EXHIBIT 10.36 

CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED FOR PORTIONS OF
THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE
INFORMATION SUBJECT TO
THE
CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED AS *. A
COMPLETE,
UNREDACTED VERSION OF THIS EXHIBIT HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.


OFFICE LEASE
AGREEMENT 

by and between

EXPONENT REALTY, LLC.

a Delaware limited liability
company

(“Landlord”)

and

GERON CORPORATION

a Delaware corporation

(“Tenant”)

For approximately

30,174

rentable square feet

at 149 Commonwealth Drive, Menlo
Park, California

(“Premises”) 







TABLE OF
CONTENTS 

	1.	      	Parties	      	2
	 
	2.		Premises		2
	 
	3.		Definitions		2
	 
	4.		Lease Term		5
			A. Term		5
			B. Commencement Date		5
			C. Commencement Date
      Memorandum		6
			D. Early Entry		6
			E. Option To Extend		6
	 
	5.		Rent		7
			A. Monthly Rent		7
			B. Prorations		8
			C. Periodic Adjustments		8
			D. Determination of Monthly Base Rent During Extension
      Term		8
	 
	6.		Late Payment Charges		11
	 
	7.		Security Deposit		11
	 
	8.		Holding Over		11
	 
	9.		Tenant Improvements		11
	 
	10.		Condition of Premises		12
	 
	11.		Use of the Premises		12
			A. Tenant’s Use		12
			B. Compliance		13
			C. Toxic Material		14
			D. Transportation Systems Management		14
			E. Rules and
Regulations		14
	 
	12.		Quiet Enjoyment		15
	 
	13.		Alterations		15
	 
	14.		Surrender of the Premises		16
	 
	15.		Operating Expenses		16
		      	A. Payment by
    Tenant	      	16
	 		B. Operating Expenses		16
		 	C. Adjustment		19
			D. Failure to Pay		21



i







	16.	      	Taxes and Assessments	     	21
			A. Payment by
    Tenant		21
			B. Annual
      Assessments		21
			C. Taxes Levied Against Tenant’s
      Alterations and Personal Property		21
			D. Failure to Pay		21
	 
	17.		Utilities and Services		21
			A. Services Provided by
      Landlord		21
			B. Services Exclusive to Tenant		22
			C. Hours of Service		22
			D. Excess Usage by Tenant		22
			E. Interruptions		22
			F. After Hours HVAC		22
			G. Paging		22
	 
	18.		Repair and Maintenance		23
			A. Premises, Building and Outside
      Area		23
			B. Control and Reconfiguration		24
			C. Waiver	 	25
			D. Compliance with Governmental Regulations		25
			E. Repair Where Tenant at
      Fault		25
	 
	19.		Fixtures		25
	 
	20.		Liens		26
	 
	21.		Landlord’s Right to Enter the Premises		26
	 
	22.		Signs		26
	 
	23.		Insurance		26
			A. Indemnification		26
			B. Tenant’s Insurance		27
			C. Landlord’s Insurance		28
			D. Evidence of Insurance		28
			E. Co-Insurer		28
			F. Insurance Requirements		28
			G. No Limitation of
      Liability		28
			H. Landlord’s Disclaimer		29



ii







	24.	      	Waiver of Subrogation	      	29
	 
	25.		Damage or Destruction		29
		 	A. Partial Damage —
    Insured		29
			B. Partial Damage — Uninsured		30
			C. Total Destruction		30
			D. Tenant’s Election		30
			E. Landlord’s
    Obligations		30
			F. Damage Near End of Term		31
	 
	26.		Condemnation		31
			A. Total Taking —
      Termination		31
			B. Partial Taking		31
			C. No Apportionment of
      Award		31
			D. Temporary Taking		31
	 
	27.		Assignment and Subletting		32
			A. Landlord’s Consent		32
			B. Information to be Furnished		32
			C. Landlord’s
    Alternatives		32
			D. Proration	 	33
			E. Executed Counterpart		33
			F. Surrender of Lease		33
			G. No Mortgages		33
			H. Effect of Default		33
			I. Permitted Transfers		34
	 
	28.		Sale Lease-Back		34
	 
	29.		Default		34
			A. Tenant’s Default		34
			B. Remedies		35
			C. Landlord’s Default		37
	 
	31.		Notices		38
	 
	33.		Estoppel Certificates		38
	 
	34.		Transfer of the Project by Landlord		39
	 
	35.		Landlord’s Right to Perform Tenant’s
    Covenants		39
	 
	36.		Tenant’s Remedy		40
	 
	37.		Mortgagee Protection		40



iii







	38.	      	Brokers	      	40
	 
	39.		Acceptance		40
	 
	40.		Recording		40
	 
	41.		Modifications for Lender		40
	 
	42.		Parking		41
	 
	43.		Use of Property Name
Prohibited		41
	 
	44.		Interest		41
	 
	45.		Quitclaim		41
	 
	46.		Security		41
			A. Landlord Reservations		41
			B. Tenant Prohibitions		42
			C. Security Regulations		42
	 
	47.		Right of First Offer		43
	 
	48.		Ownership of Furniture and
      Fixtures		44
	 
	49.		General		44
			A. Captions		44
			B. Executed Copy		44
			C. Time		44
			D. Severability		44
			E. Choice of Law		44
			F. Interpretation		44
			G. No Effect of Remeasurement		45
			H. Binding Effect		45
			I. Waiver		45
			J. Entire Agreement		45
			K. Authority		45
			L. Exhibits		45
			M. Counterparts		45
	 
	EXHIBIT A PREMISES		
	 
	EXHIBIT B PROPERTY		
	 
	EXHIBIT C TENANT IMPROVEMENTS WORK
      LETTER		
	 
	EXHIBIT D COMMENCEMENT DATE
    MEMORANDUM		
	 
	EXHIBIT E RULES AND REGULATIONS		
	 
	EXHIBIT F BUILDING SERVICES		




iv








OFFICE LEASE AGREEMENT


INFORMATION SHEET 

(“INFORMATION SHEET”) 

	A.	      	PARTIES	
					 	
			1.	      	Landlord:	EXPONENT REALTY, LLC, a Delaware limited liability
      company
							 	
			2.		Tenant:	GERON CORPORATION, a Delaware corporation
	 
	B.		EFFECTIVE DATE	February 29, 2012
			 	
	C.		BASIC
      LEASE PROVISIONS	
			 	
			1.		Premises:	
					 	
					a.	      	Address:	149 Commonwealth Drive
						      		Menlo Park, California
    94025
							 	
					b.		Floor:	2nd Floor (including patio space associated with Suite #
      *)
	 
					c		Total Building rentable area (approx.):	* square feet
					  	
			2.		Rentable Area and Load
Factor:	
	 				 	 
					a.		Rentable Area (approx.)	30,174 rentable square feet, Suites known as # *, *, *,
      *, * and *
							 	 
					b.		Load Factor (approx.)	*%
					 		 	
			3.		Term:	24 months, commencing on the Commencement Date of
      July 13, 2012 and ending on July 12, 2014, as such term may be extended
      or sooner terminated as provided in this
Lease

____________________
 

	*	      	Certain information on this page
      has been omitted and filed separately with the Commission. Confidential
      treatment has been requested with respect to the omitted
    portions.


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    	4.	      	Estimated Commencement Date:	July 13,
      2012
					 	 
			5.		Tenant’s Building Percentage:	* percent (*%)
					  	
			6.		Base Rent:	* ($*) per rentable square foot per month full service
      (or $* monthly).
					  	
		 	7.		Security Deposit:	None
					 
	
			8.		Base Year:	2012 for Operating Expenses
						 
						2012-2013 fiscal year for Real Property
Taxes
						 
						As outlined in Section 5. Base Rent
						 
			9.		Adjustments to monthly Base Rent:	None.
					 	
			10.		Brokers:	None
					 	
			11.		Address for Notices:	
					 	
					Landlord:	Exponent Realty, LLC
						149 Commonwealth Drive
						Menlo Park, California 94025
						Attn: Director of Corporate Facilities
						 
					Tenant:	GERON CORPORATION
						 
						149 Commonwealth Drive, Suite 2070
						Menlo Park, CA 94025
						Attn: Legal Department
						  
			12.		TI Allowance:	As provided in Exhibit C – Tenant Improvements Work
      Letter.
			 
			13.		Normal Business Hours:	8AM to 5PM Monday to Friday Excluding holidays observed
      by Landlord

____________________
 

	*	      	Certain information on this page
      has been omitted and filed separately with the Commission. Confidential
      treatment has been requested with respect to the omitted
    portions.


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OFFICE LEASE
AGREEMENT 

     1. Parties.
THIS OFFICE LEASE AGREEMENT (“Lease”),
effective as of the date (“Effective Date”) set forth in section B of the Office
Lease Agreement Information Sheet (“Information Sheet”), is entered into by and
between Exponent Realty, LLC, a Delaware limited liability company (“Landlord”),
and the entity set forth in section A.2. of the Information Sheet (“Tenant”).


    
2.
Premises. Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, a portion of that certain Building
located in the City of Menlo Park, County of San Mateo, State of California
containing the total rentable floor area set forth in section C.2. of the
Information Sheet, as more particularly shown on EXHIBIT A (“Premises”), and located at
the address, as designated in section C.1. of the Information Sheet, together
with a right in common to the Outside Area, as defined in Paragraph 3.K., of the
Property, as defined in Paragraph 3.N. Tenant’s right to use the Outside Area
shall be a right in common with other tenants of the Property and is subject to
the reasonable rules and regulations and changes therein from time to time
promulgated by Landlord governing the use of the Outside Area. The currently
existing such rules and regulations are set forth on EXHIBIT E. 

    
3.
Definitions. The following initially capitalized terms shall have the
following meanings when used in this Lease: 

          A.
Alterations. Any alterations, additions or improvements made in, on or about the
Building or the Premises after the Commencement Date, including, but not limited
to, lighting, heating, ventilating, air conditioning, electrical,
telecommunication cabling, partitioning, drapery and carpentry installations.


          B.
Building. That certain building on the Property, commonly known as 149
Commonwealth Drive, Menlo Park, California 94025, containing an aggregate
rentable area in the approximate amount set forth in section C.1.c. of the
Information Sheet. 

          C.
CC&R’s. The declaration of covenants, conditions, restrictions and easements
contained in that certain Grant Deed dated May 12, 1965 established by David D.
Bohannon and Ophelia E. Bohannon and recorded on May 14, 1965 in Book 4953 at
page 326 et. seq., of the Official Records of San Mateo County, California, as
they may be amended from time to time. Tenant hereby acknowledges that it has
received and read a copy of the present CC&R’s. 

          D.
City. The City of Menlo Park, in the State of California. 

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          E.
Commencement Date. The Commencement Date of this Lease shall be the first day
of the Lease Term determined in accordance with Paragraph 4.B. 

          F.
County. The County of San Mateo, in the State of California. 

          G.
HVAC. Heating, ventilating and air conditioning. 

          H.
Interest Rate. Interest Rate shall have
the meaning set forth in Paragraph 44. 

          I.
Landlord’s Agents. Landlord’s authorized agents, together with any partners and
any subsidiary, parent, and affiliate corporations, partnerships, limited
liability partnerships or limited liability companies of Landlord, and any
directors, officers, shareholders, members, managers, partners and employees of
Landlord or of any such agents, partners, or subsidiary, parent or affiliate
corporations, partnerships, limited liability partnerships or limited liability
companies. 

          J.
Monthly Rent. The rent payable pursuant to Paragraph 5.A., as adjusted from time to
time pursuant to the terms of this Lease. Such amount includes monthly Base Rent
(as defined in section C.6 of the Information Sheet), the Monthly Operating
Expense Reimbursement, as provided in such Paragraph 5.A(ii), and the Tenant
Improvement Allowance Reimbursement, as provided in such Paragraph 5.A(iii).


          K.
Outside Area. All areas and facilities within the Property, but outside the Building,
provided and designated by Landlord for the general use and convenience of
Tenant and other tenants and occupants of the Building, including, without
limitation, the parking areas, access and perimeter roads, sidewalks, landscaped
areas, service areas, trash disposal facilities, and similar areas and
facilities, and the exterior walls and windows of the Building, subject to the
reasonable rules and regulations and changes therein from time to time
promulgated by Landlord governing the use of the Outside Area. The current rules
and regulations are set forth on EXHIBIT E. 

          L.
Permitted Transferees. Such term has the meaning given to it in paragraph 27(i).


          M.
Project. The Property, Building (including the Premises), and Outside Area.


          N.
Property. That certain real property, described in EXHIBIT B upon which is located the
Building. 


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          O.
Real Property Taxes. Any form of assessment, license, fee, rent tax, real
property tax, taxes, levy, interest or penalty (unless a result of Tenant’s
delinquency), or tax (other than net income, estate, succession, inheritance,
transfer or franchise taxes), imposed by any authority having the direct or
indirect power to tax, or by any city, county, state or federal government or
any improvement or other district or division thereof, whether such tax is: (i)
determined by the value or area of the Project or any part thereof (or any
improvements now or hereafter made to the Project or any portion thereof by
Landlord, Tenant or other tenants) or the rent and other sums payable hereunder
by Tenant or by other tenants, including, but not limited to, Tenant’s gross
income or Tenant’s excise tax levied by any of the foregoing authorities with
respect to receipt of such Tenant Rent or Subrent or other sums due under this
Lease; (ii) upon any legal or equitable interest of Landlord in the Project or
any part thereof; (iii) upon this transaction or any document to which Tenant is
a party creating or transferring any interest in the Project; (iv) levied or
assessed in lieu of, in substitution for, or in addition to, existing or
additional taxes against the Project whether or not now customary or within the
contemplation of the parties; (v) assessed for the purpose of constructing or
maintaining or reimbursing the cost of construction of any streets, utilities or
other public improvements; or (vi) surcharged against the parking area or (vii)
levied upon any improvements to the Property or personal property of Landlord or
Tenant located on or used exclusively in connection with the operation of the
Project.

          P. Rent. Monthly Rent plus any other
amounts payable by Tenant under this Lease, all other such amounts being
additional rent hereunder for all purposes. 

          Q.
Sublet. Any assignment or transfer of any estate or interest in this Lease; any
subletting or parting with or sharing of the occupation, control, or possession
of the Premises, or of any part thereof or any right or privilege appurtenant
thereto; allowing anyone to conduct business at or from the Premises (whether as
concessionaire, franchisee, licensee, permittee, subtenant or otherwise); if
Tenant is a corporation, any transfer of the effective voting control of Tenant;
if Tenant is a partnership or limited liability company, any transfer of forty
percent (40%) or more, in the aggregate, of the interests in either capital or
profits of Tenant; any other transfer by voluntary or involuntary act or by
operation of law (including by merger or consolidation); or any attempt to do
any of the foregoing. 

          R.
Subrent. Any consideration of any kind (cash, non-cash or general intangibles)
received, or to be received, by Tenant from a subtenant if such sums are related
to Tenant’s interest in this Lease or in the Premises. 

          S.
Subtenant. The person or entity with whom a Sublet agreement is proposed to be or
is made. 

          T.
Tenant Improvements. Those certain improvements to the Premises to be constructed
by Landlord pursuant to EXHIBIT
C, together with any future Alterations
permitted under this Lease. 

          U.
Tenant’s Agents. Tenant’s agents, together with any subsidiary, parent and
affiliates, and any employees, officers, directors, shareholders, members,
managers, partners, contractors, representatives, invitees and licensees of
Tenant or such subsidiary, parent or affiliate.

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          V. Tenant’s Building
Percentage. The percentage determined by
dividing the approximate rentable square footage of the Premises by the
approximate total rentable square footage of the Building. Tenant’s Building
Percentage is currently agreed to be the percentage set forth in section C.5. of
the Information Sheet. 

          W.
Tenant’s Personal
Property. Tenant’s trade fixtures,
furniture, equipment and other personal property in the Premises. 

          X.
Term. The term of this Lease set forth in Paragraph 4.A., as it may be sooner
terminated under the terms hereof or as it may be extended hereunder pursuant to
any options to extend granted herein or by any written amendments to or
extensions of this Lease. 

    
4.
Lease Term. 

         
A.
Term. The Term shall be the period set forth in section C.3 of the
Information Sheet, commencing on the Commencement Date, as defined below, and
ending at midnight on the last day of such period, unless the Term is extended
or sooner terminated, as hereinafter provided. 

         
B.
Commencement Date. Commencement Date shall be
defined to mean the earliest to occur of the following: 

              
(i) the date Tenant commences occupancy under this Lease of any portion
of the Premises for the conduct of its business; or 

              
(ii) the Estimated Commencement Date specified in section C.4. of the
Information Sheet. 

          If for any
reason Landlord does not or cannot deliver possession of all or any portion of
the Premises to Tenant by the Estimated Commencement Date, Landlord shall not be
subject to any liability therefore, nor shall such failure affect the validity
of this Lease or the obligations of Tenant hereunder, provided that such delay
does not exceed thirty (30) days from the Estimated Commencement Date, but in
such case, Tenant shall not be obligated to pay any Monthly Rent hereunder,
until the date that Landlord delivers possession of the entire Premises to
Tenant (which date shall then be deemed the Commencement Date). No such delay or
adjustment in the Commencement Date shall alter the validity of this Lease or
the nature or term of the obligations of Tenant hereunder, nor shall any such
delay or adjustment cause the expiration date of this Lease to be later than
July 12, 2014. If for any reason Landlord does not deliver possession of all or
any portion of the Premises to Tenant for a period exceeding thirty (30) days
from the Estimated Commencement Date, Tenant shall be entitled to terminate this
Lease with respect to that portion of the Premises not delivered, and its
obligations under this Lease shall cease with respect to, such portion of the
Premises. Except as set forth in the Work Letter with respect to the hanging
conference room wall, if Landlord fails to deliver at least ninety percent (90%)
of the Premises by the Estimated Commencement Date, Tenant shall be
entitled to terminate this Lease in its entirety. If Landlord fails to deliver
the Premises in its entirety within ninety (90) days after the Estimated
Commencement Date, Tenant shall be entitled to terminate this Lease in its
entirety.

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          C.
Commencement Date
Memorandum. When the actual Commencement
Date is determined, the parties shall execute a Commencement Date Memorandum, in
the form attached hereto as EXHIBIT
D, setting forth the Commencement Date and Expiration Date. 

         
D.
Early Entry. After receipt of a Certificate
of Insurance from Tenant, Landlord shall permit Tenant to enter upon the
Premises from and after the date of full execution of this Lease for the purpose
of monitoring the planning and construction of the Tenant Improvements
consisting of the Initial Installation by Landlord, in accordance with the
provisions of EXHIBIT C, installing its furniture, fixtures and telephone, internet
and data communications cabling and wiring, excluding the conduct of its
business. Such early entry shall be at Tenant’s sole risk and subject to all the
terms and provisions hereof, except for the payment of Monthly Rent which shall
commence on the date set forth in Paragraph 4.B. Whereupon certain Suites are
currently occupied by other tenants, immediately upon vacation of such Suites by
the existing tenants, Tenant will be granted access to such Suites. With respect
to Suites not currently occupied by other tenants, Tenant will be granted access
immediately upon execution of this Lease and provision of a Certificate of
Insurance as set forth herein. Upon reasonable prior written notice to Landlord,
and subject to Landlord’s completion of any Tenant Improvements requested by
Tenant pursuant to EXHIBIT C with respect thereto, Tenant will have the right to occupy
Suite 2118 up to ninety (90) days prior to the Commencement Date. Should Tenant
request occupancy of Suite 2118 prior to the Commencement Date, the parties will
agree in writing upon a date certain for the commencement of such occupancy, and
the rights and obligations of the Parties pursuant to this Lease with respect to
Suite 2118, including, without limitation, Tenant’s obligation to pay Rent with
respect to Suite 2118, shall be effective upon the date of such occupancy. Early
occupancy by Tenant of any portion of the Premises, including Suite 2118, shall
not cause the expiration date of this Lease to be later or earlier than July 12,
2014.

         
E.
Option To Extend. 

              
(i) Conditions to Exercise of
Option. Provided that Tenant is not in
Default under this Lease at the time of exercise of the option to extend or at
the commencement of the extension term, Tenant shall have the right to extend
the Term of this Lease for an additional period of two (2) years
(“Extension Term”) commencing on July 13, 2014. 

              
(ii) Notice of Exercise. If Tenant elects to extend this Lease for the Extension
Term, Tenant shall deliver written notice (“Exercise Notice”) of its exercise to
Landlord not earlier than two hundred seventy (270) days prior to the Expiration Date of the initial Term of
this Lease and not less than one hundred eighty (180) days prior to the
Expiration Date of the initial Term of this Lease. Tenant’s failure to deliver
the Exercise Notice in a timely manner shall be deemed a waiver of Tenant’s
rights to extend the Term of this Lease. 

-6-








              
(iii) Terms of the
Extension Term. The delivery of an Exercise
Notice shall constitute an irrevocable election by Tenant to extend the Term of
the Lease upon the terms, covenants and conditions set forth herein. The terms,
covenants and conditions applicable to the Extension Term shall be the same
terms, covenants and conditions of this Lease except that (i) Tenant shall not
be entitled to any further option to extend after the Extension Term; (ii) the
Monthly Base Rent for the Extension Term shall be adjusted as provided in
Paragraph 5.D.; and (iii) no provisions relating to the initial delivery of the
Premises to Tenant (including, but not limited to, any TI Allowance provisions)
shall be applicable to the Extension Term if the Extension Term is
exercised.

              
(iv) Extension Option Personal to
Original Tenant. The option to extend granted
to Tenant pursuant to this Paragraph 4.E. shall not be assignable to any
successor or assign of Tenant except for a Permitted Transferee, and shall
terminate at the option of Landlord, if, at any time during the initial Term of
this Lease, Tenant has subleased all or any portion of the Premises to any other
party except for a Permitted Transferee. The foregoing right of termination
shall only apply to that portion of the Premises subleased to a third party
other than a Permitted Transferee, and shall survive with respect to any other
portion of the Premises not so subleased by Tenant. 

    
5.
Rent.

         
A.
Monthly Rent.

          Tenant
shall pay the First Month’s Base Rent by the Commencement Date. Notwithstanding
the foregoing, the parties acknowledge and agree that under that certain Office
Lease Agreement dated May 1, 2007 by and between the parties (the “2007 Lease”),
Tenant has previously paid in full all rent due with respect to Suite 2070 up to
and including July 31, 2012. Accordingly, no Base Rent shall be due under this
Lease by Tenant with respect to Suite 2070 from the Commencement Date up to and
including July 31, 2012. Thereafter, on or before the first day of each calendar
month, without prior notice or demand, deduction or offset, Tenant shall pay
Monthly Rent to Landlord, in lawful money of the United States at the Office of
the Landlord specified in section C.11. of the Information Sheet, or to such
other place or person as Landlord may designate in the manner set forth in
Paragraph 31. Monthly Rent shall consist of the sum of the following:


              
(i) Base Rent. Base Rent in the amount specified in section C.6. of the
Information Sheet.; and 

              
(ii) Monthly Operating Expense
Reimbursement. The Monthly Operating Expense Reimbursement (“Monthly Operating Expense Reimbursement”) shall equal to one twelfth (1/12) of Tenant’s Building
Percentage of the amount by which Landlord’s estimate of the Operating Expenses
for the relevant calendar year of the Term exceeds the Base Year Operating
Expenses, as such terms are defined in Paragraph 15. 

-7-








              
(iii) Tenant
Improvement Allowance Reimbursement.
The Tenant Improvement Allowance
Reimbursement (“Tenant Improvement Allowance
Reimbursement”) shall equal, for every *
dollar ($*) per square foot of Tenant Improvement Allowance utilized by Tenant
in accordance with EXHIBIT C, the amount of * ($*) divided by the number of months remaining
in the Term at the time such Tenant Improvement Allowance is utilized,
multiplied by the rentable area specified in section C.2.a. of the Information
Sheet. Reimbursement of any Tenant Improvement Allowance hereunder shall
commence with the first payment of Monthly Rent due immediately after
utilization of the Tenant Improvement Allowance by Tenant. 

         
B.
Prorations.

          If the
Commencement Date is not the first (1st) day of a month, or if the termination
date is not the last day of a month, a prorated monthly installment based on a
thirty (30) day month shall be paid for the fractional month during which this
Lease commences or terminates. 

         
C.
Periodic Adjustments.

          There shall
be no periodic adjustments to the monthly Base Rent to be paid by Tenant during
the Term of this Lease. 

         
D.
Determination of Monthly Base Rent During
Extension Term.

              
(i) Extension Term Initial Monthly
Base Rent. The monthly Base Rent payable
during the first year of the Extension Term (the “Extension Term Initial Monthly
Base Rent”) shall be the then-prevailing fair market rental value for the
comparable space located in the Menlo Park area, but in no event be less than
the monthly Base Rent as provided in section C.6 of the Information Sheet, or
greater than one hundred and twenty percent (120%) of the monthly Base Rent as
provided in section C.6 of the Information Sheet. The Extension Term Initial
Monthly Base Rent shall increase by three percent (3%) on an annual
basis.
____________________
 
	*	      	Certain information on this page
      has been omitted and filed separately with the Commission. Confidential
      treatment has been requested with respect to the omitted
    portions.



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(ii) Fair Market
Rental Value. Fair Market Rental Value as
used herein shall mean: 100% of the monthly base rent and other amounts new
tenants are then generally agreeing to pay under leases then being executed or
renewed for comparable, improved office space in the Highway 101/Menlo Park
submarket for office space. In determining the fair market rental value of the
Premises during the Extension Term, consideration shall be given to all relevant
factors, including, without limitation, such factors as credit-worthiness of the
tenant, the duration of the term, any rental or other concessions granted,
whether a broker’s commission or finder’s fee will be paid, responsibility for
Operating Expenses, the uses of the Premises permitted under this Lease and the
quality, condition, size, design and location of the Premises. Notwithstanding anything to the contrary contained in this
Lease, the Base Year for the Extension Term for purposes of determining Tenant’s
share of Monthly Operating Expenses during the Extension Term shall be the
calendar year in which the Extension Term commences. 

              
(iii) Landlord and Tenant to Seek to
Agree. Landlord and Tenant shall have
thirty (30) days after Landlord receives the Exercise Notice in which to seek to
agree on the Extension Term Initial Monthly Base Rent. If Landlord and Tenant
agree on the Extension Term Initial Monthly Base Rent during such thirty (30)
day period (or at any time thereafter), they shall promptly execute an amendment
to this Lease confirming the Extension Term Initial Monthly Base Rent as so
agreed as the monthly Base Rent for the first year of the Extension
Term.

              
(iv) Selection of Brokers to
determine the Extension Term
Initial Monthly Base
Rent. If Landlord and Tenant are unable
to agree on the Extension Term Initial Monthly Base Rent within the thirty (30)
day period, then within ten (10) days after the expiration of the thirty (30)
day period, Landlord and Tenant each, at its cost and by giving notice to the
other party, shall appoint a licensed commercial real estate broker with at
least five (5) years’ full-time commercial brokerage experience in the
geographical area of the Project (a “Broker”) to evaluate and set the
Extension Term Initial Monthly Base Rent. If either Landlord or Tenant does not
appoint a Broker within ten (10) days after the other party has given notice of
the name of its Broker, the single Broker appointed shall be the sole Broker and
shall set the Extension Term Initial Monthly Base Rent. If two (2) Brokers are
appointed by Landlord and Tenant as stated in this Paragraph, they shall meet
promptly and attempt to set the Extension Term Initial Monthly Base Rent. If the
two (2) Brokers are unable to agree within thirty (30) days after the second
Broker has been appointed, they shall attempt to select a third Broker meeting
the qualifications stated in this Paragraph (with the additional qualification
that such third Broker shall have had no prior, current, or presently committed
future business or personal relationship with either Landlord or Tenant) within
ten (10) days after the last day the two (2) Brokers are given to set the
Extension Term Initial Monthly Base Rent; provided, however, if the two Broker’s
proposed Extension Term Initial Monthly Base Rent figures are ten percent (10%) or less
apart, the two figures shall be added together and such total be divided by two
to determine the Extension Term Initial Monthly Base Rent. If they are unable to
agree on the third Broker, either Landlord or Tenant, by giving ten (10) days’
notice to the other party, can apply to the then Presiding Judge of the Superior
Court of San Mateo County for the selection of a third Broker who meets the
qualifications stated in this Paragraph. Landlord and Tenant each shall bear
one-half (1/2) of the cost of appointing the third Broker and of paying the
third Broker’s fee. Any time period set forth herein may be extended if mutually
agreed in writing by the parties, to allow for further negotiation. 

-9-








              
(v) Value
Determined by Three (3) Brokers. Within
thirty (30) days after the selection of the third Broker, a majority of the
Brokers shall set the Extension Term Initial Monthly Base Rent. If a majority of
the Brokers is unable to set the Extension Term Initial Monthly Base Rent within
the stipulated period of time, the three (3) evaluations shall be added together
and their total divided by three (3); the resulting quotient shall be the
Extension Term Initial Monthly Base Rent for the Premises. If the low evaluation
is more than ten percent (10%) lower than the middle evaluation, the low
evaluation shall be disregarded; if the high evaluation is more than
ten percent (10%) higher than the middle
evaluation, the high evaluation shall be disregarded. If only one (1) evaluation
is disregarded, the remaining two (2) evaluations shall be added together and
their total divided by two (2); the resulting quotient shall be the Extension
Term Initial Monthly Base Rent for the Premises. If both the low evaluation and
the high evaluation are disregarded as stated in this Paragraph, the middle
evaluation shall be the Extension Term Initial Monthly Base Rent for the
Premises.

              
(vi) Notice to Landlord and
Tenant. After the Extension Term Initial
Monthly Rent for the first year of the Extension Term has been set, the Brokers
shall notify Landlord and Tenant immediately and Landlord and Tenant shall
promptly execute an amendment to this Lease confirming the Extension Term
Initial Monthly Rent as so determined as the Monthly Rent for the first year of
the Extension. 


-10-








    
6.
Late Payment Charges. TENANT ACKNOWLEDGES
THAT LATE PAYMENT BY TENANT TO LANDLORD OF RENT
AND OTHER CHARGES PROVIDED FOR UNDER THIS LEASE WILL CAUSE LANDLORD TO INCUR
COSTS NOT CONTEMPLATED BY THIS LEASE, THE EXACT AMOUNT OF SUCH COSTS BEING
EXTREMELY DIFFICULT OR IMPRACTICABLE TO FIX. THEREFORE, IF ANY INSTALLMENT OF
RENT OR ANY OTHER CHARGE DUE FROM TENANT IS NOT RECEIVED BY LANDLORD WITHIN TEN
(10) DAYS FOLLOWING THE DATE OF LANDLORD’S DELIVERY OF WRITTEN NOTICE TO TENANT
STATING THAT SUCH AMOUNT WAS NOT RECEIVED ON OR BEFORE THE DATE DUE, TENANT
SHALL PAY TO LANDLORD AN ADDITIONAL SUM EQUAL TO
FIVE PERCENT (5%) OF THE AMOUNT OVERDUE AS A LATE CHARGE. THE PARTIES AGREE THAT
THIS LATE CHARGE REPRESENTS A FAIR AND REASONABLE ESTIMATE OF THE COSTS THAT
LANDLORD WILL INCUR BY REASON OF THE LATE PAYMENT BY TENANT. SUCH LATE CHARGE SHALL BE IN
ADDITION TO, AND NOT IN LIEU OF, ANY INTEREST THAT MAY ACCRUE ON ANY SUCH
OVERDUE AMOUNT PURSUANT TO THE PROVISIONS OF PARAGRAPH 44. 

	Initials:	 	         
	
	 		
	/s/ Richard Schlenker		/s/ John A. Scarlett
	Landlord		Tenant



     7. Security Deposit.
No security deposit shall be required by this
Lease.

    
8.
Holding Over. If Tenant remains in possession
of all or any part of the Premises after the
expiration of the Term, without the consent of Landlord, such tenancy shall be
from month-to-month only and not a renewal hereof or any extension for any
further term, and in such case, Monthly Rent shall be increased to an amount
equal to one hundred
fifty percent (150%) of the Monthly Rent paid during the last month of the Term
and all other sums due hereunder shall be payable in the amount and at the time
applicable at the time of expiration and at the time specified in this Lease and
such month-to-month tenancy shall be subject to every other term, covenant and
agreement of this Lease, excluding any option to extend the Term. In addition,
Tenant shall defend, indemnify
and hold Landlord, and Landlord’s Agents free and harmless from and against any
claim, loss, liability, expense or damage, including reasonable attorneys’ fees
and costs, arising out of Tenant’s failure to surrender the Premises at the
expiration of the Term, including, without limitation, any such damages
resulting from Landlord’s inability to honor its commitments to any other tenant
for the Premises. 

    
9.
Tenant Improvements. Landlord shall provide, for
Tenant’s benefit, the Tenant Improvement
Allowance set forth in Paragraph 2(f) of the Work Letter attached hereto as
EXHIBIT C.
Tenant shall have the right, but not the obligation, to utilize some or all of
such Tenant Improvement Allowance for the purpose of constructing any Tenant
Improvements permitted under this Lease (including, without limitation, the
Initial Installation (as defined by the Work Letter) or any future Alterations).
Landlord and Tenant agree to the terms and procedures for the planning,
construction and funding of the construction of the Tenant Improvements
comprising the Initial Installation as set forth in EXHIBIT C. 


-11-









    
10. Condition of
Premises. Landlord represents and warrants that the Building complied with all
local and state codes and ordinances and all American with Disabilities Act
requirements at the time of construction in 1989 and has been maintained in
compliance with the foregoing. Notwithstanding anything to the contrary set
forth in this Lease, should applicable law or any government agency require
modification of the Outside Area or common space within the Building, or of the
Premises, to permit use of thereof for general office purposes, such
modifications will be at Landlord’s sole cost. By taking possession of the
Premises, Tenant shall be deemed to have accepted the Premises in “As Is”
condition (except for the Initial Installations as set forth in Exhibit C), in
good, clean and completed condition and repair, subject to all applicable laws,
codes and ordinances. Tenant acknowledges that, except as expressly set forth in
this Lease, neither Landlord nor Landlord’s Agents have made any representations
or warranties as to the suitability or fitness of the Premises or any other part
of the Project (including, without limitation, the intra-building network
cabling) for the conduct of Tenant’s business or for any other purpose, nor has
Landlord or Landlord’s Agents agreed to undertake any Alterations or construct
any Tenant Improvements to the Premise except as expressly provided in
EXHIBIT C
of this Lease.

     11.Use of the Premises.

         
A.
Tenant’s Use. Tenant shall use the Premises
solely for general office purposes and shall not use the Premises for any other
purpose without obtaining the prior written consent of Landlord, which Landlord
may withhold in its sole and absolute discretion. Tenant agrees that the
Property is subject and this Lease is subordinate to the CC&R’s, a copy of
which has been provided to Tenant. Tenant acknowledges that it has read the
CC&R’s and knows the contents thereof. Throughout the Term, Tenant shall
faithfully and timely perform and comply with the CC&R’s and any
modification or amendments thereof, provided that Tenant is notified thereof
by Landlord.
Tenant shall comply with all duly adopted rules, regulations and restrictions as
may be adopted from time to time by any committee established pursuant to the
CC&Rs (“Association”), provided that Tenant is notified thereof by Landlord.
Any periodic or special dues or Outside Area assessments of the Association
shall be included within the definition of Operating Expenses pursuant to
Paragraph 15.B. and Tenant shall pay Tenant’s Building Percentage of such
amounts over the Base Year amounts as further set forth in Paragraph 15. Tenant
shall defend, indemnify and hold Landlord, and Landlord’s Agents free and
harmless from and against any claim, loss, liability, expense or damage,
including reasonable attorneys’ fees and costs, arising out of the actual or
asserted failure of Tenant to perform or comply with the CC&R’s. Tenant
shall not permit or make any use of the Premises which will increase the
existing rate of insurance upon the Project, or cause the cancellation of any
insurance policy covering the Project, or any part thereof. If the existing rate
of insurance shall be increased or any insurance policy covering the Project is
canceled as a result of Tenant’s or Tenant’s Agent’s acts or omissions, then
Landlord, in addition to such remedies as Landlord may have under this Lease or
pursuant to law or equity, shall be entitled to reimbursement from Tenant within
ten (10) days after receipt of written demand therefor for the entire amount of
said increase or any additional amount which must be paid for a new insurance
policy. 

-12- 







         
B. Compliance.
Tenant shall not use the Project or  permit Tenant’s Agents to do
anything in or about the Project in conflict with  any law, statute, zoning restriction, ordinance or governmental law, rule,
regulation or requirement of duly constituted public  authorities now in force or which may hereafter be in force, or the
requirements  of the Board of Fire Underwriters or other similar body now or hereafter  constituted relating to or affecting
the condition, use or occupancy of the  Project. If any law, statute, zoning restriction, ordinance or governmental law,
rule, regulation or requirement of duly constituted public  authorities requires any capital improvement to the Premises or
the Building  solely as the result of Tenant’s particular use of the Premises, then Tenant  shall be responsible for the
same (or at the election of Landlord, for  reimbursing Landlord for the cost of performing the same); provided, however,
that if such capital improvement is so required for any reason other than  Tenant’s particular use of the Premises, then
Landlord shall be responsible for  the same, at Landlord’s sole cost and expense, subject to Landlord’s right to
include such amounts as Operating Expenses on an amortized basis as provided in  Paragraph 15.B. Tenant shall not abandon the
Premises; provided, however, that  if Tenant vacates the Premises while performing all of Tenant’s other  obligations
under this Lease, such vacation shall not be deemed an abandonment  and a Default hereunder. Tenant shall not commit any
public or private nuisance  or any other act or practice which might or would disturb the quiet enjoyment of  any other
tenant of Landlord or any occupant of nearby properties. Tenant shall  place no loads upon the floors, walls or ceilings in
excess of the maximum  designed load determined by Landlord or which endanger the structure; nor place  any harmful liquids
in the drainage systems; nor dump or store waste materials  or refuse or allow such to remain outside the Building proper,
except in the  enclosed trash areas provided. Tenant shall not store or permit to be stored or  otherwise placed any material
of any nature whatsoever outside the Building. If  as a result of any Tenant-specific use or change in Tenant-specific use of
the  Premises by Tenant, any alterations are required to the Premises, the Building  or the Project by applicable laws,
including, without limitation, the Americans  with Disabilities Act or any state or local building, fire or safety codes,
ordinances or regulations, Tenant shall be responsible for the same (or at the  election of Landlord, for reimbursing
Landlord for the cost of performing the  same). Except as expressly set forth in this Lease, any alterations required to  the
Premises, the Building or the Project by applicable laws, including, without  limitation, The Americans with Disabilities Act
or any state or local building,  fire or safety codes, ordinances or regulations, shall be at Landlord’s
cost.

-13- 







         
C. Toxic Material. Tenant,
at its sole cost, shall  comply with and cause Tenant’s Agents to comply with all laws relating to the  storage, use and
disposal of hazardous, toxic or radioactive matter, including  those materials identified in Sections 66680 through 66685 of
Title 22 of the  California Administrative Code, Division 4, Chapter 30 (“Title 22”) as they may  be amended from
time to time (collectively, “Toxic Materials”). If Tenant or  Tenant’s Agents desire to store, use or dispose
of any Toxic Materials in, on or  about the Premises (other than the storage and use of reasonable quantities of  customary
office supplies), Tenant shall first request and obtain Landlord's  approval to such proposed storage, use or disposal in
writing, which request  must be made at least ten (10) days prior to the storage, use or disposal  thereof in, on or about
the Premises. Whether or not Landlord is aware or  approves of the storage, use or disposal of any Toxic Material by Tenant
or Tenant’s Agents, Tenant shall be solely responsible for and shall defend,  indemnify and hold Landlord and Landlord's
Agents harmless from and against all  claims, costs and liabilities, including reasonable attorneys' fees and costs,  arising
out of or in connection with the storage, use, generation,  transportation, disposal or release of Toxic Materials by Tenant
or Tenant’s  Agents, including without limitation, any such claims, costs, damages and  liabilities (including
reasonable attorneys' fees and costs) arising out of or  in connection with any investigation, testing, remediation, removal,
clean-up  and/or restoration services, work, materials and equipment necessary to return  the Premises and any other property
of whatever nature to their condition  existing prior to the storage, use, generation, transportation, disposal or  release
of Toxic Materials by Tenant or Tenant’s Agents in, on or about the  Premises or the Project, and to otherwise
satisfactorily investigate and  remediate the contamination arising therefrom to the reasonable satisfaction of  Landlord and
all governmental authorities. The foregoing indemnification  obligation shall likewise apply to Landlord with respect to
Tenant and Tenant’s  Agents, as to any Toxic Materials maintained in the Building by Landlord. If at  any time during or
after the term of this Lease, as it may be extended, Tenant  becomes aware of any injury, investigation, administrative
proceeding, or  judicial proceeding regarding the storage, use or disposition of any Toxic  Materials by Tenant or Tenant's
Agents on or about the Premises or the Project,  Tenant shall within five (5) days after first learning of such injury,
investigation or proceeding give Landlord written notice advising Landlord of  same. Tenant acknowledges receipt of a copy of
that certain June 1998 Focused  Environmental Site Assessment, 149 Commonwealth Drive, Menlo Park, California,  dated as of
August 16, 1998, prepared by The Gauntlett Group, LLC, together with  all attachments thereto (“Site Assessment”),
that Landlord previously made  available to Tenant, and which Tenant agrees to maintain in confidence. In  addition, Landlord
utilizes Toxic Materials in the operation of its business.  Landlord represents and warrants to Tenant that Landlord uses all
such Toxic  Materials in compliance with all applicable laws, rules, regulations and  ordinances.

         
D.
Transportation Systems
Management. Tenant shall comply with the requirements of the City or County mandated
parking or transportation systems management ordinances. 

         
E.
Rules and Regulations. The Rules and
Regulations for the Project in effect as of the Effective Date are attached
hereto as EXHIBIT E. Landlord reserves the right to adopt or amend the Rules and Regulations
from time to time in its reasonable discretion. Tenant agrees that Tenant, its
employees and agents and, to the extent Tenant can require the same, its
invitees, shall observe and perform the Rules and Regulations as they may be
amended or adopted. A breach of the Rules and Regulations by Tenant or such
persons shall constitute a Default under this Lease as if the Rules or
Regulations were contained in this Lease as covenants of the Tenant. Tenant
acknowledges that Landlord has no obligation to enforce, and shall have no
liability for non-enforcement of, the Rules and Regulations. Notwithstanding the
foregoing, in the event of any inconsistency between the Rules and Regulations
and the provisions of this Lease, the provisions of this
Lease shall control, and Landlord shall not enforce the Rules and Regulations in
a discriminatory manner. 

-14- 







     12. Quiet Enjoyment.
Landlord covenants that Tenant, upon
performing the terms, covenants and conditions of this Lease, shall have quiet
and peaceful possession of the Premises as against any person claiming the same
by, through or under Landlord. 

    
13. Alterations. Landlord hereby consents to
certain Tenant Improvements, on the terms and subject to the conditions of
Exhibit C.
Tenant shall not make or permit any Alterations in, on or about the Premises
without the prior written consent of Landlord, and according to plans and
specifications approved in writing by Landlord, which consent and approval shall not be
unreasonably withheld, conditioned or delayed. Except in the case of the Tenant
Improvements which are the subject of the Initial Installation, Landlord, at its
sole option, may, however, require as a condition to the granting of any such
consent, that Tenant provide to Landlord, at Tenant’s sole cost and expense, a
lien and completion bond in an amount equal to one and one-half (11⁄2) times any
and all estimated costs of any intended improvements to the Premises, to insure
Landlord against any liability for mechanics’ and materialmen’s liens and to
insure completion of the work. Except in the case of the Tenant Improvements
which are the subject of the Initial Installation, and unless otherwise agreed
in writing by the parties, Tenant shall, at its sole cost and expense, obtain
all necessary permits and governmental inspections and approvals required in
connection with any Alterations. All Alterations shall be installed at Tenant’s
sole expense (except as expressly set forth in this Lease), in compliance with
all applicable laws (including, but not limited to, The American With
Disabilities Act, and any state or local building, fire or safety codes,
ordinances or regulations), the Rules and Regulations and the CC&R’s, by
Landlord’s contractor unless otherwise agreed by the parties. All Alterations
shall be done in a good and workmanlike manner conforming in quality and design
with the Premises existing as of the Commencement Date, and shall not diminish
the value of the Project. All Alterations made by Tenant shall be and become the
property of Landlord upon installation and shall not be deemed Tenant’s Personal
Property. Notwithstanding any other provisions of this Lease, Tenant shall be
solely responsible for the maintenance and repair of any and all Alterations
made by it to the Premises. Tenant shall give Landlord written notice of
Tenant’s intention to perform any Alterations on the Premises at least twenty
(20) days prior to the commencement of such Alterations to enable Landlord to
post and record an appropriate Notice of Non-responsibility or other notice
deemed proper before the commencement of any such Alterations. 

-15- 







    
14. Surrender of the Premises. Tenant shall not be
required to restore or remove, or to pay Landlord for the restoration or removal
of, any portion of the Initial Installation (as defined by the Work Letter
attached hereto as Exhibit C) or any other improvement or alterations completed
prior to the Commencement Date of this Lease, including, without limitation, any
improvements or alterations completed or undertaken under the 2007 Lease, or
future Alterations, provided that such future Alterations are approved in
writing by Landlord in advance, such approval not to be unreasonably withheld. Except as permitted in this Lease, upon the expiration or
earlier termination of the Term, Tenant shall surrender the Premises to Landlord
in its condition existing as of the Commencement Date, normal wear and tear and
fire or other insured casualty for which Tenant is not otherwise obligated under
the provisions of Paragraph 18 to repair excepted, with all interior areas
cleaned. Any damage or deterioration of the Premises shall not be deemed
ordinary wear and tear if Tenant was responsible for maintaining the same under
the provisions of Paragraph 18 and if the same could reasonably have been
prevented by good maintenance practices by Tenant. Except as otherwise stated in
this Lease, Tenant shall leave the air lines, power panels, electrical
distribution systems, voice and data wiring, lighting fixtures, air
conditioning, window coverings, wall coverings, carpets, wall paneling,
ceilings, and plumbing on the Premises and in good operating condition. Tenant
shall prior to the expiration or termination of the Term remove all Tenant’s
Personal Property, including security wiring installed by Tenant if requested by
Landlord, and repair any damage and perform any restoration work caused or
necessitated by any such removal. If Tenant fails to remove Tenant’s Personal
Property, and such failure continues after the termination of this Lease,
Landlord may retain such property and all rights of Tenant with respect to it
shall cease, or Landlord may place all or any portion of such property in public
storage for Tenant’s account. Tenant shall be liable to Landlord for costs of
removal of Tenant’s Personal Property and storage and transportation costs of
same, and the cost of repairing and restoring the Premises, together with
interest at the Interest Rate from the date of expenditure by Landlord until
paid. 

    
15.
Operating Expenses.

         
A.
Payment by Tenant. During the Term of this Lease, Tenant shall pay to Landlord,
as Rent on a monthly basis as set forth in Paragraph 5.A (ii)., one-twelfth
(1/12) of Tenant’s Building Percentage of the amount by which Landlord’s
estimate of the Operating Expenses for each calendar year during the Term (after
the Base Year) are estimated by Landlord to exceed the Operating Expenses
incurred by Landlord for the Base Year, as such Base Year is specified in
section C.8. of the Information Sheet (“Base
Year Operating Expenses”). 

         
B.
Operating Expenses. The term “Operating
Expenses” shall mean all expenses, costs and
disbursements (but not capital improvements except as otherwise expressly
provided below, or specific costs especially billed to and paid by specific
tenants) of every kind and nature which Landlord shall pay or become obligated
to pay because of or in connection with the ownership, maintenance, repair or
operation of the Project and such additional building or Outside Area facilities
in subsequent years as may be determined by Landlord to be necessary or
appropriate. Operating Expenses shall include, but not be limited to, the
following, all of which shall be included in the Base Year: 

-16- 







              
(i) Wages and salaries of all employees engaged in the operation,
maintenance and security of the Project, including taxes, insurance and benefits
relating thereto; and the rental cost and overhead of any office and storage
space used to provide such services; 

              
(ii) All supplies and materials used in operation, repair and maintenance
of the Project; 

              
(iii) Cost of all utilities, including surcharges, for the Project,
including the cost of water, sewer, gas, power, heating, lighting, air
conditioning and ventilating for the Project; 

              
(iv) Cost of all maintenance and service agreements for the Project and
the equipment thereon, including but not limited to, security and energy
management services, window cleaning, floor waxing, elevator maintenance,
janitorial service, engineers, gardeners, and trash removal services;


              
(v) Cost of all insurance which Landlord or Landlord’s lender deems
necessary or appropriate for the Project such as the cost of “All-Risk” property
insurance including, at Landlord’s option, earthquake and flood coverage,
insurance against loss of rents on an “All-Risk” basis, and a lender’s loss
payable endorsement in favor of any lenders with respect to the Project, and
naming Landlord and such lenders as insureds; and casualty and liability
insurance applicable to the Building, Property and Outside Area and Landlord’s
personal property used in connection therewith, naming Landlord and Landlord’s
Agents as named or additional insureds; 

              
(vi) Cost of repairs and general maintenance (excluding repairs and
general maintenance to the extent then paid by proceeds of insurance or other
third parties); 

              
(vii) A management fee of no more than three percent (3%) of annual gross
rentals generated by the Project (which management may be provided either by
Landlord, affiliates of Landlord and/or by third parties) (the “Management
Fee”), and with any space in the Project utilized by Landlord deemed to be
leased at the rate of Monthly Rent under this Lease (on a rentable square foot
basis); 

              
(viii) The costs of any additional services not provided to the Project
at the Commencement Date but thereafter provided by Landlord in its management
of the Building, Property or Outside Area; 

              
(ix) The cost of only those capital improvements (including interest)
made to the Project after the Effective Date that are (i) intended to reduce
other Operating Expenses (as to which the amortized cost to be included in
Operating Expenses in any year shall be limited to the actual reduction in
Operating Expenses during such year as a result thereof or (ii) are required to
be made in order to conform to any changes subsequent to the Commencement Date
in any applicable laws, ordinances, rules, regulations or orders of any governmental agencies having jurisdiction
over the Building or which enhance in any material respect the general
appearance or use of the Project or any portion thereof, with the cost of such
capital improvements described in clauses (i) and (ii) above being amortized
with interest at an annual rate of eight percent (8%) simple over the period
Landlord reasonably determines to be the useful life of the capital improvement,
consistent with applicable governmental requirements and generally accepted
accounting principles consistently applied; 

-17- 







              
(x) Real Property Taxes, as that term is defined in
Paragraph 16; and 

              
(xi) Assessments, dues and other amounts payable pursuant to the
CC&R’s, including any and all assessments and dues of the Association.


          The cost of
additional or extraordinary services requested by Tenant and not paid or payable
by Tenant pursuant to other provisions of this Lease shall be payable by Tenant
on a monthly basis. 

          Operating
Expenses shall not include: 

	          
    	(a)	     	the cost of any additional or extraordinary services
      provided to other tenants of the Building;
		 
		(b)		costs paid for directly by Tenant;
		 
		(c)		principal and interest payments on loans secured by
      deeds of trust recorded against the Project;
		 
		(d)		real estate sales or leasing brokerage
      commissions;
		 
		(e)		executive salaries of off-site personnel employed by
      Landlord except for the charge (or pro rata share) of the manager of the
      Project (which manager’s salary is not included within the Management
      Fee).
		 
		(f)		attorneys’ fees, costs and disbursements and other
      expenses incurred in connection with negotiations or disputes with Tenant,
      other occupants, or prospective tenant or occupants;
		 
		(g)		renovating or otherwise improving, decorating, painting
      or redecorating spaces for tenants or other occupants of the
      Project;
		 
		(h)		costs incurred due to violations by Landlord or any
      tenant of the terms and conditions of any lease;
		 
		(i)		advertising and promotional
  expenditures;


-18- 







	          
    	(j)	     	any fines or penalties incurred due to violations by
      Landlord of any law or governmental rule or authority;
		 
		(k)		the cost of any items for which the Landlord is actually
      reimbursed by condemnation proceeds, insurance carried (or required by
      this Lease to be carried and not so carried) or by warranty or for which
      Landlord is otherwise actually compensated;
		 
		(l)		costs for sculpture, painting or other objects of
      art;
		 
		(m)		charitable contributions;
		 
		(n)		any costs relating to Toxic Materials, asbestos and the
      like not resulting from actions of Tenant;
		 
		(o)		costs incurred by Landlord due to the negligence or
      misconduct of Landlord or its agents, contractors, licensees and employees
      or the violation by Landlord or any tenants or other occupants of the
      terms and conditions of any lease of space or other agreements including
      this Lease.


          The Landlord shall not recover under this Section 15 or
elsewhere in this Lease any item of cost more than once.

         
C.
Adjustment.

              
(i) Projected
Increases. Prior to or at any time after the commencement of each calendar year
during the Term following the Base Year, Landlord
may provide Tenant with notice of Landlord’s reasonable estimate of the amount
by which the then current year’s Operating Expenses are projected, if at all, to
exceed the Base Year Operating Expenses (the “Projected Increase in Operating
Expenses”). Tenant shall thereafter during such year pay adjusted Monthly Rent
which shall include as the Monthly Operating Expense Reimbursement an amount
equal to one-twelfth (1/12) of Tenant’s Building Percentage multiplied by any
Projected Increase in Operating Expenses. 

-19- 







              
(ii) Accounting. Within ninety (90) days (or as soon thereafter as possible)
after the close of each calendar year after the Base Year, Landlord shall
provide Tenant a statement of (a) such year’s actual Operating Expenses, (b) the
Base Year Operating Expenses, (c) the amount, if any, by which the actual
Operating Expenses exceed the Base Year Operating Expenses (the “Actual Increase
in Operating Expenses”), (d) the amount equating to Tenant’s Building Percentage
of any Actual Increase in Operating Expenses and (e) the sum of any amounts
theretofore paid by Tenant as Monthly Operating Expense Reimbursements pursuant
to Paragraph 5.A. with respect to such year. If the amount set forth in clause
(d) above exceeds the amount set forth in clause (e) above, Tenant shall pay the
amount of such excess to Landlord within ten (10) days after receipt of
such statement, which obligation shall survive the expiration or earlier
termination of its Term of the Lease. If the amount set forth in clause (e)
above exceeds the amount set forth in clause (d) above, Landlord shall, within
thirty (30) days after the date of such statement, credit the amount of such
excess against the next accruing payment(s) of Monthly Operating Expense
Reimbursements or reimburse Tenant for same if this Lease has terminated prior
to the date such determination is made. If Tenant disputes the amount of the
Actual Increase in Operating Expenses stated in said statement, Tenant may
designate, within sixty (60) days after receipt of such statement, an
independent certified public accountant to inspect Landlord’s records, at
Tenant’s sole cost. Tenant is not entitled to request that inspection, however,
if Tenant is then in Default under this Lease. The accountant shall be a member
of a nationally recognized accounting firm and shall not charge a fee based on
the amount of the Actual Increase in Operating Expenses that the accountant is
able to save Tenant by the inspection. Such accountant and Tenant shall, at
Landlord’s option, prior to the occurrence of any such inspection, execute a
confidentiality agreement in form reasonably acceptable to the parties thereto
in which such accountant and Tenant agree to maintain Landlord’s books and
records and the results of such inspection in confidence. Tenant shall give
reasonable notice to Landlord of the request for inspection, and the inspection
shall be conducted in Landlord’s offices at a
reasonable time or times. If, after that inspection, Tenant still disputes the
Actual Increase in Operating Expenses, a certification of the proper amount
shall be made, at Tenant’s expense, by an independent certified public
accountant mutually acceptable to Landlord and Tenant. That certification shall
be final and conclusive. If any such certification demonstrates that Landlord’s
statement overstated the amount of the Actual Increase in Operating Expenses by
5% or more, Landlord shall credit or reimburse the reasonable cost of the audit
not to exceed $1,500.00 and the amount of Tenant’s Building Percentage thereof
against the next accruing payment(s) of Monthly Operating Expense Reimbursements
or reimburse Tenant for same if this Lease has terminated prior to the date such
determination is made. Such reimbursement is Tenant’s sole remedy for any error
in such statement from Landlord. 

              
(iii) Proration. Tenant’s liability to pay Tenant’s Building Percentage of
Operating Expenses in excess of Base Year Operating Expenses shall be prorated
on the basis of a 365-day year to account for any fractional portion of a year
included at the commencement or expiration of the term of this Lease.


              
(iv) Not Fully
Occupied. Notwithstanding any other provision to the contrary, it is agreed that if
the Building, in total, is less than ninety-five percent (95%) occupied during
all or any portion of any calendar year (including, without limitation, the Base
Year), an adjustment shall be made in calculating the Operating Expenses for the
Project for such year so that Tenant’s Percentage of Operating Expenses in
excess of the Base Year Operating Expenses shall be equivalent to the Operating
Expenses calculated as though the Building, in total, had been ninety-five
percent (95%) occupied during the entirety of such year. 

              
(v) Survival. Landlord and Tenant’s
obligation to pay for or credit any increase or decrease in payments pursuant to
this Paragraph shall survive the expiration or termination of the Term of this
Lease. 

-20- 








         
D.
Failure to Pay or
Reimburse. Failure of Tenant to pay
or by Landlord to reimburse any of the charges required to be paid or reimburse
under this Paragraph 15. shall constitute a breach of this Lease and Landlord’s
remedies shall be as specified in Paragraph 29.B. 

    
16.
Taxes and Assessments.

         
A.
Payment by Tenant. Except as provided for in Paragraph 16.C., Real Property
Taxes for the Project shall be included within Operating Expenses pursuant to
Paragraph 15.B. 

         
B.
Annual Assessments. With respect to any taxes or assessments which may be levied
against or upon the Project, or which under the laws then in force may be
evidenced by improvement or other bonds or may be paid in annual installments,
only the amount of such annual installment (with appropriate proration for any
partial year) and interest due thereon shall be included within the computation
of the annual taxes and assessments levied against the Project. 

         
C.
Taxes Levied Against Tenant’s Alterations and
Personal Property. In addition to Tenant’s obligation to pay its Building
Percentage of Operating Expenses over Base Year Operating Expenses as provided
in Paragraphs 15 and 16.A., (i) Tenant shall be responsible for and shall pay to
the taxing authority prior to delinquency to the extent Tenant is billed
directly, all Real Property Taxes assessed with respect to or against Tenant, or
any fixtures, equipment, facilities, furniture, Tenant Alterations or other
Personal Property owned by Tenant or placed, installed or located within, upon
or about the Premises by Tenant or at Tenant’s direction (collectively “Personal
Property Taxes”), and (ii) to the extent any Personal Property Taxes are billed
to Landlord and Landlord elects not to include such Personal Property Taxes in
Operating Expenses, Tenant shall be responsible for and shall pay to Landlord
within ten (10) days after written notice from Landlord, the amount of such
Personal Property Taxes so billed to Landlord. Tenant shall provide Landlord
with evidence of Tenant’s payment of the same upon Landlord’s request.


         
D.
Failure to Pay. Failure of Tenant to pay any of
the charges required to be paid under this Paragraph 16 shall constitute a
Default, and Landlord’s remedies shall be as specified in Paragraph 29.B.


    
17.
Utilities and Services. 

         
A.
Services Provided by Landlord. Landlord shall
provide heating, ventilation, air conditioning, security, janitorial and normal
office trash removal service, mail pickup and delivery (not to include postage),
reception service at the main Building lobby during
normal business hours as defined by Paragraph C.13 of the Information Sheet, and
such other services as are set forth in EXHIBIT F, and reasonable amounts of
electricity for normal lighting and office machines, water for reasonable and
normal drinking and lavatory use, and replacement light bulbs and/or fluorescent
tubes and ballasts for standard overhead fixtures. Except for those services as
to which costs are set forth in EXHIBIT F, costs of all such services shall be
included in Operating Expenses, pursuant to Paragraph 15.B. 

-21- 







          B. Services Exclusive to
Tenant. Tenant shall pay for all telephone and other utilities and services
specially or exclusively supplied and/or metered exclusively to the Tenant,
together with any taxes thereon. Any such services that are not separately
metered to the Premises shall be included in Operating Expenses, pursuant to
Paragraph 15.B. 

         
C.
Hours of Service. Said services shall be provided
during generally accepted business days and hours or such other days or hours as
may hereafter be set forth. Utilities shall be provided on a twenty-four hour
basis, subject to the provision of this Paragraph 17. 

         
D.
Excess Usage by Tenant. Tenant shall not
have connection to the utilities except by or through existing outlets and shall
not install or use machinery or equipment in or about the Premises that uses
excess water, lighting or power, or suffer or permit any act that causes extra
burden upon the utilities or services, including but not limited to security
services, over standard office usage for the Project. Landlord shall require
Tenant to reimburse Landlord for any excess expenses or costs that may arise out
of a breach of this subparagraph by Tenant. Landlord may, in its sole
discretion, install at Tenant’s expense supplemental equipment and/or separate
metering applicable to Tenant’s excess usage or loading. 

         
E.
Interruptions. There shall be no abatement of
Rent and Landlord shall not be liable in any respect whatsoever for the
inadequacy, stoppage, interruption or discontinuance of any utility or service
due to riot, strike, labor dispute, breakdown, accident, repair or other cause
beyond Landlord’s reasonable control or in cooperation with governmental request
or directions.

         
F.
After Hours HVAC. No additional charge will be
levied by Landlord for occasional after hour use of HVAC. Tenant will use bypass
switches presently installed. In the event additional HVAC is required for an
individual area within the Premises, a separate HVAC unit with check meter will
be installed to record usage, at the sole expense of Tenant. Tenant will
reimburse Landlord at the rate charged by the utility company for this usage.


         
G.
Paging.
The paging system is divided into
sub-zones whereby Tenant will have the ability to page personnel within the
confines of the Premises. In the event of an emergency or building evacuation,
Landlord will have the capability to make paging
announcements in the Premises. Tenant shall not adjust, alter, or remove any
Landlord paging system equipment at any time.


-22- 







     18. Repair and Maintenance.

         
A.
Premises, Building and Outside
Area.

              
(i) Maintenance and Repair;
Landlord’s Obligations.
Landlord shall keep the Project, including
the Premises, interior and exterior walls, roof, and common areas and the equipment, whether used exclusively for Tenant
or in common with Landlord or other tenants, in good condition and repair;
provided, however, Landlord shall not be obligated to paint, repair or replace
wall coverings, or to repair or replace any Tenant Improvements, Alterations, or
any improvements that are not ordinarily a part of the Building or are above
then Building standards. Except as provided in Paragraph 25, there shall be no
abatement of Rent or liability of Tenant on account of any injury or
interference with Tenant’s business with respect to any improvements,
alterations or repairs made by Landlord to the Project or any part thereof.
Landlord shall be responsible for maintaining and repairing (a) the structural
parts of the Building, which structural parts include the foundation, roof and
subflooring of the Premises, the basic plumbing, heating, ventilating, air
conditioning and electrical systems installed or furnished by Landlord, and (b)
the Outside Area, except for any damage to Premises, Building or Outside Area
caused by the negligence or willful acts or omissions of Tenant or of Tenant’s
Agents, or by reason of the failure of Tenant to perform or comply with any
terms, conditions or covenants in this Lease, or caused by Alterations made by
Tenant or by Tenant’s Agents, which shall be Tenant’s responsibility. Except as
otherwise provided in Paragraph 15.B., all costs of repair and maintenance of
the Project shall be included in the Operating Expenses.

              
(ii) Janitorial
Services. Landlord shall cause janitorial and
normal office trash removal service to be
provided to the Premises five (5) days a week, Sunday through Thursday, and the
cost thereof shall be included in Operating Expenses under the provisions of
Paragraph 15.B. Coverage will not be provided on holidays observed by Landlord.


              
(iii) Tenant’s
Obligations. Notwithstanding Landlord’s obligation to keep the Premises in
good condition and repair, Tenant shall be responsible for payment of the cost
thereof to Landlord as additional rent for that portion of the cost of any
maintenance and repair of the Premises, or any equipment (wherever located) that
serves only Tenant or the Premises, to the extent such cost is attributable to
causes beyond normal wear and tear. Tenant shall be responsible for the cost of
painting, repairing or replacing wall coverings, and to repair or replace any
Tenant Improvements, Alterations and any other Premises improvements installed
by or for the Tenant that are not ordinarily a part of the Building or that are
above then Building standards. Landlord may, at its
option, upon reasonable notice, elect to have Tenant perform such maintenance or
repairs which are otherwise Tenant’s responsibility hereunder.


-23- 







              
(iv) Notice of
Repairs Needed. Landlord shall not be liable for any failure to make any of
the repairs or to perform any maintenance unless the failure shall persist for
an unreasonable time after written notice of the need of the repairs or
maintenance is given to Landlord by Tenant. For any HVAC failure affecting the
server room on the Premises or other failure involving life safety systems or
security, Landlord will make best efforts to respond within twenty-four (24)
hours. For any other repairs or maintenance, an “unreasonable amount of time”
will be determined by the circumstances, but in any event such repair or
maintenance will be undertaken within forty five (45) days after written notice
to Landlord by Tenant.

              
(v) No
Abatement. There shall be no abatement of Rent and no liability of Landlord by
reason of any injury to or interference with Tenant’s business arising from the
making of any repairs, alterations or improvements in or to, or maintenance of,
any portion of the Project, or any fixtures, appurtenances and equipment therein
provided Landlord makes reasonable efforts not to unduly interfere with Tenant’s
use and enjoyment of the Project.

         
B.
Control and Reconfiguration. Landlord shall at
all times have exclusive control of the Building (other than the Premises) and
the Outside Area and may at any time temporarily close any part thereof and
exclude and restrain anyone from any part thereof, and may change the design
configuration or location of the Building or the Outside Area. Without limiting
the generality of the foregoing statements, Landlord shall have the right, in
Landlord’s sole discretion, from time to time, to: 

              
(i) Make changes to the Building interior and exterior and Outside Area,
including, without limitation, changes in the location, size, shape, number, and
appearance thereof, including but not limited to the lobbies, cafeteria,
windows, stairways, air shafts, elevators, escalators, restrooms, driveways,
parking spaces, parking areas, loading and unloading areas, entrances and exits,
direction of traffic, decorative walls, landscaped areas and walkways; however,
Landlord shall at all times provide the parking facilities required by law;


              
(ii) Temporarily close any of the Outside Area for maintenance so long as
reasonable access to the Premises remains available; 

              
(iii) Add additional buildings and improvements to the Outside Area;


              
(iv) Use the Outside Area while engaged in making additional
improvements, repairs or alterations to the Project, or any portion thereof;


-24- 







              
(v) Do and perform such other acts and make such other changes in, to or
with respect to the Outside Area and Project as Landlord may, in the exercise of
sound business judgment, deem to be appropriate; and 

              
(vi) Eliminate any of the additional services set forth on
EXHIBIT
F.
Landlord shall further have the right to enter
upon the Premises, as provided in Paragraph 21,
for the purpose of installing, maintaining, repairing, adjusting and making
connections to any utilities (including but not limited to plumbing, HVAC,
electrical, telephone, and cable TV) serving the Premises or other spaces in the
Building or for gaining access to the structural portions of the Building and
making alterations thereto for the benefit of Tenant, Landlord or other
occupants of the Building. No such entry shall be considered a constructive or
actual eviction of Tenant, and Landlord shall have no liability to Tenant
therefor, provided that Landlord shall use commercially reasonable efforts to
minimize interference with Tenant’s operations. 

         
C.
Waiver.
Provided that repairs are made by
Landlord according to the provisions of Paragraph A(iv), Tenant waives the
provisions of all laws, statutes or ordinances, including Sections 1932(1),
1932(2), 1933(4), 1941 and 1942 of the California Civil Code and any similar or
successor law, which might now or at any time hereafter otherwise afford Tenant
any right to make repairs and deduct the expenses of such repairs from the Rent
due under this Lease. 

         
D.
Compliance with Governmental
Regulations. Subject to the provisions of Paragraphs 10 and 11, Tenant shall, at its
cost comply with, including the making by Tenant of any Alteration to the
Premises, all present and future regulations, rules, laws, ordinances, and
requirements of all governmental authorities (including, state municipal, county
and federal governments and their departments, bureaus, boards and officials)
arising from the use or occupancy of, or applicable to, the Project or
privileges appurtenant thereto (including, but not limited to, any state or
local building, fire or safety codes, ordinances or regulations).

         
E.
Repair Where Tenant at Fault. If all or part of
the Project or the Premises requires repair or becomes damaged or destroyed
through any act or omission of Tenant or Tenant’s Agents, Landlord may effect
the necessary alterations, replacements or repairs at Tenant’s cost. 

    
19.  Fixtures.
Tenant shall, at its own expense, provide, install and maintain in good  condition all trade fixtures, equipment and other
Tenant’s Personal Property  required in the conduct of its business in the Premises. All fixtures and  improvements,
other than Tenant’s trade fixtures, furniture (not including  furniture owned by Landlord and used by Tenant) and
equipment, which are  installed or constructed upon or attached to the Premises by either Landlord or  Tenant shall become a
part of the realty and belong to Landlord. If Tenant is  not then in Default, Tenant may, at the termination of this Lease,
or at any  other time, remove from the Premises all trade fixtures, furniture (not including
furniture owned by Landlord and used by Tenant),  equipment and other Tenant’s Personal Property not permanently affixed
to the  Premises. Upon removal, Tenant shall restore the Premises to its original  condition at the time of occupancy, Tenant
Improvements, Alterations and normal  wear and tear excepted, subject
to the provisions of Paragraph 25.  

-25- 







     20. Liens.
Tenant shall keep the Project free from any
liens arising out of any work performed, materials furnished or obligations
incurred by or on behalf of Tenant and shall defend, indemnify and hold the
Project, Landlord and Landlord’s Agents free and harmless from and against any
lien, claim, cause of action, loss, liability, damage or expense, including
reasonable attorneys’ fees and costs, in connection with or arising out of any
such lien or claim of lien. Tenant shall cause any such lien imposed to be
released of record by payment or posting of a proper bond acceptable to Landlord
within ten (10) days after receipt of written request by Landlord. If Tenant
fails to so remove any such lien within the prescribed ten (10) day period, then
Landlord may do so and Tenant shall reimburse Landlord upon demand. Such
reimbursement shall include all sums incurred by Landlord including Landlord’s
reasonable attorneys’ fees, with interest thereon at the Interest Rate.


    
21.
Landlord’s Right to Enter the
Premises. Tenant shall permit Landlord and its Agents to enter the Premises at all
reasonable times with at least twenty-four (24) hours’ prior notice to Tenant,
with the exception of emergencies, to inspect the Premises, to post Notices of
Non-responsibility and similar notices, “For Sale” signs, to show the Premises
to interested parties such as prospective lenders and purchasers, to make
repairs or alterations to the Premises or the Building and any utility system
located therein, to discharge Tenant’s obligations hereunder when Tenant has
failed to do so within a reasonable time after written notice from Landlord, and
at any reasonable time within one hundred eighty (180) days prior to the
expiration of the Term, to place upon the Premises ordinary “For Lease” signs
and to show the Premises to prospective tenants. The above rights are subject to
reasonable security regulations of Tenant, and to the fact that Landlord shall
seek to exercise its rights in a manner so as to minimize interference with
Tenant’s business. 

    
22.
Signs.
Tenant shall not install any signs upon
the exterior of the Premises or the Project. Tenant shall not install any signs
on the interior of the premises without first obtaining Landlord’s written
consent, which shall not be unreasonably withheld or delayed. Landlord will
provide one line on a monument sign, at Landlord’s expense. Tenant may install
up to two building standard signs located at mutually acceptable locations
proximately outside Tenant’s suite, at Tenant’s expense. 

    
23.
Insurance.

         
A.
Indemnification. 

              
(i) By Tenant. Tenant shall protect, defend, indemnify
and hold Landlord and Landlord’s Agents free and harmless from and against any
and all damage, loss, liability or expense including, without limitation,
reasonable attorneys’ fees, expert witness fees and legal costs suffered
directly or indirectly or by reason of any claim, cause of action, suit or
judgment brought by or in favor of any person or persons for damage, loss or
expense (any of the foregoing referred to herein as a “Claim”) due to, but not
limited to, bodily injury and property damage sustained by such person or
persons which arises out of, is occasioned by or in any way attributable to (i)
injury or damage occurring upon the Premises, (ii) the use or occupancy of the
Project or any part thereof and adjacent areas by the Tenant, or (iii) the acts
or omissions of the Tenant, its agents or employees or any contractors brought
onto the Project by Tenant, except to the extent caused by the gross negligence
or willful misconduct of Landlord or Landlord’s Agents.

-26- 








              
(ii) By Landlord. Landlord shall protect, defend, indemnify and hold
Tenant and Tenant’s Agents free and harmless from and against any and all Claims
due to, but not limited to, bodily injury and property damage sustained by such
person or persons which arises out of, is occasioned by or in any way
attributable to the gross negligence or willful misconduct of Landlord or
Landlord’s Agents.

              
(iii) Landlord and Tenant agree that the indemnity obligations assumed
herein and in other provisions of this Lease shall survive the expiration or
earlier termination of the Term of this Lease.

         
B.
Tenant’s Insurance. Tenant shall maintain in full
force and effect at all times during the Term (including any extension(s)), at
its own expense, for the protection of Tenant and Landlord, as their interests
may appear, policies of insurance issued by a responsible carrier or carriers,
reasonably acceptable to Landlord, which afford the following coverages:


              
(i) Worker’s Compensation for Tenant’s employees - In accordance with
state law. 

              
(ii) Commercial general liability insurance in an amount not less than
Two Million and no/100ths Dollars ($2,000,000.00) combined single limit for both
bodily injury and property damage which includes contractual liability, broad
form property damage, personal injury, completed operations, and products
liability naming Landlord as an additional insured. 

              
(iii) “All Risk” property insurance (including, without limitation,
vandalism, malicious mischief, inflation and sprinkler leakage endorsement) on
Tenant’s Personal Property located on or in the Premises together with any
improvement or Alteration which Landlord is not obligated to repair pursuant to
Paragraph 25.E. Such insurance shall be in the full amount of the replacement
cost, as the same may from time to time increase as a result of inflation or
otherwise and shall name Tenant as a loss payee. 

-27- 







         
C.
Landlord’s Insurance. During the Term
Landlord shall maintain “All Risk” property insurance (including, at Landlord’s
option, inflation endorsement, sprinkler leakage endorsement, and earthquake and
flood coverage) on the Project, excluding coverage of the Tenant Improvements
and all Tenant’s Personal Property located on or in the Premises. At Landlord’s
option, the coverage shall also include insurance against loss of rents on an
“All Risk” basis, including flood, in an amount equal to the Monthly Rent, and
any other sums payable under the Lease, for a period of at least twelve (12)
months commencing on the date of loss. Such insurance shall name Landlord as a named insured and may at Landlord’s option
include ’s Landlord’s Agents as named insureds and lender’s loss payable
endorsement(s) in favor of lenders with respect to the Property. The insurance
premiums for “All Risk” property insurance, including the premiums resulting
from increases in the valuation of the Project, shall be included in Operating
Expenses. 

         
D.
Evidence of Insurance. Tenant shall deliver
to Landlord, prior to Tenant’s entry onto the Premises, certificates of
insurance evidencing the insurance for the coverage specified in Paragraph
23.B., with the limits not less than those specified therein. Tenant will
endeavor to provide not less than thirty (30) days’ prior written notification
to Landlord in the event of cancellation, and ten (10) days’ notice of
cancellation for non-payment of premiums, with respect to any required coverage
unless comparable insurance is obtained from another carrier prior to the
effective date of cancellation. 

         
E.
Co-Insurer.
If, on account of the failure of Tenant
to comply with the foregoing provisions, Landlord is adjudged a co-insurer by
its insurance carrier, then, any loss or damage Landlord shall sustain by reason
thereof, including reasonable attorneys’ fees and costs, shall be borne by
Tenant and shall be immediately paid by Tenant upon receipt of a bill therefor
and evidence of such loss. 

         
F.
Insurance Requirements. All insurance shall
be in a form reasonably satisfactory to Landlord. All policies required by
Paragraph 23.B. shall be carried with companies that have a general policy
holder’s rating of not less than “A-” and a financial rating of not less than
Class “VIII” in the most current edition of Best’s Insurance
Reports. All policies required by Paragraph
23.B. shall be primary as to the Landlord. Tenant shall provide Landlord an up
to date Certificate of Insurance within (30) thirty days of any material
alteration of its policy. Landlord may, not more than twice annually, request in
writing a copy of Tenant’s insurance certificate. If Tenant fails to procure and
maintain the insurance required hereunder, Landlord may, but shall not be
required to, order such insurance at Tenant’s sole expense and Tenant shall
reimburse Landlord the reasonable cost thereof. Such reimbursement shall include
all reasonable sums incurred by Landlord with respect to obtaining such
insurance, including reasonable attorney’s fees, with interest thereon at the
Interest Rate. 

         
G.
No Limitation of Liability. Landlord makes no
representation that the limits of liability specified to be carried by Tenant
under the terms of this Lease are adequate to protect
Tenant or Landlord, and in the event Tenant believes that any such insurance
coverage called for under this Lease is insufficient, Tenant shall provide, at
its own expense, such additional insurance as Tenant deems adequate.


-28- 







          H. 
Landlord’s
Disclaimer. Landlord and Landlord’s Agents shall not be liable for any
loss or damage to persons or property resulting from fire, explosion, falling
plaster, glass, tile or sheetrock, steam, gas, electricity, water or rain which
may leak from any part of the Project, or from the pipes, appliances or plumbing
works therein or from the roof, street or subsurface or whatsoever, unless
caused by or due to the gross negligence or willful misconduct of Landlord or
Landlord’s Agents or material breach of this Lease by Landlord. Landlord and
Landlord’s Agents shall not be liable for interference with the light, air, or
any latent defect in the Project. In no event whatsoever shall Landlord be
liable for losses attributable to interruption of telephone services. Tenant
shall give prompt written notice to Landlord in the case of a casualty, accident
or repair needed in the Project. 

    
24. Waiver of
Subrogation. Landlord and Tenant each hereby waive all rights of recovery against the
other on account of loss and damage occasioned to such waiving party for its
property or the property of others under its control to the extent that such
loss or damage is insured against under any insurance policies which may be in
force at the time of such loss or damage, but only to the extent of insurance
proceeds actually received. Tenant and Landlord shall, upon obtaining policies
of insurance required hereunder, give notice to the insurance carrier that the
foregoing mutual waiver of subrogation is contained in this Lease and Tenant and
Landlord shall cause each insurance policy obtained by such party to provide
that the insurance company waives all right of recovery by way of subrogation
against either Landlord or Tenant in connection with any damage covered by such
policy.

    
25. 
Damage or Destruction.

         
A.
Partial Damage — Insured. If the Premises or
the Building are damaged by any casualty which is covered under the “All-Risk”
insurance carried by Landlord pursuant to Paragraph 23.C., then Landlord shall
restore the damage, provided insurance proceeds are available to pay the full
cost of restoration and provided such restoration can be completed within one
hundred eighty (180) days after the commencement of the work in the reasonable
opinion of Landlord. In such event this Lease shall continue in full force and
effect, except that Tenant shall be entitled to a proportionate reduction of
Monthly Rent while such restoration for which Landlord is obligated hereunder
takes place, such proportionate reduction to be based upon the extent to which
the damage and restoration efforts interfere with Tenant’s use of the Premises.



-29- 







         
B.
Partial Damage — Uninsured. If the Premises or
the Building is damaged by a risk not covered by Landlord’s insurance, or the
available proceeds of insurance are less than the cost of restoration, or if the
restoration cannot be completed within one hundred eighty (180) days after
the commencement of work, in the reasonable opinion of Landlord, then Landlord
shall have the option either to: (i) repair or restore such damage, this Lease
continuing in full force and effect, but the Monthly Rent to be proportionately
abated as provided in Paragraph 25.A.; or (ii) give notice to Tenant at any time
within thirty (30) days after such damage terminating this Lease as of a date to
be specified in such notice, which date shall be not less than thirty (30) nor
more than sixty (60) days after giving such notice. If notice of termination is
given, this Lease shall expire and all interest of Tenant in the Premises shall
terminate on the date specified in the notice and the Monthly Rent shall be
reduced in proportion to the extent, if any, to which the damage interferes with
the use of the Premises by Tenant and any prepaid Monthly Rent and Operating
Expenses shall be refunded to Tenant to the same extent. All insurance proceeds
for the Premises shall be payable solely to Landlord, and Tenant shall have no
interest in the proceeds. 

          C. Total
Destruction. If the Premises or the Building is totally destroyed or the
Premises or Building, as the case may be, cannot be restored as required herein
under applicable laws and regulations or due to the presence of hazardous
factors such as earthquake faults, chemical waste and similar dangers,
notwithstanding the availability of insurance proceeds, this Lease shall be
terminated effective the date of the damage. 

          D.
Tenant’s
Election. If the Premises are damaged by any casualty, or if any portion of the
Outside Area is damaged by a casualty to such an extent that the Premises is no
longer useable by Tenant, in Tenant’s reasonable opinion, and if, in Landlord’s
reasonable opinion, such casualty cannot be repaired or restored within one
hundred eighty (180) days after commencement of such work, then Tenant may, by
written notice delivered to Landlord at any time within thirty (30) days after
such damage, terminate this Lease as of the future date specified in such
notice, which date shall not be less than thirty (30) nor more than sixty (60)
days after the date of Tenant’s delivery of such notice. If notice of
termination is so given, this Lease shall expire and all interests of Tenant and
the Premises shall terminate on the date specified in the notice and the Monthly
Rent shall be reduced in proportion to the extent, if any, to which the damage
interferes with the use of the Premises by Tenant and any prepaid Monthly Rent
and Operating Expenses shall be refunded to Tenant to the same extent. All
insurance proceeds for the Premises shall be payable to Landlord, and Tenant
shall have no interest in the proceeds. 

          E. Landlord’s
Obligations. Landlord shall not be required to insure against or repair any injury or
damage by fire or other cause, or to make any restoration or replacement of any
paneling, decorations, partitions, railings, floor coverings, office fixtures or
other items which are Tenant Improvements, Alterations or Personal Property
installed in the Premises by Tenant or at the direct or indirect expense of
Tenant. Tenant shall be required at Tenant’s sole cost and expense, separately
to insure the same and promptly to restore or replace same in the event of
damage. Except for any abatement of Monthly Rent relating to the plan of
restoration of damage for which Landlord is obligated to repair hereunder,
Tenant shall have no claim against Landlord for any damage suffered by reason of
any such damage, destruction, repair or restoration; nor shall Tenant have the
right to terminate this Lease as the result of any statutory provision now or
hereafter in effect pertaining to the damage and destruction of the Premises,
except as expressly provided herein.

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          F.
Damage Near End of
Term. Anything herein to the contrary notwithstanding, if more than fifty
percent (50%) of the Building is destroyed or damaged during the last twelve
(12) months of the Term, then either Tenant or Landlord may, at its option,
cancel and terminate this Lease as of the date of the occurrence of the damage.
If neither such party elects to terminate this Lease, the repair of the damage
shall be governed by the other provisions of this Paragraph 25. If this Lease is
terminated, Landlord may keep all the insurance proceeds resulting from the
damage, except for the proceeds which specifically insured Tenant’s Personal
Property.

     26. Condemnation.

          A. Total Taking —
Termination. If title to all of the Premises or so much thereof is taken or
appropriated for any public or quasi-public use under any statute or by right of
eminent domain so that reconstruction of the Premises will not, in Landlord’s
and Tenant’s mutual opinion, result in the Premises being reasonably suitable
for Tenant’s continued occupancy for the uses and purposes permitted by this
Lease, this Lease shall terminate as of the date that
possession of the Premises or part thereof be taken. A sale by Landlord to any
authority having the power of eminent domain, either under threat of
condemnation or while condemnation proceedings are pending, shall be deemed a
taking under the power of eminent domain for all purposes of this Paragraph.


          B. Partial
Taking. If any part of the Premises or the Building is taken and the remaining
part is reasonably suitable for Tenant’s continued occupancy for the purposes
and uses permitted by this Lease, this Lease shall, as to the part so taken,
terminate as of the date that possession of such part of the Premises or
Building is taken. If the Premises is so partially taken the Rent and other sums
payable hereunder shall be reduced in the same proportion that Tenant’s use and
occupancy is reduced. 

          C. No Apportionment of
Award. No award for any partial or entire taking shall be apportioned. Tenant
assigns to Landlord its interest in any award which may be made in such taking
or condemnation, together with any and all rights of Tenant arising in or to the
same or any part thereof. Nothing contained herein shall be deemed to give
Landlord any interest in or require Tenant to assign to Landlord any separate
award made to Tenant for the taking of Tenant’s Personal Property, for the
interruption to Tenant’s business, or its moving costs, or for the loss of its
good will. 

          D. Temporary
Taking. No temporary taking of the Premises shall terminate this Lease or give
Tenant any right to any abatement of Rent. Any award made to Tenant by reason of
such temporary taking shall belong entirely to Tenant and Landlord shall not be
entitled to share therein. Each party agrees to execute and deliver to the other
all instruments that may be required to effectuate the provisions of this
Paragraph.

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     27. Assignment and Subletting.

          A. Landlord’s
Consent. Except as permitted by Paragraph 27.I hereof, Tenant shall not enter into
a Sublet without Landlord’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed. Except as permitted by Paragraph
27.I, any attempted or purported Sublet without Landlord’s prior written consent
shall be void and confer no rights upon any third person and, at Landlord’s
election, shall terminate this Lease. Each Subtenant shall agree in writing, for
the benefit of Landlord, to assume, to be bound by, and to perform and observe
the terms, covenants and conditions of this Lease (with the exception of Monthly
Rent) to be performed and observed by Tenant. Every Sublet shall recite that it
is and shall be subject and subordinate to the provisions of this Lease, and
that the termination of this Lease shall constitute a termination (at the option
of the Landlord) of every such Sublet. Notwithstanding anything contained herein, (i) Tenant shall not be
released from personal liability for the performance of any of the terms,
covenants and conditions of this Lease by reason of Landlord’s consent to a
Sublet unless Landlord specifically grants such release in writing (it being
agreed that Landlord has no obligation to do so), and (ii) the parties agree
that it shall be reasonable for Landlord to withhold its consent to any proposed
Sublet when the proposed Subtenant is an occupant of the Property or is a third
party which is already involved in negotiations with Landlord to lease space in
the Project. Without limiting the generality of Landlord’s discretion in
determining whether it is reasonable to withhold consent for any requested
Sublet, it shall be deemed reasonable for Landlord to withhold such consent if
the proposed Subtenant would use the Premises for any use other than for general
office purposes. 

          B. Information to be
Furnished. If Tenant desires at any time to Sublet the Premises or any portion
thereof, it shall first notify Landlord of its desire to do so and shall submit
in writing to Landlord: (i) the name of the proposed Subtenant; (ii) the nature
of the proposed Subtenant’s business to be carried on in the Premises; (iii) the
terms and provisions of the proposed Sublet and a copy of the proposed Sublet
form containing a description of the subject premises; and (iv) such financial
information, including financial statements, as Landlord may reasonably request
concerning the proposed Subtenant. If Tenant requests Landlord’s consent to a
proposed Sublet, Tenant shall pay to Landlord, whether or not consent is
ultimately given, Landlord’s reasonable attorneys’ fees incurred in connection
with such request up to a maximum of $1,500.00. 

          C. Landlord’s
Alternatives. Except in the case of a Sublet permitted by Paragraph 27.I, at
any time within ten (10) business days after Landlord’s receipt of all the
information specified in Paragraph 27.B., Landlord may, by written notice to
Tenant, elect: (i) to lease for its own account the portion thereof of the
Premises so proposed to be Sublet by Tenant, upon the same terms as those
offered to the proposed subtenant but on a form acceptable to Landlord; (ii) to
terminate this Lease as it relates to the portion of the Premises so proposed to
be Sublet by Tenant as of the later of (x) the proposed effective date of such
Sublet or (y) thirty (30) days after the date Landlord is in receipt of the
information specified in Paragraph 27.B.; (iii) to consent to the Sublet by
Tenant; or (iv) to refuse its consent to the Sublet. Landlord’s failure to
deliver such notice of election within such 10-business day period shall be
deemed Landlord’s consent to such Sublet.

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          If Landlord consents to the Sublet, Tenant may thereafter
enter a valid Sublet of the Premises or portion thereof, upon the terms and
conditions and with the proposed Subtenant set forth in the information
furnished by Tenant to Landlord pursuant to Paragraph 27.B. provided, however,
that fifty percent (50%) of any excess of (I) the Subrent over (II) (A) the
Monthly Rent required to be paid by Tenant hereunder, (B) Tenant’s reasonable
attorneys’ fees and brokerage commissions, in each case, with the total of such amounts under this clause (B) applied on an
amortized basis over the term of the Sublet, and (C) and any then unamortized
value of the applicable Tenant Improvements, to the extent not reimbursed out of
the TI Allowance, applied on an amortized basis over the remainder of the Term,
shall be paid to Landlord as and when received by Tenant. As used immediately
above, the term “applicable Tenant Improvements” means the Tenant Improvements
allocable to the space that is subject to the applicable Sublet, based upon
rentable square footage. 

          D. Proration. If a portion of the
Premises is Sublet, the pro rata share of the Monthly Rent attributable to such
partial area of the Premises shall be determined by Landlord by dividing the
Monthly Rent payable by Tenant hereunder by the total rentable square footage of
the Premises and multiplying the resulting quotient (the per rentable square
foot rent) by the number of rentable square feet of the Premises which are
Sublet. 

          E. Executed
Counterpart. No Sublet shall be valid nor shall any Subtenant take possession of the
Premises until an executed counterpart of the Sublet agreement has been
delivered to Landlord. 

          F. Surrender of
Lease. The voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation thereof, shall not work a merger, and shall, at the option of
Landlord, terminate all or any existing Sublets, or may, at the option of
Landlord, operate as an assignment to it of any or all such Sublets. 

          G. No
Mortgages. Tenant shall not pledge, hypothecate or encumber this Lease or Tenant’s
interest herein or in the Premises in any manner, including without limitation,
by means of any mortgage, deed of trust, security interest or assignment for
security purposes, and any such attempted pledge, hypothecation or encumbrance
shall be void and constitute a Default under this Lease. 

          H. Effect of
Default. Notwithstanding any provision of this Paragraph 27 to the contrary, in
the event of the occurrence of any uncured Default by Tenant in the performance
of any term or condition of this Lease, any right of Tenant at such time to seek
to Sublet this Lease pursuant to this Paragraph 27 and any obligations of
Landlord to review any proposed Sublet or exercise its rights under Paragraph
27.C. above shall be suspended, and any applicable period for review or action
by Landlord shall be tolled, until such Default is fully cured of no force or
effect.

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          I.
Permitted
Transfers. Notwithstanding anything to the contrary contained in this Lease, Tenant,
without Landlord’s prior written consent, may sublet the Premises or assign this
Lease to: (i) a subsidiary, affiliate, division or entity controlling,
controlled by or under common control with Tenant; (ii) a successor entity
related to Tenant by merger, acquisition, consolidation, nonbankruptcy
reorganization or government action; or (iii) a purchaser of substantially all
of Tenant’s assets (collectively “Permitted Transferees”); provided Tenant
enters into such a transaction in good faith and not for the purpose of
indirectly entering into a Sublet of this Lease with a person or entity other
than a Permitted Transferee through a step transaction or otherwise. Tenant
shall not be required to obtain Landlord’s consent thereof, nor shall provisions
of Paragraph 27.C. hereof apply; in no event shall such assignment or sublease
release Tenant from any liability for the performance of the obligations under
this Lease, unless Landlord shall have released Tenant In writing (it being
agreed that Landlord has not obligation to do so). Further, the requirements
contained in the third and fourth sentences of Paragraph 27.A. shall apply to
all such transfer. 

     28. Sale Lease-Back.
Tenant acknowledges that Landlord may, at some time in the future, finance the
Property by means of a sale and lease back transaction (“Sale Lease-Back
Transaction”) in which Landlord would transfer its interest in the Project to a
financing party, as buyer, and in which such buyer would lease the Project back
to Landlord. Tenant agrees that, in the event of any such Sale Lease-Back
Transaction, this Lease shall automatically become subordinate to the leasehold
interest created by the lease between such buyer and Landlord (the “Master
Lease”). In such event, this Lease shall thereafter be a sublease below the
Master Lease. Notwithstanding the automatic effect of such subordination, Tenant
agrees to execute any documentation reasonably required by such buying party to
evidence such subordination. Notwithstanding the foregoing, any such
subordination of this Lease shall be subject to the requirement that such buying
entity shall have agreed, in form reasonably acceptable to Tenant, that in the
event of any termination of the Master Lease because of the Default of Landlord
thereunder or because of the consensual agreement of Landlord and such buying
party, this Lease shall automatically become a direct lease between such buying
party, as landlord, and Tenant, as tenant. 

     29. Default.

          A. Tenant’s
Default. A default under this Lease by Tenant shall exist if any of the following
events shall occur (as applicable, a “Default”):

               (i) If Tenant fails to pay Rent or any other sum required to be paid
hereunder within five (5) days after the date of Tenant’s receipt of written
notice from Landlord that such amount was not received when due; or

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               (ii)
If Tenant fails to perform any term, covenant or condition of this Lease except
those requiring the payment of money, and Tenant shall have failed to cure such
breach within twenty (20) days after written notice from Landlord; provided,
however, that if such failure by its nature cannot reasonably be cured within
the twenty (20) day period, then Tenant shall not be in Default if Tenant
promptly commences the performance of such cure within the twenty (20) day
period and diligently thereafter prosecutes the same to completion; or


               (iii)
If Tenant shall have abandoned the Premise; or 

               (iv)
In the event of a general assignment by Tenant for the benefit of creditors; the
filing of any voluntary petition in bankruptcy by Tenant or the filing of an
involuntary petition by Tenant’s creditors, which involuntary petition remains
undischarged for thirty (30) days; the employment of a receiver to take
possession of substantially all of Tenant’s assets or any part of the Premises,
if such receivership remains undissolved for thirty (30) days after creation
thereof; the attachment, execution or other judicial seizure of all or
substantially all of Tenant’s assets or any part of the Premises, if such
attachment or other seizure remains undismissed or undischarged for thirty (30)
days after the levy thereof; the admission by Tenant in writing of its inability
to pay its debts as they become due; the filing by Tenant of a petition seeking
any reorganization or arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation; the filing by Tenant of an answer admitting or failing timely to
contest a material allegation of a petition filed against Tenant in any such
proceeding; or, if within thirty (30) days after the commencement of any
proceeding against Tenant seeking any reorganization or arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, such proceeding shall not have
been dismissed; or 

               (v)
The occurrence of any other event specifically stated to be a Default under the
provisions of this Lease. 

          B. Remedies. Upon a Default,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by law or otherwise provided in this Lease, to which Landlord
may resort cumulatively or in the alternative: 

               (i)
Landlord may continue this Lease in full force and effect, and this Lease shall
continue in full force and effect as long as Landlord does not terminate this
Lease, and Landlord shall have the right to collect Rent when due. During the
period Tenant is in Default, Landlord may enter the Premises and relet it, or
any part of it, to third parties for Tenant’s account, provided that any Rent in
excess of the Monthly Rent due hereunder shall be payable to Landlord. Tenant
shall be liable immediately to Landlord for all costs Landlord incurs in
reletting the Premises or any part thereof, including, without limitation,
broker’s commissions, expenses of cleaning and redecorating the Premises
required by the reletting and like costs. Reletting may be for a period shorter
or longer than the remaining Term of this Lease. Except as set forth in
Paragraph 29.C., no act by Landlord other than giving written notice to Tenant
shall terminate this Lease.

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               (ii) Landlord may by written notice terminate Tenant’s right
to possession of the Premises at any time and relet the Premises or any part
thereof. Acts of maintenance, efforts to relet the Premises or the appointment
of a receiver on Landlord’s initiative to protect Landlord’s interest under this
Lease shall not constitute a termination of Tenant’s right to possession. On
termination, Landlord has the right to remove all Tenant’s Personal Property and
store same at Tenant’s cost and to recover from Tenant: 

          (a)
the worth at the time of award of the unpaid Rent which had been earned at the
time of termination including interest at the Interest Rate;

          (b)
the worth at the time of award of the amount by which the unpaid Rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that Tenant proves could have been reasonably
avoided, including interest at the Interest Rate;

          (c)
the worth at the time of award of the amount by which unpaid Rent for the
balance of the Term after the time of award exceeds the amount of such rental
loss for the same period that Tenant proves could be reasonably avoided,
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%); 

          (d)
any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform its obligations under this
Lease, including without limitation the following: (i) all expenses for
repairing or restoring the Premises, (ii) all brokers’ fees, advertising costs
and other expenses of repairing or restoring the Premises, (iii) all expenses in
retaking possession of the Premises, and (iv) reasonable attorneys’ fees, expert
witness fees and court costs; and 

          (e) as
used in subparagraphs (a) through (c) above, the term “time of award” shall mean
the date of entry of a judgment or award against Tenant in an action or
proceeding arising out of Tenant’s breach of this Lease. 

          Tenant
waives redemption or relief from forfeiture under California Code of Civil
Procedure Sections 1174 and 1179, or under any other present or future law, in
the event Tenant is evicted or Landlord takes possession of the Premises by
reason of any Default of Tenant hereunder. 

               (iii)
Landlord may, with or without terminating this Lease, re-enter the Premises and
remove all persons and property from the Premises; such property may be removed
and stored in a public warehouse or elsewhere at the cost of and for the account
of Tenant. No re-entry or taking possession of the Premises by Landlord pursuant
to this Paragraph shall be construed as an election to terminate this Lease
unless a written notice of such intention is given to Tenant.

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          C.
Landlord’s
Default. Landlord shall not be deemed to be in default in the performance of any
obligation required to be performed by it hereunder unless and until it has
failed to perform such obligation within twenty (20) days after receipt of
written notice by Tenant to Landlord specifying the nature of such default;
provided, however, that if the nature of Landlord’s obligation is such that more
than twenty (20) days are required for its performance, then Landlord shall not
be deemed to be in default if it shall commence such performance within such
twenty (20) day period and thereafter diligently prosecute the same to
completion. In the case of any uncured default by Landlord, Tenant shall have
the following remedies, in addition to all other rights and remedies provided by
law or otherwise provided in this Lease, to which Tenant may resort cumulatively
or in the alternative: 

               i. If Tenant is not in Default,
Tenant may continue this Lease in full force and effect, provided that in such
case Tenant shall be entitled to recover from Landlord any reasonable cost
incurred by Tenant that is in excess of the amount of the Rent which would have
been incurred by Tenant had no uncured breach by Landlord occurred, including
interest at the Interest Rate. 

               ii. In the case of any default
under this Lease (whether by Landlord or Tenant) each party shall make best
efforts to mitigate any losses or damages arising therefrom. 

               iii. In the case of expiration or
early termination of this Lease, those provisions of this Lease which expressly
continue in operation after termination or expiration shall continue in full
force and effect according to their terms.

     30. Subordination. This Lease is and shall automatically be subject and
subordinate to all mortgages and deeds of trust (collectively, “Encumbrance”)
which may now or hereafter affect the Premises, to the CC&R’s and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, however, (i) if the holder or holders of any such Encumbrance
(“Holder”) shall require that this Lease be prior and superior thereto, then
upon written notice from Holder to Tenant this Lease shall be automatically
prior and superior to the lien of such Encumbrance without regard to the
sequence of recordation, and (ii) such subordination is subject to the
requirement that such Holder agree not to disturb Tenant’s rights under this
Lease, so long as Tenant is not in Default under the provisions of this Lease;
Within ten (10) days after Landlord or Holder’s written request, Tenant shall
execute any and all documents requested by Landlord or Holder to further
effectuate and evidence such subordination of this Lease to any lien of the
Encumbrance or to evidence the Holder’s election that this Lease be prior and
senior to the Encumbrance. Notwithstanding anything to the contrary set forth in
this Paragraph, Tenant hereby attorns and agrees to attorn to the Holder and any
person purchasing or otherwise acquiring the Premises at any sale or other
proceeding or pursuant to the exercise of any other rights, powers or remedies
under such Encumbrance, which obligation to attorn shall survive any foreclosure
of any Encumbrance; and Tenant agrees within ten (10) days after request of
Holder or any such other person to execute an attornment agreement recognizing
Holder or such other person as Landlord under this Lease and acknowledging that
this Lease is and shall remain in full force and effect and binding upon Tenant
notwithstanding any foreclosure of such Encumbrance. Tenant acknowledges that,
as of the date of this Lease, the Property is subject to the lien of a deed of
trust for the benefit of Wells Fargo Bank, National Association
(“Wells”).

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     31.
Notices. Every notice to be given
by any party to any other party with respect hereto, shall be in writing and
shall not be effective for any purpose unless the same shall be delivered to the
addressee personally, by a reputable express delivery service, a recognized
overnight air courier service, or United States certified mail, return receipt
requested, addressed to the respective parties at the addresses set forth in
section C.11. of the Information Sheet, or to such other address as either party
may from time to time designate by notice to the other given in accordance with
this Paragraph. All notices shall be effective (i) when delivered locally by
hand or by a reputable express delivery service (ii) one business day after
deposit with a recognized overnight air courier service or (iii) five business
days after having been sent by certified mail, return receipt requested.


     32.
Attorneys’
Fees. In the event Landlord engages an attorney to pursue the recovery of any
Rent owed by Tenant hereunder (whether or not any action or legal proceeding is
ultimately filed) or if either party brings any action or legal proceeding for
damages for an alleged breach of any provision of this Lease, to recover Rent or
other sums due, to terminate the tenancy of the Premises or to enforce, protect
or establish any term, condition or covenant of this Lease or right of either
party, the prevailing party shall be entitled to recover as a part of such
action or proceedings, or in a separate action brought for that purpose,
reasonable attorneys’ fees and costs, including expert witness fees (and without
regard to whether or not such action or proceedings are pursued to judgment).


     33.
Estoppel
Certificates. Tenant shall within ten (10) business days following written
request by Landlord: 

               (i)
Execute and deliver to Landlord any documents whose content Tenant agrees is
true and correct, including estoppel certificates, in the form prepared by
Landlord (a) certifying the date of commencement of this Lease, (b) certifying
that this Lease is unmodified and in full force and effect or, if modified,
stating the nature of such modification and certifying that this Lease, as so
modified, is in full force and effect, (c) stating the dates to which Rent and
any other amounts payable hereunder have been paid and the amount of any
unforfeited security deposit then held by Landlord, (d) certifying that no
Defaults exist as of such date, or, if there are any Defaults, stating the
nature of such Defaults, (e) acknowledging that there are not, to Tenant’s
knowledge, any uncured defaults on the part of Landlord, or, if there are
uncured defaults on the part of the Landlord, stating the nature of such uncured
defaults, (f) acknowledging that Tenant does not have any claim or right of
offset against Landlord (or if Tenant does have any such claim or right of
offset, the nature of such claim or right of offset), and (g) setting forth such
other matters as may reasonably be requested by Landlord. Tenant’s failure to
deliver an estoppel certificate in the form provided or as modified by Tenant to
correct any errors or inaccuracies within ten (10) business days after delivery
of Landlord’s written request therefor shall be conclusive upon Tenant (a) that
this Lease is in full force and effect, without modification except as may be
represented by Landlord, (b) that there are now no uncured defaults in
Landlord’s performance, (c) that no Rent has been paid in advance and no
security deposit is held by Landlord, (d) that Tenant has no claims or rights of
offset against Landlord, (e) that no Defaults then exist, and (f) that such
other matters as were set forth in such estoppel certificate as prepared by
Landlord are true and correct; provided further, that such failure shall
constitute a breach of this Lease and Landlord’s remedies shall be as specified
in Section 29.B.

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               (ii)
Deliver to Landlord or direct Landlord to where it may obtain the current
financial statements of Tenant, and financial statements of the two (2) years
prior to the current financial statements year, with an opinion of a certified
public accountant, including a balance sheet and profit and loss statement for
the most recent prior year, all prepared in accordance with generally accepted
accounting principles consistently applied. To the extent such statements have
not previously been made public by Tenant, Landlord agrees to maintain any such
statements in confidence other than to disclose them to the applicable lender or
potential buyer who has requested them, or as may be required by law.


     34.
Transfer of the Project by
Landlord. In the event of any conveyance of the Project or the Building and
assignment by Landlord of this Lease, Landlord shall be and is hereby entirely
released from all liability under any and all of its covenants and obligations
contained in or derived from this Lease occurring or accruing after the date of
the conveyance and assignment, and Tenant agrees to attorn to such transferee,
except in the event of a Sale Lease-Back Transaction, in which event this Lease
will remain in full force and effect as a sublease between Landlord and Tenant
as contemplated in Paragraph 28.

     35.
Landlord’s Right to Perform
Tenant’s Covenants. If Tenant fails to make any payment or perform any other act
on its part to be made or performed under this Lease, Landlord after fifteen
(15) days’ written notice may, but shall not be obligated to, and without
waiving or releasing Tenant from any obligation of Tenant under this Lease, make
such payment or perform such other act to the extent Landlord may deem
desirable, and in connection therewith, pay expenses and employ counsel. All
sums so paid by Landlord and all penalties, interest and costs in connection
therewith shall be due and payable by Tenant on the next business day after
Landlord’s delivery to Tenant of written notice of any such payment by Landlord,
together with interest thereon at the Interest Rate from such date to the date
of payment by Tenant to Landlord, plus collection costs and reasonable
attorneys’ fees. Landlord shall have the same rights and remedies for the
nonpayment thereof as in the case of Default in the payment of Rent.

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     36.
Tenant’s Remedy. The obligations of
Landlord or Landlord’s Agents under this Lease do not and shall not constitute
personal obligations of Landlord or Landlord’s Agents , and Tenant agrees that
it shall look solely to the real estate that is the subject of this Lease and
any related insurance, and to no other assets of Landlord or Landlord’s Agents,
for satisfaction of any liability that may now or hereafter arise in respect of
this Lease and will not seek recourse against Landlord or Landlord’s Agents or
any of their personal assets of Landlord or Landlord’s Agents for satisfaction
of any liability that may now or hereafter arise in respect of this Lease.


     37.
Mortgagee
Protection. If Landlord defaults under this Lease, Tenant shall, if earlier requested
by Landlord or any lender with respect to the Project, notify by registered or
certified mail to any beneficiary of a deed of trust or mortgagee of a mortgage
covering the Premises and offer such beneficiary or mortgagee a reasonable
opportunity to cure the default, including time to obtain possession of the
Premises by power of sale or a judicial foreclosure, if such should prove
necessary to effect a cure. 

     38.
Brokers. Tenant warrants and
represents that it has had no dealings with any real estate broker or agent in
connection with the negotiation of this Lease, except for the broker(s)
specified in section C.10. of the Information Sheet, and that it knows of no
real estate broker or agent who is or might be entitled to a commission in
connection with this Lease. Landlord shall pay any commission or other
compensation owing to such specified broker(s) in section C.10. pursuant to
their separate written agreement. Tenant agrees to defend, indemnify and hold
Landlord and its Agents free and harmless from and against any and all
liabilities or expenses, including reasonable attorneys’ fees and costs, arising
out of or in connection with claims made by any broker or individual not
specified in section C.10. of the Information Sheet for commissions or fees
resulting from Tenant’s dealings with such other broker or individual.


     39.
Acceptance. Delivery of this
Lease, duly executed by Tenant, constitutes an offer to lease the Premises, and
under no circumstances shall such delivery be deemed to create an option or
reservation to lease the Premises for the benefit of Tenant. This Lease shall
only become effective and binding upon full execution hereof by Landlord and
delivery of a signed copy to Tenant. 

     40.
Recording. Neither party shall
record this Lease nor a short form memorandum thereof. 

     41.
Modifications for
Lender. If, in connection with obtaining financing for the Project, or any
portion thereof, Landlord’s lender shall request reasonable modifications to
this Lease as a condition to such financing, Tenant shall not unreasonably
withhold, delay or defer its consent thereto, provided such modifications do not
materially adversely affect Tenant’s rights hereunder. 

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     42.
Parking. Tenant shall have
the right to park at no cost in the Project’s parking facilities in common with
Landlord’s employees and the other tenants of the Building (except for those
parking spaces that have been reserved for Landlord, other tenants of the
Project, handicapped parking and certain parking spaces designated for
Landlord’s company vehicles and contractor vehicles) upon terms and conditions,
as may from time to time be reasonably established by Landlord but in any case
free of charge and in accordance with any parking control or monitoring devices
from time to time installed or implemented by Landlord. Tenant shall not
overburden the parking facilities and shall not use more than three (3)
non-reserved, non-designated parking space per one thousand (1,000) rentable
square feet of the Premises. Tenant also agrees to cooperate with Landlord and
other tenants in the use of the parking facilities. Landlord reserves the right,
in its discretion, to allocate and assign parking spaces among Tenant and the
other tenants or to restrict the use of certain parking spaces for certain
tenants and to install or otherwise implement parking control or monitoring
devices for the parking facilities. Tenant shall establish and maintain during
the Term hereof a program to encourage maximum use of public transportation by
personnel of Tenant employed on the Premises, including without limitation, the
distribution to such employees of written materials explaining the convenience
and availability of public transportation facilities adjacent or proximate to
the Building, staggering working hours of employees, and encouraging use of such
facilities, all at Tenant’s sole reasonable cost and expense. Tenant agrees to
comply with any lawful regulation or ordinance of the City of Menlo Park or the
County of San Mateo respecting transportation management in those jurisdictions,
related to the conduct of Tenant’s business within the Premises. 

     43.
Use of Property Name
Prohibited. Tenant shall not employ the term “149 Commonwealth Drive” in the name or
title of its business or occupation without Landlord’s prior written consent.


     44.
Interest. Any Rent or other
amount not paid by Tenant to Landlord when due hereunder shall bear interest at
the lesser of (i) the rate of twelve percent (12%) per annum or (ii) the maximum
rate permitted by applicable law (with such rate of interest sometimes referred
to herein as the “Interest Rate”) from the date due until paid. 

     45.
Quitclaim. Upon any termination
of this Lease, Tenant, at Landlord’s request, shall execute, have acknowledged
and deliver to Landlord a quitclaim deed for all Tenant’s interest in the
Project. 

     46.
Security. 

          A.
Landlord
Reservations. Landlord shall have the following rights: 

               (i)
To change the name, address or title of the Project or Building upon not less
than ninety (90) days prior written notice; 

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               (ii) To, at Tenant’s expense, provide and install Building
standard graphics on the door of the Premises and such portions of the Outside
Area as Landlord shall reasonably deem appropriate; 

               (iii)
To permit any tenant the exclusive right to conduct any business as long as such
exclusive right does not conflict with any rights expressly given to Tenant
herein; 

               (iv)
To place such signs, notices or displays as Landlord reasonably deems necessary
or advisable upon the roof, exterior of the Building or the Project or on pole
signs in the Outside Area. 

          B. Tenant Prohibitions.
Tenant shall not: 

               (i)
Use a representation (photographic or otherwise) of the Building or the Project
or their name(s) in connection with Tenant’s business; or 

               (ii)
suffer or permit anyone to go upon the roof of the Building. 

          C. Security
Regulations. 

               (i)
Security Access
Badges. One active badge, and only one, will be issued to each employee, agent,
consultant, contractor, or vendor, over the age of sixteen (16), of Tenant at
any given time. All lost or stolen badges must be reported immediately (and, in
any event, prior to 5:00 p.m., Pacific Time, on the day lost or stolen) to
Landlord to be canceled by Landlord’s Security Administrator. Tenant shall
inform Landlord immediately (and, in any event, prior to 5:00 p.m., Pacific
Time, on the day of such termination) upon Tenant’s termination of any employee
of Tenant, so that Landlord may cause such employee’s badge to be canceled by
Landlord’s Security Administrator. 

               (ii)
Security Guard Tours. Periodic, routine tours
of the space occupied by Tenant will be conducted by Landlord’s Security Guard
Contractor from 4:30 p.m. to 8:30 a.m. during normal work days and 24 hours a
day on Saturdays, Sundays and holidays observed by Landlord. The purpose of
these tours will be to observe and address abnormal conditions such as, but not
limited to: (a) unlocked exterior and interior doors, (b) extreme temperature
conditions, (c) unattended coffee pots and appliances in the ‘on’ position, and
(d) unbadged persons on the premises, 

               (iii)
Emergency Contact
List. Tenant agrees to provide a current “emergency contact list” for
Landlord’s Security Department in the event of an emergency in the space
occupied by Tenant.

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               (iv)
Miscellaneous Security. Tenant agrees to assist
Landlord in maintaining security for the entire Project. This includes but is
not limited to: (a) ensuring that all employees, consultants, contractors,
vendors, and agents are appropriately badged and/or escorted, (b) returning
badges of terminated employees to Landlord’s Security Administrator to be
deleted from the security badge system, (c) notifying Landlord’s Security Administrator immediately of lost or
missing badges, (d) ensuring that security access badges are only used by those
authorized persons to whom they are issued and that badges are not loaned to
anyone under any circumstances, and (e) instructing all Tenant’s Agents to
maintain in confidence any sensitive information overheard from any employees or
representatives of Landlord or any other tenant in the Building while in the
Outside Area. Tenant acknowledges and agrees that the security services provided
herein are not a guaranty against criminal activity and that Landlord assumes no
liability in the event of any breach of such security measures. 

               (v) Costs of
Services. All costs of services provided
by Landlord under this Paragraph 46 shall be included in Operating Expenses
under Paragraph 15.B. 

     47.
Right of First
Offer. 

     Provided that the Tenant is not in
Default, Tenant shall have the Right of First Offer on additional marketable
space (“Expansion Premises”) within the building (“Right of First Offer”) as it becomes available. Landlord shall provide Tenant with
written notice of intention to market, including the economic terms,
(“Notice of Intent to Market”). Tenant shall have twenty (20) business days from receipt
of written notice by Landlord to negotiate the economics for the Expansion
Premises. Except for the economics, all other terms and conditions for the
Expansion Premises shall be consistent with those applicable to the Premises. If
Tenant does not deliver to Landlord Tenant’s Acceptance Notice within the
applicable 20-business day period, Landlord shall have the right to market and
lease such Expansion Premises to any person(s) other than Tenant on any terms
Landlord desires and without offering or further offering such Expansion
Premises to Tenant, and Tenant shall have no further right of first offer to
lease such Expansion Premises pursuant to this Paragraph 47. Any Expansion
Premises leased by Tenant will be added to the Premises as of the date provided
in the offer, and the Rent will be adjusted to reflect the rent to be paid with
respect to Expansion Premises in accordance with the offer. Tenant agrees to
execute amendments to this Lease to reflect additions to the Premises resulting
from the exercise of the Right of First Offer. Tenant's lease of any Expansion
Premises pursuant to this Right of First Offer will be on all the terms and
conditions set forth in this Lease, with the exception of the economics, which
shall be set as described above. This Right of First Offer to lease the
Expansion Premises is personal to Tenant or any Permitted Transferee, and is not
transferable. Notwithstanding the foregoing,
Tenant shall not have the Right of First Offer under this Paragraph 47 if Tenant
is in Default under this Lease at the time such Expansion Premises becomes
available (and Landlord shall have no obligation to deliver to Tenant any
Landlord’s Notice). In addition to the Right of First Offer, Tenant shall have
the option to expand into contiguous space or relocate to another suite if space
becomes available. Terms will be negotiated at the time of such expansion or
relocation. 

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     48. Ownership of
Furniture and Fixtures.

     All furniture, cubicles, telephones
and other items supplied to Tenant by Landlord during the term of this Lease
shall remain the property of the Landlord at the end of the Lease and shall be
returned in good condition, normal wear and tear excepted. 

     Certain furniture in that portion of
the Premises currently occupied by Tenant under the 2007 Lease (the “Existing
Space”) is owned by Landlord. For the duration of Tenant’s occupancy in the
Premises, Tenant shall have the right to continue to utilize furniture owned by
Landlord in the Existing Space at no additional cost.

     If surplus furniture is available
and left in that portion of the Premises other than the Existing Space, Landlord
will make such furniture available to Tenant at no additional cost during the
Term of the Lease. Said furniture shall remain the property of the Landlord.
Within sixty (60) days after the Commencement Date, Tenant will notify Landlord
in writing of any furniture, fixtures or equipment in the Premises that it does
not wish to use, and Landlord will be responsible for promptly removing such
furniture, fixtures and equipment, at
Landlord’s expense. If Tenant elects to do so, a furniture inventory and
condition report will be written and signed by Tenant and Landlord promptly
after the Commencement Date.

     49. General.

          A. Captions. The captions and headings used in this Lease are for the
purpose of convenience only and shall not be construed to limit or extend the
meaning of any part of this Lease. 

          B. Executed
Copy. Any fully executed copy of this Lease shall be deemed an original for all
purposes. 

          C. Time. Time is of the
essence for the performance and observance of each term, covenant and condition
of this Lease. 

          D. Severability. If one or more of the provisions contained herein, except for
the payment of Rent, is for any reason held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of this Lease, but this Lease shall be
construed as if such invalid, illegal or unenforceable provision had not been
contained herein. 

          E. Choice of
Law. This Lease shall be construed and enforced in accordance with the laws of
the State of California. The language in all parts of this Lease shall in all
cases be construed as a whole according to its fair meaning and not strictly for
or against either Landlord or Tenant. 

          F. Interpretation. When the context of this Lease requires, the neuter gender
includes the masculine, the feminine, a partnership or corporation or joint
venture, and the singular includes the plural. The term “including” shall be
deemed to mean “including, but not by way of limitation” and the term “or” has
the inclusive meaning represented by the term “and/or.”

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          G.
No Effect of
Remeasurement. The statements of rentable
square footage set forth in this Lease are for the convenience of the parties,
and no adjustment shall be made to rental amounts, load factors or Tenant’s
Building Percentage if such square footage is later shown to be inaccurate.


          H. Binding
Effect. The covenants and agreement contained in this Lease shall be binding on
the parties hereto and on their respective successors and assigns to the extent
this Lease is assignable. 

          I. Waiver. The waiver by either
party of any breach of any term, covenant or condition of this Lease shall not
be deemed to be a waiver of such provision or any subsequent breach of the same
or any other term, covenant or condition of this Lease. The acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
at the time of acceptance of such payment. No term, covenant or condition of
this Lease shall be deemed to have been waived by either party unless the waiver
is in writing signed by the non-breaching party, as applicable. 

          J. Entire
Agreement. This Lease, including the Information Sheet, is the entire agreement
between the parties, and there are no agreements or representations between the
parties except as expressed herein. Except as otherwise provided herein, no
subsequent change or addition to this Lease shall be binding unless in writing
and signed by the parties hereto. 

          K. Authority. If Tenant is an
entity, each individual executing this Lease on behalf of such entity,
represents and warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of the entity in accordance with its governing documents,
and that this Lease is binding upon the entity in accordance with its terms.
Landlord, at its option, may require a copy of such written authorization to
enter this Lease. The failure of Tenant to deliver the same to Landlord within
fifteen (15) days of Landlord’s request therefor shall be deemed a Default under
this Lease. 

          L. Exhibits. All exhibits,
amendments, riders and addenda attached hereto are hereby incorporated herein
and made a part hereof. 

          M. Counterparts. This Lease may
be executed in counterparts, each of which shall be an original, but all
counterparts shall constitute one (1) instrument. 

          N. Force
Majeure. Neither party shall be held
liable to the other party nor be deemed to have defaulted under or breached this
Lease for failure or delay in 

          O. performing
any obligation under this Lease to the extent that such failure or delay is
caused by or results from causes beyond the reasonable control of the affected
party, potentially including, but not limited to, embargoes, war, acts of war
(whether war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances, fire, floods, or other acts of
God, or acts, omissions or delays in acting by any governmental authority or the
other party. The affected Party shall notify the other party of such force
majeure circumstances as soon as reasonably practical, and shall promptly
undertake all reasonable efforts necessary to cure such force majeure
circumstances.

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     THIS
LEASE, executed as of the date(s) set forth
below, is effective as of the Effective Date set forth in section B of the
Information Sheet.

	Dated February 29, 2012	     	TENANT:
				     
			GERON
      CORPORATION, a Delaware corporation
	 	 		   
		 	By:  	/s/ John A.
      Scarlett	 
				   	
			Its:  	President and CEO	

     

	Dated February 29, 2012	       	LANDLORD:
	     
			EXPONENT REALTY,
      LLC,
		 	a Delaware
      limited liability company
	 	 	 
	
	 		By:  	Exponent, Inc.,
      a Delaware corporation,
				sole member and
      manager
	     
				By:  	/s/ Richard
      Schlenker	 
					Richard L. Schlenker
					Chief Financial
  Officer



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