**Exhibit 10.1**

**FIRSTAMENDMENT TO AMENDED AND RESTATED OFFICE LEASE**

This FIRST AMENDMENT TO AMENDED AND RESTATED OFFICE LEASE (“**First Amendment**”) is made and entered intoas of the 22nd day of September, 2006, by and between KILROYREALTY, L.P., a Delaware limited partnership (“**Landlord**”),and FAVRILLE, INC., a Delaware corporation (“**Tenant**”).

RECITALS :

A.            Landlordand Tenant entered into that certain Amended and Restated Office Lease dated asof October 31, 2005 (the “**Lease**”),whereby Landlord leased to Tenant and Tenant leased from Landlord those certainpremises consisting of 79,871 rentable square feet of space (“**Existing Premises**”) and comprising the entire buildinglocated at 10421 Pacific Center Court, San Diego, California  92121 (the “**10421Building**”).  The ExistingPremises is referred to in the Lease as the “10421 Premises.”

B.            Tenantdesires to expand the Existing Premises to include that certain spaceconsisting of approximately 48,709 rentable square feet of space (the “**Expansion Premises**”), and comprising theentire building located at 10445 Pacific Center Court, San Diego,California  92121 (the “**10445 Building**”) as delineated on **Exhibit A** attached hereto and made apart hereof.  The Expansion Premises isreferred to in the Lease as the “10445 Premises,” and the 10421 Building andthe 10445 Building are part of the project commonly known as “**Pacific Corporate Center**.”  In connection therewith, Landlord and Tenantdesire to amend the Lease as hereinafter provided.

AGREEMENT :

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

# 1.             **Capitalized Terms**. All capitalized terms when used herein shall have the same meaning as isgiven such terms in the Lease unless expressly superseded by the terms of thisFirst Amendment.

# 2.             **Premises**.

## 2.1.          **Modification of Premises**.  Effective as of the date (the “**Expansion Commencement Date**”) which is ninety-one (91) daysfollowing the date that Landlord commences the construction of the “Improvements”(as that term is defined in Section 2.1 of the First Amendment WorkLetter attached hereto as **Exhibit B**(the “**First Amendment Work**

 

 

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## **Letter**”)) in theExpansion Premises after the termination or expiration of the “Existing Lease”as provided in Section 11, below, Tenant shall lease from Landlord andLandlord shall lease to Tenant the Expansion Premises.  Tenant acknowledges and agrees that theExpansion Commencement Date may occur prior to the “Substantial Completion ofthe Improvements” (as that term is defined in Section 5.4 of theFirst Amendment Work Letter). Consequently, effective upon the Expansion Commencement Date, thePremises (as that term is defined in the Lease) shall be increased to includethe Expansion Premises.  Landlord andTenant hereby acknowledge that such addition of the Expansion Premises to theExisting Premises shall, effective as of the Expansion Commencement Date,increase the size of the Premises to approximately 128,580 rentable squarefeet.  The Existing Premises and theExpansion Premises may hereinafter collectively be referred to as the “**Premises**.”

## 2.2.          **Verification ofRentable Square Feet of Expansion Premises**.  For purposes of the Lease, the “rentablesquare feet” of the Expansion Premises shall be calculated pursuant to theBuilding Owners and Managers Association Standard Method of Measuring FloorArea in Industrial Building, and it accompanying guidelines (“BOMA”).  Within thirty (30) days after the ExpansionCommencement Date, Tenant’s space planner/architect shall measure the rentablesquare feet of the Expansion Premises in accordance with the provisions of thisSection, and the results thereof shall be presented to Landlord inwriting.  Landlord’s spaceplanner/architect may review Tenant’s space planner/architect’s determinationof the number of rentable square feet of the Expansion Premises and Landlordmay, within fifteen (15) business days after Landlord’s receipt of Tenant’sspace planner/architect’s written determination, object to such determinationby written notice to Tenant.  Landlord’sfailure to deliver written notice of such objection within said fifteen (15)business day period shall be deemed to constitute Landlord’s acceptance ofTenant’s space planner/architect’s determination.  If Landlord objects to such determination,Landlord’s space planner/architect and Tenant’s space planner/architect shallpromptly meet and attempt to agree upon the rentable square footage of theExpansion Premises.  If Landlord’s spaceplanner/architect and Tenant’s space planner/architect cannot agree on therentable square footage of the Expansion Premises within thirty (30) days afterLandlord’s objection thereto, Landlord and Tenant shall mutually select anindependent third party space measurement professional to field measure theExpansion Premises pursuant to BOMA. Such independent third party measurement professional’s determinationshall be conclusive and binding on Landlord and Tenant.  Landlord and Tenant shall each pay one-half(1⁄2) of the fees and expenses of the independent third party space measurementprofessional.  To the extent the LeaseTerm commences prior to such final determination, Tenant’s determination shallbe utilized until a final determination is made, whereupon an appropriateadjustment, if necessary, shall be made retroactively, and Landlord, or Tenant,as applicable, shall make appropriate payment to the other.  In the event that it is determined, pursuantto the procedure described in this Section above, that the square footageamounts shall be different from those set forth in this Amendment, all amounts,percentages and figures appearing or referred to in this Amendment based uponsuch incorrect amount shall be modified in accordance with suchdetermination.  Such final determinationshall be confirmed in writing between Landlord and Tenant.

## 2.3.          **Use of the Premises**.  Tenant’s use of the Expansion Premises shallbe subject to all of the TCCs of the Lease; provided, however, with respect tothe Expansion Premises only, and provided any such use is legally permissible,Tenant shall use the Expansion Premises solely for general office use, researchand development, warehousing, biotechnology 

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## labs, pharmaceutical manufacturing (inaccordance with cGMP), and any other uses related thereto, all pursuant to theapplicable zoning and the Pacific Corporate Center P.I.D.

## 2.4.          **Maintenance and Repair ofthe Premises**.  Tenant’smaintenance and repair obligations with respect to the Expansion Premisesshall  subject to all of the TCCs of theLease; provided, however Tenant shall keep the Expansion Premises in firstclass order, repair, condition and appearance at all times during the ExpansionTerm in a manner consistent with the “Comparable Buildings,” as that term isdefined in Section 3.2.2, below.

# 3.             **Lease Term**.

## 3.1.          **Expansion Term**.  The term of Tenant’s lease of the ExpansionPremises (the “**Expansion Term**”) shall commence onthe Expansion Commencement Date and expire coterminously with Tenant’s Lease ofthe Existing Premises on the Lease ExpirationDate (i.e.,  June 20, 2025),unless sooner terminated as provided in the Lease, as hereby amended.

## 3.2.          **Expansion Term OptionRight**.

### 3.2.1.       **Option Right**.  Landlord hereby grants the Original Tenant, itsAffiliates and any Permitted Assignee, two (2) options to extend theExpansion Term for the entire Expansion Premises each by a period of five****(5) years(each, an “**Option Term**”) as setforth in this Section 3.2. The TCCs of Section 2.2 of the Lease shall not be applicableto the Expansion Premises.  Such optionsshall be exercisable only by Notice delivered by Tenant to Landlord as providedbelow, provided that, as of the date of delivery of such Notice, Tenant is notin default under the Lease (as amended, beyond any applicable notice and cureperiods).  Upon the proper exercise of anoption to extend, and provided that, as of the end of the then applicableExpansion Term, Tenant is not in default under the Lease (as amended, beyondany applicable notice and cure periods), the Expansion Term, as it applies tothe entire Expansion Premises, shall be extended for a period of five (5)years.

### 3.2.2.       **Option Rent**.  The Rent payable by Tenant during the OptionTerm (the “**Option Rent**”) shall be equal tothe Market Rent as set forth below.  For purposesof this Section 3.2, the term “**MarketRent**” shall mean rent (including additional rent andconsidering any “base year” or “expense stop” applicable thereto), includingall escalations, at which tenants, as of the commencement of the applicableterm are, pursuant to transactions completed within the twenty-four (24) monthsprior to the date Tenant delivers to Landlord the “Exercise Notice,” as thatterm is set forth below, leasing non-sublease, non-encumbered, non-synthetic,non-equity space (unless such space was leased pursuant to a definition of “fairmarket” comparable to the definition of Market Rent) comparable in size,location and quality to the Expansion Premises for a “Comparable Term,” as thatterm is defined in this Section 3.2.2 (the “**ComparableDeals**”), which comparable space is located in the “ComparableBuildings,” as that term is defined in this Section 3.2.2, givingappropriate consideration to the annual rental rates per rentable square foot(adjusting the base rent component of such rate to reflect a net value afteraccounting for whether or not utility expenses are directly paid by the tenantsuch as Tenant’s direct utility payments provided for in Section 6.1of the Lease), the standard of measurement by which the rentable square footageis measured, parking ratios, general access to such Comparable Buildings, thegeneral visibility of such Comparable Buildings, and taking into 

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### consideration only,and granting only, the following concessions (provided that the rent payable inComparable Deals in which the terms of such Comparable Deals are determined byuse of a discounted fair market rate formula shall be equitably increased inorder that such Comparable Deals will not reflect a discounted rate)(collectively, the “**Rent Concessions**”):  (a) rental abatement concessions orbuild-out periods, if any, being granted such tenants in connection with suchcomparable spaces; (b) tenant improvements or allowances provided or to beprovided for such comparable space, taking into account the value of theexisting improvements in the Expansion Premises, such value to be based uponthe age, quality and layout of the improvements and the extent to which thesame can be utilized by this particular Tenant, (c) Proposition 13protection, and (d) all other monetary concessions, if any, being grantedsuch tenants in connection with such comparable space; provided, however, thatnotwithstanding anything to the contrary herein, no consideration shall begiven to the fact that Landlord is or is not required to pay a real estatebrokerage commission in connection with the applicable term or the fact thatthe Comparable Deals do or do not involve the payment of real estate brokeragecommissions.  The term “**ComparableTerm**” shall refer to the length of the lease term, withoutconsideration of options to extend such term, for the space in question.  In addition, the determination of the MarketRent shall include a determination as to whether, and if so to what extent,Tenant must provide Landlord with financial security, such as a letter ofcredit or guaranty, for Tenant’s rent obligations during any Option Term.  Such determination shall be made by reviewingthe extent of financial security then generally being imposed in ComparableTransactions upon tenants of comparable financial condition and credit historyto the then existing financial condition and credit history of Tenant (withappropriate adjustments to account for differences in the then-existingfinancial condition of Tenant and such other tenants).  If in determining the Market Rent, Tenantwould, pursuant to the Comparable Deals and the Rent Concessions set forththerein, otherwise be entitled to a tenant improvement or comparable allowancefor the improvement of the Expansion Premises (the “**OptionTerm TI Allowance**”), Tenant shall not be entitled,and shall not be compelled, to receive such Option Term TI Allowance andLandlord shall reduce the rental rate component of the Market Rent to be aneffective rental rate which takes into consideration that Tenant will notreceive any Option Term TI Allowance. The term “**Comparable Buildings**” shall meanthe Building and other office and research/development buildings which arecomparable to the Building in terms of age (based upon the date of completionof construction or major renovation as to the building containing the portionof the Expansion Premises in question), quality of construction, level ofservices and amenities, size and appearance, and are located in the SorrentoMesa area of San Diego, California (the “**ComparableArea**”).

### 3.2.3.       **Exercise of Option**.  The option contained in this Section 3.2shall be exercised by Tenant, if at all, only in the manner set forth in this Section 3.2.3.  Tenant shall deliver notice (the “**Exercise Notice**”) to Landlord not more than fifteen (15)months nor less than nine (9) months prior to the expiration of the thenExpansion Term, stating that Tenant is exercising its option.  Concurrently with such Exercise Notice,Tenant shall deliver to Landlord Tenant’s calculation of the Market Rent (the “**Tenant’s Option Rent Calculation**”).  Landlord shall deliver notice (the “**Landlord Response Notice**”) to Tenant on or before the later tooccur of (i) the date which is thirty (30) days afterLandlord’s receipt of the Exercise Notice and Tenant’s Option Rent Calculation,and(ii) the date which is nine (9) months prior to the expiration of the thenExpansion Term (the “**Landlord Response Date**”),stating that (A) Landlord is accepting Tenant’s Option Rent Calculation asthe Market Rent, or (B) rejecting 

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### Tenant’s Option Rent Calculation and setting forth Landlord’scalculation of the Market Rent (the “**Landlord’sOption Rent Calculation**”). Within ten (10) business days of its receipt of the Landlord ResponseNotice, Tenant may, at its option, accept the Market Rent contained in theLandlord’s Option Rent Calculation.  IfTenant does not affirmatively accept or Tenant rejects the Market Rentspecified in the Landlord’s Option Rent Calculation, the parties shall followthe procedure, and the Market Rent shall be determined as set forth in Section 3.2.5.

### 3.2.4.       **NoDefaults; Required Financial Condition of Tenant**.  The rights contained in this Section 3.2shall be personal to the Original Tenant, its Affiliates and any PermittedAssignee and may only be exercised by such Original Tenant, Affiliate orPermitted Assignee (and not any other assignee, sublessee or other transfereeof the Original Tenant’s interest in the Lease, as amended) if the OriginalTenant, Affiliate and/or Permitted Assignee occupies not less than one hundredpercent (100%) of the then existing Expansion Premises.  The right to extend the Expansion Term asprovided in this Section 3.2 may not be exercised if, as of thedate of the attempted exercise of the extension option by Tenant, or as of thecommencement date of such Option Term, (A) Tenant is in economic ormaterial default pursuant to the terms of the Lease (asamended, beyond any applicable notice and cure periods), (B) Tenanthas previously been in economic or material default under the Lease (asamended, beyond any applicable notice and cure periods) during the previoustwenty-four (24) month period, or (C) Tenant fails to satisfy the “ThresholdRequirements,” as that term is set forth in Section 21.2.2 of theLease.

### 3.2.5.       **Determination of Market Rent**.  In the event Tenant objects or is deemed tohave objected to the Market Rent, Landlord and Tenant shall attempt to agreeupon the Market Rent using reasonable good-faith efforts.  If Landlord and Tenant fail to reachagreement within sixty (60) days following Tenant’s objection or deemedobjection to the Landlord’s Option Rent Calculation (the (the “**Outside Agreement Date**”), then (i) in connection withthe Option Rent, Landlord’s Option Rent Calculation and Tenant’s Option RentCalculation, each as previously delivered to the other party, shall besubmitted to the arbitrators pursuant to the TCCs of this Section 3.2.4,and (ii) in connection with any other contested calculation of marketRent, the parties shall each make a separate determination of the Market Rentand shall submit the same to the arbitrators pursuant to the TCCs of this Section 3.2.5.  The submittals shall be made concurrentlywith the selection of the arbitrators pursuant to this Section 3.2.5and shall be submitted to arbitration in accordance with Section 3.2.5.1through 3.2.5.5 of this First Amendment, but subject to theconditions, when appropriate, of Section 3.2.3.

#### 3.2.5.1.    Landlordand Tenant shall mutually and reasonably select and appoint one arbitrator whoshall by profession be a real estate broker, appraiser or attorney (the “**Neutral Arbitrator**”) who shall have been active over the five(5) year period ending on the date of such appointment in the leasing (orappraisal, as the case may be) of first-class office/lab/manufacturing propertiesin the Comparable Area.  Thedetermination of the Neutral Arbitrator shall be limited solely to the issue ofwhether Landlord’s or Tenant’s submitted Market Rent, is the closest to theactual Market Rent as determined by the Neutral Arbitrator, taking into accountthe requirements of Section 3.2.2 of this First Amendment.  Such Neutral Arbitrator shall be appointedwithin thirty (30) days after the applicable Outside Agreement Date.  Neither the Landlord nor Tenant may, directlyor indirectly, consult with the Neutral 

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#### Arbitrator prior to subsequent to his or her appearance.  The Neutral Arbitrator shall be retained viaan engagement letter jointly prepared by Landlord’s counsel and Tenant’scounsel.

#### 3.2.5.2.    Withinthirty (30) days of the appointment of the Neutral Arbitrator, such NeutralArbitrator shall reach a decision as to Market Rent and determine whether theLandlord’s or Tenant’s determination of Market Rent as submitted pursuant to Section 3.2.5.1and Section 3.2.3 of this First Amendment is closest to Market Rentas determined by such Neutral Arbitrator and simultaneously publish a ruling (“**Award**”) indicating whether Landlord’s or Tenant’s submittedMarket Rent is closest to the Market Rent as determined by the NeutralArbitrator.  Following notification ofthe Award, the Landlord’s or Tenant’s submitted Market Rent determination,whichever is selected by the Neutral Arbitrator as being closest to Market rentshall become the then applicable Market Rent.

#### 3.2.5.3.    TheAward issued by the Neutral Arbitrator shall be binding upon Landlord andTenant.

#### 3.2.5.4.    IfLandlord and Tenant fail to agree upon and appoint the Neutral Arbitrator, theneither party may petition Judicial Arbitration & Mediation Services, Inc. (“**JAMS**”) to designate an independent third party to appointthe Neutral Arbitrator, subject to criteria in Section 3.2.5.1 ofthis First Amendment.

#### 3.2.5.5.    The cost ofarbitration shall be paid by the party (either Landlord or Tenant) whose MarketRent is not selected by the Neutral Arbitrator.

## 3.3.          **Expansion PremisesTermination Right**. Notwithstanding anything to the contrary in the Lease (as herebyamended), Tenant shall have one-time option to terminate and cancel the Leasewith respect to the Expansion Premises only effective as of June 1, 2017 (the “**Termination Date**”) upon Tenant’s delivery of written noticeto Landlord (the “**Termination Notice**”),which notice shall be delivered to Landlord on or before December 31,2016.  Subject to Landlord’s timelyreceipt of the Termination Notice, the Lease (as hereby amended) with respectto the Expansion Premises only shall automatically terminate and be of nofurther force or effect, and Landlord and Tenant shall be relieved of theirrespective obligations under the Lease (as hereby amended) with respect to theExpansion Premises, as of the Termination Date, except with respect to thoseobligations set forth in the Lease (as amended) which specifically survive theexpiration or earlier termination of the Lease, including, without limitation,the payment by Tenant of all amounts owed by Tenant under the Lease (as herebyamended) with respect to the Expansion Premises arising or accruing prior tothe Termination Date.  The terminationrights granted to Tenant under this Section 3.3 are personal to theOriginal Tenant, any Affiliate or a Permitted Assignee and may not be assignedor transferred to any other person or entity.

# 4.             **Base Rent**.

## 4.1.          **Existing Premises**.  Notwithstanding anything to the contrary inthe Lease as hereby amended, Tenant shall continue to pay Base Rent for theExisting Premises in accordance with the terms of Article 3 of the Lease.

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## 4.2.          **Expansion Premises**.  Commencing on the Expansion Commencement Dateand continuing throughout the Expansion Term, Tenant shall pay to Landlordmonthly installments of Base Rent for the Expansion Premises as follows:

| **Lease Years, Commencing   on the Expansion   Commencement Date,   During Expansion Term** | ** ** | **Annualized  Base Rent** | ** **   | **Monthly  Installment  of Base Rent** | ** ** | **Approximate Monthly  Rental Rate  per Rentable  Square Foot** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------|--------------|--------------------------------------------------|------------|-------------------------------------------------------------------------------------|------------|
| 1                                                                                                                                             |       | $                              | 818,311.20   |                                             | $          | 68,192.60                                                                           |       | $ | 1.4000 |   |
| 2                                                                                                                                             |       | $                              | 846,952.09   |                                             | $          | 70,579.34                                                                           |       | $ | 1.4490 |   |
| 3                                                                                                                                             |       | $                              | 876,595.42   |                                             | $          | 73,049.62                                                                           |       | $ | 1.4997 |   |
| 4                                                                                                                                             |       | $                              | 907,276.25   |                                             | $          | 75,606.35                                                                           |       | $ | 1.5522 |   |
| 5                                                                                                                                             |       | $                              | 939,030.92   |                                             | $          | 78,252.58                                                                           |       | $ | 1.6065 |   |
| 6                                                                                                                                             |       | $                              | 971,897.01   |                                             | $          | 80,991.42                                                                           |       | $ | 1.6628 |   |
| 7                                                                                                                                             |       | $                              | 1,005,913.40 |                                             | $          | 83,826.12                                                                           |       | $ | 1.7210 |   |
| 8                                                                                                                                             |       | $                              | 1,041,120.37 |                                             | $          | 86,760.03                                                                           |       | $ | 1.7812 |   |
| 9                                                                                                                                             |       | $                              | 1,077,559.58 |                                             | $          | 89,796.63                                                                           |       | $ | 1.8435 |   |
| 10                                                                                                                                            |       | $                              | 1,115,274.17 |                                             | $          | 92,939.51                                                                           |       | $ | 1.9081 |   |
| 11                                                                                                                                            |       | $                              | 1,154,308.76 |                                             | $          | 96,192.40                                                                           |       | $ | 1.9748 |   |
| 12                                                                                                                                            |       | $                              | 1,194,709.57 |                                             | $          | 99,559.13                                                                           |       | $ | 2.0440 |   |
| 13                                                                                                                                            |       | $                              | 1,236,524.41 |                                             | $          | 103,043.70                                                                          |       | $ | 2.1155 |   |
| 14                                                                                                                                            |       | $                              | 1,279,802.76 |                                             | $          | 106,650.23                                                                          |       | $ | 2.1895 |   |
| 15                                                                                                                                            |       | $                              | 1,324,595.86 |                                             | $          | 110,382.99                                                                          |       | $ | 2.2662 |   |
| 16                                                                                                                                            |       | $                              | 1,370,956.71 |                                             | $          | 114,246.39                                                                          |       | $ | 2.3455 |   |
| 17                                                                                                                                            |       | $                              | 1,418,940.20 |                                             | $          | 118,245.02                                                                          |       | $ | 2.4276 |   |
| 18                                                                                                                                            |       | $                              | 1,468,603.10 |                                             | $          | 122,383.59                                                                          |       | $ | 2.5125 |   |
| 19                                                                                                                                            |       | $                              | 1,520,004.21 |                                             | $          | 126,667.02                                                                          |       | $ | 2.6005 |   |
| 20 though Lease  Expiration Date                                                                                                              |       | $                              | 1,573,204.36 |                                             | $          | 131,100.36                                                                          |       | $ | 2.6915 |   |

 

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## On or before the Expansion Commencement Date, Tenant shall pay toLandlord the Base Rent payable for the Expansion Premises for the first fullmonth of the Expansion Term.

# 5.             **Tenant’s Share of Building Direct Expenses**.

## 5.1.          **Existing Premises**.  Notwithstanding anything in the Lease, ashereby amended, to the contrary, Tenant shall continue to pay Tenant’s Share ofDirect Expenses in connection with the Existing Premises and attributable tothe 10421 Building in accordance with the terms of the Lease.

## 5.2.          **Expansion Premises**.  Except as specifically set forth in this Section5.2, commencing on the Expansion Commencement Date, Tenant shall pay Tenant’sShare of Direct Expenses in connection with the Expansion Premises inaccordance with the terms of Article 4 of the Lease, provided that withrespect to the calculation of Tenant’s Share of Direct Expenses in connectionwith the Expansion Premises and attributable to the 10445 Building, Tenant’sShare shall equal 100%.

# 6.             **Abated Rent**.  In the event that Tenant is not then ineconomic default of the Lease (as hereby amended, and beyond any applicablenotice and cure period), then during the twelve monthperiod commencing on the Expansion Commencement Date and ending on the dayimmediately prior to the first anniversary of the Expansion Commencement Date(the “**Rent Abatement Period**”),Tenant shall only be obligated to pay one-half (1⁄2) of (i) the Base Rentand (ii) Tenant’s Share of Direct Expenses, which are otherwise attributableto the Expansion Premises during such Rent Abatement Period (the “**Rent Abatement**”).  To the extent that Tenant is in such economicdefault of the Lease (as hereby amended, and beyond any applicable notice andcure period) as of the first day of any calendar month that is part of the RentAbatement Period, then Tenant shall be obligated to immediately pay the fullamount of the Base Rent and Tenant’s Share of Direct Expenses otherwise (butfor the Rent Abatement) attributable to the Expansion Premises during suchcalendar month (each such month, a “**DeferredAbatement Month**”); provided, however, that following Tenant’s fullpayment of any and all such amounts and Tenant’s cure of any such economicdefault, the Rent Abatement Period shall be extended one (1) month for eachDeferred Abatement Month; provided further, however, in no event shall thetotal dollar amount of such Rent Abatement exceed the dollar amount of the RentAbatement otherwise attributable to the first twelve months immediatelyfollowing the Expansion Commencement Date.

# 7.             **Expansion Improvements**. Except as specifically set forth herein, Landlord shall not be obligatedto provide or pay for any improvement work or services related to theimprovement of the Expansion Premises, and Tenant shall accept the ExpansionPremises in its presently existing, “as-is” condition.  The improvements in the Expansion Premisesshall be constructed pursuant to the terms of the First Amendment WorkLetter.  The terms and conditions of theFirst Amendment Work Letter shall not be applicable to the construction of theExisting Premises.

# 8.             **Parking**.  Effective as of the Expansion CommencementDate and continuing throughout the Expansion Term, Tenant shall be entitled toutilize, without charge, up to one hundred ninety-four (194) unreserved parkingpasses in connection with Tenant’s lease of the 

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# Expansion Premises (the “**Expansion Parking Passes**”) (i.e., four (4) unreservedparking spaces for every 1,000 rentable square feet of the ExpansionPremises).  Except as set forth in this Section 8,Tenant’s use of the Expansion Parking Passes shall be in accordance with theprovisions of Article 28 of the Lease.

# 9.             **SecurityDeposit**.  Landlord andTenant acknowledge that, in accordance with Section 21.1 of the Lease,Tenant has previously delivered the sum of Three Hundred Fifty-Five ThousandSeven Hundred Twenty-Seven and 60/100 Dollars ($355,727.60) (the “**Existing Security Deposit**”) to Landlord as security for thefaithful performance by Tenant of the terms, covenants and conditions of theLease with respect to the Existing Premises. Landlord shall continue to retain the Existing Security Deposit assecurity for the faithful performance by Tenant of the terms, covenants andconditions of the Lease, as hereby amended, with respect to the ExpansionPremises.  Notwithstanding the foregoing,to the extent that Tenant timely elects to exercise its termination right withrespect to the Expansion Premises as set forth in Section 3.3,above, then subject to the terms and conditions of Section 21.1 ofthe Lease, the amount of the Security Deposit shall be reduced to Two HundredEight-Seven Thousand Five Hundred Thirty-Five and No/100 Dollars ($287,535.00)and Landlord shall, within forty-five days following the Termination Date, returnan amount equal to Sixty-Eight Thousand One Hundred Ninety-Two and 60/100Dollars ($68,192.60) to Tenant.

# 10.           **Broker**.  Landlord and Tenant hereby warrant to eachother that they have had no dealings with any real estate broker or agent inconnection with the negotiation of this First Amendment other than ColliersInternational (the “**Broker**”), andthat they know of no other real estate broker or agent who is entitled to acommission in connection with this First Amendment.  Each party agrees to indemnify and defend theother party against and hold the other party harmless from any and all claims,demands, losses, liabilities, lawsuits, judgments, and costs and expenses(including, without limitation, reasonable attorneys’ fees) with respect to anyleasing commission or equivalent compensation alleged to be owing on account ofthe indemnifying party’s dealings with any real estate broker or agent, otherthan the Broker, occurring by, through, or under the indemnifying party.  The terms of this Section 10 shallsurvive the expiration or earlier termination of this First Amendment.

# 11.           **Landlord’sAbility to Commence Construction of Improvements**.  Landlord and Tenant hereby acknowledge thatthe Expansion Premises is currently occupied by a third-party (the “**Existing Tenant**”) pursuant to an existinglease between Landlord and the Existing Tenant (the “**Existing Lease**”).  Consequently, Landlord shall only have theability to commence the construction of the Improvements as set forth in theFirst Amendment Work Letter following the earlier to occur of (i) theexpiration of the Existing Lease (anticipated to be November 30, 2006), and (ii) any earliertermination of the Existing Lease following the full execution andunconditional delivery (i.e., no conditions to the effectiveness of suchtermination agreement) of a lease termination agreement with respect to theExisting Lease (the “**Existing LeaseTermination Agreement**”), in a manner acceptable to Landlord in itssole and absolute discretion.  Landlordshall have no liability whatsoever to Tenant relating to or arising fromLandlord’s inability or failure to obtainpossession of the Expansion Premises in order to commence construction of the Improvements, orLandlord’s delay in obtaining possession of the Expansion Premises inorder to commence construction of the Improvements.

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# 12.           **NoFurther Modification**. Except as set forth in this First Amendment, all of the terms andprovisions of the Lease shall apply with respect to the Expansion Premises andshall remain unmodified and in full force and effect.

IN WITNESS WHEREOF, this First Amendment has beenexecuted as of the day and year first above written.  
|            | **“LANDLORD”:**      |
|------------|--------------------------------|
| ** ** |                           |
|       | KILROY REALTY, L.P.,           |
|       | a Delaware limited partnership |
|       |                           |
|       | By:                            | Kilroy Realty Corporation,  a Maryland corporation,  General Partner |
|       |                           |   |
|       |                           | By: | /s/ Jeffrey C. Hawken |   |
|       |                           |   |   |
|       |                           |   | Its: | Executive Vice President |   |
|       |                           |   |   | Chief Operating Officer |   |
|       |                           |   |
|       |                           | By: |  /s/ John T. Fucci |   |
|       |                           |   |
|       |                           |   | Its: |  Sr. Vice President Asset Management |   |
|       |                           |   |   |
| ** ** | **“TENANT”:**        |   |
| ** ** | ** **                     |   |
|       | FAVRILLE, INC.,                |   |
|       | a Delaware  corporation        |   |
|       |                           |   |
|       | By:                            | /s/ Tamara A.  Seymour |   |
|       |                           |   |   |
|       | Its:                           | CFO |   |
|       |                           |   |
|       | By:                            | /s/ John P.  Longenecker |   |
|       |                           |
|       | Its:                           | CEO |   |
|            |                                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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**EXHIBITA**

**PACIFICCORPORATE CENTER**

**OUTLINEOF EXPANSION PREMISES**

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**EXHIBITB**

**PACIFICCORPORATE CENTER**

**FIRSTAMENDMENT WORK LETTER**

This FirstAmendment Work Letter shall set forth the terms and conditions relating to theconstruction of the Expansion Premises which shall be referred to in this FirstAmendment Work Letter as the “**Premises**.”  This First Amendment Work Letter isessentially organized chronologically and addresses the issues of theconstruction of the Premises, in sequence, as such issues will arise during theactual construction of the Premises.  Allreferences in this First Amendment Work Letter to Sections of “**this Amendment**” shall mean the relevantportion of the First Amendment to which this First Amendment Work Letter isattached as **Exhibit B**and of which this First Amendment Work Letter forms a part, all references inthis First Amendment Work Letter to Articles or Sections of “this Lease” shallmean the relevant portions of Articles 1 through 29 of theAmended and Restated Office Lease being amended by this Amendment, and allreferences in this First Amendment Work Letter to Sections of “this FirstAmendment Work Letter” shall mean the relevant portions of Sections 1through 5 of this First Amendment Work Letter.

**SECTION1**

**PREMISESAND BASE BUILDING**

The “BaseBuilding,” as that term is defined in Section 8.2 of the Lease,shall be in good condition and working order and shall comply with applicablebuilding codes and other governmental laws, ordinances and regulations whichwere enacted prior to the date of this Amendment to the extent the same wouldbe required to obtain a certificate of occupancy on an unoccupied basis as ofthe date Landlord commencesthe construction of the Improvements (collectively, the “**Code**”). In connection with, and to the extent consistent with, the foregoingobligation, Landlord shall address the issues raised by Tenant in thatcertain  memorandum prepared by Tenantentitled 10445 PCC Code Compliance Summary and dated October 21, 2005, underthe following headings:  “AccessibleParking,” “Curb Ramps,” and “Toilet and Bathing Facilities (Including Dressing& Fitting Rooms).  Tenant shall,except as otherwise set forth in this Lease or in this First Amendment WorkLetter, accept the Premises and Base Building from Landlord in their then existing,“as-is” condition, subject to the terms of this First Amendment Work Letter,subject only to punchlist items and Landlord’s obligations set forth in Article7 of this Lease, including, without limitation, Landlord’s obligation tomaintain in accordance with Section7.1 of theLease the Building Structure.

**SECTION2**

**IMPROVEMENTS**

2.1           **ImprovementAllowance**.  Tenant shallbe entitled to a one-time improvement allowance (the “**Improvement Allowance**”) in the amount ofOne Million Two Hundred

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Thousand and No/100 Dollars ($1,200,000.00) for the costs relating tothe initial design and construction of improvements and certain additionalcosts, all of which are set forth in Section 2.2.1, below, as “ImprovementAllowance Items” (the “**Improvements**”)andLandlord and Tenant hereby acknowledges and agree that all such Improvementsshall, upon completion of the same, be and become a part of the Premises andthe property of Landlord. In no event shall Landlord be obligated to make disbursements pursuantto this First Amendment Work Letter in a total amount which exceeds theImprovement Allowance.

2.2           **Disbursement of the Improvement Allowance**.

2.2.1        **ImprovementAllowance Items**.  Exceptas otherwise set forth in this First Amendment Work Letter, the ImprovementAllowance shall be disbursed by Landlord (each of which disbursements shall bemade pursuant to Landlord’s disbursement process) for costs related to theconstruction of the Improvements and for the following items and costs(collectively the “**Improvement AllowanceItems**”):

2.2.1.1       Paymentof the fees of the “Architect” and the “Engineers,” as those terms are definedin Section 3.1 of this First Amendment Work Letter;

2.2.1.2       Thepayment of plan check, permit and license fees relating to construction of theImprovements, and the cost of installing and purchasing Tenant’s voice and datacabling (the Improvements Allowance Items set forth in Section 2.2.1.1,above, and in this Section 2.2.1.2, shall, collectively, be knownas the “**Soft Costs**”);

2.2.1.3       Thecost of construction of the Improvements, including, without limitation,testing and inspection costs, freight elevator usage, hoisting and trashremoval costs, and contractors’ fees and general conditions;

2.2.1.4       Thecost of any changes in the Base Building when such changes are required by theConstruction Drawings (including if such changes are due to the fact that suchwork is prepared on an unoccupied basis), such cost to include all directarchitectural and/or engineering fees and expenses incurred in connectiontherewith;

2.2.1.5       Thecost of any changes to the Construction Drawings or Improvements required byCode;

2.2.1.6       Thecost of the “Coordination Fee,” as that term is defined in Section 4.2.2of this First Amendment Work Letter; and

2.2.1.7       Allother costs required or allowed by the terms of this First Amendment WorkLetter to be expended by Landlord in connection with the construction of theImprovements.

2.2.2        **OtherTerms**.  Landlord shallonly be obligated to make disbursements from the Improvement Allowance to theextent costs are incurred by Tenant for Improvement Allowance Items.  All Improvement Allowance Items for which theImprovement Allowance has been used shall be deemed Landlord’s property underthe terms of this Lease.

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2.3           **StandardImprovements**.  The qualityof Improvements shall be equal to or of greater quality than the quality of thecurrently existing improvements and alterations in the Premises (“**Building Standard Improvements**”).

2.4           **Removalof Enhanced Improvements**. “**Enhanced Improvements**”shall mean (a) any part of the Improvements which do not constitute BuildingStandard Improvements; and (b) a configuration of the Improvements whichis not usual and customary for either normal occupancy or generic wet/dry labspace.  Landlord may require that Tenant,upon the expiration or any earlier termination of this Lease, remove anyEnhanced Improvements in the lab portion of the Premises identified by Landlordconcurrently with Landlord’s review and approval of the Approved WorkingDrawings to the extent such Improvements are unique and particular to Tenantvis-à-vis generic wet/dry lab space (collectively, the “**Extraordinary Alterations**”), and to repairany damage to the Premises and Building caused by such removal (reasonable wearand tear excepted); provided, however, if Landlord, in its approval of anyEnhanced Improvements, fails to address the removal requirement with regard toparticular Enhanced Improvements, Landlord shall be deemed to have agreed towaive the removal requirement with regard to such particular EnhancedImprovements; provided further, however, in no event shall identifiedExtraordinary Alterations include improvements which are industry standardimprovements in research and development wet labs.

**SECTION3**

**CONSTRUCTIONDRAWINGS**

3.1           **Selection of Architect/Construction Drawings**.  Tenant shall retain an architect/spaceplanner selected by Tenant, subject to Landlord’s reasonable approval (the “**Architect**”) to prepare the “ConstructionDrawings,” as that term is defined in this Section 3.1.  Tenant shall retain the engineeringconsultants selected by Tenant, subject to Landlord’s reasonable approval (the “**Engineers**”) to prepare all plans andengineering working drawings relating to the structural, mechanical,electrical, plumbing, HVAC, life safety, and sprinkler work in the Premises,which work is not part of the Base Building. Landlord shall approve or disapprove of Tenant’s proposed Architect orEngineers, as the case may be, within five (5) business days following Tenant’ssubmission of the name(s) of Tenant’s proposed Architects or Engineers,respectively, together with all documentation and other information reasonablyrequired by Landlord.  The plans anddrawings to be prepared by Architect and the Engineers hereunder shall be knowncollectively as the “**Construction Drawings**.”  All Construction Drawings shall comply withthe drawing format and specifications determined by Landlord, and shall besubject to Landlord’s approval, which approval shall not be unreasonablywithheld.  Tenant and Architect shallverify, in the field, the dimensions and conditions as shown on the relevantportions of the base building plans, and Tenant and Architect shall be solelyresponsible for the same, and Landlord shall have no responsibility inconnection therewith.  Landlord’s reviewof the Construction Drawings as set forth in this Section 3, shallbe for its sole purpose and shall not imply Landlord’s review of the same, orobligate Landlord to review the same, for quality, design, Code compliance orother like matters.  Accordingly,notwithstanding that any Construction Drawings are reviewed by Landlord or itsspace planner, architect, engineers and consultants, and notwithstanding anyadvice or assistance which may be rendered to Tenant by Landlord or Landlord’sspace planner, architect, engineers, and consultants, Landlord shall have

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no liability whatsoever in connection therewith and shall not beresponsible for any omissions or errors contained in the Construction Drawings,and Tenant’s waiver and indemnity set forth in this Lease shall specificallyapply to the Construction Drawings.

3.2           **FinalSpace Plan**.  Tenant shallsupply Landlord with four (4) copies signed by Tenant of its final space planfor the Premises before any architectural working drawings or engineeringdrawings have been commenced.  The finalspace plan (the “**Final Space Plan**”)shall include a layout and designation of all offices, rooms and otherpartitioning, their intended use, and equipment to be contained therein.  Landlord may request clarification or morespecific drawings for special use items not included in the Final SpacePlan.  Landlord shall, within ten (10)business days after Landlord’s receipt of the Final Space Plan,(i) approve the Final Space Plan, (ii) approve the Final Space Plan subjectto specified conditions to be complied with when the Final Working Drawings aresubmitted by Tenant to Landlord, or (iii) disapprove the Final Space Planand return the same to Tenant with detailed requested revisions.  If Landlord disapproves the Final Space Plan,Tenant shall resubmit the Final Space Plan to Landlord, and Landlord shallapprove or disapprove of the resubmitted Final Space Plan, based upon thecriteria set forth in this Section 3.2 (except that Landlord’sdisapproval of the Final Space Plan, as resubmitted, shall be final), withinfive (5) business days after Landlord receives such resubmitted Final SpacePlan.  If Tenant is so advised, Tenantshall promptly cause the Final Space Plan to be revised to correct anydeficiencies or other matters Landlord may reasonably require.

3.3           **FinalWorking Drawings**.  Afterthe Final Space Plan has been approved by Landlord, Tenant shall supply theEngineers with a complete listing of standard and non-standard equipment andspecifications, including, without limitation, B.T.U. calculations, electricalrequirements and special electrical receptacle requirements for the Premises,to enable the Engineers and the Architect to complete the “Final WorkingDrawings” (as that term is defined below) in the manner as set forthbelow.  Upon the approval of the FinalSpace Plan by Landlord and Tenant, Tenant shall promptly cause the Architectand the Engineers to complete the architectural and engineering drawings forthe Premises, and Architect shall compile architectural, structural,mechanical, electrical and plumbing working drawings in a form which iscomplete to allow subcontractors to bid on the work and to obtain allapplicable permits (which may be done by subspecialty if such subspecialty willbe separately permitted by the City) (collectively, the “**Final Working Drawings**”) and shall submitthe same to Landlord for Landlord’s approval. Tenant shall supply Landlord with four (4) copies signed by Tenant ofsuch Final Working Drawings.  Landlordshall, within ten (10) business days after Landlord’s receipt of the FinalWorking Drawings, (i) approve the Final Working Drawings,(ii) approve the Final Working Drawings subject to specified conditions tobe satisfied by Tenant prior to submitting the Approved Working Drawings forpermits as set forth in Section 3.4, below, or (iii) disapprove theFinal Working Drawings and return the same to Tenant with detailed requestedrevisions.  If Landlord disapproves theFinal Working Drawings, Tenant shall resubmit the Final Working Drawings toLandlord, and Landlord shall approve or disapprove of the resubmitted FinalWorking Drawings (except that Landlord’s disapproval of the Final WorkingDrawings, as resubmitted, shall be final), within five (5) business days afterLandlord receives such resubmitted Final Working Drawings.  If Tenant is so advised, Tenant shallimmediately revise the Final Working Drawings in accordance with such reviewand any disapproval of Landlord in connection therewith.  In addition, if the Final Working Drawings orany amendment

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thereof or supplement thereto shall require alterations in the BaseBuilding (as contrasted with the Improvements), and if Landlord in its sole andexclusive discretion agrees to any such alterations, and notifies Tenant of theneed and cost for such alterations, then Tenant shall pay, at its sole cost andexpense, the cost of such required changes upon receipt of bills therefor.

3.4           **ApprovedWorking Drawings**. Notwithstanding anything in this First Amendment Work Letter to thecontrary, Landlord shall not commence (or allow the commencement of) theconstruction of the Improvements until the Final Working Drawings are approvedin writing by Tenant and Landlord (the “**ApprovedWorking Drawings**”).  Afterapproval by Landlord of the Final Working Drawings, Tenant may submit the sameto the appropriate municipal authorities for all applicable buildingpermits.  Tenant hereby agrees thatneither Landlord nor Landlord’s consultants shall be responsible for obtainingany building permit or certificate of occupancy for the Premises and thatobtaining the same shall be Tenant’s responsibility; provided, however, thatLandlord shall cooperate with Tenant in executing permit applications andperforming other ministerial acts reasonably necessary to enable Tenant toobtain any such permit or certificate of occupancy.  Subject to the terms of Section 4.2.1,below, no changes, modifications or alterations in the Approved WorkingDrawings may be made without the prior written consent of Landlord, whichconsent may not be unreasonably withheld.

**SECTION 4**

**CONSTRUCTION OF THE IMPROVEMENTS**

4.1           **TheContractor**.  Tenant shallselect, subject to Landlord’s reasonable approval, three (3) licensed generalcontractors (the “**Bidding Contractors**”)to bid on the construction of the Improvements. Following such selection, Tenant shall solicit bids from the BiddingContractors and, following such bidding process, shall select which BiddingContractor shall be the contractor to construct the Improvements (the “**Contractor**”).  Landlord shall independently retain theContractor to construct the Improvements in accordance with the ApprovedWorking Drawings.  All subcontractors,materialmen and suppliers are subject to Tenant’s prior approval, whichapproval shall not be unreasonably withheld, conditioned or delayed.

4.2           **Construction of Improvements by Contractor under theSupervision of Landlord and Tenant**.

4.2.1        **ConstructionContract; Over-Allowance Amount**. Landlord shall negotiate and prepare the form of the constructioncontract (the “**Contract**”) to beexecuted by and between Landlord and the Contractor based upon the form of theconstruction contract to be used in connection with the Tenant Work Letterattached to the Lease and applicable to the Existing Premises.  Notwithstanding the foregoing, the Contractshall expressly state that all “change orders” which (x) involve the expenditure ofmore than $25,000.00 in the aggregate; (y) adversely affect the systemsand equipment of the Building or the Building Structure, or (z) adverselyaffect the exterior appearance of the Building, must beapproved in advance by Landlord and Tenant in writing.  Prior to the commencement of the constructionof the Improvements, and after Tenant has accepted all bids for the Improvements,Landlord shall submit to Tenant, for Tenant’s review and approval, a detailedbreakdown, by trade, of the final costs to be incurred or which have beenincurred, as set forth more particularly in 

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Sections 2.2.1.1 through 2.2.1.7,above, in connection with the design and construction of the Improvements,which costs form a basis for the amount of the Contract (the “**Final Costs**”).  Prior to the commencement of construction ofthe Improvements, Tenant and Landlord shall identify the amount (the “**Over-Allowance Amount**”) equal to thedifference between the amount of the Final Costs and the Improvement Allowance(less any portion thereof already disbursed by Landlord, or in the process ofbeing disbursed by Landlord, on or before the commencement of construction ofthe Improvements).  To the extent thereexists an Over-Allowance Amount, then following Landlord’s disbursement ofninety percent (90%) of the Improvement Allowance to the Contractor (i.e., allof such Improvement Allowance minus a ten percent (10%) retention (the “**Final Retention**”) which Final Retentionshall only be disbursed by Landlord to the Contractor following the completionof the Improvements and in accordance with the terms of the Contract), Landlordshall disburse, in accordance with the terms of this First Amendment WorkLetter and in an aggregate amount not to exceed the Over-Allowance Amount,additional payments (“**Over-Allowance Payments**”)to Contractor in an amount equal to the total amount then due and owing to theContractor in connection with the construction of the Improvements in thePremises as set forth in this First Amendment Work Letter (other than anycorresponding Final Retention which shall be paid concurrently with Landlord’spayment of the Final Retention to the Contractor).  Tenant shall pay to Landlord the full amountof any and all amounts so disbursed by Landlord as Over-Allowance Paymentswithin ten (10) days following Tenant’s receipt of a reasonably detailedinvoice therefor.  In the event that,after the Final Costs have been determined, any revisions, changes, orsubstitutions shall be made to the Construction Drawings or the Improvements,any additional costs which arise in connection with such revisions, changes orsubstitutions or any other additional costs shall be deemed to be an additionto the Over-Allowance Amount.

4.2.2        **Supervisionof Contractor**.  Landlordand Tenant shall jointly supervise the construction of the Improvements byContractor.  Landlord and Tenant shallmutually cooperate with each other in all phases of such supervision in orderfor the Improvements to be completed in a timely manner in accordance with theApproved Working Drawings. Notwithstanding such joint supervision, Tenant shall pay a constructionsupervision and management fee (the “**LandlordSupervision Fee**”) to Landlord in an amount equal to the product of(A) one percent (1%), and (B) the hard costs incurred with the ImprovementAllowance Items identified in Sections 2.2.1.3 – 2.2.1.5 (whetherpaid for via the Improvement Allowance or as an Over-Allowance Amount, whichLandlord Supervision Fee shall be for services relating to the coordination ofthe construction of the Improvements.

4.2.3        **Contractor’sWarranties and Guaranties**. Landlord hereby assigns to Tenant all warranties and guaranties byContractor relating to the Improvements, and Tenant hereby waives all claimsagainst Landlord relating to, or arising out of the construction of, theImprovements and which claims are covered by such warranties.

4.2.4        **Indemnity**.  Tenant’s indemnity of Landlord as set forthin this Lease shall also apply with respect to any and all costs, losses,damages, injuries and liabilities incurred by Landlord Parties and related inany way to any act or omission of Tenant or Tenant’s Architect at the Project;provided, however, that the foregoing indemnity shall not apply to the extentof Landlord’s gross negligence or willful misconduct.

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4.2.5        **Requirementsof Contractor**.  TheContractor shall guarantee to Landlord and for the benefit of Tenant that theportion of the Improvements for which it is responsible shall be free from anydefects in workmanship and materials for a period of not less than one (1) yearfrom the date of completion thereof, and that the Contractor shall provide awarranty making Contractor responsible for the replacement or repair, withoutadditional charge, of all work done or furnished in accordance with itscontract within one (1) year after the substantial completion of theImprovements.  The correction of suchwork shall include, without additional charge, all additional expenses anddamages incurred in connection with such removal or replacement of all or anypart of the Improvements, and/or the Building and/or common areas that may bedamaged or disturbed thereby.  All suchwarranties or guarantees as to materials or workmanship of or with respect tothe Improvements shall be contained in the Contract or subcontract and shall bewritten such that such guarantees or warranties shall inure to the benefit ofboth Landlord and Tenant, as their respective interests may appear, and may bedirectly enforced by either.  Landlordcovenants to give to Tenant any assignment or other assurances which may benecessary to effect such right of direct enforcement.

4.2.6        **Insurance Requirements**.

4.2.6.1       **General Coverages**.  Contractor and all subcontractors shall carryworker’s compensation insurance covering all of their respective employees, andshall also carry public liability insurance, including property damage, allwith limits, in form and with companies as are required to be carried by Tenantas set forth in this Lease.

4.2.6.2       **Special Coverages**.  “Builder’s All Risk” insurance in an amountapproved by Landlord covering the construction of the Improvements, and suchother insurance as Landlord may require, it being understood and agreed thatthe Improvements shall be insured by Tenant pursuant to this Lease immediatelyupon completion thereof.  Such insuranceshall be in amounts and shall include such extended coverage endorsements asmay be reasonably required by Landlord including, but not limited to, therequirement that all Contractor and all subcontractors shall carry excessliability and Products and Completed Operation Coverage insurance, each inamounts not less than $500,000 per incident, $1,000,000 in aggregate, and inform and with companies as are required to be carried by Tenant as set forth inthis Lease.

4.2.6.3       **General Terms**.  Certificates for all insurance carriedpursuant to this Section 4.2.6.3 shall be delivered to Landlord andTenant before the commencement of construction of the Improvements and beforethe Contractor’s equipment is moved onto the site.  All such policies of insurance must contain aprovision that the company writing said policy will give Landlord and Tenantthirty (30) days prior written notice of any cancellation or lapse of theeffective date or any reduction in the amounts of such insurance.  In the event that the Improvements aredamaged by any cause during the course of the construction thereof, Landlordshall immediately repair the same. Landlord shall use commercially reasonable efforts to ensure thatContractor and all subcontractors maintain all of the foregoing insurancecoverage in force until the Improvements are fully completed and accepted byTenant, except for any Products and Completed Operation Coverage insurance,which is to be maintained for ten (10) years following completion of the workand acceptance by Landlord and Tenant. All policies carried under this Section 4.2.6.3 shall insureLandlord and Tenant, as their interests may appear, as well as Contractor andTenant’s Agents.  Landlord shall usecommercially reasonable efforts to ensure

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that all insurance, except Workers’ Compensation, maintained byContractor and all subcontractors shall preclude subrogation claims by theinsurer against anyone insured thereunder. Such insurance shall provide that it is primary insurance as respectsthe owner and that any other insurance maintained by owner is excess andnoncontributing with the insurance required hereunder.  The requirements for the foregoing insuranceshall not derogate from the provisions for indemnification of Landlord byTenant under Section 4.2.4 of this First Amendment Work Letter.

4.2.7        **GovernmentalCompliance**.  The Improvementsshall comply in all respects with the following:  (i) the Code and other state, federal, cityor quasi-governmental laws, codes, ordinances and regulations, as each mayapply according to the rulings of the controlling public official, agent or otherperson; (ii) applicable standards of the American Insurance Association(formerly, the National Board of Fire Underwriters) and the National ElectricalCode; and (iii) building material manufacturer’s specifications.

4.2.8        **Inspection**.  Landlord and Tenant shall each have the rightto inspect the Improvements upon reasonable notice to the other party and theContractor, provided however, that Landlord’s or Tenant’s failure to inspectthe Improvements shall in no event constitute a waiver of any of Landlord’s orTenant’s, respectively, rights hereunder nor shall any such inspection of theImprovements constitute either party’s approval of the same.  Should either party disapprove any portion ofthe Improvements based on the failure of the Improvements to conform to theFinal Working Drawings, the disapproving party shall notify the other inwriting of such disapproval and shall specify the items disapproved.  Any defects or deviations in, and/or suchdisapproval of, the Improvements shall be rectified by Landlord.

4.2.9        **Meetings**.  Commencing upon Tenant’s selection of theContractor and Architect, Landlord and Tenant shall hold regular meetings at areasonable time (but in no event to be required more often than weekly), withthe Architect and the Contractor (or their agents) regarding the progress ofthe preparation of Construction Drawings and the construction of theImprovements, which meetings shall be held at a location reasonably designatedby Tenant or, in Landlord’s discretion, at the Premises.  In addition, minutes shall be taken at allsuch meetings, a copy of which minutes shall be promptly delivered toLandlord.  One such meeting each monthshall include the review of Contractor’s current request for payment.

4.3           **Noticeof Completion; Copy of Record Set of Plans**.  Within ten (10) days after completion ofconstruction of the Improvements, Landlord shall cause a Notice of Completionto be recorded in the office of the Recorder of the county in which theBuilding is located in accordance with Section 3093 of the Civil Code of theState of California or any successor statute, and shall furnish a copy thereofto Tenant upon such recordation.  IfLandlord fails to do so, Tenant may execute and file the same on behalf ofLandlord as Landlord’s agent for such purpose, at Landlord’s sole cost andexpense.  At the conclusion ofconstruction, (i) Landlord and Tenant shall cause the Architect andContractor (A) to update the Approved Working Drawings as necessary to reflectall changes made to the Approved Working Drawings during the course ofconstruction, (B) to certify to the best of their knowledge that the “record-set”of as-built drawings are true and correct, which certification shall survivethe expiration or termination of this Lease, and (C) to deliver to Landlord andTenant two (2) sets of copies of such record set of drawings within ninety (90)days following issuance of a certificate of occupancy for the

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Premises, and (ii) Landlord shall deliver to Tenant a copy, bound in abinder (with an index), of all warranties, guaranties, and operating manualsand information relating to the improvements, equipment, and systems in thePremises.

4.4           **Cooperationand Joint Efforts**. Landlord and Tenant hereby acknowledge that the design and constructionof the Improvements will require both of Landlord and Tenant to mutuallycooperate in good faith, using diligent and commercially reasonable efforts toreach agreement or otherwise cooperate in connection with a significant amountof design and construction milestones and action items, only the mostsignificant of which milestones and items are specifically addressed in thisFirst Amendment Work Letter.  Landlordand Tenant each hereby commit to so cooperate in good faith, and to use suchdiligent and commercially reasonable efforts. Such cooperative efforts shall include the parties’ prompt sharing ofinformation with regard to municipal or local planning group meetings which mayaffect the construction of the Improvements so as to provide all relevantparties an opportunity to attend the same.

**SECTION 5**

**DELAYS**

5.1           **LandlordCaused Delays**.  If thereshall be a delay or there are delays in the “Substantial Completion of theImprovements” (as that term is defined in Section 5.4, below) due to a “LandlordCaused Delay,” then Tenant shall be entitled to the “Substantial CompletionRent Abatement” as more particularly set forth in Section 5.3,below.  As used in this First AmendmentWork Letter, “**Landlord Caused Delay**”shall mean actual delays to the extent resulting from the acts or omissions ofLandlord including, but not limited to (i) failure of Landlord to timelyapprove or disapprove any Construction Drawings; (ii) material and unreasonableinterference by Landlord, its agents, employees or contractors with the SubstantialCompletion of the Improvements and which objectively preclude or delay theconstruction of tenant improvements in the Building by any person, whichinterference relates to access by Tenant, or the Contractor to the Building orany Building facilities (including loading docks and freight elevators) orservice (including temporary power and parking areas as provided herein) duringnormal construction hours, or the use thereof during normal construction hours;(iii) delays due to the acts or failures to act of Landlord, its agents,employees or contractors including without limitation any such acts or failuresto act with respect to payment of the Improvement Allowance.

5.2           **Determinationof a Landlord Caused Delay**. If Tenant contends that a Landlord Caused Delay has occurred, Tenantshall immediately notify Landlord in writing (the “**Delay Notice**”)of the event that constitutes such Landlord Caused Delay.  If such action, inaction or circumstancequalifies as a Landlord Caused Delay, then a Landlord Caused Delay shall bedeemed to have occurred commencing on the date such action, inaction orcircumstance first occurred, and ending on the date such delay ends.  Each day during such period shall be referredto herein as a “**Landlord Delay Day**;”provided, however, to the extent Tenant is aware (or using commerciallyreasonable due diligence, should be aware) of an event that otherwiseconstitutes a Landlord Caused Delay and fails to immediately provide a DelayNotice to Landlord, then the number of Landlord Delay Days shall be reduced bythe number of calendar

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days occurring during the period commencing on the date when Tenantbecame aware (or using commercially reasonable due diligence, should havebecome aware) of such event and the date upon which Tenant actually provides aDelay Notice to Landlord in connection with the same.

5.3           **SubstantialCompletion Rent Abatement**. In the event a Landlord Delay shall be determined to have occurred asset forth in Section 5.2, above, then commencing on the ExpansionCommencement Date, and continuing for each Landlord Delay Day (such period, the“**Substantial Commencement Rent AbatementPeriod**”), Tenant shall receive a day-for-day abatement of the BaseRent otherwise attributable to the 10445 Premises (as opposed to the 10421Premises) (the “**Substantial Completion RentAbatement**”) for each Landlord Delay Day.

5.4           **Definitionof Substantial Completion of the Improvements**.  For purposes of this Section 5, “**Substantial Completion of the Improvements**”shall mean completion of construction of the Improvements in the Premisespursuant to the Approved Working Drawings as evidenced by a Certificate ofCompletion from the Architect, with the exception of any punch list items andany tenant fixtures, work-stations, built-in furniture, or equipment to beinstalled by Tenant or under the supervision of Contractor.

5.5           **TenantCaused Delays**.  If thereshall be an actual delay or there are delays in the Substantial Completion ofthe Improvements as a direct, indirect, partial, or total result of:

5.5.1        Tenant’s failure toapprove any matter requiring Tenant’s approval in this First Amendment WorkLetter within the longer of the time period set forth herein or five (5)business days;

5.5.2        A default by Tenantof the terms of this First Amendment Work Letter or the Lease which continuesbeyond the applicable notice and cure period;

5.5.3        Changes in any of theConstruction Drawings after reasonable disapproval of the same by Landlord orbecause the same do not comply with Code or other applicable laws;

5.5.4        Tenant’s request forchanges in the Approved Working Drawings;

5.5.5        Tenant’s requirementfor materials, components, finishes or improvements which are not available ina commercially reasonable time given the anticipated date of Substantial Completionof the Improvements, as set forth in this Amendment;

5.5.6        Changes to the BaseBuilding required by the Approved Working Drawings; or

5.5.7        Any other acts oromissions of Tenant, or its agents, or employees;

then, notwithstanding anything to the contrary set forth in the Lease,as hereby amended, or this First Amendment Work Letter and regardless of theactual date of the Substantial Completion of the Improvements, the SubstantialCompletion of the Improvements shall be deemed to be the date the SubstantialCompletion of the Improvements would have occurred if no Tenant delay ordelays, as set forth above, had occurred. If Landlord contends that a Tenant Delay has occurred

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or may be occurring, Landlord shall immediately notify Tenant inwriting (the “**Tenant Delay Notice**”)of the event that constitutes such Tenant Delay.  Landlord and Tenant hereby acknowledge andagree that as of the date of this Amendment, no event has occurred which mayconstitute a Tenant delay.

**SECTION 6**

**MISCELLANEOUS**

6.1           **Tenant’sRepresentative**.  Tenanthas designated Richard Murawski and Tamara Seymour as its representatives withrespect to the matters set forth in this First Amendment Work Letter, each ofwhom shall have full authority and responsibility to act on behalf of the Tenantas required in this First Amendment Work Letter.

6.2           **Landlord’sRepresentative**.  Landlordhas designated Randy Jackson as its sole representatives with respect to thematters set forth in this First Amendment Work Letter, who, until furthernotice to Tenant, shall have full authority and responsibility to act on behalfof the Landlord as required in this First Amendment Work Letter.

6.3           **Timeof the Essence in This First Amendment Work Letter**.  Unless otherwise indicated, all referencesherein to a “number of days” shall mean and refer to calendar days.  If any item requiring approval is timelydisapproved by Landlord, the procedure for preparation of the document andapproval thereof shall be repeated until the document is approved by Landlord.

6.4           **Tenant’sLease Default**. Notwithstanding any provision to the contrary contained in this Lease,if an economic or material default (after applicable notice and cure periods,if any) as described in the Lease or this First Amendment Work Letter hasoccurred at any time on or before the substantial completion of theImprovements, then (i) in addition to all other rights and remedies granted toLandlord pursuant to this Lease, Landlord shall have the right to withholdpayment of all or any portion of the Improvement Allowance(in which case,Tenant shall be responsible for any delay in the substantial completion of thePremises caused thereby), and (ii) all other obligations of Landlord under theterms of this First Amendment Work Letter shall be forgiven until such time assuch default is cured pursuant to the terms of this Lease (in which case,Tenant shall be responsible for any delay in the substantial completion of thePremises caused by such inaction by Landlord).

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