supplying such After Hours HVAC within ten(10) days of receipt of a reasonably detailed bill therefor. Tenant shall beresponsible for and shall pay to Landlord any additional costs (including,without limitation, the costs of installation of additional HVAC equipment)incurred by Landlord because of the failure of the HVAC system to perform itsfunction due to arrangement of partitioning in the Premises or changes oralterations thereto or from any use by Tenant of heat-generating machinery orequipment other than normal office equipment, including small photocopyingmachines and personal computers not linked to a central mainframe at thePremises.

8.1.3          Atall reasonable times, electric current as required for Building Standardlighting and fractional horsepower office machines and adequate electricalwiring and facilities for connection to the lighting fixtures and incidentaluse equipment of Tenant; provided, however, that notwithstanding any provisionof this Lease to the contrary the total connected electrical load for all ofthe incidental use equipment located in the Premises shall in no case exceed anaverage of two and one-half (2.5) watts per usable square foot of the Premisesduring Business Hours, with the electricity so furnished for incidental useequipment to be at a nominal one hundred twenty (120) volts and with noelectrical circuit for the supply of such equipment to require a currentcapacity exceeding twenty (20) amperes, and the total connected electrical loadfor Tenant’s lighting fixtures within the Premises shall in no case exceedLandlord’s per usable square foot Business Hours standard, and the electricityso furnished for Tenant’s lighting to be at a nominal one hundred twenty (120)volts. Without Landlord’s consent, Tenant shall not install, or permit theinstallation, in the Premises of any computers, word processors, electronicdata processing equipment or other type of equipment or machines which willincrease Tenant’s use of electric current in excess of that which Landlord isobligated to provide pursuant to this Section 8.1.3 (“**Excess Electrical Requirements**”). If Tenantshall require or utilize Excess Electrical Requirements or electric currentwhich may disrupt the provision of electrical service to other tenants in theBuilding or the Project, Landlord, at its election (a) may refuse to grant itsconsent or (b) may condition its consent upon Tenant’s payment in advance ofLandlord’s total direct and indirect cost (including, without limitation, areasonable administration fee) of designing, installing, maintaining andproviding any additional facilities determined by Landlord to be required tosatisfy such Excess Electrical Requirements (or otherwise related to theadditional wear on Building Systems associated therewith). If Tenant’s actualelectricity consumption for any portion of the Premises, as determined in goodfaith by Landlord pursuant to such measurement method or methods as Landlordshall employ from time to time (including, without limitation, the use ofsubmeters and/or pulse meters, electrical surveys and/or engineer’s estimates)exceeds Landlord’s nondiscriminatory standard for excess electrical consumptionfor any reasonable calculation period determined by Landlord, Tenant shall payto Landlord, as Additional Rent in addition to those costs otherwise payable byTenant pursuant to Section 4.3.4, the sum of (a) Landlord’s actual direct andindirect costs of supplying such excess consumption, including, withoutlimitation, all taxes thereon, and the cost of additional wear on BuildingSystems resulting from such excess consumption, (b) all of Landlord’s costs ofmonitoring and measuring such excess consumption and (c) Landlord’s reasonableadministration fee. If Tenant’s increased electrical requirements willmaterially affect the temperature level in the Premises or in the Building,Landlord’s consent may be conditioned upon Tenant’s payment of all direct andindirect costs of installation and operation of any machinery or equipmentnecessary to restore the temperature level to that otherwise required to beprovided by Landlord, including, but not limited to, the cost of modificationsto the Building Systems and increased wear and tear on existing HVAC equipment.Landlord shall not, in any way, be liable or responsible to Tenant for any lossor damage or expense which Tenant may incur or sustain if, for any reasonsbeyond Landlord’s reasonable control, either the quantity or character ofelectric service is changed or is no longer available or suitable for Tenant’srequirements. Tenant covenants that at all times its use of electric currentshall never exceed the capacity of the feeders, risers or electricalinstallations of the Building or the Project.

8.1.4          Citywater for drinking and rest room purposes.

10

----

8.1.5          Janitorialand cleaning services conforming to the Landlord’s Project standards in effectfrom time to time (which shall be consistent with Institutional OwnerPractices), provided that the Premises are used exclusively for office purposesand are kept reasonably in order by Tenant. Landlord shall not be required to providejanitorial services for portions of the Premises used for preparing orconsuming food or beverages, for storage, as a mailroom, or for a lavatory(other than the Common Area lavatory rooms) other than normal “light”janitorial services such as emptying of waste containers, standard vacuuming,mopping and sweeping. Landlord shall not be responsible for more extensivelunch room cleaning such as the washing of dishware or cleaning anyrefrigerator located therein. In all events, Tenant shall pay to Landlord thecost of removal of Tenant’s refuse and rubbish, to the extent that the sameexceeds the refuse and rubbish attendant to normal office usage.

Any amounts which Tenantis required to pay to Landlord pursuant to this Section 8.1 shall be payable upondemand by Landlord and shall constitute Additional Rent. From time to timeduring the Term, Landlord shall have the right to modify the services providedto Tenant hereunder; provided such modified services are consistent withInstitutional Owner Practices.

8.2 **Interruption of Services**. Landlordshall not be liable for any failure to furnish, stoppage of, or interruption infurnishing any of the services or utilities described in Section 8.1 when suchfailure is caused by accident, breakage, repairs, strikes, lockouts, labordisputes, labor disturbances, governmental regulation, civil disturbances, actsof war, moratorium or other governmental action, or any other cause beyondLandlord’s reasonable control, and, in such event, Tenant shall not be entitledto any damages nor shall any failure or interruption abate or suspend Tenant’sobligation to pay Base Rent and Additional Rent required under this Lease orconstitute or be construed as a constructive or other eviction of Tenant. Inthe event any governmental or quasi-governmental authority or public utilitypromulgates or revises any Law or issues mandatory controls or voluntarycontrols relating to the use or conservation of energy, water, gas, light orelectricity, the reduction of automobile or other emissions, or the provisionof any other utility or service, Landlord may take any reasonably appropriateaction to comply with such Law, mandatory control or voluntary guidelinewithout affecting Tenant’s obligations hereunder. Tenant recognizes that any securityservices provided by Landlord at the Project are for the protection of Landlord’sproperty and under no circumstances shall Landlord be responsible for, andTenant waives any rights with respect to, providing security or otherprotection for Tenant or its employees, invitees or property in or about thePremises or the Project. Landlord makes no representation with respect to theadequacy or fitness of the Project’s HVAC system to maintain temperatures asmay be required for the operation of any computer, data processing or otherspecial equipment.

**ARTICLE9 - MAINTENANCE AND REPAIRS**

9.1 **Landlord’s Obligations.** Landlord shallendeavor to keep the Common Areas of the Building and the Project in a cleanand neat condition. Subject to Section 9.2 below, Landlord shall make allnecessary repairs, within a reasonable period following receipt of notice ofthe need therefor from Tenant, to the exterior walls, exterior doors andwindows of the Building, and to public corridors and other public areas of theProject not constituting a portion of any tenant’s premises and shall usecommercially reasonable efforts to keep all Building Systems used by Tenant incommon with other tenants in reasonable condition and repair, reasonable wearand tear excepted (and Landlord shall use commercially reasonable efforts inthe performance of its obligations under this Section 9.1 not to materially andadversely affect Tenant’s access to or use of the Premises). Notwithstandingthe foregoing, Tenant shall be solely responsible for the repair andmaintenance of, and all damage to, the Building or the Project (or anycomponent thereof) resulting from the design and operation of all improvementswhich are not Building Standard Installations (described in the Work Letter) inor serving the Premises installed at the request of Tenant (regardless ofwhether installed by Landlord, its agents or contractors or third partycontractors). Except as provided in Article 12, there shall be no abatement ofRent, nor shall there be any liability of Landlord, by reason of any injury to,or damage suffered by Tenant, including without limitation, any inconvenienceto, or interference with, Tenant’s business or operations arising from themaking of, or failure to make, any maintenance or repairs, alterations orimprovements in or to any portion of the Building. Tenant waives the right tomake repairs at Landlord’s expense under Sections 1941 and 1942 of theCalifornia Civil Code, and under all other similar laws, statutes or ordinancesnow or hereafter in effect. No provision of this Lease shall be construed asobligating Landlord to perform any repairs, Alterations or decorations to thePremises or the Project except as otherwise expressly agreed to be performed byLandlord pursuant to the provisions of this Lease.

9.2 **Tenant’s Obligations.** Norepresentations, except as contained herein or endorsed hereon, have been madeto Tenant respecting the condition of the Premises, and the acceptance ofpossession of the Premises by Tenant shall be conclusive evidence as againstTenant that the Premises are now in tenantable and good condition. During theTerm of this Lease, Tenant shall, at its sole cost and expense, maintain thePremises in good order and repair and in a safe, clean and neat condition.Tenant shall make all repairs to the Premises not required to be made byLandlord under Section 9.1 above (including, without limitation, all damagedand broken fixtures and appurtenances) with replacements of any materials to bemade by use of materials of equal or better quality. Further, Tenant shall beresponsible for, and upon demand by Landlord shall promptly reimburse Landlordfor, any damage to any portion of the Project or the Premises caused by (a)activities of Tenant or any Tenant Party in the Building or the Premises; (b)the performance or existence of any alterations, additions or improvements madeby Tenant or any Tenant Party in or to the Premises; (c) the installation, use,operation or movement of Tenant’s property in or about the Building or thePremises; or (d) any act or omission by Tenant or any Tenant Party or any otherperson permitted in or invited to the Premises or the Project by Tenant or anyTenant Party.

9.3 **Landlord’s Rights.** Landlord and itscontractors shall have the right, at all reasonable times, to enter upon thePremises to make any repairs to the Premises or the Building or the Projectreasonably required or deemed reasonably necessary by Landlord and to erectsuch equipment, including scaffolding, as is reasonably necessary to effectsuch repairs. In the event of any failure of Tenant to perform any of itsobligations under this Article 9, or under Article 7, 10 or 11, where suchfailure remains uncured for ten (10) days after delivery by Landlord to Tenantof written notice of such failure (or in the case of an emergency, after suchoral or written notice, if any, as may be practical under the circumstances),Landlord may (but shall not be obligated to) elect to perform such obligationof Tenant at Tenant’s sole cost and expense, and in the event of suchperformance by Landlord, Tenant shall pay to Landlord within ten (10) days ofwritten demand therefor one hundred ten percent (110%) of Landlord’s actualdirect

11

----

and indirect costs (including interest, overhead,general conditions and administration) in performing such obligations ofTenant.

**ARTICLE10 - ALTERATIONS, ADDITIONS ANDIMPROVEMENTS**

10.1**Landlord’s Work; As-Is.**Tenant hereby accepts the Premises in its existing “As-Is” condition, andLandlord shall have no obligation to make any improvements (other than theTenant Improvements, as defined in the Work Letter), alterations or othermodifications to the Premises or, except as specifically provided in thisSection 10.1 and in Section 2.1 of the Work Letter, to provide Tenant anyallowance, rent credit or abatement in connection with Tenant’s entering intothis Lease. Landlord’s sole construction obligation under this Lease shall beas set forth in the Work Letter attached hereto as Exhibit “C”. Provided that an Event of Defaulthas not occurred under this Lease and subject to the provisions of this Section10.1, in addition to the Allowance Amount (as defined in Section 2.1 of theWork Letter), Landlord shall provide Tenant with an additional allowance in anamount equal to Sixty Thousand Two Hundred Ninety-Eight Dollars ($60,298.00)(the “**Additional Allowance**”)payable by Landlord to Tenant in two (2) equal installments of Thirty ThousandOne Hundred Forty-Nine Dollars ($30,149.00) each, payable in months twenty-four(24) and thirty-six (36) of the Initial Term; provided, however, that at Tenant’selection and upon written notice from Tenant to Landlord of such election, theAdditional Allowance may be credited against Tenant’s obligation to pay BaseRent for such months (and subsequent months until such installment of theAdditional Allowance is exhausted). Should an Event of Default (as defined inSection 16.1) occur at any time (after the expiration of the applicable cureperiod, if any), then any such installment of the Additional Allowance whichhas previously been paid by Landlord to Tenant shall become immediately due andpayable by Tenant to Landlord at once without notice or demand, and anyinstallment of the Additional Allowance which would have been payable by Landlordto Tenant in the future as set forth in this Section 10.1 shall be null andvoid. Tenant hereby acknowledges and agrees that any improvements,modifications or alterations performed by Tenant during the Term shall besubject to the provisions of this Article 10.

10.2**Landlord’s Consent; Conditions.**Tenant shall not make or permit to be made any alterations, additions, orimprovements in or to the Premises (“**Alterations**”)without first obtaining the prior written consent of Landlord, which consentshall be requested in writing not less than fifteen (15) business days prior tothe scheduled and actual commencement of any work therein (which consent shallnot be unreasonably withheld, provided that each of Landlord and Tenantacknowledge that Landlord’s denial of its consent to any proposed Alterationwhich does not meet and/or comply with the requirements of the followingsentence shall be deemed a reasonable denial of Landlord’s consent to suchproposed Alteration). All such Alterations (i) shall comply with all applicableLaws, (ii) shall be compatible (as determined in good faith by Landlord) withthe Building and its mechanical, electrical, heating, ventilating,air-conditioning, and life safety systems; (iii) shall not interfere with theuse and occupancy of any other portion of the Building or the Project by anyother tenant or their invitees; (iv) shall not be visible from the exterior ofthe Building or from any Common Areas; and (v) shall not affect the integrityof the structural portions of the Building. In addition, Landlord may impose asa condition to such consent such additional requirements as Landlord deemsreasonably necessary or desirable including without limitation: (A) Tenant’ssubmission to Landlord, for Landlord’s prior written approval, of all plans andspecifications relating to the Alterations; (B) Landlord’s prior writtenapproval of the time or times when the Alterations are to be performed; (C)Landlord’s prior written approval of the contractors and subcontractorsperforming work in connection with the Alterations; (D) Tenant’s receipt of allnecessary permits and approvals from all governmental authorities havingjurisdiction over the Premises prior to the construction of the Alterations;(E) Tenant’s written notice of whether the Alterations include the Handling ofany Hazardous Materials; (F) Tenant’s delivery to Landlord of such bonds andinsurance as Landlord shall customarily require; (G) Tenant’s payment toLandlord within ten (10) days of written demand therefor of all costs andexpenses incurred by Landlord because of Tenant’s Alterations, including butnot limited to costs incurred in reviewing the plans and specifications for,and the progress of, the Alterations and Landlord’s supervision fee (whichshall equal ten percent (10%) of the cost of the Alterations in question) and(H) Tenant’s (and Tenant’s contractor’s) compliance with such constructionrules and regulations and building standards as Landlord may promulgate fromtime to time. All direct and indirect costs relating to any modifications,alterations or improvements of the Project or the Building, whether outside orinside of the Premises, required by any governmental agency or by Law as acondition or as the result of any Alteration requested or effected by Tenant shallbe borne by Tenant, and in connection therewith, Landlord may elect to performsuch modifications, alterations or improvements (at Tenant’s sole cost andexpense) or require such performance directly by Tenant.

10.3**Performance of Alterations Work.**All work relating to the Alterations shall be performed in compliance with theplans and specifications approved by Landlord, all applicable laws, ordinances,rules, regulations and directives of all governmental authorities havingjurisdiction (including without limitation Title 24 of the CaliforniaAdministrative Code) and the requirements of all carriers of insurance on thePremises and the Building, the Board of Underwriters, Fire Rating Bureau, orsimilar organization. All work shall be performed by Tenant at Tenant’s solecost and expense and shall be prosecuted to completion in a diligent, firstclass manner and so as not to interfere with any other tenants or occupants ofthe Building. Without Landlord’s prior written consent, which Landlord maywithhold in its sole and absolute discretion, Tenant shall not use any portionof the Common Areas in connection with the making of any Alterations, andTenant shall not modify or alter any improvements or components of the Buildingor the Project outside of the Premises. Upon completion of any Alterations,Tenant agrees to cause a timely Notice of Completion to be recorded in theoffice of the Recorder of the County of San Diego in accordance with the termsof Section 3093 of the Civil Code of the State of California or any successorstatute, and Tenant shall deliver to the Building management office, withinthirty (30) days following completion of the Alterations, a reproducible copyof the “as built” drawings of the Alterations together with a CAD file of the “asbuilt” documents of the Alterations (current version of AutoCad).

10.4**Liens.** Tenant shall paywhen due all costs for work performed and materials supplied to the Premises.Tenant shall keep Landlord, the Premises and the Project free from all liens,stop notices and violation notices relating to the Alterations or any otherwork performed for, materials furnished to or obligations incurred by Tenantand Tenant shall indemnify, defend and hold harmless Landlord, the Premises andthe Project of and from any and all loss, cost, damage, liability and expense,including attorneys’ fees, arising out of or related to any such liens ornotices. Tenant shall give Landlord not less than seven (7) business days priorwritten notice before commencing any Alterations in or about the Premises topermit Landlord to post appropriate notices of non-responsibility. Tenant shallalso secure, prior to commencing any Alterations, at Tenant’s sole expense, acompletion and lien indemnity bond satisfactory to

12

----

Landlord for such work. During the progress of suchwork, Tenant shall, upon Landlord’s request, furnish Landlord with sworncontractor’s statements and lien waivers covering all work theretoforeperformed. Tenant shall satisfy or otherwise discharge all liens, stop noticesor other claims or encumbrances within ten (10) days after Landlord notifiesTenant in writing that any such lien, stop notice, claim or encumbrance hasbeen filed. If Tenant fails to pay and remove such lien, claim or encumbrancewithin such ten (10) day period, Landlord, at its election, may pay and satisfythe same and in such event the sums so paid by Landlord, with interest from thedate of payment at the Interest Rate, shall be deemed to be Additional Rent dueand payable by Tenant at once without notice or demand.

10.5**Surrender.** Except asprovided in Section 7.3 and in this Section 10.5, upon expiration or earliertermination of this Lease, Tenant shall surrender the Premises to Landlord inthe same condition as when received at the inception of this Lease, subject toordinary wear and tear. All Alterations shall become a part of the Premises andshall become the property of Landlord upon the expiration or earliertermination of this Lease, unless Landlord shall, by written notice given toTenant, require Tenant to remove some or all of Tenant’s Alterations, in whichevent Tenant shall promptly remove prior to the date of such expiration ortermination the Alterations designated by Landlord to be so removed and shallpromptly restore, patch and repair any resulting damage, all at Tenant’s soleexpense. Failure by Tenant to strictly comply with the provisions of thisSection 10.5 shall constitute a failure of Tenant to validly surrender thePremises. In the event of any failure of Tenant to perform its obligationsunder this Section 10.5, in addition to (and without prejudice to) any and allother remedies of Landlord, Landlord may use, apply or retain all or any partof the Security Deposit with respect to such failure. All business and tradefixtures, machinery and equipment, furniture, movable partitions,wallcoverings, telecommunications equipment, data cabling and items of personalproperty owned by Tenant or installed by Tenant at its expense in the Premisesshall be and remain the property of Tenant; upon the expiration or earliertermination of this Lease, Tenant shall, at its sole expense, remove all suchitems and repair any damage to the Premises or the Project caused by suchremoval. If Tenant fails to remove any such items or repair such damagepromptly after the expiration or earlier termination of this Lease, Tenantshall be deemed to have abandoned the same, in which case Landlord may storethe same at Tenant’s expense (and Tenant shall pay Landlord the cost thereofupon demand), or appropriate the same for itself, and/or sell the same in itsdiscretion, with no liability to Tenant.

**ARTICLE11 - INDEMNIFICATION AND INSURANCE**

11.1**Waiver of Liability and Indemnification.**

Exceptto the extent expressly provided to the contrary herein, Tenant hereby waivesall claims and causes of action against Landlord, its partners, advisors,mortgagees and ground lessors and each of their respective officers, managers,directors, employees, contractors, agents, successors and assigns(collectively, “**Landlord Parties**”)for any damage to persons or property (including, without limitation, loss ofprofits and intangible property) in any way relating to Tenant’s use andoccupancy of the Premises. Tenant shall indemnify, defend, protect and holdharmless Landlord and each of the Landlord Parties (except to the extent of thelosses described below are caused by the gross negligence or willful misconductof Landlord, its agents or employees), from and against:

(a)any and all claims, losses, damages, obligations, liabilities, costs andexpenses (including but not limited to reasonable attorneys’ fees and legalcosts) (collectively, “**Claims, Damages andCosts**”) which arises out of, is occasioned by or is in any wayattributable to (i) the use or occupancy of the Premises or any portion of theProject by Tenant, (ii) or the acts or omissions of Tenant or any Tenant Partyor (iii) any default of this Lease by Tenant.

(b)any and all environmental damages which arise from: (i) the Handling of anyTenant’s Hazardous Materials, or (ii) the breach of any of the provisions ofthis Lease. For the purpose of this Lease, “**environmentaldamages**” shall mean (X) all claims, judgments, damages, penalties,fines, costs, liabilities, and losses (including without limitation, diminutionin the value of the Premises or any portion of the Project, damages for theloss of or restriction on use of rentable space, and from any adverse impact ofLandlord’s marketing of space); (Y) all sums paid for settlement of claims,reasonable attorneys’ fees, consultants’ fees and experts’ fees; and (Z) allcosts incurred by Landlord in connection with investigation or remediationrelating to the Handling of Tenant’s Hazardous Materials, necessary forLandlord to make full economic use of the Premises.

11.2 **Property Insurance.**

11.2.1        Atall times during the Term of this Lease, Tenant shall procure and maintain, atits sole expense, “All-Risk” (and at Landlord’s option earthquake, earthquakesprinkler leakage and/or flood) property insurance, in an amount not less thanone hundred percent (100%) of replacement cost covering (i) all leasehold andtenant improvements in and to the Premises (including, without limitation, anyexisting leasehold improvements, the Tenant Improvements (as defined in theWork Letter), and any Alterations); (ii) all floor and wall coverings; and(iii) Tenant’s office furniture, business and personal trade fixtures,equipment, furniture system and other personal property from time to timesituated in the Premises. The proceeds of such insurance shall be used for therepair and replacement of the property so insured, except that if not soapplied or if this Lease is terminated following a casualty, the proceedsapplicable to the leasehold improvements shall be paid to Landlord and the proceedsapplicable to Tenant’s personal property shall be paid to Tenant.

11.2.2        Atall times during the Term of this Lease, Tenant shall procure and maintainbusiness interruption insurance in such amount as will reimburse Tenant fordirect or indirect loss of earnings attributable to all perils insured againstin Section 11.2.1 for a period of not less than twelve (12) months.

11.3 **Liability Insurance.**

11.3.1        Atall times during the Term of this Lease, Tenant shall procure and maintain, atits sole expense for the protection of Landlord and Tenant, commercial generalliability insurance applying to the use and occupancy of the Premises and thebusiness operated by Tenant. Such insurance shall have a minimum combinedsingle limit of liability of at least $1,000,000 per occurrence and a generalaggregate limit of at least $2,000,000, and

13

----

Tenant shall provide in addition excess liabilityinsurance on a following form basis, with overall limits of at least$5,000,000. All such policies shall be written to apply to all bodily injury(including death), property damage and personal injury losses, shall includeblanket contractual liability, broad form property damage, independentcontractor’s coverage, completed operations, products liability, crossliability and severance of interest clauses, and shall be endorsed to includeLandlord, the State of California Public Employees’ Retirement System (“**CalPERS**”), and each of their respectiveagents, beneficiaries, partners, employees, and any Holder (defined in Section18.1) of any Security Document (defined in Section 18.1) designated by Landlordas additional insureds.

11.3.2        Atall times during the Term of this Lease, Tenant shall procure and maintain, atits sole expense for the protection of Landlord and Tenant, primary automobileliability insurance with limits of not less than $1,000,000 per occurrencecovering owned, hired and non-owned vehicles used by Tenant.

11.3.3        Priorto the sale, storage, use or giving away of alcoholic beverages on or from thePremises by Tenant or another person, Tenant, at its own expense, shall obtaina policy or policies of insurance issued by a responsible insurance company andin a form acceptable to Landlord saving harmless and protecting Landlord andthe Premises against any and all damages, claims, liens, judgments, expensesand costs, including actual attorneys’ fees, arising under any present orfuture law, statute, or ordinance of the State of California or othergovernmental authority having jurisdiction of the Premises, by reason of anystorage, sale, use or giving away of alcoholic beverages on or from thePremises. Such policy or policies of insurance shall have a minimum combinedsingle limit of $3,000,000 per occurrence and shall apply to bodily injury,fatal or nonfatal; injury to means of support; and injury to property of anyperson. Such policy or policies of insurance shall name the Landlord and itsagents, beneficiaries, partners, employees and any Holder of any SecurityDocument designated by Landlord as additional insureds.

11.3.4        Atall times during the Term of this Lease, Tenant shall procure and maintainWorkers’ Compensation Insurance in accordance with the laws of the State ofCalifornia, and Employer’s Liability insurance with a limit not less than$1,000,000 Bodily Injury Each Accident; $1,000,000 Bodily Injury By Disease -Each Person; and $1,000,000 Bodily Injury By Disease - Policy Limit.

11.4**Policy Requirements.** Allinsurance required to be maintained by Tenant shall be issued by insurancecompanies authorized to do insurance business in the State of California andrated not less than A:X in Best’s Insurance Guide. All such insurance policiesshall be written as primary policies, not excess or contributing with orsecondary to any other insurance as may be available to Landlord or to theadditional insureds. A certificate of insurance (or, at Landlord’s option,copies of the applicable policies) evidencing the insurance required under thisArticle 11 shall be delivered to Landlord not less than thirty (30) days priorto the Commencement Date. No such policy shall be subject to cancellation ormodification without thirty (30) days prior written notice to Landlord and toany Holder of any Security Document designated by Landlord and such policyshall be endorsed to provide that the insurer thereunder shall provide Landlordwith written notice of any failure by Tenant to pay any premium thereunder whendue and such failure continues for a period of ten (10) days after such date.Tenant shall furnish Landlord with a replacement certificate with respect toany insurance not less than thirty (30) days prior to the expiration of thecurrent policy. Tenant shall have the right to provide the insurance requiredby this Article 11 pursuant to blanket policies, but only if such blanketpolicies expressly provide coverage to the Premises and the Landlord asrequired by this Lease without regard to claims made under such policies withrespect to other persons.

11.5**Waiver of Subrogation.**Notwithstanding any provision of this Article 11 to the contrary, in the eventthat Landlord’s insurance policies with respect to the Premises, the Buildingor the Project permit a waiver of subrogation, Landlord hereby waives any andall rights of recovery against Tenant for or arising out of damage to, ordestruction of, the Premises, the Building or the Project from causes thenincluded under standard “All-Risk” insurance policies or endorsements;provided, however, that such waiver of subrogation shall be limited exclusivelyto insurance proceeds actually received by Landlord for such damage ordestruction. In the event that Tenant’s insurance policies with respect to thePremises permit a waiver of subrogation, Tenant waives any and all rights ofrecovery against Landlord for or arising out of damage to or destruction of,any property of Tenant, from causes then included under standard “All Risk”insurance policies or endorsements. Tenant represents that its presentinsurance policies now in force permit such waiver. If at any time during theTerm of this Lease (i) either party shall give less than five (5) days’ priorwritten notice to the other party certifying that any insurance carrier whichhas issued any such policy shall refuse to consent to the aforesaid waiver ofsubrogation, or (ii) such insurance carrier shall consent to such waiver onlyupon the payment of an additional premium (and such additional premium is notpaid by the other party hereto), or (iii) such insurance carrier shall revoke aconsent previously given or shall cancel or threaten to cancel any policypreviously issued and then in force and effect, because of such waiver ofsubrogation, then, in any of such events, the waiver of subrogation containedherein shall thereupon be of no further force or effect as to the loss, damageor destruction covered by such policy. If, however, at any time thereafter, aconsent to such waiver of subrogation shall be obtainable without a substantialadditional premium from any existing or substitute insurance carrier, thewaiver hereinabove provided for shall again become effective.

11.6**Failure to Insure.** IfTenant fails to maintain any insurance which Tenant is required to maintainpursuant to this Article 11, Tenant shall be liable to Landlord for any loss orcost resulting from such failure to maintain. Landlord shall have the right, inits sole discretion, to procure and maintain such insurance which Tenant isrequired to maintain hereunder and the cost thereof shall be deemed AdditionalRent due and payable by Tenant. Tenant may not self-insure against any risksrequired to be covered by insurance provided by Tenant hereunder.

11.7**Miscellaneous.** Landlordmakes no representation that the insurance coverage specified to be carried byTenant pursuant to this Article 11 is adequate to protect Tenant against Tenant’sundertaking under the terms of this Lease or otherwise, and in the event Tenantbelieves that any such insurance coverage called for under this Lease isinsufficient, Tenant shall provide, at its own expense, such additional insuranceas Tenant deems adequate. Tenant shall not keep, use, sell or offer for sale inor upon the Premises any article which may be prohibited by any insurancepolicy periodically in force covering the Premises, the Building or theProject. If any of Landlord’s insurance policies shall be cancelled orcancellation shall be threatened or the coverage thereunder reduced orthreatened to be reduced in any way because of the use of the Premises or anypart thereof by Tenant or any assignee, subtenant, licensee or invitee ofTenant and, if Tenant fails to remedy the condition giving rise to suchcancellation, threatened cancellation,

14

----

reduction of coverage, or threatened reduction ofcoverage, within 48 hours after notice thereof, Landlord may, at its option, eitherterminate this Lease or enter upon the Premises and attempt to remedy suchcondition, and Tenant shall promptly pay the cost thereof to Landlord asAdditional Rent. Landlord shall not be liable for any damage or injury causedto any property of Tenant or of others located on the Premises resulting fromsuch entry. If Landlord is unable, or elects not to remedy such condition, thenLandlord shall have all of the remedies provided for in this Lease upon theoccurrence of an Event of Default. Tenant shall not do or permit to be done anyact or things upon or about the Premises or the Project, which will (i) resultin the assertion of any defense by the insurer to any claim under, (ii)invalidate or (iii) be in conflict with, the insurance policies of Landlord orTenant covering the Building, the Premises or fixtures and property therein, orwhich would increase the rate of fire insurance applicable to the Building orthe Project to an amount higher than it otherwise would be; and Tenant shallneither do nor permit to be done any act or thing upon or about the Premises orthe Building which shall or might subject Landlord to any liability orresponsibility for injury to any person or persons or to property. If, as aresult of any act or omission by or on the part of Tenant or violation of thisLease, whether or not Landlord has consented to the same, the rate of “All Risk”or other type of insurance maintained by Landlord on or with respect to theBuilding and fixtures and property therein, shall be increased to an amounthigher than it otherwise would be, Tenant shall reimburse Landlord for allincreases of Landlord’s insurance premiums so caused within ten (10) days afterdelivery of written demand therefor by Landlord. In any action or proceedingwherein Landlord and Tenant are parties, a schedule or “make-up” of rates forthe Project or the Premises issued by the body making fire insurance rates orestablished by insurance carrier providing coverage for the Building or demisedpremises shall be presumptive evidence of the facts stated therein includingthe items and charges taken into consideration in fixing the “All Risk”insurance rate then applicable to the Building or the Premises.

**ARTICLE12 - DAMAGE OR DESTRUCTION**

12.1**Repair of the Premises**.Tenant shall promptly notify Landlord in writing (a “**Damage Notice**”) of any casualty event, damage or condition towhich this Article 12 is or may be applicable. Landlord shall, within areasonable time after the discovery by Landlord of any damage resulting from anycasualty event (“**Casualty**”),subject to reasonable delays for insurance adjustment or other matters beyondLandlord’s reasonable control, and subject to all other terms of this Article12, begin to repair the damage to the Project and the Premises resulting fromsuch Casualty and shall proceed with reasonable diligence to restore theProject and Premises to substantially the same condition as existed immediatelybefore such Casualty, except for modifications required by applicable Laws orcovenants, conditions and restrictions, and modifications to the Building orthe Project deemed desirable in good faith by Landlord; provided, however, thatLandlord shall not be required to repair or replace any of the Alterations,furniture, equipment, fixtures, and other improvements which may have beenplaced by, or at the request of, Tenant or other occupants in the Project orthe Premises. Landlord shall have no liability for any inconvenience orannoyance to Tenant or injury to Tenant’s business as a result of any Casualty,or Landlord’s Restoration (defined in Section 12.2) activities hereunder,regardless of the cause therefor. Base Rent, and Additional Rent payable underArticle 4, shall abate if and to the extent a Casualty damages the Premises andas a result thereof all or any material portion of the Premises are renderedunfit for occupancy, and are not occupied by Tenant, for the period of timecommencing on the date Tenant vacates the portion of the Premises affected onaccount thereof and continuing until the date the Restoration to be performedby Landlord hereunder with respect to the Premises is substantially complete,as determined by Landlord’s architect; provided, however, that such abatementshall be limited to the proceeds of rental interruption insurance proceeds withrespect to the Premises and such Casualty collected by Landlord. Tenant shallassign to Landlord (or to any party designated by Landlord) all insuranceproceeds payable to Tenant under Tenant’s insurance required under this Leasewith respect to the leasehold improvements in the Premises, provided that ifthe cost of Restoration of improvements in the Premises by Landlord exceeds theamount of insurance proceeds received by Landlord from Tenant’s insurancecarrier, as assigned by Tenant, the cost of repairs to such improvements shallbe paid by Tenant to Landlord prior to Landlord’s repair of the damage, or atLandlord’s election, at any later time following Landlord’s discovery of anyinsufficiency of such insurance proceeds.

12.2**Exceptions to Landlord’s Obligations.**Notwithstanding anything to the contrary contained in this Article 12, Landlordshall have no obligation to repair the Premises and shall have the right toterminate this Lease in any case where (a) any portion of the Premises or anymaterial portion of the Project is damaged and (b) (i) Landlord estimates ingood faith that the repair and restoration of such damage under Section 12.1 (“**Restoration**”) cannot reasonably becompleted (without the payment of overtime) within one hundred eighty (180)days of Landlord’s actual discovery of such damage, (ii) the Holder of anySecurity Document requires the application of any insurance proceeds withrespect to such Casualty to be applied to the outstanding balance of theobligation secured by such Security Document, (iii) the cost of suchRestoration is not fully covered by insurance proceeds available to Landlordand/or payments received by Landlord from tenants, (iv) Tenant shall beentitled to an abatement of rent under this Section 12 for any period of timein excess of thirty-three percent (33%) of the remainder of the Term, or (v)such Casualty occurs (or Landlord discovers the damage relating thereto) at anytime within the last eighteen (18) months of the then applicable Term (disregardingExtension Terms if any). Such right of termination shall be exercisable byLandlord by delivery of written notice to Tenant at any time following theCasualty until forty-five (45) days following the later of (X) delivery of theDamage Notice or (Y) Landlord’s discovery or determination of any of the eventsdescribed in clauses (i) through (v) of the preceding sentence and shall beeffective upon delivery of such notice of termination (or if Tenant has notvacated the Premises, upon the expiration of thirty (30) days thereafter).

12.3**Waiver.** Landlord and Tenantagree that the provisions of this Article 12 and the remaining provisions ofthis Lease shall exclusively govern the rights and obligations of the partieswith respect to any and all damage to, or destruction of, all or any portion ofthe Premises or the Project, and Landlord and Tenant hereby waive and releaseeach and all of their respective common law and statutory rights inconsistentherewith, whether now or hereinafter in effect (including, without limitation,Sections 1932(2) and 1933(4) of the California Civil Code, as amended from timeto time).

**ARTICLE13 - CONDEMNATION**

13.1**Taking.** In the event thewhole or a material portion of the Premises, the Building or the Project shallbe taken under the power of eminent domain, or sold to prevent the exercisethereof (collectively, a “**Taking**”),this Lease shall automatically terminate as of the date of such Taking. In theevent of a Taking of such portion of the Project, the Building or the Premisesas shall, in the opinion of Landlord, substantially interfere with Landlord’soperation thereof,

15

----

Landlord may terminate this Lease upon thirty (30)days’ written notice to Tenant given at any time within sixty (60) daysfollowing the date of such Taking. For purposes of this Lease, the date ofTaking shall be the earlier of the date of transfer of title resulting fromsuch Taking or the date of transfer of possession resulting from such Taking.

13.2**Restoration of Premises.** Inthe event that a portion of the Premises is so taken and this Lease is notterminated, Landlord shall, with reasonable diligence, proceed to restore (tothe extent permitted by Law and covenants, conditions and restrictions thenapplicable to the Project) the Premises (other than Tenant’s personal propertyand fixtures, and tenant improvements not constituting Building StandardInstallations) to a complete, functioning unit, to the extent of thecondemnation award received by Landlord. In such case, the Annual Base Rentshall be reduced proportionately based on the portion of the Premises so taken.

13.3**Award.** In the event of anyTaking, the entire award for such taking shall belong to Landlord, except thatTenant shall be entitled to independently pursue a separate award relating tothe loss of, or damage to, Tenant’s personal property and trade fixtures andTenant’s relocation costs directly associated with the taking. Except asprovided herein, Tenant shall not assert any claim against Landlord or thecondemning authority for, and hereby assigns to Landlord, any compensation inconnection with any such Taking, and Landlord shall be entitled to receive theentire amount of any award therefor, without deduction for any estate orinterest of Tenant. Notwithstanding any provision to the contrary contained inthis Section 13.3, in the event of any such Taking, Tenant may claim andrecover from the condemning authority a separate award for Tenant’s movingexpenses, business dislocation damages and Tenant’s personal property and tradefixtures. Subject to the provisions of this Section 13.3, each party shall seekits own award, as limited above, at its own expense, and neither shall have anyright to the award made to the other.

13.4**Temporary Taking.** Notemporary taking of the Premises shall terminate this Lease or entitle Tenantto any abatement of the Rent payable to Landlord under this Lease; provided,further, that any award for such temporary taking shall belong to Tenant to theextent that the award applies to any time period during the Term of this Leaseand to Landlord to the extent that the award applies to any time period outsidethe Term.

13.5**Exclusive Remedy.** ThisArticle 13 shall be Tenant’s sole and exclusive remedy in the event of aTaking. Each party hereby waives the provisions of Sections 1265.130 and1265.150 of the California Code of Civil Procedure and the provisions of anysuccessor or other law of like import.

**ARTICLE14 - RELOCATION**

Landlordshall have the right, in its sole discretion, upon not less than thirty (30)days prior written notice to Tenant, to relocate Tenant and to substitute forthe Premises described above to other space in the Project containing at leastas much rentable area as the Premises described in Item 2 of the Basic LeaseProvisions. If Tenant is already in occupancy of the Premises, then Landlordshall also reimburse Tenant for Tenant’s reasonable moving, telephone and datacabling relocation expenses and for reasonable quantities of new stationeryupon submission to Landlord of receipts for such expenditures incurred byTenant.

**ARTICLE15 - ASSIGNMENT AND SUBLETTING**

15.1**Restriction.** Without theprior written consent of Landlord, Tenant shall not, either involuntarily orvoluntarily or by operation of law or otherwise, assign, mortgage, pledge,hypothecate, encumber or permit any lien to attach to, or transfer this Leaseor any interest herein, or sublet the Premises or any part thereof, or permitthe Premises to be occupied by anyone other than Tenant or Tenant’s employees(each a “**Transfer**” and any personor entity to whom a Transfer is made or sought to be made is referred to hereinas a “**Transferee**”). Any Transferin violation of the provisions of this Article 15 shall be void and, atLandlord’s option, shall constitute an Event of Default. For purposes of thisLease, the term “**Transfer**” shallalso include (i) if a Tenant is a partnership or limited liability company, thewithdrawal or change, voluntary, involuntary or by operation of law, of fiftypercent (50%) or more of the partners, members or managers thereof, or transferof twenty-five percent (25%) or more of partnership or membership intereststherein within a twelve (12) month period, or the dissolution of thepartnership or the limited liability company without immediate reconstitutionthereof, and (ii) if Tenant is a corporation whose stock is not publicly heldand not traded through an exchange or over the counter or any other form ofentity, (A) the dissolution, merger, consolidation or other reorganization ofTenant, the sale or other transfer of more than an aggregate of fifty percent(50%) of the voting shares or other interests of or in Tenant (other than in totrust for estate planning purposes or to immediate family members by reason ofgift or death), within a twelve (12) month period, or (B) the sale, mortgage,hypothecation or pledge of more than an aggregate of fifty percent (50%) of thevalue of the unencumbered assets of Tenant within a twelve (12) month period.Notwithstanding anything contained in this Article 15 to the contrary, Tenantexpressly covenants and agrees not to enter into any lease, sublease, license,concession or other agreement for use, occupancy or utilization of the Premiseswhich provides for rental or other payment for such use, occupancy or utilizationbased in whole or in part on the net income or profits derived by any personfrom the property leased, used, occupied or utilized (other than an amountbased on a fixed percentage or percentages of receipts or sales), and that anysuch purported lease, sublease, license, concession or other agreement shall beabsolutely void.

15.2**Notice to Landlord.** IfTenant desires to Transfer this Lease or any interest herein, then at leasttwenty (20) business days (but no more than one hundred eighty (180) days)prior to the effective date of the proposed Transfer, Tenant shall submit toLandlord a written request (a “**TransferNotice**”) for Landlord’s consent, which notice shall include:

15.2.1        Astatement containing (i) the name and address of the proposed Transferee; (ii)current financial statements of the proposed Transferee certified by anofficer, partner or owner thereof, and any other information and materials(including, without limitation, credit reports, business plans, operatinghistory, bank and character references) required by Landlord to assist Landlordin reviewing the financial responsibility, character, and reputation of theproposed Transferee; (iii) the nature of such Transferee’s business andproposed use of the Premises; (iv) the proposed effective date of the Transfer;(v) a description of the portion of the Premises subject to the proposedTransfer; (vi) all of the principal terms of the proposed Transfer (including acalculation of the Transfer Profits (defined below)); and (vii) such otherinformation or materials as Landlord may reasonably request (provided, that ifLandlord

16

----

requests such additional information or materials, theTransfer Notice shall not be deemed to have been received until Landlordreceives such additional materials).

15.2.2        Four(4) originals of the proposed assignment or sublease or other Transfer on aform approved by Landlord and four (4) originals of the Landlord’s Consent toSublease or Assignment and Assumption of Lease and Consent executed by Tenantand the proposed Transferee.

15.2.3        IfTenant modifies any of the terms and conditions relevant to a proposed Transferspecified in the Transfer Notice such that Landlord would be entitled towithhold its consent to such Transfer under Section 15.4, Tenant shall re-submitsuch Transfer Notice to Landlord for its consent pursuant to all of the termsand conditions of this Article 15.

15.3**Landlord’s Recapture Rights.**At any time within twenty (20) business days after Landlord’s receipt of all(but not less than all) of the information and documents described in Section15.2, Landlord may, at its option, in its sole and absolute discretion, bywritten notice to Tenant, elect to: (i) sublease the Premises or the portionthereof proposed to be sublet by Tenant upon the same terms as those offered tothe proposed subtenant; (ii) take an assignment of this Lease upon the sameterms as those offered to the proposed assignee; or (iii) terminate this Leasein its entirety or as to the portion of the Premises subject to the proposedTransfer, with a proportionate adjustment in the Rent payable hereunder if thisLease is terminated as to less than all of the Premises. If Landlord does notexercise any of the options described in the preceding sentence, then, duringthe above-described twenty (20) business day period. Landlord shall eitherconsent or deny its consent to the proposed Transfer.

15.4**Landlord’s Consent; Standards.**

15.4.1        Subjectto the provisions of Section 15.3, Landlord’s consent to any proposed Transfershall not be unreasonably withheld; provided, however, that in addition to anyother grounds available hereunder or under applicable Law for properlywithholding consent to such proposed Transfer, Landlord’s consent with respectthereto shall be deemed reasonably withheld if in Landlord’s good faithjudgment: (i) the proposed Transferee does not have the financial strength(taking into account all of the Transferee’s other actual or potentialobligations and liabilities) to perform its obligations with respect to the proposedTransfer (or otherwise does not satisfy Landlord’s standards for financialstanding with respect to tenants under direct leases of comparable economicscope); (ii) the business and operations of the proposed Transferee are not ofcomparable quality to the business and operations being conducted by directtenants of Landlord in the Project; (iii) the proposed Transferee intends touse any part of the Premises for a purpose not permitted under this Lease; (iv)either the proposed Transferee, or any person which directly or indirectlycontrols, is controlled by, or is under common control with the proposedTransferee occupies space in the Project or has negotiated with Landlord withinthe preceding one hundred eighty (180) days (or is currently negotiating withLandlord) to lease space in the Project; (v) the proposed Transferee is of acharacter or reputation or engaged in a business which is not consistent withthe quality of the Project as evidenced by the parameters consistently appliedin Landlord’s direct leasing activities; (vi) the use of the Premises, theBuilding or the Project by the proposed Transferee would, in Landlord’sjudgment, significantly increase the pedestrian traffic in and out of theBuilding and/or the Project, would generate increased loitering in CommonAreas, would increase security risk, or would require any alterations to theBuilding or the Project to comply with applicable Laws; (vii) the proposedTransfer would result in more than three subleases per each full floor of the Premisesbeing in effect at any one time during the Term; (viii) any ground lessor ormortgagee whose consent to such Transfer is required fails to consent thereto;(ix) at the time Tenant delivers the Transfer Notice, there is then in effectan uncured Event of Default; (x) the terms of the proposed Transfer will allowthe Transferee to exercise a right of renewal, right of expansion, right offirst offer, or other similar rights held by Tenant (or will allow theTransferee to occupy space leased by Tenant pursuant to any such right); (xi)the proposed Transfer would cause Landlord to be in violation of another leaseor agreement to which Landlord is a party or would give an occupant of theProject a right to cancel or modify its lease; (xii) the proposed Transferwould be on economic terms (based upon effective rental rates) more favorableto the Transferee than the economic terms then being accepted by Landlord forcomparable direct leasing transactions in the Project; or (xiii) the proposedTransferee has the power of eminent domain, is a governmental agency or anagency or subdivision of a foreign government.

15.4.2        Notwithstandinganything to the contrary in this Lease, if Tenant or any proposed Transfereeclaims that Landlord has unreasonably withheld or delayed its consent orotherwise acted in a manner not permitted under this Article 15, then the soleremedy of Tenant and such proposed Transferee if such claim is determined by acourt of competent jurisdiction to be successful shall be a declaratory judgmentand an injunction for the relief sought without any monetary damages or othermonetary relief. Tenant and each proposed Transferee hereby waive to themaximum extent permitted by Law any and all other remedies, including, withoutlimitation, any right at law or equity to terminate this Lease with respect toany such claim. Tenant shall indemnify, defend, protect and hold harmlessLandlord from any and all Claims, Damages and Costs involving or asserted byany third party or parties (including, without limitation, Tenant’s proposedTransferee and any broker representing Tenant and/or such Transferee) claimingthey were damaged by Landlord’s wrongful withholding or delaying of Landlord’sconsent to such proposed Transfer or other breach of this Article 15. Tenantacknowledges that Tenant’s rights under this Article 15 satisfy the conditionsset forth in Section 1951.4 of the California Civil Code with respect to theavailability to Landlord of certain remedies for a default by Tenant under thisLease.

15.5**Transfer Profits.** Subjectto the provisions of this Article 15, if Landlord consents to any Transfer,Tenant shall pay to Landlord fifty percent (50%) of any Transfer Profits(defined below). “**Transfer Profits**”shall mean all rent, additional rent or other consideration paid by or onbehalf of such Transferee in connection with the Transfer in excess of MonthlyBase Rent and Additional Rent payable by Tenant under this Lease during theTerm of the Transfer. Tenant shall provide Landlord with a detailed statementsetting forth the calculation of any Transfer Profits Tenant either has or willderive from such Transfer. In addition, Landlord or its representative shallhave the right at all reasonable times to audit the books and records of Tenantwith respect to the calculation of the Transfer profits. If such inspectionreveals that the amount of Transfer Profits paid to Landlord was incorrect,then within ten (10) days of Tenant’s receipt of the results of such audit.Tenant, shall pay Landlord the deficiency and the cost of Landlords audit.

17

----

15.6 **Landlord’s Costs.** With respect to eachTransfer proposed to be consummated by Tenant, whether or not Landlord shallgrant consent, Tenant shall pay all of Landlord’s review and processing fees,and costs, as well as any reasonable professional, attorneys’, accountants’,engineers’ or other consultants’ fees incurred by Landlord relating to suchproposal Transfer within thirty (30) days after written request by Landlord.

15.7**Continuing Liability of Tenant.**Notwithstanding the consummation or attempted consummation of any Transferunder this Article 15, Tenant shall remain as fully and primarily liable forthe payment of Rent and for the performance of all other obligations of tenantcontained in this Lease to the same extent as if the Transfer had not occurred;provided, however, that any act or omission of any Transferee, other thanLandlord, that violates the terms of this Lease shall be deemed a violation ofthis Lease by Tenant. If any Transferee defaults beyond applicable cure andgrace periods in the performance of any of the terms hereof, Landlord mayproceed directly against Tenant without the necessity of exhausting itsremedies against such Transferee. Landlord may consent to subsequent Transfersof this Lease with Transferees of Tenant, upon notice to Tenant, but withoutobtaining its or their consent thereto, and such action shall not relieveTenant of its liability under this Lease.

15.8**Non-Waiver.** The consent byLandlord to any Transfer shall not relieve Tenant, or any person claimingthrough or by Tenant, of the obligation to obtain the consent of Landlord,pursuant to this Article 15, to any further Transfer. In the event of aTransfer, Landlord may collect rent from the Transferee without waiving any rightshereunder and collection of the rent from a person other than Tenant shall notbe deemed a waiver of any of Landlord’s rights under this Article 15, anacceptance of Transferee as Tenant, or a release of Tenant from the performanceof Tenant’s obligations under this Lease.

**ARTICLE16 - DEFAULT AND REMEDIES**

16.1**Events of Default By Tenant.**The occurrence of any of the following shall constitute a material default andbreach of this Lease by Tenant (an “**Event of Default**”):

16.1.1        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 notice that the sameis due, which notice shall be in lieu of any notice required under CaliforniaCode of Civil Procedure Section 1161 or any similar or successor law.

16.1.2        Theabandonment of the Premises by Tenant, or the vacation of the Premises byTenant for a period of ten (10) consecutive days (with or without the paymentof Rent), or the failure of Tenant to take occupancy of the Premises withinthirty (30) days of the Commencement Date, it being agreed that the fact thatany of Tenant’s Property remains in the Premises shall not be evidence thatTenant has not vacated or abandoned the Premises.

16.1.3        Anyfailure by Tenant to execute and deliver any statement or document described inArticles 18 and 22 requested by Landlord within the time periods specifiedtherein, where such failure continues for three (3) days after delivery ofwritten notice of such failure by Landlord to Tenant; provided, however, thatany such notice shall be in lieu of, and not in addition to, any noticerequired under Section 1161 et seq., of the California Code of Civil Procedure.

16.1.4        Thefailure by Tenant to observe or perform any other provision of this Lease to beobserved or performed by Tenant, other than those described in Sections 16.1.1,16.1.2 and 16.1.3 above, if such failure continues for twenty (20) days (exceptwhere a different period of time is specified in this Lease, in which case suchdifferent time period shall apply) after written notice thereof by Landlord toTenant; provided, however, that if the nature of the default is such that itcannot be cured within the twenty (20) day period, no default shall exist ifTenant commences the curing of the default within the twenty (20) day periodand thereafter diligently prosecutes the same to completion. The twenty (20)day notice described herein shall be in lieu of, and not in addition to, anynotice required under Section 1161 of the California Code of Civil Procedure orany other law now or hereafter in effect requiring that notice of default begiven prior to the commencement of an unlawful detainer or other legalproceeding.

16.1.5        Themaking or furnishing by Tenant of any warranty, representation or statement toLandlord in connection with this Lease, or any other agreement to which Tenantand Landlord are parties, which is false or misleading in any material respectwhen made or furnished.

16.1.6        Theassignment, subletting or other Transfer, or any attempted assignment,subletting or other Transfer, of this Lease in violation of Article 15.

16.1.7        Anyinstance whereby Tenant or any general partner of Tenant shall cease doingbusiness as a going concern, make an assignment for the benefit of creditors,generally not pay its debts as they become due or admit in writing itsinability to pay its debts as they become due, file a petition commencing avoluntary case under any chapter of the Bankruptcy Code, be adjudicated aninsolvent, file a petition seeking for itself any reorganization, composition,readjustment, liquidation, dissolution or similar arrangement under theBankruptcy Code or any other present or future similar statute, law, rule orregulation, or file an answer admitting the material allegations of a petitionfiled against it in any such proceeding, consent to the filing of such apetition or acquiesce in the appointment of a trustee, receiver, custodian orother similar official for it or of all or any substantial part of its assetsor properties, or take any action looking to its dissolution or liquidation.

16.1.8        Anyinstance whereby a case, proceeding or other action shall be instituted againstTenant or any general partner of Tenant seeking the entry of an order forrelief against Tenant or any general partner thereof as debtor, to adjudicateTenant or any general partner thereof as a bankrupt or insolvent, or seekingreorganization, arrangement, readjustment, liquidation, dissolution or similarrelief against Tenant or any general partner thereof under the Bankruptcy Codeor any other present or future similar statute, law, rule or regulation, whichcase, proceeding or other action either results in such entry, adjudication orissuance or entry of any other order or judgment having a similar effect, orremains undismissed for 60 days, or within 60 days after the appointment(without Tenant’s or such general partner’s consent) of any trustee, receiver,custodian or other similar official for it or such

18

----

general partner, or of all or any substantial part ofits or such general partner’s assets and properties, such appointment shall notbe vacated.

16.1.9        Theappointment of a receiver, trustee or custodian to take possession of all orany substantial portion of the assets of Tenant, or the formation of anycommittee of Tenant’s creditors, or any class thereof, for the purpose ofmonitoring or investigating the financial affairs of Tenant or enforcing suchcreditors’ rights.

16.1.10      Thedefault by any guarantor of Tenant’s obligations hereunder under any guarantyof this Lease, the attempted repudiation or revocation of any such guaranty orthe participation by any such guarantor in any other event described in thisSection 16.1 (as if this Section 16.1.10 referred to such guarantor in place ofTenant).

16.2**Landlord’s Right To Terminate Upon TenantDefault**. In the event of any default by Tenant as provided inSection 16.1 above, Landlord shall have the right to terminate this Lease andrecover possession of the Premises by giving written notice to Tenant ofLandlord’s election to terminate this Lease, in which event Landlord shall beentitled to receive from Tenant:

16.2.1        Theworth at the time of award or any unpaid Rent which had been earned at the timeof such termination; plus

16.2.2        Theworth at the time of award of the amount by which the unpaid Rent which wouldhave been earned after termination until the time of award exceeds the amountof such rental loss Tenant proves could have been reasonably avoided; plus

16.2.3        Theworth at the time of award of the amount by which the unpaid Rent for thebalance of the Term after the time of award exceeds the amount of such rentalloss that Tenant proves could be reasonably avoided; plus

16.2.4        Anyother amount necessary to compensate Landlord for all the detriment proximatelycaused by Tenant’s failure to perform its obligations under this Lease or whichin the ordinary course of things would be likely to result therefrom; and

16.2.5        AtLandlord’s election, such other amounts in addition to or in lieu of theforegoing as may be permitted from time to time by applicable law. As used inSections 16.2.1 and 16.2.2 above, “**worth atthe time of award**”****shall be computed by allowinginterest at the then highest lawful contract rate of interest. As used inSection 16.2.3 above, “worth atthe time of award” shall becomputed by discounting such amount at the Interest Rate. As used herein, theterm “**InterestRate**” means the lesser of (i) the “prime rate” or “referencerate” announced from time to time by Bank of America, N.T. & S.A. (or suchreasonable comparable national banking institution as is selected by Landlordin the event Bank of America, N.T. & S.A. ceases to publish a prime rate orreference rate) (the “Reference Rate”), plus one percent (1%), or (ii) themaximum rate permitted by Law.

16.3**Landlord’s Right To Continue Lease UponTenant Default**. In the event of a default of this Lease andabandonment of the Premises by Tenant, if Landlord does not elect to terminatethis Lease as provided in Section 16.2 above, Landlord may from time to time,without terminating this Lease, enforce all of its rights and remedies underthis Lease. Without limiting the foregoing, Landlord has the remedy describedin California Civil Code Section 1951.4 (Landlord may continue this Lease ineffect after Tenant’s breach and abandonment and recover Rent as it becomesdue, if Tenant has the right to sublet or assign, subject only to reasonablelimitations). To the fullest extent permitted by law, the proceeds of anyreletting shall be applied first to pay to Landlord all costs and expenses ofsuch reletting (including without limitation, costs and expenses of retaking orrepossessing the Premises, removing persons and property therefrom, securingnew tenants, including expenses for redecoration, alterations and other costsin connection with preparing the Premises for the new tenant, and if Landlordshall maintain and operate the Premises, the costs thereof) and receivers’ feesincurred in connection with the appointment of and performance by a receiver toprotect the Premises and Landlord’s interest under this Lease and any necessaryor reasonable alterations; second, to the payment of any indebtedness of Tenantto Landlord other than Rent due and unpaid hereunder; third, to the payment ofRent due and unpaid hereunder; and the residue, if any, shall be held byLandlord and applied in payment of other or future obligations of Tenant toLandlord as the same may become due and payable, and Tenant shall not beentitled to receive any portion of such revenue. No re-entry or taking ofpossession of the Premises by Landlord pursuant to this Section 16.3 shall beconstrued as an election to terminate this Lease unless a written notice ofsuch election shall be given to Tenant or unless the termination thereof bedecreed by a court of competent jurisdiction. Notwithstanding any relettingwithout termination by Landlord, Landlord may, at any time after suchreletting, elect to terminate this Lease for any such default. Upon the occurrenceof a default by Tenant under Section 16.1 above, if the Premises or any portionthereof are sublet, Landlord, in addition and without prejudice to any otherremedies herein provided or provided by Law, may, at its option, collectdirectly from the sublessee all rentals becoming due to the Tenant and applysuch rentals against other sums due hereunder to Landlord.

16.4**Right of Landlord to Perform**.All covenants and agreements to be performed by Tenant under this Lease shallbe performed by Tenant at Tenant’s sole cost and expense. If Tenant shall failto pay any sum of money, other than Annual Base Rent, required to be paid by ithereunder or shall fail to perform any other act on its part to be performedhereunder, then, in addition to and without prejudice to any other right orremedy of Landlord (including, without limitation, any right or remedy providedunder Article 9), Landlord may cure the same at the expense of Tenant (i)immediately and without notice in the case (a) of emergency, (b) where such defaultunreasonably interferes with any other tenant in the Project, or (c) where suchdefault will result in the violation of Law or the cancellation of anyinsurance policy maintained by Landlord and (ii) in any other case if suchdefault continues for ten (10) days from the receipt by Tenant of notice ofsuch default from Landlord. Any sums so paid by Landlord and all incidentalcosts, together with interest thereon at the maximum rate permitted by law fromthe date of such payment, shall be payable to Landlord as Additional Rent ondemand, and Landlord shall have the same rights and remedies in the event ofnonpayment as in the case of default by Tenant in the payment of Rent.

19

----

16.5 **Late Payments of Rent**. Following theoccurrence of three instances of payment of Rent more than 10 days late in anytwelve month period, Landlord may, without prejudice to any other rights orremedies available to it, upon written notice to Tenant, (i) require that allremaining monthly installments of Rent shall be payable three months inadvance; and in addition or in the alternative at Landlord’s election, (ii)require that Tenant increase the amount of the Security Deposit (if any) by anamount equal to one month’s Rent.

16.6**Default Under Other Leases**.If the term of any lease, other than this Lease, heretofore or hereafter madeby Tenant for any space in the Building shall be terminated or terminable afterthe making of this Lease because of any default by Tenant under such otherlease, such fact shall empower Landlord, at Landlord’s sole option, toterminate this Lease by notice to Tenant or to exercise any of the rights orremedies set forth in Section 16.2.

16.7**Subleases of Tenant**.Whether or not Landlord elects to terminate this Lease on account of anydefault by Tenant, as set forth in this Article 16, Landlord shall have theright to terminate any and all subleases, licenses, concessions or otherconsensual arrangements for possession entered into by Tenant and affecting thePremises or may, in Landlord’s sole discretion, succeed to Tenant’s interest insuch subleases, licenses, concessions or arrangements. 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.

16.8**Efforts to Relet**. For thepurposes of this Article 16, Tenant’s right to possession shall not be deemedto have been terminated by efforts of Landlord to relet the Premises, by itsacts of maintenance or preservation with respect to the Premises, or byappointment of a receiver to protect Landlord’s interests hereunder. Theforegoing enumeration is not exhaustive, but merely illustrative of acts whichmay be performed by Landlord without terminating Tenant’s right to possession.

16.9**Waiver of Right of Redemption**.Tenant hereby waives for Tenant and for all those claiming under Tenant allright now or hereafter existing to redeem by order or judgment of any court orby any legal process or writ, Tenant’s right of occupancy of the Premises afterany termination of this Lease. Notwithstanding any provision of this Lease tothe contrary, the expiration or termination of this Lease and/or thetermination of Tenant’s rights to possession of the Premises shall notdischarge, relieve or release Tenant from any obligation or liabilitywhatsoever under any indemnity provision of this Lease, including withoutlimitation the provisions of Section 11.1 hereof.

16.10**Non-Waiver.** Nothing in thisArticle 16 shall be deemed to affect Landlord’s rights to indemnification forliability or liabilities arising prior to termination of this Lease forpersonal injury or property damages under the indemnification clause or clausescontained in this Lease. No acceptance by Landlord of a lesser sum than theRent then due shall be deemed to be other than on account of the earliestinstallment of such rent due, nor shall any endorsement or statement on anycheck or any letter accompanying any check or payment as rent be deemed anaccord and satisfaction, and Landlord may accept such check or payment withoutprejudice to Landlord’s right to recover the balance of such installment orpursue any other remedy provided in this Lease. The delivery of keys to anyemployee of Landlord or to Landlord’s agent or any employee thereof shall notoperate as a termination of this Lease or a surrender of the Premises.

16.11**Waiver of Trial by Jury.**Landlord and Tenant each expressly waive their right to trial by jury in anytrial held as a result of a claim arising out of or in connection with thisLease in which Landlord and Tenant are adverse parties. The filing of across-complaint by one against the other is sufficient to make the parties “adverse.”

16.12**Cumulative Remedies.** Thespecific remedies to which Landlord may resort under the terms of this Leaseare cumulative and are not intended to be exclusive of any other remedies ormeans of redress to which it may be lawfully entitled in case of any breach orthreatened breach by Tenant of any provisions of this Lease. In addition to theother remedies provided in this Lease, Landlord shall be entitled to arestraint by injunction of the violation or attempted or threatened violationof any of the covenants, conditions or provisions of this Lease or to a decreecompelling specific performance of any such covenants, conditions orprovisions.

16.13**Default by Landlord**.Landlord’s failure to perform or observe any of its obligations under thisLease shall constitute a default by Landlord under this Lease only if suchfailure shall continue for a period of thirty (30) days (or the additionaltime, if any, that is reasonably necessary promptly and diligently to cure thefailure) after Landlord receives written notice from Tenant specifying thedefault, which notice shall describe in reasonable detail the nature and extentof the failure and shall identify the Lease provision(s) containing theobligation(s) in question. Subject to the remaining provisions of this Lease,following the occurrence of any such default, Tenant shall have the right topursue any remedy available under Law for such default by Landlord; provided,however, that in no case shall Tenant have any right to terminate this Lease onaccount of any such default.

**ARTICLE17 - ATTORNEYS FEES; COSTS OF SUIT**

17.1**Attorneys Fees**. If eitherLandlord or Tenant shall commence any action or other proceeding against theother arising out of, or relating to, this Lease or the Premises, theprevailing party shall be entitled to recover from the losing party, inaddition to any other relief, its actual attorneys fees irrespective of whetheror not the action or other proceeding is prosecuted to judgment andirrespective of any court schedule of reasonable attorneys’ fees. In addition,Tenant shall reimburse Landlord, upon demand, for all reasonable attorneys’fees incurred in collecting Rent or otherwise seeking enforcement againstTenant, its sublessees and assigns, of Tenant’s obligations under this Lease.

17.2**Indemnification**. Except ifcaused by the gross negligence or willful misconduct of Landlord or its agents,employees or contractors, should Landlord be made a party to any litigationinstituted by Tenant against a party other than Landlord, or by a third partyagainst Tenant, Tenant shall indemnify, hold harmless and defend Landlord fromany and all loss, cost, liability, damage or expense incurred by Landlord,including attorneys’ fees, in connection with the litigation.

20

----

**ARTICLE 18 -SUBORDINATION AND ATTORNMENT**

18.1**Subordination**. This Lease,and the rights of Tenant hereunder, are and shall be subordinate to theinterests of (i) all present and future ground leases and master leases of allor any part of the Building; (ii) present and future mortgages and deeds oftrust encumbering all or any part of the Building; (iii) all past and futureadvances made under any such mortgages or deeds of trust; and (iv) allrenewals, modifications, replacements and extensions of any such ground leases,master leases, mortgages and deeds of trust (collectively, “**Security Documents**”) which now or hereafterconstitute a lien upon or affect the Project, the Building or the Premises.Such subordination shall be effective without the necessity of the execution byTenant of any additional document for the purpose of evidencing or effectingsuch subordination. In addition, Landlord shall have the right to subordinateor cause to be subordinated any such Security Documents to this Lease and in suchcase, in the event of the termination or transfer of Landlord’s estate orinterest in the Project by reason of any termination or foreclosure of any suchSecurity Documents, Tenant shall, notwithstanding such subordination, attorn toand become the Tenant of the successor in interest to Landlord at the option ofsuch successor in interest. Furthermore, Tenant shall within ten (10) days ofdemand therefor execute any instruments or other documents which may berequired by Landlord or the holder (“**Holder**”)of any Security Document and specifically shall execute, acknowledge anddeliver within five (5) days of demand therefor a subordination of lease orsubordination of deed of trust, in the form required by the Holder of theSecurity Document requesting the document; the failure to do so by Tenantwithin such time period shall be a material default hereunder. Such instrumentsmay contain, among other things, provisions to the effect that such lessor,mortgagee or beneficiary (hereafter, for the purposes of this Section 18.1, a “**Successor Landlord**”) shall (a) not beliable for any act or omission of Landlord or its predecessors, if any, priorto the date of such Successor Landlord’s succession to Landlord’s interestunder this Lease; (b) not be subject to any offsets or defenses which Tenantmight have been able to assert against Landlord or its predecessors, if any,prior to the date of such Successor Landlord’s succession to Landlord’sinterest under this Lease; (c) not be liable for the return of any securitydeposit under this Lease unless the same shall have actually been depositedwith such Successor Landlord; and (d) be entitled to receive notice of anyLandlord default under this Lease plus a reasonable opportunity to cure suchdefault prior to Tenant having any right or ability to terminate this Lease asa result of such Landlord default. Landlord is hereby irrevocably appointed andauthorized as agent and attorney-in-fact of Tenant to execute and deliver allsuch subordination instruments in the event that Tenant fails to execute anddeliver said instruments within five days after notice from Landlord requestingexecution and delivery thereof.

18.2**Attornment**. If requested todo so, Tenant shall attorn to and recognize as Tenant’s landlord under thisLease any superior lessor, superior mortgagee or other purchaser or persontaking title to the Building by reason of the termination of any superior leaseor the foreclosure of any superior mortgage or deed of trust, and Tenant shall,within five (5) days of demand therefor execute any instruments or otherdocuments which may be required by Landlord or the Holder of any such SecurityDocument to evidence the attornment described in this Section 18.2.

18.3**Mortgage and Ground Lessor Protection**.Tenant agrees to give each Holder of any Security Document, by registered orcertified mail, a copy of any notice of default served upon the Landlord byTenant, provided that prior to such notice Tenant has been notified in writingof the address of such Holder (hereafter the “Notified Party”). Tenant furtheragrees that if Landlord shall have failed to cure such default within thirty(30) days after such notice to Landlord (or if such default cannot be cured orcorrected within that time, then such additional time as may be necessary ifLandlord has commenced within such thirty (30) days and is diligently pursuingthe remedies or steps necessary to cure or correct such default), then prior toTenant pursuing any remedy for such default provided hereunder, at law or inequity, the Notified Party shall have an additional thirty (30) days withinwhich to cure or correct such default (or if such default cannot be cured orcorrected within that time, then such additional time as may be necessary ifthe Notified Party has commenced within such thirty (30) days and is diligentlypursuing the remedies or steps necessary to cure or correct such default).

**ARTICLE19 - QUIET ENJOYMENT**

Providedthat Tenant performs all of its obligations hereunder, Tenant shall have andpeaceably enjoy the Premises during the Term of this Lease, subject to all ofthe terms and conditions contained in this Lease, from and against all personsholding an interest in the Project from and through Landlord.

**ARTICLE20 - PARKING**

20.1         Pursuantto Item 7 of the Basic Lease Provisions, Tenant shall lease from Landlord eachmonth during the Term the number of (i) unreserved parking privileges (“**Unreserved Parking Privileges**”) and (ii)covered and reserved parking spaces (“**ReservedParking Privileges**”), at the rates set forth in Item 7 of the BasicLease Provisions; provided that, subject to availability (as determined byLandlord in its sole but good faith discretion), Tenant shall have the right tolease from Landlord on a month-to-month basis additional Unreserved ParkingPrivileges and/or additional Reserved Parking Privileges at Landlord’s thenprevailing charge. Tenant shall have the right to use on a first come, firstserved basis, the number of Unreserved Parking Privileges leased by Tenant fromLandlord pursuant to Item 7 of the Basic Lease Provisions. All Reserved ParkingPrivileges and Unreserved Parking Privileges are referred to hereincollectively as “**Parking Privileges**”,and such Parking Privileges shall be at a location designated by Landlord inits sole discretion.

20.2         Tenantshall pay to Landlord, as Additional Rent, on the first day of each calendarmonth during the Initial Term, for the Reserved Parking Privileges (if any) andthe Unreserved Parking Privileges then rented by Tenant for such calendar monthat the rates set forth in Item 7 of the Basic Lease Provisions. Such parkingcharges shall be in addition to all taxes, assessments or other impositionsimposed by any governmental entity (“**ParkingTaxes**”) in connection with Tenant’s use of such Parking Privileges,which Parking Taxes shall be paid by Tenant, or if required to be paid byLandlord, shall be reimbursed to Landlord by Tenant (in either case asAdditional Rent) concurrently with the payment of the parking charges describedabove.

20.3         The ParkingPrivileges are with respect to, subject to the provisions of this Article 20,use of the Project’s parking facilities (the “**ParkingFacilities**”). The specific location of the Reserved ParkingPrivileges in the

21

----

Parking Facilities shall be specified by, and may,from time to time, be relocated by Landlord in its sole discretion. Landlordshall have the right to modify, change, add to or delete the design,configuration, layout, size, ingress, egress, areas, method of operation, andother characteristics of or relating to the Parking Facilities at any time,and/or to provide for nonuse, partial use or restricted use of portionsthereof.

20.4         Tenantshall cause each of its employees and occupants utilizing Tenant’s ParkingPrivileges to abide by all rules and regulations for the use of the ParkingFacilities prescribed from time to time by Landlord. If any employee,contractor or other individual using one of Tenant’s Parking Privilegesviolates any of the terms and conditions of this Article or such parking rulesand regulations, then Landlord may revoke the license granted hereunder withrespect to the particular violating party’s use of the Parking Facilities.Landlord may delegate its responsibilities hereunder to a parking operator inwhich case such parking operator shall have all the rights of controlattributed hereby to the Landlord. The Parking Privileges provided to Tenantpursuant to this Article 20 are provided to Tenant solely for use by officers,directors, and employees of Tenant, its Affiliates, sublessees and assignees,and such passes may not otherwise be transferred, assigned, subleased orotherwise alienated by Tenant to any other type of transferee without Landlord’sprior approval.

20.5         Tenant’sbusiness visitors may park on the Parking Facilities on a space-availablebasis, upon payment of the prevailing fee for parking charged to visitors tothe Project.

**ARTICLE21 - RULES AND REGULATIONS**

The “**Rules and Regulations**” attached hereto as Exhibit“D” are hereby incorporated by reference herein and made a part hereof.Tenant shall abide by, and faithfully observe and comply with the Rules andRegulations and any reasonable and non-discriminatory amendments, modificationsand/or additions thereto as may hereafter be adopted and published by writtennotice to tenants by Landlord for the safety, care, security, good order and/orcleanliness of the Premises and/or the Project. Landlord shall not be liable toTenant for any violation of such rules and regulations by any other tenant oroccupant of the Project.

**ARTICLE22 - ESTOPPEL CERTIFICATES**

Tenantagrees at any time and from time to time upon not less than five (5) days’prior written notice from Landlord, execute, acknowledge and deliver toLandlord a statement in writing certifying to those facts for whichcertification has been requested by Landlord or any current or prospectivepurchaser, holder of any Security Document, ground lessor or master lessor,including, but without limitation, that (i) this Lease is unmodified and infull force and effect (or if there have been modifications, that the same is infull force and effect as modified and stating the modifications), (ii) thedates to which the Annual Base Rent, Rent and other charges hereunder have beenpaid, if any, and (iii) whether or not to the best knowledge of Tenant,Landlord is in default in the performance of any covenant, agreement orcondition contained in this Lease and, if so, specifying each such default ofwhich Tenant may have knowledge. The form of the statement attached hereto as Exhibit“E” is hereby approved by Tenant for use pursuant to this Article 22;however, at Landlord’s option, Landlord shall have the right to use other formsfor such purpose. Tenant’s failure to execute and deliver such statement withinsuch time shall, at the option of Landlord, constitute a material default underthis Lease and, in any event, shall be conclusive upon Tenant that this Leaseis in full force and effect without modification except as may be representedby Landlord in any such certificate prepared by Landlord and delivered toTenant for execution. In the event that such certificate is being given to anyHolder or ground lessor, such statement may contain any other provisionscustomarily required by such Holder or ground lessor including, withoutlimitation, an agreement on the part of Tenant to furnish to such Holder orground lessor, as applicable, written notice of any Landlord default and areasonable opportunity for such Holder or ground lessor to cure such defaultprior to Tenant being able to terminate this Lease. In addition, Landlord ishereby irrevocably appointed and authorized as agent and attorney-in-fact ofTenant to execute and deliver such statement in the event that Tenant fails toexecute and deliver such statement within five (5) days after notice fromLandlord requesting execution and delivery thereof. Any statement deliveredpursuant to this Article 22 may be relied upon by any prospective purchaser ofthe fee of the Building or the Project or any mortgagee, ground lessor or otherlike encumbrancer thereof or any assignee of any such encumbrance upon theBuilding or the Project.

**ARTICLE23 - ENTRY BY LANDLORD**

Landlordmay enter the Premises at all reasonable times to: inspect the same; exhibitthe same to prospective purchasers, lenders or tenants; determine whetherTenant is complying with all of its obligations under this Lease; supplyjanitorial and other services to be provided by Landlord to Tenant under thisLease; post notices of non-responsibility; and make repairs or improvements inor to the Project or the Premises; provided, however, that all such work shallbe done as promptly as reasonably possible and so as to cause as littleinterference to Tenant as reasonably possible. Tenant hereby waives any claim fordamages for any injury or inconvenience to, or interference with, Tenant’sbusiness, any loss of occupancy or quiet enjoyment of the Premises or any otherloss occasioned by such entry. Landlord shall at all times have and retain akey with which to unlock all of the doors in, on or about the Premises(excluding Tenant’s vaults, safes and similar areas designated by Tenant inwriting in advance), and Landlord shall have the right to use any and all meansby which Landlord may deem proper to open such doors to obtain entry to thePremises, and any entry to the Premises obtained by Landlord by any such means,or otherwise, shall not under any circumstances be deemed or construed to be aforcible or unlawful entry into or a detainer of the Premises or an eviction,actual or constructive, of Tenant from any part of the Premises. Such entry byLandlord shall not act as a termination of Tenant’s duties under this Lease. IfLandlord shall be required to obtain entry by means other than a key providedby Tenant, the cost of such entry shall be payable by Tenant to Landlord asAdditional Rent.

**ARTICLE24LANDLORD’S LEASE UNDERTAKINGS-EXCULPATION FROM PERSONAL LIABILITY TRANSFER OF LANDLORD’S INTEREST**

24.1**Landlord’s Lease Undertakings**.Notwithstanding anything to the contrary contained in this Lease or in anyexhibits, riders or addenda hereto attached (collectively the “**Lease Documents**”), it is expresslyunderstood and

22

----

agreed by and between the parties hereto that: (a) the recourse ofTenant or its successors or assigns against Landlord (and the liability ofLandlord to Tenant, its successors and assigns) with respect to (i) any actualor alleged breach or breaches by or on the part of Landlord of anyrepresentation, warranty, covenant, undertaking or agreement contained in anyof the Lease Documents or (ii) any matter relating to Tenant’s occupancy of thePremises (collectively, “**Landlord’s LeaseUndertakings**”) shall be limited to solely an amount equal to thelesser of (x) only to Landlord’s interest in the Project and (y) the equityinterest Landlord would have in the Project if the Project were encumbered byindependent secured financing equal to eighty percent (80%) of the value of theProject; (b) Tenant shall have no recourse against any other assets of Landlordor its officers, directors or shareholders; (c) except to the extent ofLandlord’s interest in the Project, no personal liability or personalresponsibility of any sort with respect to any of Landlord’s Lease Undertakingsor any alleged breach thereof is assumed by, or shall at any time be assertedor enforceable against. Landlord, CalPERS, CWP Capital Management, LLC,Commonwealth Pacific, LLC, Commonwealth Partners, LLC, Commonwealth PartnersManagement Services, L.P. or against any of their respective directors,officers, shareholders, members, employees, agents, constituent partners,beneficiaries, trustees or representatives, and (d) at no time shall Landlordbe responsible or liable to Tenant for any lost profits, lost economicopportunities or any form of consequential damage as the result of any actualor alleged breach by Landlord of Landlord’s Lease Undertakings.

24.2 **Transfer ofLandlord’s Interest**. Landlord and each successor to Landlordshall be fully released from the performance of Landlord’s obligationshereunder upon their transfer of Landlord’s interest in the Building to a thirdparty. Landlord shall not be liable for any obligation hereunder after atransfer of its interest in the Building.

**ARTICLE25 - HOLDOVER TENANCY**

IfTenant holds possession of the Premises after the expiration or termination ofthe Term of this Lease, by lapse of time or otherwise, with or without theexpress or implied consent of Landlord, Tenant shall become a tenant atsufferance upon all of the terms contained herein, except as to Term and BaseRent and any other provision reasonably determined by Landlord to beinapplicable. During such holdover period, Tenant shall pay to Landlord amonthly Base Rent equivalent to the greater of one hundred fifty percent (150%)of (i) Landlord’s then published asking rental rate or (ii) the Base Rent andAdditional Rent payable by Tenant to Landlord during the last month of the Termof this Lease. The monthly rent payable for such holdover period shall in noevent be construed as a penalty or as liquidated damages for such retention ofpossession. Neither any provision hereof nor any acceptance by Landlord of anyrent after any such expiration or earlier termination shall be deemed a consentto any holdover hereunder or result in a renewal of this Lease or an extensionof the Term, or any waiver of any of Landlord’s rights or remedies with respectto such holdover. Notwithstanding any provision to the contrary containedherein, (a) Landlord expressly reserves the right to require Tenant tosurrender possession of the Premises upon the expiration of the Term of thisLease or upon the earlier termination hereof or at any time during any holdoverand the right to assert any remedy at law or in equity to evict Tenant andcollect damages in connection with any such holdover, and (b) Tenant shallindemnify, defend and hold Landlord harmless from and against any and allclaims, demands, actions, proceedings, losses, damages, liabilities,obligations, penalties, costs and expenses, including, without limitation, alllost profits and other consequential damages, attorneys’ fees, consultants’fees and court costs incurred or suffered by or asserted against Landlord byreason of Tenant’s failure to surrender the Premises on the expiration or earliertermination of this Lease in accordance with the provisions of this Lease.

**ARTICLE26 - NOTICES**

Allnotices which Landlord or Tenant may be required, or may desire, to serve onthe other may be served, as an alternative to personal service, by mailing thesame by registered or certified mail, postage prepaid, or by a reputableovernight courier service, which provides evidence of delivery, addressed tothe Landlord at the address for Landlord set forth in Item 10 of the BasicLease Provisions and to Tenant at the address for Tenant set forth in Item 10of the Basic Lease Provisions, or, from and after the Commencement Date, to theTenant at the Premises whether or not Tenant has departed from, abandoned orvacated the Premises, or addressed to such other address or addresses as eitherLandlord or Tenant may from time to time designate to the other in writing. Anynotice shall be deemed to have been served at the time the same was posted.

**ARTICLE27 - BROKERS**

Theparties recognize as the broker(s) who procured this Lease the firm(s)specified in Item 8 of the Basic Lease Provisions and agree that Landlord shallbe solely responsible for the payment of any brokerage commissions to saidbroker(s), and that Tenant shall have no responsibility therefor unless writtenprovision to the contrary has been made a part of this Lease. If Tenant hasdealt with any other person or real estate broker in respect to leasing,subleasing or renting space in the Building, Tenant shall be solely responsiblefor the payment of any fee due said person or firm and Tenant shall protect,indemnify, hold harmless and defend Landlord from any liability in respectthereto.

**ARTICLE28 - SIGNAGE RIGHTS**

28.1Except to the extent expressly provided in this Section 28, Tenant shall not(i) place or install (or permit to be placed or installed by any Tenant Party)any signs, advertisements, logos, identifying materials, pictures or names ofany type on the roof, exterior areas or Common Areas of the Building or theProject or in any area of the Building, Premises or Project which is visiblefrom the exterior of the Building or outside of the Premises or (ii) place orinstall (or permit to be placed or installed by any Tenant Party) in or aboutany portion of the Premises any window covering (even if behind Buildingstandard window coverings) or any other material visible from outside of thePremises or from the exterior of the Building.

28.2 Subject tocompliance with applicable Laws and such Building signage criteria as Landlordshall apply from time to time and subject to receipt of Landlord’s priorwritten consent, (i) in the case where Tenant occupies an entire floor in theBuilding, Tenant may place in any portion of such floor which is not visiblefrom the exterior of the Building such identification signage as Tenant shalldesire and (ii) in the case where Tenant occupies less than an entire

23

----

floor in the Building (A) Tenant may require Landlordto install, at Tenant’s sole cost and expense, in such portion of themulti-tenant corridor on such floor as is called for by Landlord’s signageprogram (as the same may exist from time to time) identification signage of thetype prescribed by Landlord’s signage program identifying Tenant and (B) Tenantmay place in any portion of the inside of the Premises not visible from theexterior of the Building or from outside of the Premises such identificationsignage as Tenant shall desire. All signage described in this Section 28 shallbe treated as Tenant’s personal property under the provisions of Section 10.5with respect to Tenant’s obligation at the expiration or early termination ofthis Lease.

**ARTICLE29 - FINANCIAL STATEMENTS**

Priorto execution of this Lease, Tenant shall provide Landlord with currentfinancial statements for each of the three (3) calendar (or fiscal) yearsimmediately prior to the execution date of this Lease. Thereafter, at any timeduring the Term, Tenant shall, upon ten (10) days’ prior notice from Landlord,provide Landlord with then current financial statements and financial statementsfor each of the two (2) years prior to the then current calendar year for eachof Tenant and Tenant’s Guarantor, provided, however, (i) if the financialstatements of either Tenant or the Guarantor are not available to the generalpublic, except in the case where Landlord is requesting such financialstatements for delivery to an existing or prospective lender (a “**Requesting Lender**”) (A) in connection witha new loan (a “**Project Loan**”) (ormodification or extension of an existing loan) secured in whole or in part bysome form of mortgage, deed of trust or other security interest in the Project(or some interest therein) or (B) under circumstances where the failure to sodeliver such financial statements would (or could, with notice, the passage oftime, or both) constitute a default under any document relating to a ProjectLoan, Tenant shall not be required to provide those financial statements whichare not available to the general public; provided, further, however, thatnotwithstanding the foregoing, in the circumstances described in eitherexception (A) or (B) of the foregoing proviso, Tenant shall be required toprovide the financial statements of Tenant and Guarantor in the form requiredhereunder only to the Requesting Lender (but not to Landlord). Such statementsshall be prepared in accordance with generally accepted accounting principles,consistently applied, and shall be audited by an independent certified publicaccountant.

**ARTICLE30 - MISCELLANEOUS**

30.1         **Entire Agreement.** This Lease containsall of the agreements and understandings relating to the leasing of thePremises and the obligations of Landlord and Tenant in connection with suchleasing. Landlord has not made, and Tenant is not relying upon, any warranties,or representations, promises or statements made by Landlord or any agent ofLandlord, except as expressly set forth herein. This Lease supersedes any andall prior agreements and understandings between Landlord and Tenant and aloneexpresses the agreement of the parties.

30.2         **Amendments.** This Lease shall not beamended, changed or modified in any way unless in writing executed by Landlordand Tenant. Landlord shall not have waived or released any of its rightshereunder unless in writing and executed by the Landlord.

30.3         **Successors.** Except as expresslyprovided herein, this Lease and the obligations of Landlord and Tenantcontained herein shall bind or inure to the benefit of Landlord and Tenant andtheir respective successors and assigns, provided this clause shall not permitany Transfer by Tenant contrary to the provisions of Article 15.

30.4         **Sale by Landlord.** An arm’s length saleor conveyance by Landlord of the Project shall operate to release Landlord fromany future liability upon any of the agreements, obligations, covenants orconditions, express or implied, herein contained in favor of Tenant, and Tenantagrees to look solely to the responsibility of the successor in interest ofLandlord in and to this Lease except for obligations and liabilities incurredby Landlord prior to such sale or conveyance. This Lease shall not be affectedby any such sale, however, and Tenant agrees to attorn to the purchaser orassignee, such attornment to be effective and self-operative without theexecution of any further instruments by any of the parties to this Lease.

30.5         **Force Majeure.** Landlord shall incur noliability to Tenant with respect to, and shall not be responsible for anyfailure to perform, any of Landlord’s obligations hereunder if such failure iscaused by any reason beyond the control of Landlord including, but not limitedto, strike, labor trouble, governmental rule, regulations, ordinance, statuteor interpretation, or by fire, earthquake, civil commotion, or failure ordisruption of utility services. The amount of time for Landlord to perform anyof Landlord’s obligations shall be extended by the amount of time Landlord isdelayed in performing such obligation by reason or any force majeure occurrencewhether similar to or different from the foregoing types of occurrences.

30.6         **Survival of Obligations.** Anyobligations of Tenant accruing prior to the expiration of this Lease shallsurvive the termination of this Lease, and Tenant shall promptly perform allsuch obligations whether or not this Lease has expired.

30.7         **Light and Air.** No diminution orshutting off of any light, air or view by any structure now or hereaftererected shall in any manner affect this Lease or the obligations of Tenanthereunder, or increase any of the obligations of Landlord hereunder.

30.8         **Governing Law.** This Lease shall begoverned by, and construed in accordance with, the laws of the state ofCalifornia.

30.9         **Prohibition Against Recording.** Neitherthis Lease nor any memorandum, affidavit or other writing with respect theretoshall be recorded by Tenant or by anyone acting through, under or on behalf ofTenant

30.10       **Severability.**In the event any provision of this Lease is found to be unenforceable, theremainder of this Lease shall not be affected, and any provision found to beinvalid shall be enforceable to the extent permitted by law. The parties agreethat in the event two different interpretations may be given to any provisionhereunder, one of

24

----

which will render the provision unenforceable, and oneof which will render the provision enforceable, the interpretation renderingthe provision enforceable shall be adopted.

30.11       **Captions.** All captions, headings,titles, numerical references and computer highlighting are for convenience onlyand shall have no effect on the interpretation of this Lease.

30.12       **Interpretation.** Tenant acknowledgesthat it has read and reviewed this Lease and that it has had the opportunity toconfer with counsel in the negotiation of this Lease. Accordingly, this Leaseshall be construed neither for nor against Landlord or Tenant, but shall begiven a fair and reasonable interpretation in accordance with the meaning ofits terms and the intent of the parties.

30.13       **Independent Covenants.** Each covenant,agreement, obligation or other provision of this Lease to be performed by Tenantare separate and independent covenants of Tenant, and not dependent on anyother provision of this Lease.

30.14       **Number and Gender.** All terms and wordsused in this Lease, regardless of the number or gender in which they are used,shall be deemed to include the appropriate number and gender, as the contextmay require.

30.15       **Time is of the Essence.** Time is of theessence of this Lease and the performance of all obligations hereunder.

30.16       **Joint and Several Liability.** If Tenantcomprises more than one person or entity, or if this Lease is guaranteed by anyparty, all such persons shall be jointly and severally liable for payment ofrents and the performance of Tenant’s obligations hereunder.

30.17       **No Offer to Lease.** The submission ofthis Lease to Tenant or its Broker or other agent, does not constitute an offerto Tenant to lease the Premises. This Lease shall have no force and effectuntil (i) it is executed and delivered by Tenant to Landlord and (ii) it isfully reviewed and executed by Landlord; provided, however, that, uponexecution of this Lease by Tenant and delivery to Landlord, such execution anddelivery by Tenant shall, in consideration of the time and expense incurred byLandlord in reviewing this Lease and Tenant’s credit, constitute an offer byTenant to Lease the Premises upon the terms and conditions set forth herein(which offer to Lease shall be irrevocable for twenty (20) business daysfollowing the date of delivery).

30.18       **No Counterclaim; Choice of Laws.** It ismutually agreed that in the event Landlord commences any summary proceeding fornon-payment of Rent, Tenant will not interpose any counterclaim of whatevernature or description in any such proceeding. In addition, Tenant herebysubmits to local jurisdiction in the State of California and agrees that anyaction by Tenant against Landlord shall be instituted in the State ofCalifornia and that Landlord shall have personal jurisdiction over Tenant forany action brought by Landlord against Tenant in the State of California.

30.19       **Rights Reserved by Landlord.** Landlordreserves the following rights exercisable without notice (except as otherwiseexpressly provided to the contrary in this Lease) and without being, deemed aneviction or disturbance of Tenant’s use or possession of the Premises or givingrise to any claim for set-off or abatement of Rent: (i) to change the name orstreet address of the Building and/or the Project; (ii) to install, affix andmaintain all signs on the exterior and/or interior of the Building and/or theProject; (iii) to designate and/or approve prior to installation, all types ofsigns, window shades, blinds, drapes, awnings or other similar items, and allinternal lighting that may be visible from the exterior of the Premises and,notwithstanding the provisions of Article 10, the design, arrangement, style,color and general appearance of the portion of the Premises visible from theexterior, and contents thereof, including, without limitation, furniture,fixtures, signs, art work, wall coverings, carpet and decorations, and allchanges, additions and removals thereto, shall, at all times have theappearance of premises having the same type of exposure and used forsubstantially the same purposes that are generally prevailing in first classoffice buildings in the area. Any violation of this provision shall be deemed amaterial breach of this Lease; (iv) to display the Premises and/or the Buildingand/or the Project to mortgagees, prospective mortgagees, prospectivepurchasers and ground lessors at reasonable hours upon reasonable advancenotice to Tenant; (v) to change the arrangement of entrances, doors, corridors,elevators and/or stairs in the Building and/or the Project, provided no suchchange shall materially adversely affect access to the Premises; (vi) to grantany party the exclusive right to conduct any business or render any service inthe Building or in the Project, provided such exclusive right shall not operateto prohibit Tenant from using the Premises for the purposes permitted underthis Lease; (vii) to prohibit the placement of vending or dispensing machinesof any kind in or about the Premises other than for use by Tenant’s employees;(viii) to prohibit the placement of video or other electronic games in thePremises; (ix) to have access for Landlord and other tenants of the Building toany mail chutes and boxes located in or on the Premises according to the rulesof the United States Post Office and to discontinue any mail chute business inthe Building and/or the Project; (x) to close the Building after normalbusiness hours, except that Tenant and its employees and invitees shall beentitled to admission at all times under such rules and regulations as Landlordprescribes for security purposes; (xi) to install, operate and maintainsecurity systems which monitor, by closed circuit television or otherwise, allpersons entering or leaving the Building and/or the Project; (xii) to installand maintain pipes, ducts, conduits, wires and structural elements located inthe Premises which serve other parts or other tenants of the Building and/orthe Project; and (xiii) to retain at all times master keys or pass keys to thePremises.

30.20       **Modification of Lease.** Should anycurrent or prospective mortgagee or ground lessor for the Building require amodification or modifications of the Lease, which modification or modificationswill not cause an increased cost or expense to Tenant or in any other waymaterially and adversely change the rights and obligations of Tenant hereunder,then and in such event, Tenant agrees that this Lease may be so modified andagrees to execute whatever documents are required therefor and deliver the sameto Landlord within ten (10) days following the request therefor.

30.21       **Authority.** If Tenant signs as acorporation or a partnership, each of the persons executing this Lease onbehalf of Tenant does hereby covenant and warrant that Tenant is a dulyauthorized and existing entity, that

25

----

Tenant has and is qualified to do business inCalifornia, that Tenant has full right and authority to enter into this Lease,and that each of both of the persons signing on behalf of Tenant are authorizedto do so. Upon Landlord’s request, Tenant shall provide Landlord with evidencereasonably satisfactory to Landlord confirming the foregoing covenants andwarranties. The person executing this Lease on behalf of Landlord herebycovenants and warrants that Landlord has full right and authority to enter intothis Lease and that the person signing on behalf of Landlord is authorized todo so.

30.22       **Transportation Management.** Tenant shallfully comply with all present or future programs intended to manage parking,transportation or traffic in and around the Building, 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.

30.23       **The Other Improvements.** If portions ofthe Project or property adjacent to the Project (collectively, the “**Other Improvements**”) are owned by an entityother than Landlord, Landlord, at its option, in its sole and absolutediscretion, may enter into an agreement with the owner or owners of any or allof the Other Improvements to provide (i) for reciprocal rights of access and/oruse of the Project and the Other Improvements, (ii) for the common management,operation, maintenance, improvement and/or repair of all or any portion of theProject and the Other Improvements, (iii) for the allocation of a portion ofthe Operating Expenses to the Other Improvements and the operating expenses andtaxes for the Other Improvements to the Project, and (iv) for the use orimprovement of the Other Improvements and/or the Project in connection with theimprovement, construction, and/or excavation of the Other Improvements and/orthe Project. Nothing contained herein shall be deemed or construed to limit orotherwise affect Landlord’s right to convey all or any portion of the Projector any other of Landlord’s rights described in this Lease.

30.24       **Renovation of the Project and Other Improvements.**Tenant acknowledges that portions of the Project and/or the Other Improvementsmay be under construction following Tenant’s occupancy of the Premises, andthat such construction may result in levels of noise, dust, obstruction ofaccess, etc. which are in excess of that present in a fully constructedproject. It is expressly understood and agreed that Landlord has made norepresentation or warranty to Tenant and has no obligation to alter, remodel,improve, renovate, repair or decorate the Premises, the Building, or theProject or any portion thereof. It is further agreed and acknowledged that norepresentations respecting the condition of the Premises, the Building or theProject have been made by Landlord to Tenant except as specifically set forthin this Lease. Tenant acknowledges and agrees that Landlord may alter, remodel,improve and/or renovate (collectively, the “**RenovationWork**”) the Building, Premises, and/or the Project, and in connectionwith any Renovation Work, Landlord may, among other things, erect scaffoldingor other necessary structures in the Building, or the Project, restrict accessto portions of the Project, including portions of the Common Areas, or performwork in the Building and/or the Project. Tenant hereby agrees that suchRenovation Work and Landlord’s actions in connection with such Renovation Workshall in no way constitute a constructive eviction of Tenant nor entitle Tenantto any abatement of Rent. Landlord shall have no responsibility or liability toTenant for any injury to or interference with Tenant’s business arising fromany such Renovation Work, and Tenant shall not be entitled to any damages fromLandlord for loss of use of the Premises, in whole or in part, or for loss ofTenant’s personal property or improvements, resulting from the Renovation Workor Landlord’s actions in connection therewith or for any inconvenienceoccasioned by such Renovation Work or Landlord’s actions in connectiontherewith.

30.25       **No Partnership or Joint Venture.**Nothing contained in this Lease shall be deemed or construed to create therelationship of principal and agent, or partnership, or joint venturer, or anyother relationship between Landlord and Tenant other than landlord and tenant.

30.26       **Right to Lease.** Landlord reserves theabsolute right to lease space in the Project and to create such other tenanciesin the Project as Landlord, in its sole business judgment, shall determine isin the best interests of the Project. Landlord does not represent and Tenantdoes not rely upon any specific type or number of tenants occupying any spacein the Building and/or the Project during the Term of this Lease.

30.27       **Building Name and Signage.** Landlordshall have the right at any time to change the name of the Building and/or theProject and to install, affix and maintain any and all signs on the exteriorand on the interior of the Building and/or the Project as Landlord may sodesire, in its sole discretion. Tenant shall not, without the prior writtenconsent of Landlord, use the name of the Building and/or the Project, or anypictures or illustrations of the Building and/or the Project, in Tenant’sadvertising or in any other publicity.

26

----

30.28       **Confidentiality.**Tenant agrees that (i) the terms and provisions of this Lease are confidentialand constitute proprietary information of Landlord and (ii) except if requiredby law, it shall not disclose, and it shall cause its partners, officers,directors, shareholders, employees, brokers, financial professionals andattorneys to not disclose any term or provision of this Lease to any otherperson without first obtaining the prior written consent of Landlord.

30.29       **Right to Eliminate Lease Concessions by Purchase.**Upon written notice to Tenant, Landlord shall have the right (but not theobligation) at any time during the Term of this Lease to eliminate all or anyportion of the Lease Concessions from Tenant by purchasing from Tenant suchLease Concessions at the Concession Amount (as each such term is defined inthis Section 30.29). As used herein, “**LeaseConcessions**” shall mean the Additional Allowance, and/or any otherpayment, offset, deduction or economic concessions (or any portion thereof asdetermined by Landlord) of which the timing and amount can be reasonablyquantified or estimated by Landlord and which would be payable by Landlord toTenant or would be deducted from or otherwise reduce Tenant’s obligation to payto Landlord Rent. As used herein, “**ConcessionAmount**” shall mean the present value of the Lease Concessions to beeliminated by Landlord by purchase as of the date of payment by Landlord toTenant of the Concession Amount. The present value of the Lease Concessionsshall be calculated by Landlord (i) by reasonably estimating the date that suchLease Concession would be payable by Landlord to Tenant (or the date that suchLease Concession or portion thereof would otherwise be deducted from orotherwise reduce Tenant’s obligation to pay to Landlord Rent), and (ii) using adiscount rate for each such Lease Concession or portion thereof equal to elevenpercent (11%) per annum. Upon such payment by Landlord to Tenant of anyConcession Amount, the Lease Concession (or portion thereof) purchased byLandlord shall be eliminated and shall be deemed null, void and of no furtherforce or effect.

INWITNESS WHEREOF, this Lease is hereby executed as of the Effective Date.
|        | ** ** | ** ** | ** ** | **LANDLORD:**                                                  |
|--------|------------|------------|------------|----------------------------------------------------------------|
|   | ** ** | ** ** | ** ** | ** **                                                     | ** ** | ** ** |
|   |       |       | ** ** | FSP REGENTS SQUARE, LLC,  a Delaware limited liability company |
|   |       |       | ** ** |                                                           |
|   |       |       |       | By:                                                            | CWP Capital Management, LLC,  a Delaware limited liability company |
|   |       |       |       |                                                           |   |   |
|   |       |       |       |                                                           | By: | /s/ Sharyl Gabriel |
|   |       |       |       |                                                           | Name: | Sharyl Gabriel |
|   |       |       |       |                                                           | Its: | Senior Vice President |
|   |       |       |       |                                                           |   | OCT 6 2004 |
|   |       |       |       |                                                           |   |   |
|   | ** ** | ** ** | ** ** | **TENANT:**                                                    |
|   | ** ** | ** ** | ** ** | ** **                                                     | ** ** | ** ** |
|   |       |       | ** ** | 1ST PACIFIC BANK OF CALIFORNIA,  a California corporation      |
|   |       |       | ** ** |                                                           |
|   |       |       |       | By:                                                            |   | /s/ A. Vincent Siciliano |
|   |       |       |       | Name:                                                          |   | A. Vincent Siciliano |
|   |       |       |       | Its:                                                           |   | CEO |
|   |       |       |       |                                                           |   |   |
|   |       |       |       | By:                                                            |   | /s/ James Burgess |
|   |       |       |       | Name:                                                          |   | James Burgess |
|   |       |       |       | Its:                                                           |   | CFO |
|        |            |            |            |                                                                |  |  |  |

** **

27

----

**DEPICTION OF THE PREMISES**

**EXHIBIT “A”**

** **

28

----

**EXHIBIT B**

**NOTICE OF LEASE TERMDATES**

To: 

 

 

 

Re: Office Lease dated September 17, 2004 (the “**Lease**”) between FSP Regents Square, LLC, aDelaware limited liability company (“**Landlord**”),and 1st Pacific Bank of California, a California corporation (“**Tenant**”) concerning Suite 650 on floor six(6) of the office building located at 4275 Executive Square, La Jolla,California.

Ladies and Gentlemen:

In accordance with theLease, we wish to advise you and/or confirm as follows:

1. The Premises aresubstantially completed, and the Term shall commence on or has commenced on                           for a term of                   (        ) months ending on                           .

2. Monthly Base Rentcommenced to accrue on                           ,in the amount of $                          per month and as more particularly set forth in Item 4 of the Basic LeaseProvisions of the Lease.

3. If the CommencementDate is other than the first day of the month, the first billing will contain apro rata adjustment. Each billing thereafter, with the exception of the finalbilling, shall be for the full amount of the monthly installment as providedfor in the Lease.

4. Your rent checksshould be made payable to Regents Square, a property of Fifth StreetProperties, LLC, File #56684, Los Angeles, California 90074-6684.

5. The approximate numberof rentable square feet within the Premises is                           rentable square feet.

6. Tenant’sProportionate Share is                 %.

 
|        | ** ** | ** ** | ** ** | **“Landlord”:**                                                                                                                                    |
|--------|------------|------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ** ** | ** ** | ** ** | ** **                                                                                                                                                   | ** ** | ** ** |
|   |       |       | ** ** | FSP REGENTS SQUARE, LLC,  a Delaware limited liability company                                                                                               |
|   |       |       | ** ** |                                                                                                                                                         |
|   |       |       | ** ** |                                                                                                                                                         |
|   |       |       |       | By:                                                                                                                                                          | CWP Capital Management, LLC,  a Delaware limited liability company |
|   |       |       |       |                                                                                                                                                         |   |   |
|   |       |       |       |                                                                                                                                                         | By: |   |   |   |
|   |       |       |       |                                                                                                                                                         |   |   |   |   |
|   |       |       |       |                                                                                                                                                         | Name: |   |   |   |   |
|   |       |       |       |                                                                                                                                                         |   |   |   |   |   |
|   |       |       |       |                                                                                                                                                         | Its: |   |   |   |   |
|   |       |       | ** ** | ** **                                                                                                                                                   | ** ** |
|   |       |       | ** ** | Agreed to and Accepted as  of                   ,  20  . | ** ** |
|   | ** ** | ** ** | ** ** | ** **                                                                                                                                                   | ** ** | ** ** |
|   | ** ** | ** ** | ** ** | ** **                                                                                                                                                   | ** ** | ** ** |
|   | ** ** | ** ** | ** ** | **“Tenant”:**                                                                                                                                      | ** ** |
|   | ** ** | ** ** | ** ** | ** **                                                                                                                                                   | ** ** | ** ** |
|   |       |       | ** ** | 1st Pacific Bank of California,  a California corporation                                                                                                    | ** ** |
|   |       |       | ** ** |                                                                                                                                                         | ** ** |
|   |       |       |       | By:                                                                                                                                                          |   |   |   |
|   |       |       |       |                                                                                                                                                         |   |   |
|   |       |       |       | Its:                                                                                                                                                         |   |   |   |
|        |            |            |            |                                                                                                                                                              |  |  |  |  |  |  |  |

 

29

----

**EXHIBIT “C”**

**REGENTSSQUARE**

**WORKLETTER**

**THIS WORK LETTER** (this “**WorkLetter**”) is attached as Exhibit “C” to that certain Office Leasedated concurrently herewith (the “**Lease**”)by and between **FSP REGENTS SQUARE, LLC**,a Delaware limited liability company (“**Landlord**”)and **1ST PACIFIC BANK OF CALIFORNIA**,a California corporation (“**Tenant**”).All capitalized terms used herein not otherwise defined herein shall have themeanings attributed to such terms in the Lease.

**SECTION1PREPARATION OF THE CONSTRUCTION DRAWINGS**

1.1       **Selection of Tenant’s Architect and the Engineers**.On or before the date therefor specified in the Time Schedule attached heretoas Exhibit “C-l” (the “**Time Schedule**”),Tenant shall engage (a) EN Studio Interior Design or another qualified interiorarchitect reasonably approved in advance by Landlord (“**Tenant’s Architect**”) to prepare theConstruction Drawings (defined below) for the Premises and (b) engineeringconsultants (if required) designated by Landlord (the “**Engineers**”) to prepare all engineeringplans and drawings for the structural, mechanical, electrical, plumbing, HVAC,life safety, and sprinkler work relating to the Tenant Improvements for thePremises.

1.2       **Final Space Plan**.Tenant and Tenant’s Architect shall prepare and deliver to Landlord forLandlord’s approval four (4) copies signed by the Tenant of the final spaceplan for all Tenant Improvements in the Premises (“**Final Space Plan**”), which Final Space Plan shall reflect alayout and description of all offices, rooms and other partitions, theirintended use, and the equipment to be contained therein. Landlord may requestreasonable clarification or more specific drawings for special use items notincluded in the Final Space Plan. Landlord shall, within a reasonable periodafter Landlord receives such Final Space Plan, (i) approve the Final SpacePlan, (ii) approve the Final Space Plan subject to specified conditions to becomplied with in connection with the Final Working Drawings (defined below), or(iii) disapprove the Final Space Plan and return the same to Tenant withrequired revisions. If Landlord disapproves the Final Space Plan, within three(3) business days of receipt of such disapproval, Tenant shall make all changesthereto required to satisfy Landlord’s required revisions and shall resubmit toLandlord for approval such revised Final Space Plan, with the foregoingprocedure to be repeated until the Final Space Plan is ultimately approved byLandlord.

1.3       **Final Working Drawings**. Based upon theFinal Space Plan for the Premises approved by Landlord (and any conditions ofapproval thereof imposed by Landlord), on or before the date therefor set forthin the Time Schedule, Tenant shall cause the Architect and the Engineers (ifany) to complete and deliver to Landlord for Landlord’s approval four (4)copies of complete fully coordinated architectural and (to the extent required)structural, mechanical, electrical and plumbing working drawings andspecifications for the Tenant Improvements for the Premises in a form which issufficiently complete to allow all subcontractors to bid on the work showntherein and to obtain all applicable Permits therefor (defined below)(collectively, the “**Final Working Drawings**”).Landlord shall, within a reasonable period after Landlord receives the FinalWorking Drawings, either (i) approve the Final Working Drawings, (ii) approvethe Final Working Drawings subject to specified conditions to be satisfied byTenant prior to submission of the same by Tenant for the Permits, or (iii)disapprove and return the same to Tenant with required revisions. If Landlorddisapproves the Final Working Drawings, within three (3) business days ofreceipt of such disapproval, Tenant shall make all changes thereto required tosatisfy Landlord’s required revisions and shall resubmit to Landlord such FinalWorking Drawings, with the foregoing procedure to be repeated until the FinalWorking Drawings for the Premises are ultimately approved by Landlord (as soapproved, the “**Approved Working Drawings**”).The Approved Working Drawings for the Premises and all parts or componentsthereof are sometimes referred to herein as the “**Construction Drawings**.”

1.4       **Changes in the Approved Working Drawings**.No changes, modifications or alterations in the Approved Working Drawings or inthe Tenant Improvements for the Premises contemplated thereby (a “**Change**”) may be made by Tenant without theprior written consent of Landlord; provided, however, that Landlord maywithhold its consent in its sole discretion to any Change which in Landlord’sjudgment would directly or indirectly delay Substantial Completion (definedbelow) of the Tenant Improvements.

1.5       **The Tenant Improvements**;**Standards for Approval**. The term “**Tenant Improvements**” means allimprovements, fixtures and equipment to be permanently affixed to the Premisespursuant to this Work Letter. Any approval or consent of Landlord hereunderwith respect to any portion or component of the Construction Drawings or theTenant Improvements shall be granted or withheld on the basis of such standardsas Landlord shall establish in good faith from time to time.

**SECTION2COST OF THE TENANT IMPROVEMENTS**

2.1       **Allocationof Costs**. Landlord shall bear all Tenant Improvement Costs(defined below) to the extent the total Tenant Improvement Costs do not exceedan amount (the “**Allowance Amount**”)equal to: (a) Eighteen Dollars ($18.00) multiplied by (b) the number of squarefeet of Usable Area contained within the Premises as determined by Landlord’sArchitect (defined below) (i.e., Seventy-Seven Thousand Five Hundred Twenty-SixDollars ($77,526.00)). Tenant shall bear all Tenant Improvement Costs in excessof the Allowance Amount (“**Excess TenantImprovement Costs**”) in accordance with the provisions of this WorkLetter. Notwithstanding

C-1

----

any provision of this Work Letter to the contrary,Landlord shall have no obligation hereunder to make any payments ordisbursements, or incur any obligation to make any payment or disbursement, ina total amount which exceeds the Allowance Amount.

2.2       **Payment of Excess Tenant ImprovementCosts by Tenant**.

(a)       Priorto commencement of performance of the Tenant Improvements and not later thanthree (3) business days following Landlord’s written request therefor, Tenantshall pay in cash the full Estimated Excess Tenant Improvement Costs (definedbelow) for the Premises, if any, estimated by Landlord. Prior to commencementof performance of any Change and not later than three (3) business daysfollowing Landlord’s written request therefor, Tenant shall pay in cash in fullLandlord’s estimate of the net increase in Estimated Excess Tenant ImprovementCosts, if any, expected by Landlord to result from such Change. If at any timeduring the course of performance of the Tenant Improvements, Landlord in goodfaith determines that the total Tenant Improvement Costs to be incurred inconnection with performance of the Tenant Improvements will exceed the sum of(i) the Allowance Amount and (ii) the amount of any cash amounts (“**Deposits**”) previously deposited by Tenantwith Landlord pursuant to this Section 2.2(a) (“**Excess Total Tenant Improvement Costs**”), Tenant shall pay toLandlord in cash the amount of such excess estimated by Landlord within five(5) business days of Landlord’s written request therefor. Any failure by Tenantto pay in cash in full any such Estimated Excess Tenant Improvement Costs orthe Excess Total Tenant Improvement Costs to Landlord within the time periodsspecified above shall be deemed a Tenant Delay (defined below). Notwithstandinganything in this Work Letter or the Lease to the contrary, (i) Landlord shallhave the right to discontinue its performance of the Tenant Improvements untilsuch time as Tenant complies with the requirements of this Section 2.2(a) and(ii) Landlord shall not be liable to Tenant for any additional costs, lostprofits, lost economic opportunities or any form of consequential damage whichmay result from any such discontinuance by Landlord under this Section 2.2(a).

(b)       Followingfinal completion of the Tenant Improvements, Landlord shall reconcile theactual total Tenant Improvement Costs incurred hereunder with the total of (i)the Allowance Amount and (ii) all cash amounts previously paid by Tenant toLandlord pursuant to this Section 2.2 (collectively, “**Tenant Credit Amount**”). If the total TenantImprovement Costs exceed the Tenant Credit Amount, Tenant shall pay in cash toLandlord the amount of the excess within five (5) business days of Landlord’swritten request therefor. If the Tenant Credit Amount exceeds the total TenantImprovement Costs, to the extent of any Deposits previously paid by Tenant,Landlord shall promptly return the amount of such excess Deposits to Tenant. Inthe event that the Allowance Amount exceeds the total Tenant Improvement Costs,Tenant may credit any unused portion of the Allowance Amount against Tenant’scosts of network cabling/IT costs, telecommunications systems, furniture costs,Tenant’s relocation costs to the Premises, and Tenant’s obligation to pay BaseRent next coming due under the Lease until the Allowance Amount is exhausted.

2.3       **Selection of the Contractor and Preparation of the BidEstimates**. The contractor which shall construct the TenantImprovements shall be a contractor selected pursuant to the followingprocedure. The Approved Working Drawings shall be submitted by Landlord tothree (3) general contractors selected by Landlord in its good faithdiscretion. Each such contractor shall be invited to submit a sealed, fixedprice contract bid (on such bid form as Landlord shall designate) to constructthe Tenant Improvements. Each contractor shall be notified in the bid packageof the time schedule for construction of the Tenant Improvements. Thecontractors shall be required to promptly submit to Landlord bids and Landlordshall reconcile all such promptly submitted bids to adjust inconsistent orincorrect assumptions so that a like-kind comparison can be made and a lowbidder determined. Unless mutually agreed upon by Landlord and Tenant inwriting, Landlord shall select the contractor who shall be the lowest bidderand who states that it will be able to meet Landlord’s construction schedule.The contractor selected may be referred to herein as the “**Contractor**”). Upon the selection of theContractor, Landlord shall submit the fixed bid from the Contractor to Tenant,together with Landlord’s nonbinding estimate of (i) the total TenantImprovement Costs and, if applicable, (ii) the total excess Tenant ImprovementCosts to be incurred in connection with such bid (“**Estimated Excess Tenant Improvement Cost**”) (the “**Bid Estimate**”). Within three (3) businessdays of receipt of the Bid Estimate. Tenant shall pay to Landlord in cash theamount of Landlord’s Estimated Excess Tenant Improvement Cost, if any,associated with the Bid Estimate.

**SECTION3CONSTRUCTION**

3.1       **Permits**. Upon approval by Landlord ofthe Approved Working Drawings, Tenant shall cause Tenant’s Architect and theEngineers (if any) to submit the same to the appropriate governmental entitiesand otherwise apply for all applicable building and other permits and approvals(collectively, “**Permits**”)necessary or required for the Contractor to commence, perform and fullycomplete the construction of the Tenant Improvements (and to permit Tenant tolegally occupy the Premises) and Tenant shall cause all of the Permits to befully issued within five (5) business days of Landlord’s approval of theApproved Working Drawings. Neither Landlord nor any Landlord Party shall haveany obligation or liability to Tenant if any Permit (including, withoutlimitation, any building permit, certificate of occupancy, or equivalent) isnot timely issued to Tenant.

3.2       **Landlord’s Retention of the Contractor**.Landlord shall independently retain the Contractor selected pursuant toSection 2.3 to construct the Tenant Improvements in accordance with theApproved Working Drawings andsuch Contractor’s Bid Estimate pursuant to such construction contract form asLandlord shall reasonably determine. Landlord reserves the right to designatethe subcontractor or subcontractors to perform particular trades (orcomponents of) the Tenant Improvements such as fire/life safety, HVAC,structural and electrical work. Tenantshall pay to Landlord a supervisory fee (the “**SupervisionFee**”) in an amount equal to three percent (3%) of an amount equal tothe sum of (a) the total Tenant Improvement Costs and (b) costs incurred byLandlord in connection with the issuance of the Permits (collectively, the “**Construction Costs**”). Landlord

C-2

----

reserves the absolute right, without the need forconsultation with or the consent of Tenant, to terminate the Contractor fornonperformance (as determined in good faith by Landlord) and in such caseLandlord may select another Contractor (or another Contractor reasonablyapproved by Tenant) to complete the Tenant Improvements. Notwithstanding anyprovision of this Work Letter to the contrary, Tenant hereby waives all claimsagainst Landlord, and Landlord shall have no responsibility or liability toTenant, on account of any nonperformance or any misconduct of any Contractor (orany subcontractor thereof) for any reason.

3.3       **Record Set of Drawings**. Immediatelyafter the Substantial Completion, Tenant shall cause Tenant’s Architect toprepare and deliver to Landlord two (2) complete copies of a “record set” ofreproducible as-built drawings and two (2) complete sets of CAD files of theas-built documents (current version of AutoCad) for the Tenant Improvements.

3.4       **As-Is**.

(a)       Tenantshall, subject to the express provisions of this Work Letter, accept thePremises in its then condition on the Delivery Date, “AS-IS,” “WITH ALL FAULTS”and Landlord shall have no duty or obligation to improve, or pay for anyimprovement for, the Premises or any portion thereof (or correct any violationof any statutes, law, ordinance, code or regulation applicable thereto);provided, however, that the Landlord shall be responsible to cause the existingelectrical, mechanical, HVAC, plumbing and restroom equipment and facilitiescontained in the Premises to be in working condition (consistent with InstitutionalOwner Practices) on the Delivery Date.

(b)       The base building work and base building systems and equipmentwith respect to the Premises and the Building, as customarily defined byLandlord (“**Base Building**” and “**Base Building Systems,**” respectively) shallbe provided on an “as is” basis, and Tenant accepts the same and the Premisesin its existing condition as of the date hereof.

**SECTION4SUBSTANTIAL COMPLETION**

4.1       **Ready for Occupancy**. The Premises shallbe deemed “**Ready for Occupancy**”upon the earlier of (i) the date upon which Tenant occupies any portion of thePremises, or (ii) Substantial Completion of the Tenant Improvements; provided,however, if Tenant occupies all or any portion of the Premises prior toSubstantial Completion, Tenant shall not impede or otherwise disrupt theSubstantial Completion of the Premises. In addition, Tenant shall indemnify,defend, protect and hold harmless Landlord with respect to any Claims, Damagesand Costs (as defined in Section 11.1(a) of the Lease) in connection withTenant’s occupancy of the Premises prior to Substantial Completion. Forpurposes of this Lease, “**SubstantialCompletion**” of the Premises shall occur upon the substantialcompletion of construction of the Tenant Improvements pursuant to the ApprovedWorking Drawings, as evidenced by a “signoff’ on the building permit card by aninspector of the City of San Diego and as otherwise determined by Landlord’sArchitect, with the exception of any punch list items and any tenant fixtures,work-stations, built-in furniture, or equipment to be installed by Tenant orunder the supervision of Contractor. The “**DeliveryDate**” shall mean the date Landlord delivers to Tenant actualpossession of the Premises upon Substantial Completion of the TenantImprovements in accordance with the terms and conditions of the Lease and thisWork Letter.

4.2       **Time Deadlines**. Tenant shall use itsbest, good faith, efforts and all due diligence to cause Tenant’s Architect andthe Engineers (if any) to complete (and to cooperate with Landlord and theContractor to complete) all phases of the Construction Drawings and thepermitting process and to receive the Permits, and to achieve SubstantialCompletion as soon as possible, and, in that regard, shall meet with Landlordon a scheduled basis to be determined by Landlord, to discuss Tenant’s progressin connection with the same. The applicable dates for action by Tenant or byTenant’s Agents (defined below) under this Work Letter are set forth in theTime Schedule (the “Time Deadlines”). Tenant agrees to strictly comply witheach Time Deadline.

4.3       **Tenant Delays**. A “**Tenant Delay**” shall mean any delay in theSubstantial Completion of the Premises as a direct, indirect, partial, or totalresult of any act or omission of Tenant or any of Tenant’s Agents, including,without limitation, Tenant’s Architect or any Engineer, including, withoutlimitation, any of the following: (a) Tenant’s failure to comply with any TimeDeadline; (b) Tenant’s failure to timely approve any matter requiring Tenant’sapproval hereunder; (c) any breach by Tenant of the provisions of this WorkLetter or of the Lease; (d) any Changes including, without limitation, anyChange required because the Construction Drawings do not comply with applicableCodes or other applicable Laws; (e) any Tenant request for a Change; (f) anyrequirement of Tenant for materials, components, finishes or improvements whichare not available within a commercially reasonable period, or which aredifferent from, or not included in, the Building Standards; (g) changes to theBase Building and/or Base Building Systems required by the Approved WorkingDrawings; and (h) failure to pay in cash in full any portion of the EstimatedExcess Tenant Improvement Costs or the Total Excess Tenant Improvement Costs inaccordance with Section 2.2(a) within the time periods specified in Section2.2(a).

4.4       **Disbursement of the Allowance Amount**.

(a)       “**Tenant Improvement Costs**” means thefollowing: (i) the fees of the Architect and the Engineers (if any), whichpayment shall not exceed an aggregate amount equal to Five Dollars ($5.00) persquare foot of Usable Area contained in the Premises, (ii) all fees and costsincurred by, and the cost of documents and materials supplied by, Landlord andLandlord’s consultants in connection with the preparation and review of theConstruction Drawings; (iii) the cost of any Changes in or to the Base Building(or Base Building Systems) when such Changes are required by the ConstructionDrawings; (iv) the cost of any Changes to the

C-3

----

Construction Drawings or the Tenant Improvementsrequired by Code; (v) the Supervision Fee; (vi) all costs of (or relating to)construction of the Tenant Improvements (without regard to the amount of theBid Estimate or Landlord’s estimate of total Tenant Improvement Costs),including, without limitation, testing and inspection costs, trash removalcosts, parking fees, after-hours utilities usage, and contractors’ fees andgeneral conditions; (vii) the cost of cable and other telecommunications linesinstalled as part of the Tenant Improvements, but specifically excluding anycosts in connection with the installation of Tenant’s telephone service (whichshall be separately installed by Tenant’s Agents); (viii) plan check, permitfees, license fees, Title 24 fees and use taxes; and (ix) the cost ofinstalling Building Standard window coverings.

(b)       Landlord shall have the right to disbursethe Allowance Amount and the Deposits for such Tenant Improvement Costs and insuch order as Landlord shall determine. In the event that (i) Tenant desiresLandlord to disburse the Allowance Amount and the Deposits for TenantImprovement Costs payable directly by Tenant and (ii) in Landlord’s judgment,the Allowance Amount and the Deposits are sufficient to cover the sum of (A)the Tenant Improvement Costs directly payable by Landlord in connection withthis Work Letter and (B) the amounts desired to be so disbursed by Tenant,Landlord shall make such disbursements to Tenant pursuant to this Section4.4(b). Landlord shall not be required to make more than one such disbursementto Tenant per calendar month and then only if on or before the twenty-fifty(25th) day of the preceding calendar month, Tenant delivers to Landlord (i) arequest for payment substantially in the form of AIA Document G702, (ii)invoices from all of Tenant’s Agents covered by Tenant’s request fordisbursement, (iii) executed mechanic’s lien releases from all of such Tenant’sAgents that are entitled to lien rights, which shall comply with theappropriate provisions, as reasonably determined by Landlord, of CaliforniaCivil Code Section 3262(d); and (iv) all other information reasonably requestedby Landlord. Tenant’s request for payment shall be deemed Tenant’s acceptanceand approval of the work furnished and/or the materials supplied as set forthin Tenant’s payment request vis-á-vis the Landlord. Provided that such requestfor disbursement (and the work covered hereby) is in Landlord’s judgment incompliance with the provisions of this Work Letter, on or before the last dayof the calendar month following Landlord’s receipt of such request, Landlordshall deliver a check to Tenant made payable to either Tenant’s Agent or Tenant(at the election of Landlord), in an amount equal to the lesser of: (A) ninetypercent (90%) of the amount so requested by Tenant and (B) the balance of anyremaining available portion of the Allowance Amount and the Deposits. Landlord’spayment of such amounts shall not be deemed Landlord’s approval or acceptanceof the work furnished or materials supplied as set forth in Tenant’s paymentrequest. In addition to the conditions set forth in this Section 4.5(b)applicable to all disbursements on Tenant’s request, any disbursement of aretention previously withheld and with respect to any such request by Tenant,following Substantial Completion, the following conditions to payment shallalso be applicable: (i) Tenant shall deliver to Landlord properly executedmechanic’s lien releases from all such Tenant’s Agents in compliance with bothCalifornia Civil Code Section 3262(d)(2) and either Section 3262(d)(3) orSection 3262(d)(4), (ii) Landlord shall determine that no substandard workexists which adversely affects the mechanical, electrical, plumbing, heating,ventilating and air conditioning, life-safety or other systems of the Building,the curtain wall of the Building, the structure or exterior appearance of theBuilding, or any other tenant’s use of such other tenant’s leased premises inthe Building, (iii) Landlord shall have determined that all other TenantImprovement Costs shall have been paid in full, and (iv) Landlord’s Architectand Landlord shall have determined that Substantial Completion of the TenantImprovements has occurred.

4.5       **BuildingStandards**. Landlord has established (or may establish in thefuture) Building Standards for the components to be used in the construction ofthe Tenant Improvements in the Premises (“**BuildingStandards**”). The quality of all Tenant Improvements shall be equalto or of greater quality than the quality specifications of the BuildingStandards, provided, however that Landlord may, at Landlord’s option, requirethe Tenant Improvements to comply with specific Building Standards. Landlordreserves the right to promulgate, establish, modify, delete from, and makeother changes to the Building Standards from time to time.

**SECTION5 GENERAL PROVISIONS**

5.1       **Tenant’sEntry into the Premises Prior to Substantial Completion**.Provided that Tenant and Tenant’s Agents do not interfere in any respect withContractor’s work (or performance of the Tenant Improvements) in the Buildingand the Premises, Landlord shall allow Tenant reasonable access to the Premisesprior to the Substantial Completion for the purpose of Tenant installing overstandard equipment or fixtures (including Tenant’s data and telephoneequipment). Not less than five (5) business days prior to Tenant’s entry aspermitted by the terms of this Section 5.1, Tenant shall submit a schedule toLandlord and Contractor, for their approval, which schedule shall detail thetiming and purpose of Tenant’s entry and the particular Tenant’s Agentsinvolved, and a copy of any governmental permits and approvals required inconnection therewith. Tenant shall indemnify, protect, defend and hold Landlordharmless from and against any Claims, Damages and Costs resulting in any wayfrom any such entry.

5.2       **Tenant’sRepresentative**. Tenant has designated Vincent Siciliano as itssole representative with respect to the matters set forth in this Work Letter,who, until further notice to Landlord, shall have full authority andresponsibility to act on behalf of the Tenant as required in this Work Letter.

5.3       **Landlord’sRepresentative**. Landlord has designated Meg Somers as its solerepresentative with respect to the matters set forth in this Work Letter who,until further notice to Tenant, shall have full authority and responsibility toact on behalf of the Landlord as required in this Work Letter.

5.4       **ConstructionDrawings**. Following Tenant’s request, Landlord shall makeavailable to Tenant and Tenant’s Architect, reasonable access to any basebuilding plans relating to the Premises in Landlord’s possession; provided,however, Landlord hereby disclaims any express or implied representation orwarranty as to the accuracy of the same. Tenant, Tenant’s Architect and theEngineers (if any) shall verify, in the field, the

C-4

----

dimensions and conditions as shown on the relevantportions of the base building plans, if any, and Tenant and Architect shall besolely responsible for the same, and Landlord shall have no responsibility inconnection therewith. Tenant’s Final Working Drawings shall, at a minimum,comply with the format requirements of Exhibit “C-2” attached hereto.Landlord’s review of the Construction Drawings as set forth in this Work Lettershall be solely for the purpose of protecting Landlord’s interests hereunderand shall not imply Landlord’s review of the same, or obligate Landlord toreview the same, for quality, design, Code compliance or other like matters,for the benefit of Tenant, the Contractor or any other party, and Landlordshall have no liability whatsoever in connection therewith and shall not beresponsible for any omissions or errors contained in the Construction Drawings.Tenant’s waiver and indemnity set forth in Section 11.1 of this Lease shallspecifically apply to the Construction Drawings. All references containedherein to “**Landlord’s Architect**”shall refer to such qualified licensed architect as shall be designated byLandlord from time to time as “Landlord’s Architect.”

5.5       **Tenant’sAgents and Construction Matters**. Tenant’s Architect, theEngineers (if any) and all subcontractors, laborers, materialmen, and suppliersretained directly by Tenant (collectively, “**Tenants**’**Agents**”) shall conduct their activities inand around the Premises, Building and the Project in a harmonious relationshipwith all other subcontractors, laborers, materialmen and suppliers at thePremises, Building and Project and, if required by Landlord, allsubcontractors, laborers, materialmen, and suppliers retained directly byTenant shall all be union labor in compliance with the master labor agreementsexisting between trade unions and the Southern California Chapter of theAssociated General Contractors of America. Subject to the provisions of thisWork Letter, Tenant shall (a) timely pay in full all charges of each Tenant’sAgents, (b) shall, on demand from Landlord, eliminate of record and satisfy infull all mechanics liens, stop notices as similar liens or encumbrances on theBuilding asserted or filed by any Tenant’s Agent, (c) prior to any entry intothe Building by Tenant or any Tenant’s Agent, evidence, in form satisfactory toLandlord, compliance in full with the insurance requirements set forth in Exhibit“C-3” attached hereto, and (d) indemnify, defend, protect and hold Landlordharmless from any Claims, Damages and Costs asserted against or incurred byLandlord in connection with any act or omission of any Tenant’s Agent in orabout the Building or the Premises or otherwise related to the Premises. Tenantshall comply in full (and shall cause each of its Tenant’s Agents to comply infull) with such construction rules and regulations as Landlord shall adopt fromtime to time. Effective upon completion of the Tenant Improvements, Landlordhereby assigns to Tenant all warranties and guaranties by Contractor relatingto the Tenant Improvements, and Tenant hereby waives all claims againstLandlord relating to, or arising out of the construction of, the TenantImprovements.

5.6       **Timeof the Essence in This Work Letter**. Unless otherwise indicated,all references herein to a “number of days” shall mean and refer to calendardays. 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 such periodthe item shall automatically be deemed approved or delivered by Tenant and thenext succeeding time period shall commence. Except where specific time periodsare specified herein, all references to a “reasonable period” contained in thisWork Letter shall mean a reasonable amount of time to respond to the request orsubmission in question, taking into consideration all of the circumstancesreasonably related to the amount of time required, assuming reasonablediligence; provided, however, in no case shall such period ever be less thanfive (5) business days.

5.7       **Tenant’sLease Default**. Notwithstanding any provision to the contrarycontained in this Lease, if an Event of Default as described in Section 16.1 ofthe Lease, or a default by Tenant under this Work Letter, has occurred at anytime on or before the Substantial Completion, then (i) in addition to all otherrights and remedies granted to Landlord pursuant to the Lease, Landlord shallhave the right to withhold payment of all or any portion of the AllowanceAmount and/or Landlord may cause Contractor to cease the construction of theTenant Improvements in question (in which case, Tenant shall be responsible forany delay in or increase in the cost of the Substantial Completion of theTenant Improvements caused by such work stoppage), and (ii) all otherobligations of Landlord under the terms of this Work Letter shall be forgivenuntil such time as such default is cured pursuant to the terms of the Lease.

C-5

----

**EXHIBIT “C-1”**

**TIMESCHEDULE**
| **Dates** | ** ** | **Actions to be Performed** |
|-----------|------------|-----------------------------|
|      |       |                        |   |   |
| 1.        |       | September 8, 2004           |   | Final Space Plan to be completed by Tenant and  delivered to Landlord. |
|      |       |                        |   |   |
| 2.        |       | September 24, 2004          |   | Tenant to deliver to Landlord its Final Working  Drawings. |
|      |       |                        |   |   |
| 3.        |       | October 1, 2004             |   | Tenant to deliver all Permits to Landlord. |
|      |       |                        |   |   |
| 4.        |       | November 30, 2004           |   | Estimated date of Substantial Completion. |

 

----

**EXHIBIT “C-2”**

**SPECIFICATIONS**

Floor Plans Showing:

1.         Location and type of all partitions.

2.         Location and type of all doors. Indicate hardware andprovide keying schedule.

3.         Location and type of glass partitions, windows, and doors.Indicate framing and reference full-height partitions.

4.         Locations of telephone equipment room.

5.         Critical dimensions necessary for construction and indicaterequired clearances.

6.         Location and types of all electrical items: outlets,switches, telephone outlets and lighting.

7.         Location and type of equipment that will require specialelectrical requirements. Provide manufacturer’s specifications for use andoperation, including heat output.

8.         Location, weight per square foot, and description of anyheavy equipment or filing system and confirmation from a structural engineerthat loads created by any of Tenant’s systems, furniture, equipment, etc. arein conformance with the allowable structural loads on any given floor.

9.         Requirements for special air conditioning or ventilation.

10.       Location and type of plumbing.

11.       Location and type of kitchen equipment.

12.       Location, type and color of floorcovering, wall covering, paint and finishes.

Details Showing:

1.         All millwork with verified dimensions of all equipment to bebuilt in.

2.         Corridor entrance.

3.         Bracing or support of special walls, glass partitions, etc.,if desired. If not included with the plans, Tenant’s engineer will design allsupport or bracing required at Tenant’s expense.

Additional Information:

1.         Provide Landlord with Title 24 energy calculations.   

2

----

**EXHIBIT “C-3”**

**INSURANCE REQUIREMENTS**

1.         **GeneralCoverages**. All of Tenant’s Agents shall carry worker’scompensation insurance covering all of their respective employees, and shallalso carry public liability insurance, including property damage, all with limits,in form and with companies as are required to be carried by Tenant as set forthin Article 11 of the Lease.

2.         **SpecialCoverages**. The Tenant Improvements shall be insured by Tenantpursuant to Article 11 of the Lease immediately upon completion thereof.All of Tenant’s Agents shall carry excess liability and Products and CompletedOperation Coverage insurance, each in amounts not less than $500,000 perincident, $1,000,000 in aggregate, and in form and with companies as arerequired to be carried by Tenant as set forth in Article 11 of theLease.

3.         **GeneralTerms**. Certificates for all insurance carried pursuant to this ExhibitC-3 shall be delivered to Landlord before any entry into the Project byTenant or any Tenant’s Agent. All such policies of insurance must contain aprovision that the company writing said policy will give Landlord thirty (30)days prior written notice of any cancellation or lapse of the effective date orany reduction in the amounts of such insurance. In the event that the TenantImprovements are damaged by any cause during the course of the constructionthereof, Tenant shall immediately repair the same at Tenant’s sole cost andexpense. Tenant’s Agents shall maintain all of the foregoing insurance coveragein force until the Tenant Improvements are fully completed and accepted byLandlord. All policies carried under this Exhibit C-3 shall insureLandlord and Tenant, as their interests may appear, as well as Contractor andTenant’s Agents. All insurance, except Workers’ Compensation, maintained byTenant’s Agents shall preclude subrogation claims by the insurer against anyoneinsured thereunder. Such insurance shall provide that it is primary insuranceas respects the Landlord and that any other insurance maintained by Landlord isexcess and noncontributing with the insurance required hereunder. Therequirements of the foregoing insurance shall not derogate from the provisionsfor indemnification of Landlord by Tenant contained in this Work Letter.

----

**EXHIBIT D**

**RULES ANDREGULATIONS**

Tenant shall faithfully observe and comply with thefollowing Rules and Regulations. Landlord shall not be responsible to Tenantfor the nonperformance of any of said Rules and Regulations by or otherwisewith respect to the acts or omissions of any other tenants or occupants of theProject.

1.      Thesidewalks, driveways, entrances, passages, courts, elevators, vestibules,stairways, corridors or halls shall not be obstructed or used for any purposeother than ingress and egress.

2.      Noawnings or other projection shall be attached to the outside walls of theProject without Landlord’s prior written consent.

3.      Thesashes, sash doors, skylights, windows and doors that reflect or admit lightand air into the halls, passageways or other public places in the Project shallnot be covered or obstructed, nor shall any bottles, parcels or other articlesbe placed on the windowsills. If Tenant desires window curtains, the same mustbe of such uniform shape, color, material and make as may be prescribed byLandlord. Neither the interior nor the exterior of any windows shall be coatedor otherwise sunscreened without Landlord’s prior written consent.

4.      No sign,advertisement or notice shall be exhibited, painted or affixed by Tenant on anypart of, or so as to be seen from the outside of, its Premises or the Projectwithout Landlord’s prior written consent. In the event of Tenant’s violation ofthe foregoing, Landlord may remove the same without any liability and maycharge the expense incurred in such removal to Tenant. All signs whether ondoors, directory tablets or elsewhere, shall be inscribed, painted or affixedfor Tenant by Landlord at the expense of Tenant, and shall be of a size, colorand style acceptable to Landlord.

5.      Thebulletin board or directory of the Project will be provided exclusively for thedisplay of the name and location of Tenant only; and Landlord reserves theright to exclude any other names therefrom, and each and every name in additionto the name of Tenant placed upon such bulletin board or directory, shall besubject to Landlord’s prior written consent (and if approved by Landlord, allcosts therefor shall be paid by Tenants). Any such listings or representations,once installed, shall be subject to relocation or removal upon Landlord’swritten request for any reason (except that any such relocations or removals atLandlord’s request, unless such request is based upon Tenant’s breach of theLease, of which these Rules and Regulations are a part, shall be paid for byLandlord), and Tenant shall pay for the removal of any such listings orrepresentations upon its departure from its Premises.

6.      All doorsopening onto public corridors shall be kept closed, except when being used foringress and egress.

7.      Tenantshall not mark, paint, drill or bore into, cut or string wires in, lay linoleumor other floor coverings, in, or in any way deface any part of its Premises orthe Project, except with Landlord’s prior written consent and as Landlord maydirect.

8.      All keysshall be obtained from Landlord. No additional locks or bolts of any kind shallbe placed upon any of the doors or windows by Tenant, nor shall any changes bemade in existing locks or the mechanisms thereof. Tenant must, upon thetermination of its tenancy, give to Landlord all keys pertaining to thePremises and the Project, and in the event of the loss of any keys sofurnished, Tenant shall pay Landlord the cost of replacing same or changing thelock or locks opened by such lost key(s) if Landlord shall deem it necessary tomake such change.

9.      No windowor other air conditioning or heating units or other similar apparatus shall beinstalled or used by Tenant without Landlord’s prior written consent.

10.    The waterand wash closets and other plumbing fixtures shall not be used for any purposeother than those for which they were constructed and no sweepings, rubbish,rags or other substances shall be thrown therein. All damages resulting fromany misuse of the fixtures by Tenant or its servants, employees, agents,visitors or licensees shall be borne by Tenant.

11.    Allremovals from, or carrying in or out of, the Project of any safes, freight,furniture, heavy or bulky matter of any description, must take place only priorto 7:00 A.M. and/or after 5:30 P.M. of days other than Saturdays, Sundays andholidays (no moving being permitted on Saturdays, Sundays or holidays withoutspecial permission) and must be made upon previous written notice to Landlordand under its supervision, and the persons employed by Tenant for such workmust be acceptable to Landlord. Tenant shall be responsible for any damage tothe Premises from any such activity. Landlord reserves the right to inspect allsafes or other heavy or bulky equipment or articles to be brought into theProject and to exclude from the Project all such heavy or bulky equipment orarticles, the weight of which may exceed the floor load for which the Projectis designed, or such equipment or articles as may violate any of the provisionsof the Lease of which these Rules and Regulations are a part. Tenant shall notuse any machinery or other bulky articles in the Premises, even though itsinstallation may have been permitted, which may cause any noise, or jar, ortremor to the floors or walks, or which by its weight might cause injury to thefloor of the Project.

12.    NeitherTenant nor its servants, employees, agents, visitors or licensees shall at anytime bring or keep upon the Premises any flammable, combustible or explosivefluid, chemical or substance, except for a reasonable quantity of such materialreasonably necessary for the conduct of Tenant’s business.

13.    Tenant’sPremises shall not be used for manufacturing or for the storage of merchandiseexcept as such storage may be incidental to the permitted use of such Premises.Tenant shall not, without Landlord’s

30

----

prior written consent, occupy or permit any portion of its Premises tobe occupied or used for the manufacture or sale of liquor or tobacco in anyform, or as a barber or manicure shop, or as an employment bureau. The Premisesshall not be used for lodging or sleeping or for any immoral or illegalpurposes.

14.    Tenantshall not make, or permit to be made, any unseemly or disturbing noises, ordisturb or interfere with occupants of the Project or neighboring buildings orpremises or those having business with it by the use of any musical instrument,radio, phonographs or unusual noise, or in any other way. Neither Tenant norits servants, employees, agents, visitors or licensees shall throw anything outof doors, windows or skylights or down the passageways.

15.    Nobicycles, vehicles or animals of any kind shall be brought into or kept in orabout Tenant’s Premises and no cooking shall be done or permitted by Tenant inits Premises, except that the preparation of coffee, tea, hot chocolate andsimilar items for Tenant, its employees and visitors shall be permittedprovided such activities do not otherwise violate the Lease of which theseRules and Regulations are part. Tenant shall not cause or permit any unusual orobjectionable odors to be produced in or emanate from its Premises.

16.    Thereshall not be used in any space, or in the public halls of the building, anyhand trucks except those equipped with rubber tires and side guards.

17.    No vendingor coin operated machines shall be placed by Tenant within the Premises withoutLandlord’s prior written consent.

18.    No personshall be employed by Tenant to do janitorial, maintenance, construction orsimilar work in any part of said Project without Landlord’s prior writtenconsent. Any person employed by Tenant to do janitorial, maintenance or similarwork with Landlord’s consent shall, while in the Project, be subject to andunder the control and direction of Landlord or its agent or representative (butnot as an agent or servant of Landlord) and Tenant shall be responsible for allacts of such persons.

19.    Landlordshall have the right to prohibit any advertising by Tenant which, in Landlord’sopinion, tends to impair the reputation of the Project or its desirability asan office building, and upon written notice from Landlord, Tenant shall refrainfrom or discontinue such advertising.

20.    Canvassing,soliciting and peddling in the Project are prohibited and Tenant shallcooperate to prevent same.

21.    Landlordreserves the right to control access to the Project by all persons afterreasonable hours of generally recognized business days and at all hours onSundays and legal holidays. Tenant shall be responsible for all persons forwhom it requests after hours access and shall be liable to Landlord for allacts of such persons. Landlord assumes no responsibility and shall not beliable for any damage resulting from the admission of any unauthorized personto the Project.

22.    Landlordreserves the right to exclude or expel from the Project any person who, in thejudgment of Landlord, is intoxicated or under the influence of liquor or drugs,or who shall in any manner do any act in violation of the Rules and Regulationsof the Project.

23.    It isunderstood and agreed between Landlord and Tenant that no assent or consent toany waiver of any part hereof by Landlord in spirit or letter shall be deemedor taken as made except if same is done in writing and attached to or endorsedhereon by Landlord. Any such waiver shall not constitute a waiver of any otherrule or regulation or any subsequent application thereof to Tenant.

24.    Landlordreserves the right at any time to change or rescind any one of more of theseRules and Regulations, or to make such other and further reasonable Rules andRegulations as in Landlord’s judgment may from time to time be necessary forthe management, safety, care and cleanliness of the Premises and Project, andfor the preservation of good order therein, as well as for the convenience ofother occupants and tenants therein. Landlord shall not be responsible toTenant herein or to any other person for the nonobservance of the Rules andRegulations by any other tenant or other person. Tenant shall be deemed to haveread these Rules and Regulations and to have agreed to abide by them as acondition of its occupancy of the Premises.

25.    Tenantshall not suffer or permit smoking or carrying of lighted cigars or cigarettesin areas reasonably designated by Landlord or by applicable governmentalagencies as nonsmoking areas.

26.    Tenantshall comply with all safety, fire protection and evacuation regulationsestablished by Landlord or any applicable governmental agency.

27.    Tenantassumes all risks from theft or vandalism and agrees to keep the Premises lockedas may be required.

31

----

**PARKING RULES**

The following parking rules and regulations (“**Parking Rules**”) shall be in effect at theProject. Landlord reserves the right to adopt reasonable, nondiscriminatorymodifications and additions to the Parking Rules by written notice to Tenant.In the case of any conflict between these Parking Rules and the Lease, theLease shall control.

1.      Parkingareas shall be used only for parking vehicles no larger than full size,passenger automobiles herein called “Permitted Size Vehicles.” Vehicles otherthan Permitted Size Vehicles are herein referred to as “Oversized Vehicles.”

2.      Tenantshall not permit or allow any vehicles that belong to or are controlled byTenant or Tenant’s employees, suppliers, shippers, customers, or invitees to beloaded, unloaded, or parked in areas other than those designated by Landlordfor such activities.

3.      Parkingstickers, access cards or identification devices shall be the property ofLandlord and be returned to Landlord by the holder thereof upon termination ofthe holder’s parking privileges. Tenant shall pay to Landlord refundabledeposits on such devices as reasonably established by Landlord from time totime. Tenant will pay such replacement charge as is reasonably established byLandlord for the loss of such devices.

4.      Landlordreserves the right to refuse the sale of monthly identification devices and/orparking access cards to any person or entity that willfully refuses to complywith the applicable rules, regulations, laws and/or agreements.

5.      Landlordreserves the right to relocate all or a part of the parking spaces on theProperty from one location on the Property to another and/or to reasonablyadjacent offsite location(s), and to reasonably allocate them between compactand standard size spaces, so long as the same complies with applicable laws,ordinances and regulations.

6.      Users ofthe parking area will obey all posted signs and park only in the areasdesignated for vehicle parking.

7.      Unlessotherwise instructed, every person using the parking area is required to parkand lock his own vehicle. Landlord will not be responsible or liable to Tenant,its visitors or employees for any damage to vehicles, injury to persons or lossof property, all of which risks are assumed by the party using the parkingarea.

8.      Parkingvalidation, if established, will be permissible only by such method or methodsas Landlord and/or its licensee may establish at rates generally applicable.

9.      TheParking Facilities shall be used only for parking vehicles. The maintenance,washing, waxing or cleaning of vehicles in the parking structure or commonareas of the Project is prohibited. Tenant shall have no right to install anyfixtures, equipment or personal property (other than vehicles) in the ParkingFacilities, nor shall Tenant make any alteration to the Parking Facilities.

10.    Tenantshall be responsible for seeing that all of its employees, agents and inviteescomply with all applicable parking rules, regulations, laws and agreements.

11.    Suchparking use as is herein provided is intended only as a license and no bailmentis intended or shall be created hereby.

12.    In noevent shall Tenant or its employees park in reserved spaces leased to othertenants or in stalls within designated visitor parking zones. Tenant shallcomply with Landlord’s Parking Rules in its use (and in the use of itsvisitors, patrons and employees) of the Parking Facilities.

13.    Tenantshall, upon request of Landlord from time to time, furnish Landlord with a listof its employees’ names and of Tenant’s and its employees’ vehicle licensenumbers. Tenant agrees to notify its employees and visitors with these ParkingRules as the same are modified from time to time, and assumes responsibilityfor compliance by its employees and visitors with these Parking Rules as thesame are modified from time to time, and shall be liable to Landlord for allunpaid parking charges incurred by its employees. Tenant authorizes Landlord totow away from the Building and/or Parking Facilities any vehicle belonging toTenant or its employees or visitors parked in violation of these Parking Rules,and/or to attach violation stickers or notices to those vehicles.

14.    Personsusing the Parking Facilities shall observe all directional signs and arrows andany posted speed limits. Unless otherwise posted, in no event shall the speedlimit of five (5) miles per hour be exceeded. All vehicles shall be parkedentirely within painted stalls, and no vehicles shall be parked in areas whichare posted or marked as “no parking” or on ramps, driveways and aisles. Onlyone (1) vehicle may be parked in a parking space. In no event shall Tenantinterfere with the use and enjoyment of the Parking Facilities by other tenantsof the Building or their employees or invitees.

15.    Should anyparking spaces be allotted by Landlord or Tenant, either on a reserved orunreserved basis, Tenant shall not assign or sublet any of those spaces, eithervoluntarily or by operation of law, without the prior written consent ofLandlord, except in connection with an authorized assignment of this Lease orsubletting of the Premises.

16.    Landlordreserves the right to modify these rules and regulations and to adopt suchother reasonable and non-discriminatory rules and regulations as it may fromtime to time deem necessary for the proper operation and safety of the parkingarea. Tenant agrees to abide by these and such other rules and regulations.

32

----

Landlord reserves the right at any time to change or rescind any one ormore of these Rules and Regulations, or to make such other and furtherreasonable Rules and Regulations as in Landlord’s judgment may from time totime be necessary for the management, safety, care and cleanliness of thePremises and the Project, and for the preservation of good order therein, aswell as for the convenience of other occupants and tenants therein. Landlordmay waive any one or more of these Rules and Regulations for the benefit of anyparticular tenants, but no such waiver by Landlord shall be construed as awaiver of such Rules and Regulations in favor of any other tenant, nor preventLandlord from thereafter enforcing any such Rules or Regulations against any orall tenants of the Project. Tenant shall be deemed to have read these Rules andRegulations and to have agreed to abide by them as a condition of its occupancyof the Premises.

33

----

**EXHIBIT “E”**

**FORM OF TENANT ESTOPPEL CERTIFICATE**

The undersigned as Tenant under that certain OfficeLease dated September 17, 2004 (the “**Lease**”)between FSP Regents Square, LLC, a Delaware limited liability company, aslandlord, and the undersigned, as tenant, for Premises on the sixth (6th) floorof the Office Building located at 4275 Executive Square, La Jolla, Californiacertifies as follows:

1.      True,correct and complete copies of the Lease and all amendments, modifications andsupplements thereto are attached hereto and the Lease, as so amended, modifiedand supplemented, is in full force and effect, and represents the entireagreement between Tenant and Landlord with respect to the Premises and theProperty. There are no amendments, modifications or supplements to the Lease,whether oral or written, except as follows (include the date of such amendment,modification or supplement):
|        |
|--------|
|   |
|   |

 

2.      Theundersigned has commenced occupancy of the Premises described in the Lease,currently occupies the Premises, and the Commencement Date of the Leaseoccurred on                 ,20   .
|        |
|--------|
|   |

 

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

4.      Base Rentbecame payable on                                                  .

5.      Inaccordance with the Lease, Rent commenced to accrue on         ,20   .

6.      The Termof the Lease expires on                                  .

7.      The Leaseprovides for an option to extend the term of the Lease for         years. The rental rate for such extension term is as follows:                                                                                                                          .Except as expressly provided in the Lease, and other documents attached hereto,Tenant does not have any right or option to renew or extend the term of the Lease,to lease other space at the Property, nor any preferential right to purchaseall or any part of the Premises or the Property.

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. All space and improvements leased by Tenant have been completed andfurnished in accordance with the provisions of the Lease, and Tenant hasaccepted and taken possession of the Premises.

9.      There areno offsets or credits against rentals payable under the Lease and no freeperiods or rental concessions have been granted to Tenant, except as follows:
|        |
|--------|
|   |

 

10.    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 Rent is $                     .

11.    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.

12.    Eachindividual executing this Estoppel Certificate on behalf of Tenant herebyrepresents and warrants that Tenant is a duly formed and existing entityqualified to do business in California and that Tenant has full right andauthority to execute and deliver this Estoppel Certificate and that each personsigning on behalf of Tenant is authorized to do so.

Executed at                      on the              day of            , 20    .
|        | ** ** | **“Tenant”:**         |
|--------|------------|---------------------------------|
|   | ** ** | ** **                      |
|   |       | 1st Pacific Bank of California, |
|   |       | a California corporation        |
|   |       |                            |
|   |       | By:                             |   |
|   |       | Name:                           |   |
|   |       | Its:                            |   |
|        |            |                                 |  |  |  |

 

34

----