1

 
**Parking**: Three and one-half (3.5) non-reserved parking stalls per 1,000 rentable squarefeet of the Premises for a total of approximately forty-nine (49) parking stalls, at noadditional charge. In addition, Tenant shall have the use of up to five (5) visitor parkingstalls located throughout the Project during the Lease Term and any extensions thereof.**Manager**: Simeon Commercial Properties, or its replacement as specified by written noticefrom Landlord to Tenant.**Tenant Improvement Allowance**: Seventeen and 50/100 Dollars ($17.50) per rentable squarefoot of the Premises, to be used as described in Paragraph 2.7 below.**Brokers**: Simeon Commercial Properties, a licensed broker, represents Landlord in thistransaction. Jones Lang LaSalle, a licensed broker, represents Tenant in this transaction.**SECTION 2: PREMISES AND TERM**2.1 **Lease of Premises**. Landlord leases the Premises to Tenant, and Tenant leases thePremises from Landlord, on the terms and conditions set forth in this Lease.2.2 **Rentable Areas**. The Rentable Areas of the Premises and the Building as specified inSection 1 are final, conclusive and controlling for all purposes. A portion of the Building commonareas is included in the Rentable Area of the Premises.2.3 **Lease Term**. The Lease Term shall be for the period stated in the definition of thatterm, unless earlier terminated as provided in this Lease.2.4 **Renewal Option**.     2.4.1 Tenant shall have the option to renew this Lease for one (1) additional extension termof three (3) years. Such renewal option must be exercised, if at all, by written notice given byTenant to Landlord not later than six (6) months and not more than twelve (12) months prior toexpiration of the Lease Term. Timely delivery of notice of exercise of this renewal option shallact to automatically extend the Lease Term for three years upon the same terms and conditions asthis Lease, except for the amount of Base Rent, which shall be calculated pursuant to this Sectionand confirmed by a subsequent document executed by Landlord and Tenant. Notwithstanding theforegoing, this renewal option shall be null and void and Tenant shall have no right to renew thisLease if (i) on the date Tenant exercises such renewal option or as of the date immediatelypreceding the commencement date of the renewal period, Tenant is in default beyond applicablenotice and cure periods of any of its obligations under this Lease; and (ii) at no time prior tothe expiration of the initial Lease Term shall there have been any assignment or subletting of thePremises that shall remain in effect after the expiration of the initial Lease Term, except forPermitted Transfers (as defined below).     2.4.2 If Tenant exercises this renewal option, then during the renewal period the Base Rentpayable by Tenant shall be the then Fair Market Rent for the Premises. For purposes of thisparagraph, the term “Fair Market Rent” shall mean the rental rate for comparable space for arenewal term with an existing tenant, situated in comparable office and light warehouse buildingsin comparable business parks in the Hayward, California market area, taking into account tenantimprovement packages and any other customary concessions for renewals with existing tenants. FairMarket Rent shall include the periodic rental increases, if any, that would be included for spaceleased for the renewal period. The Fair Market Rent shall be negotiated by Landlord and Tenantwithin the sixty (60) calendar day period commencing upon Landlord’s receipt of Tenant’s noticeexercising the renewal option.     2.4.3 If the parties cannot agree on the Fair Market Rent within the sixty (60) day periodafter the date of Tenant’s notice to Landlord, Landlord shall, no more than fifteen (15) calendardays thereafter, select an independent M.A.I. real estate appraiser (certified in the State ofCalifornia) with at least ten (10) years experience in the Hayward, California commercial realestate market, who shall prepare a written appraisal of the Fair Market Rent using the assumptionsdescribed in this paragraph. The appraisal report shall be completed and delivered to Tenant andLandlord within fifteen (15) calendar days from the date Landlord selects the appraiser. Suchappraiser’s determination of Fair Market Rent shall be determinative unless Tenant disputes it asprovided in the next sentence. If Tenant disputes such appraisal, Tenant shall within ten (10)calendar days following delivery of the appraisal report, deliver to Landlord written notice (a)that Tenant disputes such appraisal report, and (b) of the identity of the appraiser selected byTenant meeting the qualifications set forth in this paragraph. The appraiser selected by Tenantshall submit his appraisal report of the Fair Market Rent using the assumptions described in thisparagraph within fifteen (15) calendar days following the delivery of Tenant’s notice to
2

 
Landlord disputing the initial appraisal. If the two appraisals are within five percent (5%) ofeach other (based on the higher number), the Fair Market Rent shall be the higher of the twoappraisals. If not, then within ten (10) calendar days after the delivery of the second appraisal,the two appraisers shall appoint a third appraiser meeting the qualifications set forth in thisSection, and the third appraiser shall deliver his decision within ten (10) calendar days followinghis selection and acceptance of the appraisal assignment. If the two appraisers fail to select athird qualified appraiser, the third appraiser shall be appointed by the then presiding judge ofthe county where the Premises are located upon application by either party. The third appraisershall be limited in authority to selecting, in his opinion, which of the two earlier appraisaldeterminations best reflects the Fair Market Rent under the assumptions set forth in thisparagraph. The third appraiser must choose one of the two earlier appraisals, and, upon doing so,the third appraiser’s determination shall be the controlling determination of the Fair Market Rent.Each party shall pay the costs and fees of the appraiser it selected; if a third appraiser isselected, the party whose appraisal is not selected to be the Fair Market Rent by said thirdappraiser shall pay all of said appraiser’s costs and fees.2.5 **Termination Option**. Tenant shall have the one-time right to terminate this Lease(“Termination Right”) as of the last day of the twenty-fourth (24th) month of the LeaseTerm (the “Termination Date”) by providing Landlord with not less than nine (9) months’prior written notice. As a condition to the effectiveness of the Termination Right, Tenant mustsatisfy all of the following requirements, satisfaction of which shall mean that the Lease willterminate on the Termination Date with the same force and effect as if such date were the dateoriginally established in this Lease for the expiration of the Lease Term:     2.5.1 As of the date that Tenant notifies Landlord of Tenant’s exercise of this TerminationRight and as of the Termination Date, there shall be no monetary Event of Default (beyond theexpiration of all applicable notice and cure periods) by Tenant under this Lease and there shallhave occurred no act or omission which, with the passage of time or giving of notice, or both,would become an Event of Default by Tenant under the Lease;     2.5.2 [Intentionally omitted];     2.5.3 At the time Tenant gives written notice to Landlord as provided for in subpart 2.5.1above, Tenant shall have paid Landlord a termination fee, equal to the unamortized portions of theTenant Improvement Allowance and leasing commissions, which shall be amortized over the Lease Termat an annual interest rate of 8%, and repayment of the initial two (2) months of abated rent. Theamount of the Tenant Improvement Allowance shall be set forth in a written notice from Landlord toTenant, as soon as the amount is determined; and     2.5.4 Upon termination of the Lease pursuant to this paragraph, Tenant shall surrender andvacate the Premises to Landlord as provided for in this Lease. All rights and obligations ofLandlord and Tenant, unless expressly stated herein to survive the expiration or earliertermination of this Lease, shall cease to exist as of the Termination Date.2.6 **Physical Condition of Premises**.     2.6.1 Tenant (a) accepts the Premises, the Building and the Project in its current **AS IS**condition, and (b) acknowledges that Tenant is not relying on any representations or warranties byany person regarding the Premises or the Building except as specifically set forth in this Lease.     2.6.2 Landlord represents and warrants to Tenant that, (a) as of the Commencement Date andfor the first twelve (12) months of the Lease Term, all Building systems shall be operational andin good condition and repair; (b) to Landlord’s actual knowledge, as of the date of this Lease theBuilding and the Premises are in material compliance with all applicable Governmental Requirements;(c) Landlord is the fee owner of the Building; and (d) as of the date of this Lease, Landlord hasno actual knowledge of any material defects in the Premises or the Building which wouldunreasonably interfere with Tenant’s use and enjoyment of the Premises for the Permitted Use. Inthe event of any breach of any of Landlord’s warranties in this Section 2.6.2, Landlord shallpromptly rectify the same at its sole cost and expense.2.7 **Tenant Improvement Allowance**.     2.7.1 Landlord shall provide a Tenant Improvement Allowance of Seventeen and 50/100 Dollars($17.50) per rentable square feet for the Premises. The Tenant Improvement Allowance shall beapplied to the hard and soft construction costs incurred by Tenant, including but not limited to,architectural services, cabling, furniture, electrical, signage, Tenant’s construction managementfees and any security system associated with the Premises and may used by Tenant to offset movingcosts. If the sum of Tenant’s actual hard and soft costs associated with the Tenant improvementsto the Premises is less than the Tenant Improvement Allowance, then up to Five and No/100 Dollars($5.00) per rentable
3

 
square foot (such amount being the difference between the $17.50/RSF allowance and the amountactually expended per rentable square feet) shall be applied as a credit against the Base Rent andOperating Costs Reimbursements due immediately after the eighteenth (18th) month of the Lease Term.     2.7.2 At Tenant’s option, Landlord shall pay all or any portion of the Tenant ImprovementAllowance directly to third parties, including but not limited to, contractors, architects andother consultants, based on billing invoices approved in advance in writing by Tenant.2.8 **Construction of Tenant Improvements**.     2.8.1 Tenant shall retain a licensed architect of its choice, subject to Landlord’s priorwritten approval, to prepare the Plans and Specifications for the Tenant Improvements. The Plansand Specifications shall be subject to Landlord’s approval, which approval shall not beunreasonably delayed, provided that such Plans and Specifications comply with the requirements ofthis paragraph.     2.8.2 Within one hundred eighty (180) days following the date of execution of the Lease byTenant, Tenant shall cause its architect to furnish to Landlord for Landlord’s approval space planssufficient to convey the architectural design of the Premises, including, without limitation, thelocation of doors, partitions, electrical and telephone outlets, plumbing fixtures, heavy floorloads and other special requirements (collectively, the “Space Plan”). If required byLandlord, Tenant’s architect shall consult with Landlord’s engineer in preparing the Space Plan,and incorporate such engineer’s requirements into the Space Plan. If Landlord fails to disapprovethe Space Plan within the ten (10) day period following its receipt of the Space Plan, the SpacePlan shall be deemed approved. If Landlord shall disapprove of any portion of the Space Planwithin such ten (10) day period, Landlord shall advise Tenant of the reasons therefor and shallnotify Tenant of the revisions to the Space Plan that are reasonably required by Landlord for thepurpose of obtaining approval. Tenant shall within seven (7) days submit to Landlord, forLandlord’s approval, a redesign of the Space Plan, incorporating the revisions required by Landlordor proposing alternatives for Landlord’s consideration, which shall be undertaken pursuant to theprocess set forth above.     2.8.3 Tenant shall cause its architect to prepare from Tenant’s approved Space Plan, completePlans and Specifications within one hundred twenty (120) days after Landlord approves the SpacePlan. The Plans and Specifications shall (a) be compatible with the Building shell and with thedesign, construction and equipment of the Building; (b) comply with all Governmental Requirements;(c) comply with all applicable insurance regulations; and (d) be consistent with the approved SpacePlan. Tenant shall submit the Plans and Specifications for Landlord’s Approval in the same mannerand timeframe as provided in Subparagraph 2.8.2 above for approval by Landlord of Tenant’s SpacePlan.     2.8.4 Tenant shall complete the Tenant Improvements in accordance with the approved Plans andSpecifications and all applicable Governmental Requirements and in accordance with the provisionsof Paragraph 5.8 (“Work Performance and Responsible Contracting”). Tenant shall provide anexhibit depicting the intended Tenant Improvements to be attached as an exhibit to this Lease.Landlord shall review and manage the construction of the Tenant Improvements for a constructionmanagement fee of one and fifty percent (1.5%) of actual hard construction costs.     2.8.5 If Landlord requires performance or payment bonds, they shall be provided at Landlord’ssole cost and expense, and shall not be funded from the Tenant Improvement Allowance.     2.8.6 All Tenant Improvements, regardless of which party constructed or paid for them, shallbecome the property of Landlord and shall remain upon and be surrendered with the Premises on theexpiration or earlier termination of this Lease. Tenant shall not be responsible for anyrestoration (or removal) of its initial Tenant Improvements completed in accordance with theprovisions of this Section 2.8 at the expiration of the Lease Term other than its TelecommunicationFacilities (as defined in Section 4.1.2).2.9 **Commencement Date**. The Commencement Date shall be August 1, 2011. Tenant agrees tosign a Commencement Date Memorandum in the form of Exhibit E, when prepared by Landlord.2.10 **Use and Conduct of Business**.     2.10.1 The Premises are to be used only for general business office and research anddevelopment uses (the “Permitted Uses”). Tenant shall, at its own cost and expense, obtainand maintain any and all licenses, permits, and approvals necessary or appropriate for itsparticular use, occupation and operation of the Premises for the Permitted Uses.     2.10.2 No act shall be done in or about the Premises that is unlawful or that will increasethe existing rate of insurance on the Land or Building. Tenant shall not commit or allow to becommitted or exist: (a) any waste upon the Premises, (b) any public or private nuisance, or (c) anyact or condition
4

 
which disturbs the quiet enjoyment of any other tenant in the Building, or materially andunreasonably interferes in any way with the business of Landlord or any other tenant in theBuilding.2.11 **Compliance with Governmental Requirements and Rules and Regulations**. Subject toSection 4.2 below, Tenant shall comply with all Governmental Requirements relating to itsparticular use, occupancy and operation of the Premises and shall observe such reasonable rules andregulations as may be adopted and published by Landlord from time to time. Notwithstandinganything to the contrary in this Lease, Tenant shall not be responsible for compliance with anyGovernmental Requirements where such compliance would require capital expenditures, or is notrelated specifically to Tenant’s use and occupancy of the Premises. For example, if anyGovernmental Agency should require the Building or Premises to be structurally strengthened againstearthquake, or should require the removal of asbestos from the Premises and such measures areimposed as a general requirement applicable to all tenants rather than as a condition to Tenant’sspecific use or occupancy of the Premises, such work shall be performed by Landlord and the costthereof shall be an Operating Costs to the extent provided in Section R1.4 of Rider 1hereto. Current Rules and Regulations are attached to this Lease as Exhibit C.“Governmental Requirements” are any and all statutes, ordinances, codes, laws, rules,regulations, orders and directives of any Governmental Agency as now or later amended, promulgatedor issued and all current or future final orders, judgments or decrees of any court withjurisdiction interpreting or enforcing any of the foregoing. A “Governmental Agency” isthe United States of America, the state in which the Land is located, any county, city, district,municipality or other governmental subdivision, court or agency or quasi-governmental agency withjurisdiction and any board, agency or authority associated with any such governmental entity.2.12 **Green Agency Ratings**. The Building may become certified under a Green Agency Rating(as hereinafter defined) or operated pursuant to Landlord’s sustainable building practices, as thesame may be in effect or modified from time to time. Landlord’s sustainability practices address,without limitation, whole building operations and maintenance issues including chemical use, indoorair quality, energy efficiency, water efficiency, recycling programs, exterior maintenanceprograms, and systems upgrades to meet green building energy, water, indoor air quality, andlighting performance standards. Tenant will use good faith, commercially reasonable efforts not touse or operate the Premises in a manner that will cause the Premises not to conform with Landlord’ssustainability practices or the certification of the Building by a Green Agency Rating; provided,however, Tenant may endeavor, at no cost or expense to Tenant, to follow such practices. Landlordreserves the right to change electricity providers for the Building at any time and to purchasegreen or renewable energy. To the extent commercially reasonable, all construction, maintenanceand repairs made by Tenant shall comply with Landlord’s sustainability practices and with theminimum standards and specifications as outlined by the Green Agency Rating in addition to allGovernmental Requirements. Tenant shall use proven energy and carbon reduction measures, includingenergy efficient bulbs in task lighting; use of lighting controls; daylighting measures to avoidoverlighting interior spaces; closing shades on the south side of the Building to avoidover-heating the space; turning off lights and equipment at the end of the work day; and purchasingEnergy Star qualified equipment, including but not limited to lighting, office equipment, kitchenequipment, vending and ice machines; and purchasing products certified by the U.S. EPA’s WaterSenseprogram. As used herein, “Green Agency Rating” means any one or more of the following ratings, asthe same may be in effect or amended or supplemented from time to time: the U.S. EPA’s Energy Starrating and/or Design to Earn Energy Star, the Green Building Initiative’s Green Globes forContinual Improvement of Existing Buildings (Green Globes-CIEB), the U.S. Green Building Council’sLeadership in Energy and Environmental Design (LEED) rating system, LEED EBOM (existing buildingsoperations and maintenance) and any applicable substitute third party or government mandated ratingsystems2.13 **Relocation**. Intentionally omitted.2.14 **Holdover**. Base Rent shall increase on the expiration or termination of this Lease toan amount equal to one hundred fifty percent (150%) of the Base Rent prevailing immediately priorto the expiration or termination (a) if and for so long as Landlord has authorized Tenant toholdover or (b) if Tenant wrongfully refuses to relinquish possession of the Premises upon suchexpiration or termination. The increase in Base Rent under clause (b) of the preceding sentence isan agreed increase in Base Rent, is not liquidated damages and shall not limit the right ofLandlord to recover direct and consequential damages for the Tenant’s violation of this paragraphor to exercise other rights and remedies provided under applicable law for Tenant’s wrongfulrefusal to surrender possession.
5

 
**SECTION 3: BASE RENT, OPERATING COSTS REIMBURSEMENTS AND OTHER SUMS PAYABLE UNDER LEASE**3.1 **Payment of Rental**. Tenant agrees to pay Base Rent, Operating Costs Reimbursements(defined in Rider 1) and any other sum payable under this Lease to Landlord when duewithout demand, deduction, credit, adjustment or offset of any kind. All such payments shall be inlawful money of the United States and shall be paid to Landlord or to Manager or to such otherplace as Landlord may from time to time designate in writing.3.2 **Base Rent**. On execution of this Lease, Tenant shall pay to Landlord the amountspecified in the definition of Prepaid Rent for the month specified in the definition of that term.Monthly installments of Base Rent shall be paid, without demand and in advance, on or before thefirst day of each calendar month during the Lease Term. The monthly Base Rent installment for anypartial month at the beginning or end of the Lease Term shall be prorated. Subject to abatement,Base Rent for any partial month at the beginning of the Lease Term shall be paid by Tenant on theCommencement Date.3.3 **Security Deposit**. All sums payable under this Lease (including Base Rent and OperatingCosts Reimbursements) shall be considered Rent and all rights and remedies available pursuant tolaw for non-payment of rent shall apply. Tenant has deposited with Landlord or Manager the sum setforth in the blank opposite the words “Security Deposit” in Section 1 of this Lease (the“Security Deposit”) to secure Tenant’s performance of this Lease. If Tenant defaults inany payment or performance due under this Lease, Landlord, in its absolute discretion and withoutprejudice in its other rights or remedies, may apply the Security Deposit, in whole or in part, tothe payment of sums due from Tenant as a result of such default. If such application cures thedefault, Tenant shall within ten (10) days from demand, deposit with Landlord the sum necessary torestore the Security Deposit to the specified amount. If Tenant has fully performed under thisLease, the remainder of the Security Deposit shall be repaid to Tenant, without interest, withinthirty (30) days after the expiration of this Lease, such obligation of Landlord surviving theexpiration or earlier termination of this Lease. If the Land and the Building are sold ortransferred by Landlord, Tenant shall look solely to the successor Landlord for the return of theremainder of the Security Deposit, provided Landlord has turned over or credited the amount of theSecurity Deposit to such successor landlord.3.4 **Operating Costs Reimbursements**. The definition “Operating CostsReimbursements” and the provisions of this Lease applicable to Operating Costs Reimbursementsare set forth in Rider 1.3.5 **Late Charge**. If Tenant fails to make any payment of Base Rent, or other amount whendue under this Lease, a late charge is immediately due and payable by Tenant equal to five percent(5%) of the amount of any such payment but Landlord will waive the late charge for the first suchfailure occurring during any calendar year during the Lease Term. Landlord and Tenant agree thatthis charge compensates Landlord for the administrative costs caused by the late payment.3.6 **Default Rate**. Any Base Rent, Operating Costs Reimbursements or other sum payable underthis Lease which is not paid when due shall bear interest at a rate equal to the lesser of: (a)the published prime or reference rate then in effect at a national banking institution designatedby Landlord (the “Prime Rate”), plus two (2) percentage points, or (b) the maximum rate ofinterest per annum permitted by applicable law (the “Default Rate”).**SECTION 4: SERVICES AND REPAIR**4.1 **Utilities and Services**.     4.1.1 Tenant shall contract directly for all utilities and services to the Premises, includingthe following: (a) electricity and gas; (b) heating, ventilation and air-conditioning services(“HVAC”); (c) hot and cold domestic water, wastewater and sewage service at the points nowexisting in the Premises or as specified for initial Tenant Improvements (where applicable); (d)Telecommunication services; (e) cleaning and janitorial service; and (f) refuse/trash removal.Tenant shall select the company or companies providing such utility and other services described inthis subparagraph.     4.1.2 Landlord will provide only a suitable connection for usual and customary voice telephoneand internet services at the designated locations in the Building. All connection, installation,usage charges, maintenance and repair charges for such telephone service shall be Tenant’sresponsibility. Installation of Telecommunication Facilities beyond those specified as Landlord’sresponsibility under the first sentence shall be the responsibility of Tenant except to the extentthe Initial Tenant Improvements
6

 
include Telecommunication Facilities. “Telecommunication Facilities” are defined asequipment, apparatus, installations, facilities and other materials utilized for the purposes ofelectronic communication, whether wireless or wired, including cable, switches, conduit, sleevesand wiring. Tenant shall be required to remove all Telecommunication Facilities, at Tenant’sexpense, on the expiration or earlier termination of the Lease in accordance with paragraph 5.3(“Removal of Property”).     4.1.3 Tenant acknowledges that space on the Building rooftop and in Building risers, equipmentrooms and equipment closets is limited. Unless otherwise required by law, neither Tenant nor aprovider of telecommunication services to Tenant shall be entitled to locate or installTelecommunication Facilities in, on or about the Building without first obtaining Landlord’sadvance, written consent (given in its reasonable discretion).     4.1.4 Landlord shall in no case be liable or in any way be responsible for damages (includingconsequential damages) or the loss to Tenant of utilities or other services arising from thefailure of, diminution of or interruption of any kind to the Premises, unless (a) such interruptionin, deprivation of or reduction of any such service was caused by the gross negligence or willfulmisconduct of Landlord, its agents or contractors or by the uncured breach of this Lease byLandlord, and (b) any such claims are not covered by the business interruption insurance requiredof Tenant by this Lease. To the extent that Landlord bears any responsibility for the foregoing,Landlord’s responsibility and Tenant’s remedy shall be limited to an abatement in Base Rent for theperiod beginning with (a) the day which is three (3) consecutive days after the date on whichTenant delivers notice to Landlord of such interruption, deprivation or reduction and of the factthat Tenant is being deprived of all reasonable use of the Premises and ending on (b) the date suchinterruption, deprivation or reduction which is Landlord’s responsibility is no longer causingTenant to be deprived of all reasonable use of the Premises.4.2 **Maintenance and Repair by Landlord**. Subject to the paragraph 5.5 (“Damage orDestruction”) and paragraph 5.6 (“Condemnation”), Landlord shall maintain the roof,roof membrane, load-bearing and exterior walls and structural elements of the Building, public andcommon areas of the Building, plate glass and the Building systems in good order and conditionsubject to reasonable use and wear. The costs of such maintenance and repair are Operating Costsas defined in subparagraph R1.4.1 of Rider 1. Landlord, at its sole cost, shall also beresponsible on an ongoing basis during the Lease Term for any necessary improvements to theBuilding shell to comply with building code, the Americans With Disabilities Act of 1990(“ADA”), and seismic requirements, provided such ADA compliance is not triggered byTenant’s Alterations during the Lease Term. These code compliance costs shall not be allocated asOperating Costs of the Building or passed through to Tenant. In addition, Landlord, at its solecost and not as an Operating Cost, shall be responsible for the demising and separate metering ofall utilities and building systems.4.3 **Maintenance and Repair by Tenant**. Except as specified to be Landlord’s responsibilityunder paragraph 4.1 (“Utilities and Services”) and paragraph 4.2 (“Maintenance andRepair by Landlord”), and except for reasonable wear and tear, casualty and condemnation,Tenant shall keep the Premises in good condition and repair. Notwithstanding the foregoing, in theevent that Tenant would be required by this Section to make a repair or replacement that would beconsidered a “capital improvement” as determined in accordance with generally accepted accountingprinciples, Landlord shall make such repair or replacement and charge Tenant, as an Operating Cost,the cost thereof, provided that the cost of such repair or replacement shall be amortized over itsuseful life and only the amortized portion of such cost shall be included in Operating Costs on amonthly basis. Tenant shall be responsible for replacing light bulbs and ballasts within thePremises. Tenant shall enter into all contracts for all repairs and services related to operatingthe Premises. (See Paragraph 4.1 for additional responsibilities by Tenant.) Tenant agrees tonotify Landlord immediately if water or moisture conditions from any source (including leaks) arediscovered and to allow Landlord to evaluate and make recommendations and/or take appropriatecorrective action.4.4 **Common Areas/Security**. The common areas of the Building and the Project shall be underLandlord’s sole management and control. Landlord has no duty or obligation to provide any securityservices in, on or around the Premises, Land, Building or Project, and Tenant recognizes thatsecurity services, if any, provided by Landlord will be for the sole benefit of Landlord and theprotection of Landlord’s property.4.5. **Signage**. Tenant, at its sole cost and expense, shall have the right to the maximumbuilding top signage on the Premises and to Building, entry, and monument/directional signage inaccordance with
7

 
Landlord’s signage criteria without additional rental charges. All such signage shall be subjectto the reasonable approval of Landlord and any required Governmental Agencies.**SECTION 5:****OCCUPANCY PROVISIONS**5.1 **Tenant Alterations**. Tenant shall not make or permit to be made any alterations,additions, improvements or installations in or to the Premises (including TelecommunicationFacilities), or place signs or other displays visible from outside the Premises (individually andcollectively “Tenant Alterations”), without first obtaining the consent of Landlord whichmay be withheld in Landlord’s reasonable discretion. If Landlord fails to respond to Tenant’srequest within fifteen (15) days after the receipt of Tenant’s request, Tenant shall give Landlorda second notice. Landlord’s failure to respond to Tenant’s second notice within ten (10) daysafter the receipt of Tenant’s request shall be deemed to be Landlord’s approval of the proposedTenant Alterations. Notwithstanding the foregoing, Tenant, without Landlord’s prior writtenconsent, but with prior notice thereto, shall be permitted to make non-structural TenantAlterations to the Building, provided that (a) Tenant shall deliver to Landlord in writingapproximately thirty (30) days prior to commencement of the Tenant Alterations a generaldescription of the Tenant Alterations Tenant intends to make, (b) the cost of such TenantAlteration does not exceed Twenty-Five Thousand and No/100 Dollars ($25,000.00) individually, (c)Tenant shall notify Landlord in writing within thirty (30) days of completion of the TenantAlteration and deliver to Landlord a set of the plans and specifications therefor, either“as-built” or marked to show construction changes made, and (d) Tenant shall, upon Landlord’srequest made within ten (10) days after the notice referred to in clause (c), remove the TenantAlteration at the termination of the Lease and restore the Premises to their condition prior tosuch Tenant Alteration. Tenant shall deliver to Landlord complete plans and specifications for anyproposed Tenant Alterations and, if consent by Landlord is given, all such work shall be performedat Tenant’s expense by Landlord or, with Landlord’s consent, by Tenant. Tenant shall be authorizedto perform Tenant Alterations only to the extent and under such terms and conditions as Landlord,in its absolute discretion, shall specify which, in all events, shall include compliance withparagraph 5.8 (“Work Performance and Responsible Contracting”). All Tenant Alterationsperformed by Tenant shall be (1) completed in accordance with the plans and specifications approvedby Landlord; (2) completed in accordance with all Governmental Requirements; (3) carried outpromptly in a good and workmanlike manner; (4) of all new materials; and (5) free of defects inmaterials and workmanship.5.2 **Surrender of Possession**. Tenant shall, at the expiration or earlier termination ofthis Lease, surrender and deliver the Premises to Landlord (a) in as good condition as whenreceived by Tenant from Landlord or as later improved, reasonable use and wear, casualty andcondemnation excepted, and (b) free from any tenancy or occupancy by any person.5.3 **Removal of Property**. Upon the expiration or earlier termination of this Lease, Tenantmay remove its personal property, office supplies and office furniture and equipment if (a) suchitems are readily moveable and are not attached to the Premises; (b) such removal is completedprior to the expiration or earlier termination of this Lease; and (c) Tenant immediately repairsall damage caused by or resulting from such removal. All Tenant Alterations shall become theproperty of Landlord and shall remain upon and be surrendered with the Premises, unless Landlordrequires their removal at the time Landlord grants consent to the construction of such TenantAlterations. In no event shall Tenant have any obligation to remove the initial TenantImprovements (other than Telecommunication Facilities) at the expiration of the Lease as requiredby Section 2.8 above. If removal is required, Tenant shall, at its sole cost and expense, removeall (or such portion as Landlord shall designate) of the Tenant Alterations, repair any damagesresulting from such removal and return the Premises to the same condition as existed prior to suchTenant Alterations.5.4 **Building Hours/Access**. Tenant shall have access to the Building seven (7) days perweek, twenty-four (24) hours per day, fifty-two (52) weeks a year. Tenant shall permit Landlordand Landlord’s Affiliates (defined in paragraph 6.1) to enter into the Premises at any time onreasonable prior written notice (no less than forty-eight (48) hours prior to such entry, except incase of emergency in which case no notice shall be required) for the purposes of inspection or forthe purpose of repairing, altering or improving the Premises or the Building. When reasonablynecessary, Landlord may temporarily close Building or Land entrances, Building doors or otherfacilities, but Landlord shall use good faith efforts to minimize disruption to Tenant’s businessand shall, in all cases, provide continued access to the Premises. Landlord shall have the righton reasonable notice to enter the Premises during the last nine
8

 
(9) months of the Lease Term for the purpose of showing the Premises to prospective tenants and toerect on the Premises a suitable sign indicating the Premises are available.5.5 **Damage or Destruction**.     5.5.1 If the Premises are damaged by fire, earthquake or other casualty (“Casualty”),Tenant shall give immediate written notice to Landlord. If Landlord estimates that the damage canbe repaired to meet Tenant’s business needs within one hundred eighty (180) days after Landlord isnotified by Tenant of such damage and if there are sufficient insurance proceeds available torepair such damage (net of any deductible), then Landlord shall proceed with reasonable diligenceto restore the Premises to substantially the condition which existed prior to the damage and thisLease shall not terminate. If neither circumstance described in the previous sentence exists,Landlord may elect, in its absolute discretion, to either: (a) terminate this Lease or (b) restorethe Premises to substantially the condition which existed prior to the damage and this Lease willcontinue. Notice of Landlord’s election shall be delivered to Tenant within sixty (60) days afterthe date Landlord receives written notice of the damage. Failure to deliver notice within thespecified period shall be treated as election not to restore. Tenant agrees to look to theprovider of Tenant’s insurance for coverage for the loss of Tenant’s use of the Premises and anyother related losses or damages incurred by Tenant during any reconstruction period following aCasualty.     5.5.2 If the Building is damaged by Casualty and more than fifty percent (50%) of the Buildingis rendered untenantable, without regard to whether the Premises are affected by such damage,Landlord may, in its absolute discretion, elect to terminate this Lease by notice in writing toTenant within thirty (30) days after the date Landlord receives written notice of the damage. Suchnotice shall be effective twenty (20) days after delivery to Tenant unless a later date is setforth in Landlord’s notice.     5.5.3 Notwithstanding any provision to the contrary contained herein, (i) if Tenant’s use ofthe Premises is substantially impaired for a period of more than one hundred eighty (180) daysafter the date of Casualty, or during the last six (6) months of the Lease Term, then both Landlordand Tenant shall have the right to terminate this Lease by written notice to the other party at anytime thereafter until Tenant’s use of the Premises is substantially restored, and (ii) if thisLease is terminated by either Landlord or Tenant due to a Casualty, then Tenant shall not berequired to pay for any insurance deductibles relating to such Casualty as part of Landlord’sinsurance cost or otherwise.5.6 **Condemnation**. If more than fifty percent (50%) of the Premises, or such portions ofthe Building as may be required for the Tenant’s reasonable use of the Premises, are taken byeminent domain or by conveyance in lieu thereof, this Lease shall automatically terminate as of thedate the physical taking occurs, and all Base Rent, Operating Costs Reimbursements and other sumspayable under this Lease shall be paid to that date. In the case of a taking of a part of thePremises or a portion of the Building not required for the Tenant’s reasonable use of the Premises,this Lease shall continue in full force and effect and the Base Rent shall be equitably reducedbased on the proportion by which the floor area of the Premises is reduced, such reduction in BaseRent to be effective as of the date the physical taking occurs. Operating Costs Reimbursementspayments may be redetermined as equitable under the circumstances. Landlord reserves all rights todamages or awards for any taking by eminent domain relating to the Premises, Building, Land and theunexpired term of this Lease. Tenant assigns to Landlord any right Tenant may have to such damagesor award and Tenant shall make no claim against Landlord for damages for termination of itsleasehold interest or interference with Tenant’s business. Tenant shall have the right, however,to claim and recover from the condemning authority compensation for any loss to which Tenant may beentitled for Tenant’s moving expenses or other relocation costs if they are awarded separately toTenant in the eminent domain proceedings and are not claimed by Tenant to be a part of the damagesrecoverable by Landlord.5.7 **Liens**. Tenant shall have no authority, express or implied, to create or place any lienor encumbrance of any kind or nature whatsoever upon the interest of Landlord or Tenant in thePremises or to charge the rentals payable under this Lease for any Claims in favor of any persondealing with Tenant, including those who may furnish materials or perform labor for anyconstruction or repairs. If any such lien or encumbrance is filed or recorded, Tenant shall causeit to be released or otherwise removed within five (5) days by a means or method approved byLandlord.5.8 **Work Performance and Responsible Contracting**.     5.8.1 Tenant acknowledges and agrees that all alterations, additions, improvements, repairsand installations made to or on the Premises (including any Initial Improvements and any TenantAlterations) shall be performed subject to contractual requirements applicable for the entireduration of
9

 
the contract that the prime contractor and each and every subcontractor of every tier shall (a) bea party to or bound by a collective bargaining agreement applicable to the geographic area in whichthe Land is located, applicable to the trade or trades in which the work under the contract is tobe performed and entered with one or more labor organizations affiliated with the Building andConstruction Trades Department of the AFL-CIO or with an independent, nationally recognized labororganization or one of its affiliated locals, and (b) solely employ members of such labororganizations to perform work within their respective jurisdictions. The previous sentence shallapply whether it is Landlord or Tenant performing or contracting for any such alterations,additions, improvements or installations. Waivers or exceptions to the requirement in thissentence may be given only in writing by Landlord. Landlord hereby approves Skyline Constructionas the general contractor.     5.8.2 In addition to the requirements of the previous subparagraph, Tenant shall usecommercially reasonable efforts to contract for services to be performed in or about the Premiseswith companies which are a “Responsible Contractor”. A “Responsible Contractor” is definedas a contractor or subcontractor who pays workers a fair wage and Fair Benefits as evidenced bypayroll and employee records and who complies with a service-disabled veteran business policy.“Fair Benefits” are defined as including employer-paid family health care coverage, pensionbenefits, and apprenticeship programs.5.9 **Estoppel Certificate**. On Landlord’s written request within ten (10) business days ofsuch request, Tenant shall timely complete, sign and deliver a certificate to an addresseedesignated by Landlord stating (a) the material terms of this Lease, (b) whether any defaultcurrently exists under the Lease, and (c) such other information as may reasonably be requested.5.10 **Utility Bills**. In order to assist Landlord in monitoring the energy efficiency of theBuilding, on Landlord’s request, Tenant shall timely deliver to Landlord a copy of Tenant’s utilitybills for the Premises and such other information related to Tenant’s use of utilities as mayreasonably be requested.5.11 **Modification for Lender**. If, in connection with obtaining construction, interim orpermanent financing for the Building or Land, Landlord’s lender, if any, shall request reasonablemodifications to this Lease as a condition to such financing, Tenant will not unreasonably withholdor delay its consent to such modifications; provided that, such modifications do notincrease the obligations of Tenant under this Lease or materially adversely affect Tenant’s rightsunder this Lease.5.12 **Hazardous Substances**.     5.12.1 Landlord represents to Tenant that as of the execution date of this Lease, Landlord isnot aware of any Hazardous Substances prohibited by applicable Governmental Requirements locatedin, on, or about the Premises, Building or the Project. Neither Tenant nor any of Tenant’sAffiliates shall store, place, generate, manufacture, refine, handle, or locate on, in, under oraround the Land or Building any asbestos, PCBs, petroleum or petroleum-based chemicals orsubstances, urea formaldehyde or any chemical, material, element, compound, solution, mixture,substance or other matter of any kind whatsoever which is now or later defined, classified, listed,designated or regulated as hazardous, toxic or radioactive by any Governmental Agency(“Hazardous Substance”), except for storage, handling and use of reasonable quantities andtypes of cleaning fluids, a generator with petroleum storage, office supplies and substancesnecessary for Tenant’s drug research and development business in the Premises in the ordinarycourse and the prudent conduct of Tenant’s business in the Premises and in accordance withapplicable law. Tenant agrees that (a) the storage, handling and use of such permitted HazardousSubstances must at all times conform to all Governmental Requirements and to applicable fire,safety and insurance requirements; (b) the types and quantities of permitted Hazardous Substanceswhich are stored in the Premises must be reasonable and appropriate to the nature and size ofTenant’s operation in the Premises and reasonable and appropriate for a first-class building of thesame or similar use and in the same market area as the Building; and (c) no Hazardous Substanceshall be spilled or disposed of on, in, under or around the Land or Building or otherwisedischarged from the Premises or any area adjacent to the Land or Building. In no event will Tenantbe permitted to store, handle or use on, in, under or around the Premises any Hazardous Substancewhich will increase the rate of fire or extended coverage insurance on the Land or Building,unless: (1) such Hazardous Substance and the expected rate increase have been specificallydisclosed in writing to Landlord; (2) Tenant has agreed in writing to pay any rate increase relatedto each such Hazardous Substance; and (3) Landlord has approved in writing each such HazardousSubstance, which approval shall be subject to Landlord’s discretion.     5.12.2 Tenant shall indemnify, defend and hold harmless Landlord and Landlord’s Agents fromand against any and all Claims arising out of any breach of any provision of this paragraph, whichexpenses shall also include laboratory testing fees, personal injury claims, clean-up costs and
10

 
environmental consultants’ fees; provided, the foregoing shall not apply to the extent of the grossnegligence or willful misconduct of Landlord, its agents, or contractors or the uncured breach ofthis Lease by Landlord. Tenant agrees that Landlord may be irreparably harmed by Tenant’s breachof this paragraph and that a specific performance action may appropriately be brought by Landlord;provided that, Landlord’s election to bring or not bring any such specific performanceaction shall in no way limit, waive, impair or hinder Landlord’s other remedies against Tenant.     5.12.3 As of the execution date of this Lease, Tenant represents and warrants to Landlordthat, except as otherwise disclosed by Tenant to Landlord, Tenant has no intent to bring anyHazardous Substances on, in or under the Premises except for the type and quantities authorized inSection 5.12.1.5.13 **Access Laws**.     5.13.1 Landlord represents and warrants to Tenant that, as of the Commencement Date, toLandlord’s actual knowledge, the Premises shall be in material compliance with the ADA (includingthe Americans with Disabilities Act Accessibility Guidelines for Buildings and Facilities) and allother Governmental Requirements relating to the foregoing (collectively, “Access Laws”).     5.13.2 Tenant agrees to notify Landlord immediately if Tenant receives notification orotherwise becomes aware of: (a) any condition or situation on, in, under or around the Land orBuilding which may constitute a violation of any Access Laws or (b) any threatened or actual lien,action or notice that the Land or Building is not in compliance with any Access Laws. If Tenant isresponsible for such condition, situation, lien, action or notice under this paragraph, Tenant’snotice to Landlord shall include a statement as to the actions Tenant proposes to take in responseto such condition, situation, lien, action or notice.     5.13.3 Tenant shall not alter or permit any assignee or subtenant or any other person to alterthe Premises in any manner which would violate any Access Laws or increase Landlord’sresponsibilities for compliance with Access Laws, without the prior approval of the Landlord, whichshall not be unreasonably withheld provided that such Tenant Alteration complies with theprovisions of Section 5.1 above and Tenant causes compliance with Access Laws. In connection withany such approval, Landlord may require a certificate of compliance with Access Laws from anarchitect, engineer or other person acceptable to Landlord. Tenant agrees to pay the reasonablefees incurred by such architect, engineer or other third party in connection with the issuance ofsuch certificate of compliance. Landlord’s consent to any proposed Tenant Alteration shall (a) notrelieve Tenant of its obligations or indemnities contained in this paragraph or this Lease or (b)be construed as a warranty that such proposed alteration complies with any Access Law.     5.13.4 Tenant shall be solely responsible for all costs and expenses relating to or incurredin connection with bringing the Premises, the Building, or the common areas of the Building intocompliance with Access Laws, if and to the extent such noncompliance arises out of or relates to:(1) Tenant’s specific use of the Premises, including the hiring of employees; (2) any TenantAlterations to the Premises; or (3) any Tenant Improvements constructed in the Premises at therequest of Tenant.     5.13.5 Landlord shall be responsible for all costs and expenses relating to or incurred inconnection with bringing the common areas of the Building into compliance with Access Laws, unlesssuch costs and expenses are Tenant’s responsibility as provided in the preceding subparagraph.     5.13.6 Tenant agrees to indemnify, defend and hold harmless Landlord and Landlord’s Affiliates fromand against any and all claims arising out of or relating to any failure of Tenant or Tenant’sAffiliates to comply with Tenant’s obligations under this paragraph.     5.13.7 Subject to Section 4.2 above, the provisions of this paragraph shall supersede anyother provisions in this Lease regarding Access Laws, to the extent inconsistent with theprovisions of any other paragraphs.5.14 **Subordination**. Tenant subordinates this Lease and all rights of Tenant under thisLease to any mortgage, deed of trust, ground lease or vendor’s lien, or similar instrument whichmay from time to time be placed upon the Premises (and all renewals, modifications, replacementsand extensions of such encumbrances), and each such mortgage, deed of trust, ground lease or lienor other instrument shall be superior to and prior to this Lease. Notwithstanding the foregoing,the holder or beneficiary of such mortgage, deed of trust, ground lease, vendor’s lien or similarinstrument shall have the right to subordinate or cause to be subordinated any such mortgage, deedof trust, ground lease, vendor’s lien or similar instrument to this Lease or to execute anon-disturbance agreement in favor of Tenant on the standard form utilized by such lender or groundlessor. At the request of Landlord, the holder of such mortgage or deed of trust or any groundlessor, Tenant shallexecute, acknowledge and deliver promptly in recordable form any customary instrument orsubordination agreement that Landlord or such holder
11

 
may request, provided that the agreement contains a commercially reasonable non-disturbance andattornment agreement and does not materially increase Tenant’s obligations or decrease its rightsunder this Lease. Tenant further covenants and agrees that if the lender or ground lessor acquiresthe Premises as a purchaser at any foreclosure sale or otherwise, Tenant shall recognize and attornto such party as landlord under this Lease, and shall make all payments required hereunder to suchnew landlord without deduction or set-off and, upon the request of such purchaser or othersuccessor, execute, deliver and acknowledge documents confirming such attornment. Tenant waivesthe provisions of any law or regulation, now or hereafter in effect, which may give or purport togive Tenant any right to terminate or otherwise adversely affect this Lease or the obligations ofTenant hereunder in the event that any such foreclosure or termination or other proceeding isprosecuted or completed.**SECTION 6:****INSURANCE AND INDEMNIFICATION**6.1 **Indemnification**. Tenant shall indemnify, defend and hold harmless Landlord, Landlord’sAffiliates and the Manager from and against any and all Claims made against such persons, arisingsolely out of (a) the possession, use or occupancy of the Premises or the business conducted in thePremises, (b) any act, omission or actionable neglect of Tenant or Tenant’s Affiliates, or (c) anybreach or default under this Lease by Tenant or by any Tenant’s Affiliates. Tenant’s obligationsunder the previous sentence shall not apply to the extent the Claim arises from intentionalmisconduct by or actionable neglect of Landlord or Landlord’s Affiliates or uncured breach of thisLease by Landlord. “Landlord’s Affiliates” are (i) the trustee of and, the investmentadvisor to the Landlord and (ii) employees of the foregoing. “Tenant’s Affiliates” are allofficers, partners, contractors, employees and invitees of Tenant. “Claims” is anindividual and collective reference to any and all claims, demands, damages, injuries, losses,liens, liabilities, penalties, fines, lawsuits, actions, and other proceedings and expenses(including attorneys’ fees and expenses incurred in connection with the proceeding, whether attrial or on appeal).6.2 **Tenant Insurance**.     6.2.1 Tenant shall, throughout the Lease Term, at its own expense, keep and maintain in fullforce and effect each and every one of the following policies, each of which shall be endorsed asneeded to provide that the insurance afforded by these policies is primary and that all insurancecarried by Landlord is strictly excess and secondary and shall not contribute with Tenant’sliability insurance:          (a) A policy of commercial general liability insurance, including a contractual liabilityendorsement covering Tenant’s obligations under the paragraph captioned “Indemnification”, insuringagainst claims of bodily injury and death or property damage or loss with a combined single limitat the Commencement Date of this Lease of not less than Two Million Dollars ($2,000,000.00) peroccurrence and location. Tenant shall include Landlord, Manager, Landlord’s investment advisor,and at Landlord’s request, Landlord’s mortgage lender(s) as additional insureds. The limit shallbe reasonably increased during the Lease Term at Landlord’s request.          (b) “Special Form” property insurance (which is commonly called “all risk”) covering InitialTenant Improvements, Tenant Alterations, and any and all furniture, fixtures, equipment, inventory,improvements and other property in or about the Premises which is not owned by Landlord, for thethen, entire current replacement cost of such property.          (c) Business interruption insurance in an amount sufficient to cover costs, damages, lostincome, expenses, Base Rent, Operating Costs Reimbursements and all other sums payable under thisLease, should any or all of the Premises not be usable for a period of up to twelve (12) months.          (d) A policy of worker’s compensation insurance if and as required by applicable law andemployer’s liability insurance with limits of no less than One Million and No/100 Dollars($1,000,000.00).          (e) In the event Tenant acquires company automobiles, a policy of comprehensive automobileliability insurance, including loading and unloading, and covering owned and hired vehicles withlimits of no less than One Million Dollars ($1,000,000.00) per occurrence.     6.2.2 All insurance policies required under this paragraph shall be with companies having arating according to Best’s Insurance Key Rating Guide for Property — Casualties of no less than A-Class VIII. Each policy shall provide that it is not subject to cancellation, lapse or reductionin coverage except after thirty (30) days’ written notice to Landlord. Tenant shall deliver toLandlord, prior to the Commencement Date and, from time to time thereafter, certificates evidencingthe existence and amounts of all such policies and, on Landlord’s request, copies of such insurancepolicies. There shall be
12

 
no deductible amount applicable with respect to the insurance policy requirements in part (a) ofthe previous subparagraph unless approved in advance by Landlord. Deductibles under policiesprocured under the requirements of clause (b) of subparagraph 6.2.1 must be reasonable andcustomary. There shall be no self-insured retention with respect to the requirements in eitherpart (a) or (b) of the previous subparagraph unless approved in advance by Landlord.     6.2.3 If Tenant fails to acquire or maintain any insurance or provide evidence of insurancerequired by this paragraph, Landlord may, but shall not be required to, obtain such insurance orevidence and the costs associated with obtaining such insurance or evidence shall be payable byTenant to Landlord on demand.6.3 **Landlord’s Insurance**. Landlord shall, throughout the Lease Term, keep and maintain infull force and effect:     (a) Commercial general liability insurance, insuring against claims of bodily injury and deathor property damage or loss with a combined single limit at the Commencement Date of not less thanOne Million Dollars ($1,000,000.00) per occurrence and Two Million Dollars ($2,000,000.00) generalaggregate, which policy shall be payable on an “occurrence” rather than a “claims made” basis.     (b) “Special Form” property insurance (which is commonly called “all risk”) covering theBuilding and Landlord’s personal property, if any, located on the Land for the then, currentreplacement value of such property.     (c) Landlord may, but shall not be required to, maintain other types of insurance as Landlorddeems appropriate, including property insurance coverage for earthquakes and floods in such amountsas Landlord deems appropriate.6.4 **Waiver of Subrogation**. Notwithstanding anything in this Lease to the contrary,Landlord and Tenant each waive and release the other from any and all Claims or any loss or damagethat may occur to the Land, Building, Premises, or personal property located on or in the describedPremises, by reason of Casualty, but only to the extent of deductibles specified in the insurancepolicies plus the insurance proceeds paid to such party under its policies of insurance or, if itfails to maintain the required policies, the insurance proceeds that would have been paid to suchparty if it had maintained such policies.**SECTION 7:****ASSIGNMENT AND SUBLETTING**7.1 **Assignment and Subletting by Tenant**. Except for Permitted Transfers, Tenant shall nothave the right, directly or indirectly (by change of control or otherwise) to assign, transfer,mortgage or encumber this Lease in whole or in part, nor sublet the whole or any part of thePremises, nor allow the occupancy of all or any part of the Premises by another, without firstobtaining Landlord’s consent, which consent may not be unreasonably withheld or delayed. NeitherLandlord’s demand for Recapture under paragraph 7.2 (“Recapture”) or Landlord’sconditioning of its consent under paragraph 7.3 (“Landlord Share of Revenue Surplus”) shallbe deemed unreasonable. No sublease or assignment , including one to which Landlord has consented,shall release Tenant from its obligations under this Lease.7.2 **Recapture**. Landlord shall have the right to recapture all or the applicable portion ofthe Premises proposed to be assigned or sublet by giving written notice of Landlord’s intention toexercise such right within fifteen (15) days after delivery of Tenant’s request that Landlordconsent to assignment or subletting (“Recapture”). The Recapture shall be effective on theearlier of (a) the date Tenant proposed to assign or sublet or (b) the last day of a calendar monthwhich is at least sixty (60) days after delivery of Tenant’s request that Landlord’s consent to theassignment or subletting. On the effective date of the Recapture, this Lease shall be terminatedas to the Premises or the portion of the Premises subject to the Recapture. Notwithstanding thefirst sentence of this subparagraph, Landlord shall have no right to Recapture the Premises orapplicable portion thereof if: (a) Tenant’s proposed assignment or sublet is a Permitted Transferor to an affiliate or wholly-owned subsidiary or is to a reorganized entity under which no changein ownership has occurred, or (b) Tenant’s proposed assignment or sublet, together with anyprevious assignments and/or sublets in effect as of the date of Tenant’s request, encompass in theaggregate net rentable area equal to or less than fifty percent (50%) of the total net rentablearea of Premises.7.3 **Landlord Share of Revenue Surplus**. Landlord may elect to condition its consent to anassignment or subletting on this paragraph. If Landlord so gives conditional consent, Tenant shallpay to Landlord if, as and when received by Tenant, fifty percent (50%) of the considerationreceived by Tenant for the assignment or subletting (after deduction of leasing commissions,attorneys’ fees, tenant
13

 
improvement allowances, and other reasonable costs of assignment or subletting) to the extent thatconsideration exceeds Tenant’s obligations under this Lease for the same portion of the Lease Term.If the sublet is for other than the entirety of the Premises, Tenant’s obligation under this Leaseshall be prorated based on the area subleased as compared to the Rentable Area of the Premises.7.4 **Permitted Transfers**. Notwithstanding anything to the contrary in subparagraph 7.1, butsubject to the other provisions of this paragraph, Tenant may assign this Lease or sublet thePremises or any portion thereof (a “Permitted Transfer”), without Landlord’s consent: (a)to any partnership, corporation or other entity which controls, is controlled by, or is undercommon control with Tenant (control being defined for such purposes as ownership of 50% or more ofall of the voting stock of a corporation or 50% or more of the voting legal or equitable interestin any other business entity, and the power to direct the management and operations of the relevantentity) (an “Affiliate”) or (b) to any partnership, corporation or other entity resultingfrom a merger or consolidation with Tenant or which acquires all or substantially all of Tenant’sassets (through a transfer of assets or equity interests in Tenant) as a going concern and suchassets include substantial assets other than this Lease (a “Successor”); or (c) to anyentity engaged in a joint venture with Tenant, provided that, (i) Landlord receives atleast ten (10) days’ prior written notice of the assignment or subletting, in which Tenant shallexpressly confirm that Tenant remains primarily liable (together with the assignee in the event ofan assignment) for all of the obligations of Tenant under this Lease, (ii) in the case of asubletting or assignment to an Affiliate, the Affiliate remains an Affiliate for the duration ofthe subletting or the balance of the term in the event of an assignment,, (iii) Landlord receives afully executed coy of the assignment or sublease agreement between Tenant and the Affiliate orSuccessor at least ten (10) days prior to the effective date of such assignment or sublease, inwhich the Affiliate or Successor, as the case may be, assumes (in the event of an assignment) allof Tenant’s obligations under the Lease, and agrees (in the event of a sublease) that suchsubtenant will, at Landlord’s election, attorn directly to Landlord in the event that this Lease isterminated for any reason, and (iv) in the case of an assignment, the essential purpose of suchassignment is to transfer an active, ongoing business with substantial assets in addition to thisLease, and, in the case of an assignment or sublease, the transaction is for legitimate businesspurposes unrelated to this Lease and the transaction is not a subterfuge by Tenant to avoid itsobligations under this Lease or the restrictions on assignment and subletting contained herein. Inaddition, a sale or transfer of the capital stock of Tenant shall be deemed a Permitted Transfer if(1) such sale or transfer occurs in connection with any bona fide financing or capitalization forthe benefit of Tenant, or (2) Tenant is or becomes a publicly traded corporation. Landlord shallno right to any sums or other economic consideration resulting from any Permitted Transfer.Additionally, any rights that are personal to Tenant shall also accrue to any Permitted Transferee.7.5 **Assignment by Landlord**. Landlord shall have the right to transfer and assign, in wholeor in part, its rights and obligations under this Lease and in any and all of the Land or Building.If Landlord sells or transfers any or all of the Building, Landlord and Landlord’s Affiliatesshall, upon consummation of such transfer be released automatically from any liability under thisLease for obligations to be performed or observed after the date of the transfer. After theeffective date of the transfer, Tenant must look solely to Landlord’s successor-in-interest.**SECTION 8: DEFAULT AND REMEDIES**8.1 **Events of Default**.     8.1.1 The occurrence of any one or more of the following events shall constitute a materialdefault and breach of this Lease by Tenant (“Event of Default”):          (a) vacation or abandonment of all or any portion of the Premises without continued paymentwhen due of Base Rent and Operating Costs Reimbursements and other sums due under this Lease;          (b) failure by Tenant to make any payment of Base Rent, Operating Costs Reimbursements or anyother sum payable by Tenant under this Lease within three (3) days after its due date, or, in thecase of the first such failure during a calendar year of the Lease Term, within three (3) daysafter written notice to Tenant of such failure;          (c) failure by Tenant to observe or perform any covenant or condition of this Lease, otherthan the making of Base Rent, Operating Costs Reimbursements and other payments, where such failurecontinues for a period of twenty (20) days after written notice from Landlord; provided, however,
14

 
that if the nature of Tenant’s obligation is such that more than the specified period requiredfor performance, then Tenant shall not be in default if Tenant commences performance within suchperiod and thereafter diligently prosecutes it to completion;          (d) the failure of Tenant to surrender possession of the Premises at the expiration or earliertermination of this Lease in the condition required by this Lease;          (e) (1) the making by Tenant of any general assignment or general arrangement for the benefitof creditors; (2) the filing by or against Tenant of a petition in bankruptcy, includingreorganization or arrangement, unless, in the case of a petition filed against Tenant, it isdismissed within sixty (60) days; (3) the appointment of a trustee or receiver to take possessionof substantially all of Tenant’s assets located in the Premises or of Tenant’s interest in thisLease; (4) any execution, levy, attachment or other process of law against any property of Tenantor Tenant’s interest in this Lease, unless it is dismissed within sixty (60) days; (5) adjudicationthat Tenant is bankrupt; (6) the making by Tenant of a transfer in fraud of creditors; or (7) thefailure of Tenant to generally pay its debts as they become due;          (f) any information furnished by or on behalf of Tenant to Landlord in connection with thisLease is determined to have been materially false, or misleading and Tenant knew of same; or          (g) if a letter of credit is required under the Credit Enhancement Rider to this Lease, afailure of the Tenant to deliver that letter of credit within the time period specified.     8.1.2 If a petition in bankruptcy is filed by or against Tenant, and if this Lease is treatedas an “unexpired lease” under applicable bankruptcy law, then Tenant shall neither attempt norcause any trustee to attempt to extend the time period specified by the Bankruptcy Act for theassumption or rejection of this Lease.8.2 **Remedies**.     8.2.1 If any Event of Default occurs, Landlord may at any time after such occurrence, with orwithout notice or demand except as stated in this paragraph, and without limiting Landlord in theexercise of any other right or remedy which Landlord may have by reason of such Event of Default,exercise the rights and remedies, either singularly or in combination, specified or described inthe subparagraphs of this paragraph.     8.2.2 Landlord may terminate this Lease and all rights of Tenant under this Lease, eitherimmediately or at some later date, by giving Tenant written notice that this Lease is terminated.If Landlord so terminates this Lease, then Landlord may recover from Tenant the sum of:          (a) the unpaid Base Rent, Operating Costs Reimbursements and all other sums payable under thisLease which have been earned up to and including the date of termination; plus          (b) interest at the Default Rate on the sum stated in clause (a); plus          (c) the amount by which (i) the unpaid Base Rent, Operating Costs Reimbursements and all othersums payable under this Lease which would have been earned after termination until the time ofaward exceeds (ii) the amount of such rental loss, if any, as Tenant affirmatively proves couldhave been reasonably avoided during such time period, together with interest on such resultingdifference at the Default Rate; plus          (d) the amount by which (i) the aggregate of the unpaid Base Rent, Operating CostsReimbursements and all other sums payable under this Lease for the balance of the Lease Term afterthe time of award exceeds (ii) the amount of such rental loss, if any, as Tenant affirmativelyproves could be reasonably avoided, with such resulting difference being discounted to presentvalue at the time of the award at the Prime Rate in existence at such time; plus          (e) any other amount necessary to compensate Landlord for the detriment proximately caused byTenant’s failure to perform Tenant’s obligations under this Lease or which, in the ordinary courseof things, would be likely to result from such failure, including, leasing commissions, tenantimprovement costs, renovation costs and advertising costs.     8.2.3 Landlord shall also have the right, with or without terminating this Lease, to re-enterthe Premises and remove all persons and property from the Premises. Landlord may cause property soremoved from the Premises to be stored in a public warehouse or elsewhere at the expense, for theaccount of, and at the risk of Tenant.     8.2.4 Landlord shall also have the right, without terminating this Lease, to accelerate andrecover from Tenant the sum of all unpaid Base Rent, Operating Costs Reimbursements and all othersums payable under the then remaining term of the Lease, discounting such amount to present valueat the Prime Rate.
15

 
     8.2.5 If Tenant vacates, abandons or surrenders the Premises without Landlord’s consent, or ifLandlord re-enters the Premises as provided in subparagraph 8.2.3 or takes possession of thePremises pursuant to legal or notice proceedings, then, if Landlord does not elect to terminatethis Lease, Landlord may, from time to time, without terminating this Lease, either (a) recover allBase Rent, Operating Costs Reimbursements and all other sums payable under this Lease as theybecome due or (b) relet the Premises or any part of the Premises on behalf of Tenant for such termor terms, at such rent or rents and pursuant to such other provisions as Landlord, in its solediscretion, may deem advisable, all with the right, at Tenant’s cost, to make alterations andrepairs to the Premises and recover any deficiency from Tenant as set forth in subparagraph 8.2.6.     8.2.6 If Landlord relets the Premises without terminating this Lease, Landlord shall apply therevenue from such reletting to Landlord’s costs and Tenant’s obligations in such order as Landlorddeems appropriate. Should revenue from letting during any month be less than the sum of the BaseRent, Operating Costs Reimbursements and other sums payable under this Lease and Landlord’sexpenditures for the Premises during such month, Tenant shall be obligated to pay such deficiencyto Landlord as and when such deficiency arises.8.3 **Right to Perform**. If Tenant shall fail to pay any sum of money, other than Base Rentor Operating Costs Reimbursements, required to be paid by it under this Lease or shall fail toperform any other act on its part to be performed under this Lease, and such failure shall continuefor ten (10) days after written notice of such failure by Landlord, Landlord may, but shall not beobligated to, and without waiving or releasing Tenant from any obligations, make such payment orperform such other act on Tenant’s part to be made or performed as provided in this Lease.Landlord shall have all rights and remedies for recovery of any sum or for the cost of suchperformance as specified in this Lease.8.4 **Landlord’s Default**. Landlord shall not be in default under this Lease unless Landlordfails to perform obligations required of Landlord within thirty (30) days after written notice isdelivered by Tenant to Landlord specifying the obligation which Landlord has failed to perform;provided, however, that if the nature of Landlord’s obligation is such that more than thespecified period required for performance, then Landlord shall not be in default if Landlordcommences performance within such period and thereafter diligently prosecutes it to completion.Tenant waives the benefit of any laws granting it the right to perform Landlord’s obligation, alien upon the property of Landlord or upon rent due Landlord, or the right to terminate this Leaseor withhold rent.8.5 **Limitation on Recourse**. Liability with respect to the entry and performance of thisLease by or on behalf of Landlord or any other obligation of Landlord, however it may arise, shallbe asserted and enforced only against Landlord’s estate and equity interest in the Building andproceeds therefrom and from insurance. Neither Landlord nor any of Landlord’s Affiliates shallhave any personal liability in the event of any Claim against any of them arising out of or inconnection with this Lease, the relationship of Landlord and Tenant or Tenant’s use of thePremises. Any and all personal liability, if any, beyond that which may be asserted under thisparagraph, is expressly waived and released by Tenant and by all persons claiming by, through orunder Tenant.**SECTION 9: MISCELLANEOUS PROVISIONS**9.1 **Notices**. All notices, demands, consents, approvals, statements and communicationsrequired or permitted under this Lease shall be in writing and shall be addressed to a party at theaddresses set forth opposite that party’s signature, or to such other address as either party mayspecify by written notice, given in accordance with this paragraph. Unless otherwise specifiedopposite Tenant’s signature, Tenant’s notice address shall be changed to the address of thePremises after the Commencement Date. All such communications shall be transmitted by personaldelivery, reputable express or courier service, or United States Postal Service, postage prepaid.All such communications shall be deemed delivered and effective on the earlier of (a) the datereceived or refused for delivery, or (b) three (3) calendar days after having been deposited in theUnited States Postal Service, postage prepaid.9.2 **Attorney’s Fees and Expenses**. In the event that (a) either party requires the servicesof an attorney in connection with enforcing the terms of this Lease, (b) suit is brought for theenforcement of this Lease or the exercise of rights and remedies afforded by this Lease or underlaw, or (c) proceedings are held in bankruptcy, then the substantially prevailing party shall beentitled to a reasonable sum for attorney’s and paralegal’s fees, expenses and court costs,including those relating to any appeal.
16

 
9.3 **Successors; Joint and Several Liability**. All of the covenants and conditions containedin this Lease shall apply to and be binding upon Landlord and Tenant and their respective heirs,executors, administrators, permitted successors and permitted assigns. In the event that more thanone person or organization is included in the term “Tenant”, then each such person ororganization shall be jointly and severally liable for all obligations of Tenant under this Lease.9.4 **Choice of Law**. This Lease shall be construed and governed by the laws of the state inwhich the Land is located.9.5 **Offer to Lease**. The submission of this Lease in a draft form to Tenant or its brokeror other agent does not constitute an offer to Tenant to lease the Premises. This Lease shall haveno force or effect until it is executed and delivered by both Tenant and Landlord.9.6 **Force Majeure**. In the event that either party shall be delayed, hindered in orprevented from the performance of any act or obligation required under this Lease by reason of actsof God, strikes, lockouts, labor troubles or disputes, inability to procure or shortage ofmaterials or labor, failure of power or utilities, delay in transportation, fire, vandalism,accident, flood, severe weather, other casualty, Governmental Requirements (including mandatedchanges in the Plans and Specifications or the Tenant Improvements resulting from changes inpertinent Governmental Requirements or interpretations thereof), riot, insurrection, civilcommotion, sabotage, explosion, war, natural or local emergency, acts or omissions of others,including the other party, or other reasons of a similar or dissimilar nature not solely the faultof, or under the exclusive control of, Landlord, then performance of such act or obligation (otherthan Tenant’s rental obligations under this Lease) shall be excused for the period of the delay andthe period for the performance of any such act or obligation shall be extended for the periodequivalent to the period of such delay.9.7 **Interpretation**. Headings or captions shall in no way define, limit or otherwise affectthe construction or interpretation of this Lease. Whenever a provision of this Lease uses theterms “include” or “including”, that term shall not be limiting but shall be construed asillustrative. This Lease shall be given a fair and reasonable interpretation of the wordscontained in it without any weight being given to whether a provision was drafted by one party orits counsel. Unless otherwise specified, whenever this Lease requires a consent or approval, thedecision shall be reached in good faith discretion of the party entitled to give such consent orapproval.9.8 **Prior Agreement and Amendments**. This Lease contains all of the agreements of theparties to this Lease with respect to any matter covered or mentioned in this Lease. No prioragreement, understanding or statement pertaining to any such matter shall be effective for anypurpose. No provision of this Lease may be amended or added to except by an agreement in writingsigned by the parties to this Lease.9.9 **Time of Essence**. Time is of the essence with respect to the performance of this Lease.9.10 **Survival of Obligations**. Notwithstanding anything contained in this Lease to thecontrary or the expiration or earlier termination of this Lease, any and all obligations of eitherparty accruing prior to the expiration or termination of this Lease shall survive the expiration orearlier termination of this Lease, and either party shall promptly perform all such obligationswhether or not this Lease has expired or terminated.9.11 **Landlord’s Authorized Agents**. Notwithstanding anything contained in the Lease to thecontrary, including the definition of Landlord’s Agents, MEPT Edgemoor REIT LLC (the manager ofLandlord) and Bentall Kennedy (U.S.) Limited Partnership (the authorized signatory of MEPT EdgemoorREIT LLC) are the only entities authorized to amend, renew or terminate this Lease, to compromiseany of Landlord’s claims under this Lease or to bind Landlord in any manner with respect to thisLease. Neither the Manager nor any leasing agent or broker shall be considered an authorized agentof Landlord for such purposes.9.12 **Tenant Certification**. Tenant certifies that it is not acting, directly or indirectly,for or on behalf of any person, group, entity, or nation named as a terrorist, “SpeciallyDesignated National and Blocked Person”, or other banned or blocked person, group, entity, nation,or transaction pursuant to any law, order, rule or regulation that is enforced or administered bythe Office of Foreign Assets Control. Tenant is not entering this Lease, directly or indirectly onbehalf of, or instigating or facilitating this Lease, directly or indirectly on behalf of, any suchperson, group, entity or nation.ADDITIONAL DEFINED TERMS CROSS REFERENCE TABLE
17

 
       ADA  Paragraph 4.2 (“Maintenance and Repair byLandlord”)  Affiliate  Paragraph 7.4 (“Permitted Transfers”)  Casualty  Subparagraph 5.5.1  Claims  Paragraph 6.1 (“Indemnification”)  Fair Benefits  Subparagraph 5.8.2  Governmental Agency  Paragraph 2.11 (“Compliance with GovernmentalRequirements and Rules and Regulations”)  Governmental Requirements  Paragraph 2.11 (“Compliance with GovernmentalRequirements and Rules and Regulations”)  HVAC  Subparagraph 4.1.1  Land  Definition of Building and also Exhibit A  Landlord’s Affiliates  Paragraph 6.1 (“Indemnification”)  Permitted Transfer  Paragraph 7.4 (“Permitted Transfers”)  Permitted Uses  Subparagraph 2.10.1  Recapture  Paragraph 7.2 (“Recapture”)  Responsible Contractor  Subparagraph 5.8.2  Successor  Paragraph 7.4 (“Permitted Transfers”)  Telecommunication Facilities  Subparagraph 4.1.2  Tenant Affiliates  Paragraph 6.1 (“Indemnification”)  Tenant Alterations  Paragraph 5.1 (“Tenant Alterations”)  LISTING OF EXHIBITS   Exhibit A Legal Description of the LandExhibit B Drawing Showing Location and Configuration of the PremisesExhibit C Rules and RegulationsExhibit D Commencement Date Memorandum FormLISTING OF RIDERSRider 1:   Operating Costs Reimbursements
18

 
     This Lease has been executed the day and year set forth on the first page of this Lease   Designated Address for Landlord: LANDLORD:
MEPT Mount Eden LLC