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Exhibit 10.7    
    


SECOND AMENDMENT TO LEASE AGREEMENT  


        THIS SECOND AMENDMENT TO LEASE AGREEMENT (this "Amendment") is made as of May 19, 2000, by and between HMS GATEWAY OFFICE, L.P., a Delaware limited
partnership ("Landlord"), and COULTER PHARMACEUTICAL, INC., a Delaware corporation ("Tenant"). 


RECITALS  


        A.    Landlord
and Tenant have previously entered into that certain Lease Agreement dated as of November 7, 1997, as amended by a First Amendment to Lease Agreement
dated as of November 10, 1998 (as amended, the "Lease"), which Lease covers certain premises commonly known as 600 Gateway Boulevard and 650 Gateway Boulevard in the City of South
San Francisco, State of California, all as more particularly descried in the Lease. Capitalized terms used but not defined herein shall have the meanings set forth in the Lease. 


        B.    Concurrently
herewith, Landlord and Tenant are entering into a Lease Agreement, dated as of even date herewith, covering certain premises to be hereafter developed by
Landlord and to be known as 630 Gateway Boulevard, South San Francisco, California (the "630 Gateway Lease"). 



        C.    Landlord
and Tenant desire to modify the Lease as provided herein. 


AGREEMENT  


        NOW THEREFORE, in consideration of the agreements of Landlord and Tenant herein contained and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Landlord and Tenant hereby agree as follows: 



        1.     The
following provision is hereby added to the Lease as new Paragraph 24(o): 



        (o)   Any
Default (as defined in the 630 Gateway Lease) by Tenant (or any assignee or sublessee of Tenant) under the terms of the 630 Gateway Lease during any period in which
Tenant (or any such assignee or sublessee) is the tenant under the 630 Gateway Lease. 




        2.     Except
as expressly amended hereby, the Lease shall remain unmodified and in full force and effect. As modified hereby, the Lease is hereby ratified and confirmed in all
respects. In the event of any inconsistencies between the terms of this Amendment and the Lease, the terms of this Amendment shall prevail. 



        3.     This
Amendment shall bind and inure to the benefit of Landlord and Tenant and their respective legal representatives and successors and assigns. 



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        IN
WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of the date first above written. 



	 	Landlord:	HMS GATEWAY OFFICE, L.P.

a Delaware limited partnership
	

 	

 	

By:	

Hines Gateway Office, L.P.,

General Partner
	

 	

 	

 	

By:	

Hines Interests Limited Partnership,

General Partner
	

 	

 	

 	

 	

By:	

Hines Holdings, Inc.,

General Partner
	

 	

 	

 	

 	

 	

By:	

/s/  JAMES C. BUIE, JR.      

	

 	

 	

 	

 	

 	

Name:	

James C. Buie, Jr.

	

 	

 	

 	

 	

 	

Title:	

Executive Vice President

	

 	
Tenant:	

COULTER PHARMACEUTICAL, INC.,

a Delaware Corporation
	

 	

 	

By:	

/s/  WILLIAM G. HARRIS      

	

 	

 	

Name:	

William G. Harris

	

 	

 	

Title:	

Vice President and CFO





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FIRST AMENDMENT TO LEASE AGREEMENT  


        THIS FIRST AMENDMENT TO LEASE AGREEMENT (this "Amendment") is made as of November 10, 1998, by and between HMS GATEWAY OFFICE L.P., a Delaware limited
partnership ("Landlord"), and COULTER PHARMACEUTICAL, INC., a Delaware corporation ("Tenant"). 


RECITALS  


        1.     Landlord
and Tenant have previously entered into that certain Lease Agreement dated November 7, 1997 (the "Lease"). 


        2.     Pursuant
to the Lease, Tenant leased from Landlord approximately 50,400 square feet (the "Original Premises"), which Original Premises constitute the entire building
commonly known as 600 Gateway Boulevard, South San Francisco, California (the "Building"). 



        3.     Landlord
and Tenant desire to amend the Lease to reflect the expansion of the Original Premises, all upon and subject to the terms, covenants and conditions hereinafter
set forth. 


AGREEMENT  


        NOW THEREFORE, in consideration of the agreements of Landlord and Tenant herein contained and other valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Landlord and Tenant hereby agree as follows: 



        1.     DEFINED
TERMS 


        Except
as otherwise defined herein, capitalized terms shall have the meaning ascribed to them in the Lease. 


        2.     PREMISES



        Landlord
shall lease to Tenant, and Tenant shall lease from Landlord, the Premises on the terms and conditions set forth in the lease and herein. From and after the Expansion Space
Commencement Date (as defined in Exhibit B-FA attached hereto), the Premises shall mean the Original Premises and an additional approximately 50,400 square feet (the "Expansion
Space"), which Expansion Space shall constitute the entire building to be constructed in accordance with Exhibit A-FA and Exhibit B-FA hereto and to be commonly
known as 650 Gateway Boulevard, South San Francisco, California (the "Expansion Building"). 


        3.     MONTHLY
BASE RENT FOR THE EXPANSION 


        Monthly
Base Rent for the Expansion Space shall, as of the Expansion Space Commencement Date, be an amount equal to the applicable rate per square foot being charged from time to time
under the Lease for the Original Premises multiplied by the square footage of the Expansion Space. The rate per square foot being charged under the Lease for the Original Premises shall be determined
by dividing the Monthly Base Rent due for the Original Premises by the Premises Square Footage for the Original Premises. Nothing in this Paragraph 2 shall alter or amend the Monthly Base Rent
payable under the Lease for the Original Premises. 


        4.     TENANT'S
PROPORTIONATE SHARE; PARKING 


        As
of the Expansion Space Commencement Date and subject to the terms and conditions set forth in the Lease, (i) Tenant's Proportionate Share of the Project shall be increased to
66.66%, (ii) Tenant's Proportionate Share of the building shall remain 100% and (iii) the number of unreserved parking spaces shall be increased to 302 non-exclusive and
undesignated parking spaces. 



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        5.     SECURITY
DEPOSIT 


        Prior
to execution of this Amendment and in satisfaction of the condition set forth in Paragraph 52 of the Lease, Tenant has increased the Security Deposit by $75,000 such that
the total Security Deposit held by Landlord under the Lease is $150,000. Such increased Security Deposit is subject to the terms and conditions of the Lease, including without limitation,
Paragraph 7 of the Lease. 


        6.     EXPANSION
CONSTRUCTION AGREEMENTS 


        Attached
hereto as Exhibit A-FA and Exhibit B-FA, respectively, are the Expansion Construction Agreements that set forth the rights and obligations
of Landlord and Tenant with respect to the construction of the Expansion Building and the Expansion Space. These Expansion Construction Agreements amend and restate the Base Building Construction
Agreement and the Premises Construction Agreement currently attached to the Lease with respect to the construction of the Expansion Building and Expansion Space only. 


        7.     TIME
FOR PERFORMANCE 


        With
respect to construction of the Expansion Space, the parties have set forth on Exhibit H-FA hereto certain events which must occur prior to or during the
construction of the Expansion Space (each a "Condition"), together with certain dates upon which each condition must be satisfied ("Initial Window Date"); provided however, if Landlord is delayed in
satisfying any Condition due to Tenant Delays or Force Majeure Events (as defined in Exhibit B-FA hereto), all of the Initial Window Dates set forth on
Exhibit H-FA shall be extended for a period equal to the length of such delay. If any Condition is not satisfied on or before its respective Initial Window Date, as such may be so
extended, Tenant shall have the right to terminate this Lease, as to both the Original Premises and Expansion Space, by delivering written notice to Landlord within five (5) business days after
expiration of the applicable Initial Window Date. If Tenant does not deliver written notice of termination to Landlord within such five day period, time being of the essence, Tenant shall have waived
its right to terminate as a result of Landlord's failure to satisfy the particular Condition in question. If Tenant timely elects to terminate the Lease as set forth above, the lease, as to the
Original Premises and the Expansion Space, shall terminate. 


        If
Tenant timely exercises its right to terminate the Lease as provided above, Landlord shall have the right to nullify Tenant's election to terminate the Lease as to the Original
premises by notifying Tenant, within fifteen (15) days after receipt of tenant's election to terminate, of landlord's election to pay to Tenant the Relocation Costs (as defined below). In the
even landlord nullifies tenant's election to terminate the Lese as to the Original premises and Tenant (i) gives Landlord written notice within three (3) months of such nullification
that Tenant will vacate the Original Premises and (ii) vacates the Original Premises, Tenant shall have the right to sublease the Original Premises as otherwise provided under
paragraph 23 of the Lease, provided however, Tenant, in this instance, shall not be required to pay the Additional Rent required to be paid to Landlord under Paragraph 23(c) of the
Lease. Notwithstanding this paragraph, Tenant and any guarantor or surety of Tenant's obligations under the lease shall at all times remain fully responsible and liable for payment of the Rent and for
compliance with all of Tenant's obligations under the lease, as provided in paragraph 23(d) of the Lease. 



        "Relocation
Costs" are defined as 150% of the reasonable out-of-pocket costs that Tenants incurs to relocate from the Original Premises to a new location.
Relocation Costs shall not include any payment of rent or any cost of tenant improvements. Prior to the reimbursement of Relocation Costs by Landlord, Tenant shall provide Landlord with
back-up invoices evidencing the costs incurred by Tenant in relocating to Tenant's new location. In no even shall Landlord pay 



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Relocation
Costs in excess of $500,000. Relocation Costs shall be paid by landlord within ten (10) days after receipt of the above-referenced back-up invoices. 


        8.     CARRY
COSTS 


        Notwithstanding
anything in Paragraph 52(e) of the lease to the contrary, except for any delays in the Phase II Commencement Date due to Force Majeure Events, Tenant shall
continue to pay to landlord the Carry Costs on the first day of each month up to and including October 1, 1998. In the event of a delay in the Phase II Commencement Date due to Majeure Events,
Tenant shall continue payment (prorated as appropriate) of Carry Costs for the time attributable to such delay. 


        9.     TENANT
MAINTENANCE 


        Notwithstanding
anything in the Paragraph 13 of the Lease to the contrary, Tenant shall be responsible for maintaining the heating, ventilating and air-conditioning
systems and the life-safety systems serving the Premises. Tenant shall maintain these systems in good order and condition and shall, at a minimum, follow Landlord's standard servicing
guidelines for such systems. 


        10.   R&D
SPACE 


        Notwithstanding
anything in Paragraph 11 of the Lease to the contrary, Tenant shall be permitted a maximum of 25,000 square feet of R&D Space in the Expansion Space. Tenant may
not exceed such maximum square footage for R&D space in the Expansion Space and therefore no Conversion Allowance shall be payable by tenant nor shall any Converted Office Space be available to Tenant
with respect to the Expansion Space. The terms and conditions of Paragraph 11 shall remain unmodified and continue to apply in full force and effect with respect to the Original Premises. 


        11.   BROKERS



        Landlord
and Tenant each represents and warrants to the other that neither it nor its officers or agents or anyone acting on its behalf has deal with any real estate broker except the
Broker(s) specified in the Basic Lese Information in the negotiating or making of this Amendment, and each party agrees to indemnify and hold harmless the other from any claim or claims, and costs and
expenses, including attorneys' fees, incurred by the indemnified party in conjunction with any such claim or claims of any other broker or brokers to a commission in connection with this Amendment as
a result of the actions of the indemnifying party. Landlord shall pay the brokerage commissions due to the Brokers listed in the Basic Lease Information. 


        12.   BASIC
LEASE INFORMATION 


        As
of the Expansion Space Commencement Date, the Basic Lease Information in the Lease shall be amended and restated pursuant to the Basic Lease Information attached as Exhibit Z. 


        13.   RATIFICATION



        As
amended hereby, the Lease is hereby ratified and confirmed in all respects. In the event of any inconsistencies between the terms of this Amendment and the Lease, the terms of this
Amendment shall prevail. 


        14.   SUCCESSORS
AND ASSIGNS 


        This
Amendment shall bind and inure to the benefit of Landlord and Tenant and their respective legal representatives and successors and assigns. 



signatures on next page.  


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        IN
WITNESS WHEREOF, landlord and Tenant have executed this Amendment to Lease as of the date first above written. 



	 	Landlord:	HMS GATEWAY OFFICE, L.P.

a Delaware limited partnership
	

 	

 	

By:	

Hines Gateway Office, L.P.,

General Partner
	

 	

 	

By:	

Hines Interests Limited Partnership,

General Partner
	

 	

 	

By:	

Hines Holdings, Inc.,

General Partner
	

 	

 	

 	

By:	

/s/  JAMES BUIE      

	

 	

 	

 	

Name:	

James Buie

	

 	

 	

 	

Title:	

Executive Vice President

	

 	
Tenant:	

COULTER PHARMACEUTICAL, INC.,

a Delaware Corporation
	

 	

 	

By:	

/s/  WILLIAM G. HARRIS      

	

 	

 	

Name:	

William G. Harris

	

 	

 	

Title:	

Vice President and CFO





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   AMENDED AND RESTATED AGREEMENT

CONCERNING ASSIGNMENT AND SUBLEASE PROFITS  


        This Amended and Restated Agreement Concerning Assignment and Sublease Profits is entered into as of May 23, 2002, by and among Gateway Boulevard
Associates, LLC, a California limited liability company ("Gateway I"), Gateway Boulevard Associates II LLC, a California limited liability company ("Gateway B"), and Coulter Pharmaceutical, Inc, a
Delaware corporation ("Tenant"). 


RECITALS  


        A.    Gateway
I, as successor-in-interest to HMS Gateway Office, L.P., a Delaware limited partnership ("Hines") and Tenant are parties to that certain
Lease Agreement dated as of November 7, 1997, as amended by a First Amendment to Lease Agreement dated as of November 10, 1998 and a Second Amendment to Lease Agreement dated as of
May 19,2000 (such lease, as so amended, the "600/650 Lease") with respect to certain premises commonly known as 600 Gateway Boulevard ("600 Gateway Premises") and 650 Gateway Boulevard ("650
Gateway Premises") South San Francisco, California. 


        B.    Gateway
II, as successor-in-interest to Hines and Tenant are parties to that certain Lease Agreement dated May 19, 2000 as amended by a
First Amendment to Lease Agreement dated as of January 15, 2002 (such lease, as so amended, the. "630 Lease') with respect to certain premises commonly known as 630 Gateway. Boulevard, South
San Francisco, California ("630 Gateway Premises'). The 600/650 Lease and the 630 Lease am hereinafter referred to from time to time as a 



        C.    Gateway
I, Gateway II and Tenant have entered into that certain Agreement Concerning Assignment and Sublease Profits ("Agreement"). Gateway I, Gateway II and Tenant now
desire to amend and restate. in its entirety the Agreement as set forth below. 


AGREEMENT  


        In consideration of the agreements referred to above, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Gateway
I, Gateway II and Tenant hereby agree as follows: 



        1.     Section 23(a)
of the 600/650 Lease is hereby amended by modifying the fourth and fifth sentences thereof to read as follows: 



        In
the event Tenant wishes to assign the Lease or sublet the entire Premises or all of the Premises located in either the building known as 600 Gateway Boulevard or the building known as
650 Gateway Boulevard (each, for the purposes of this Section 23(a), a "Building"), for the remainder of the Term (except in connection with a Permitted Transfer), Landlord shall have the
option, to be exercised within 30 days of receipt of the foregoing, to (1) terminate this Lease in its entirety, unless the sublease is for only one of the Buildings, in which case
Landlord may terminate this Lease as to the Building proposed to be sublet, (2) sublease or take an assignment as the case may be, from Tenant of the interest in this Lease and/or the Premises
that Tenant proposes to assign or sublease, on the same terms and conditions as stated in the proposed Sublet or Assignment Agreement, (3) consent to the proposed Assignment or Sublease or
(4) refuse its consent to the proposed Assignment or Sublease, providing that such consent shall not be unreasonably withheld, conditioned or delayed so long as Tenant is not then in Default
under this Lease, nor is any event then occurring which, with the giving of notice or the passage of time, or both, would constitute a Default hereunder. In the event Landlord elects to terminate this
Lease (or, in the case of a proposed subletting of one Building to terminate this Lease in connection with such Building) or sublease or take an assignment from Tenant of the interest in the Lease
and/or the 




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Premises
that Tenant proposes to assign or sublease as provided in the foregoing clauses (1) and (2) respectively, then Landlord shall have the additional right to negotiate directly
with Tenant's proposed Assignee or Subtenant and to enter into a direct Lease or occupancy agreement with such party on such terms as shall be acceptable to Landlord in its sole and absolute
discretion, and Tenant hereby waives any claims against Landlord related thereto, including. without limitation, any claims for any compensation or profit related to any such Lease or occupancy
agreement. 




        2.     Section 23(b)
of the 600/650 Lease and Section 23(b) of the 630 Lease are each amended by adding after the first sentence the following: 



        "Further,
Landlord may withhold its consent to any sublease or assignment, the terms of which reflect less than Fair Market Rental (as defined in Section 23(h) below) for the
Premises or any portion thereof." 




        3.     Section 23(c)
of the 600/650 Lease and Section 23(c) of the 630 Lease are each amended by revising the first sentence thereof to read as follows: 



        "If
Landlord approves an assignment or subletting as herein provided, Tenant shall pay to Landlord, as Additional Rent, seventy percent (70%) of the difference, if any, (which difference
is hereinafter referred to as "Assignment/Sublease Profits") between (i) the Base Rent plus Additional Rent allocable to that part of the Premises affected by such assignment or sublease
pursuant to the provisions of this Lease, and (ii) the rent, any additional rent and any other consideration payable by assignee or sublessee to Tenant, less actual leasing commissions,
reasonable attorneys' fees, cost of tenant improvements installed by Tenant at Tenant's expense for the subtenant or installed by the subtenant and paid for by Tenant, and other reasonable
out-of-pocket expenses, if any, incurred by Tenant in connection with such assignment or sublease as evidenced by written records reasonably satisfactory to Landlord
(collectively "Transfer Costs"), such Transfer Costs, in the event of a sublease, to be amortized evenly over the sublease term. 




        4.     Section 23(d)
of the: 600/650 Lease and Section 23(d) of the 630 Lease are each amended to read as follows: 



        Notwithstanding
any assignment or subletting, Tenant and any guarantor or surety of Tenant's obligations under this Lease shall at all times remain fully responsible and liable for the
payment of the Rent and for compliance with all of Tenant's other obligations under this Lease (regardless of whether Landlord's approval has been obtained for such assignment or subletting), except
with respect to the portion of the Premises affected by an assignment or subletting in which Landlord has exercised its option to sublease or take an assignment from Tenant pursuant to
paragraph 23(a) above. 




        5.     The
600/650 Lease and the 630 Lease are each amended by adding the following Section 23(h). 



        Tenant
acknowledges that Landlord's agreement pursuant to Section 23(c) to permit Tenant to retain 30% of the Assignment/Sublease Profits, is given in consideration of, and
conditioned upon, Tenant's agreement to sublease the premises at Fair Market Rental as of the date of the proposed sublease. For purposes hereof, "Fair Market Rental" shall be determined with
reference to the prevailing rental rate for leases or subleases then being entered into for comparable biotechnology properties, comparably improved and comparably located in South San Francisco, as
adjusted to account for the relative size, age, character, quality, condition and location of such other properties. Fair Market Rental shall take into consideration the stated rental rate, together
with economic concessions then being offered, including tenant improvement allowances, moving allowances, rent concessions and other 




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economic
concessions. In the event of a sublease, the determination of Fair Market Rental shall take into account the difference between rent obtainable for subleases and direct leases. If the parties
disagree as to the Fair Market Rental for the premises proposed to be subleased ("Sublease Premises"), then, within ten (10) days after request by either party to the other in writing, each
party shall select as an appraiser a real estate broker with at least ten (10) years experience in leasing commercial properties in the South San Francisco area. The two appraisers shall
promptly appoint as a third appraiser a broker with the qualifications required above. Each appraiser shall submit his or her opinion as to the Fair Market Rental of the Sublease Premises within ten
(10) days of his or her appointment. If the parties are unable to agree on Fair Market Rental within five (5) days after submission of the opinions of the appraisers selected by Landlord
and Tenant, then the opinion of those two appraisers that is closest to the opinion of the third appraiser shall be the Fair Market Rental. If either party fails to appoint an appraiser within the
time specified above, or if such party's appraiser falls to submit an opinion within the time specified above, then the Fair Market Rental shall be as determined by the other party's appraiser. Each
party shall bear the expenses of its own appraiser, and the parties shall each pay one-half of the expenses of the third appraiser. 




        6.     The
600/650 Lease and the 630 Lease remain unmodified and in full force and effect except as set forth above. Tenant acknowledges that neither Gateway I nor Gateway II is
in default of its obligations under its respective Lease, and that the Tenant has no claim of offset against or defense to its obligations under either Lease. 



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        IN
WITNESS WHEREOF, Gateway I, Gateway II and Tenant have executed this Agreement regarding Assignment/Sublease Profits as of the date first written above. 



	GATEWAY I AND GATEWAY II

address for notices:	 	"TENANT"
	

c/o The Raiser Organization

800 South Claremont Street,	
 	

COULTER PHARMACEUTICAL INC.,

a Delaware corporation
	Suite 201

San Mateo, CA 94402	 	By:	/s/  KATHLEEN MCKEREGHAN      

	Attn: Phillip H. Raiser	 	Name:	Kathleen McKereghan

	 	 	Title:	Secretary

	

 	
 	

"GATEWAY I"
	

 	
 	

GATEWAY BOULEVARD

ASSOCIATES LLC, a California

limited liability company
	

 	
 	

By:	

/s/  PHILIP RAISER      
 Phillip H. Raiser, Manager
	

 	
 	

"GATEWAY II"
	

 	
 	

GATEWAY BOULEVARD

ASSOCIATES II, LLC, a California

limited liability company
	

 	
 	

By:	

/s/  PHILIP RAISER      
 Phillip H. Raiser, Manager




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Consent of Guarantor  


        The undersigned Corixa Corporation, a Delaware corporation ("Guarantor") has executed that certain Lease Guaranty dated January 15, 2002 with respect to
the 600/650 Lease and that certain Lease Guaranty dated January 15, 2002 with respect to the 630 Lease (collectively, the "Guaranties"). Guarantor hereby consents to the above Amended and
Restated Agreement Concerning Assignment and Sublease Profits and acknowledges that the Guaranties are in full force and effect, and that Guarantor has no claim of offset against or defense to its
obligations under the Guaranties. 



	CORIXA CORPORATION, a Delaware corporation	 	 
	

By:	

/s/  KATHLEEN MCKEREGHAN      
	
 	

 
	Name:	Kathleen McKereghan
	 	 
	Title:	Senior VP, GC and Secretary
	 	 




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LEASE AGREEMENT  


 BY AND BETWEEN  


 HMS GATEWAY OFFICE L.P.,
  a Delaware limited partnership 


AS LANDLORD  


 AND  


 COULTER PHARMACEUTICAL, INC.,
  a Delaware corporation 


AS TENANT  


 DATED November 7, 1997  





 
TABLE OF CONTENTS  



	 
	 
	 	PAGE

	Basic Lease Information	 	iii
	1.	Demise	 	1
	2.	Premises	 	1
	3.	Term	 	2
	4.	Rent	 	3
	5.	Utility Expenses	 	9
	6.	Late Charge	 	9
	7.	Security Deposit	 	10
	8.	Possession	 	10
	9.	Use of Premises	 	11
	10.	Acceptance Of Premises	 	13
	11.	Surrender	 	13
	12.	Alterations and Additions	 	15
	13.	Maintenance and Repairs of Premises	 	16
	14.	Landlord's Insurance	 	17
	15.	Tenant's Insurance	 	18
	16.	Indemnification	 	18
	17.	Subrogation	 	19
	18.	Signs	 	19
	19.	Free from Liens	 	20
	20.	Entry by Landlord	 	20
	21.	Destruction and Damage	 	20
	22.	Condemnation	 	22
	23.	Assignment and Subletting	 	23
	24.	Tenant's Default	 	25
	25.	Landlord's Remedies	 	27
	26.	Landlord's Right to Perform Tenant's Obligations	 	29
	27.	Attorney's Fees	 	29
	28.	Taxes	 	30
	29.	Effect of Conveyance	 	30
	30.	Tenant's Estoppel Certificate	 	30
	33.	Environmental Covenants	 	34
	34.	Notices	 	34
	35.	Waiver	 	34
	36.	Holding Over	 	35
	37.	Successors and Assigns	 	35
	38.	Time	 	35
	39.	Brokers	 	35
	40.	Limitation of Liability	 	36
	41.	Financial Statements	 	36
	42.	Rules and Regulations	 	36
	43.	Mortgagee Protection	 	36
	44.	Entire Agreement	 	37
	45.	Interest	 	37
	46.	Interpretation	 	37
	47.	Representations and Warranties	 	38
	48.	Security	 	38
	49.	Jury Trial Waiver	 	38
	 	 	 	 





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	50.	Option to Renew	 	40
	51.	Right of First Negotiation	 	40
	52.	Right of First Offer	 	41
	53.	Right to Expand	 	43
	54.	Memorandum of Lease	 	43





	
Exhibit
	
 	

 

	A	 	Base Building Construction Agreement
	B	 	Premises Construction Agreement
	C	 	Guaranty
	D	 	Commencement and Expiration Date Memorandum
	E	 	Rules and Regulations
	F	 	Hazardous Materials Disclosure Certificate
	G	 	Expansion Land
	H	 	Initial Window Dates
	I	 	Tenant's Property
	J	 	Memorandum of Lease





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LEASE AGREEMENT  


 BASIC LEASE INFORMATION  



	Lease Date:	 	November 7, 1997
	

Landlord:	
 	

HMS Gateway Office, L.P.

a Delaware limited partnership
	

Landlord's Address:	
 	

c/o Hines Interests Limited Partnership

101 California Street, Suite 1000

San Francisco, California 94111-5848

Attn: Tom Kruggel
	

 	
 	
All notices sent to Landlord under this Lease shall be sent to the above address, with copies to:

  

Hines Interests Limited Partnership

101 California Street, Suite 1000

San Francisco, California 94111-5848

Attn: Paul Paradis
	

Tenant:	
 	

Coulter Pharmaceutical, Inc.,

a Delaware corporation
	

Tenant's Contact Person:	
 	

William G. Harris
	

Tenant's Address and Telephone Number:	
 	

550 California Avenue

Suite 200

Palo Alto, California 94306-1440

(650) 842-7300
	

Premises Square Footage:	
 	

50,400 square feet, subject to final determination by Landlord's Architect upon Commencement of the Term. Such measurement to be made in accordance with Landlord's Architect's standard measurement procedures for research and development
space.
	

Premises Address:	
 	

600 Gateway Boulevard

South San Francisco, California
	

Project:	
 	

Approximately 7.85 acres of land commonly known as Lot 2B of the Gateway Center and referred to as the Gateway Technology Center, together with the land and improvements on which the Project is situated and all Common Areas.
	

Building(s) (if not the same as the Project):	
 	

600 Gateway Boulevard

South San Francisco, California
	

Tenant's Proportionate Share of Project:	
 	

33.33%, subject to adjustment in accordance with Paragraph 4(c)(3)
	

Tenant's Proportionate Share of Building:	
 	

100%
	

Length of Term:	
 	

One hundred forty-four (144) months
	

Estimated Commencement Date:	
 	

August 15, 1998
	 	 	 	 





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Estimated Expiration Date:	
 	

August 14, 2010
	

Monthly Base Rent	
 	

1.	

Monthly Base Rent for the first Lease Year shall be $78,120.00;
	(Original Premises):	 	2.	Monthly Base Rent for the second Lease Year shall be $81,244.80;
	 	 	3.	Monthly Base Rent for the third Lease Year shall be $84,494.59;
	 	 	4.	Monthly Base Rent for the fourth Lease Year shall be $87,874.38;
	 	 	5.	Monthly Base Rent for the fifth Lease Year shall be $91,389.35;
	 	 	6.	Monthly Base Rent for the sixth Lease Year shall be $95,044.92;
	 	 	7.	Monthly Base Rent for the seventh Lease Year shall be $98,846.72;
	 	 	8.	Monthly Base Rent for the eighth Lease Year shall be $102,800.59;
	 	 	9.	Monthly Base Rent for the ninth Lease Year shall be $106,912.61;
	 	 	10.	Monthly Base Rent for the tenth Lease Year shall be $111,189.12;
	 	 	11.	Monthly Base Rent for the eleventh Lease Year shall be $115,636.68;
	 	 	12.	Monthly Base Rent for the twelfth Lease Year shall be $120,262.15.
	

 	
 	

The above Monthly Base Rent calculations are subject to change after final determination of the Premises Square Footage and any such adjustment shall be based on a monthly Base Rent for the first Lease Year of $1.55 per square foot multiplied by the
Premises Square Footage, and each subsequent Lease Year being 104% of the preceding Lease Year's Monthly Base Rent.
	

Prepaid Rent:	
 	

None
	

Prepaid Additional Rent:	
 	

None
	

Security Deposit:	
 	

Seventy-Five Thousand Dollars ($75,000)
	

Permitted Use:	
 	

General office and research and development activities associated with biotechnology/pharmaceutical services. All uses must be in accordance with zoning ordinances of the City of South San Francisco.
	

Unreserved Parking Spaces:	
 	

One Hundred Fifty-One (151) non-exclusive and undesignated parking spaces.
	

Broker(s):	
 	

CB Commercial Real Estate Group, Inc.

CB Madison Advisory Group.
	

Tenant's Allowance:	
 	

$1,512,000.00




iv






   LEASE AGREEMENT  


        THIS LEASE AGREEMENT is made and entered into by and between Landlord and Tenant on the Lease Date. The defined
terms used in this Lease which are defined in the Basic Lease Information attached to this Lease Agreement ("Basic Lease Information") shall have the meaning and definition given them in the Basic
Lease Information. The Basic Lease Information, the exhibits, the addendum or addenda described in the Basic Lease Information, and this Lease Agreement are and shall be construed as a single
instrument and are referred to herein as the "Lease." 


1.     DEMISE  


        In consideration for the rents and all other charges and payments payable by Tenant, and for the agreements, terms and conditions to be performed by Tenant in
this Lease, LANDLORD DOES HEREBY LEASE TO TENANT, AND TENANT DOES HEREBY HIRE AND TAKE FROM LANDLORD, the Premises described below (the "Premises"),
upon the agreements, terms and conditions of this Lease for the Term hereinafter stated. 


2.     PREMISES  


        The "Premises" demised by this Lease are to consist initially of that certain building (the "Building") specified in the Basic Lease Information, which Building
is to be located in that certain real estate development (the "Project") specified in the Basic Lease Information. If at any time during the Term, Tenant is leasing, in accordance with the terms and
conditions of this Lease, less than all of the Building, the "Premises" shall be deemed to include only that portion of the Building then leased by Tenant pursuant to this Lease. Tenant shall have the
non-exclusive right (in common with the other tenants, Landlord and any other person granted use by Landlord) to use the Common Areas (as hereinafter defined), except that, with respect to
parking, Tenant shall have only a license to use the number of non-exclusive and undesignated parking spaces set forth in the Basic Lease Information in the Project's parking areas (the
"Parking Areas"); provided, however, Landlord shall use commercially reasonable efforts to enforce Tenant's right to use such parking spaces. No easement for light or air is incorporated in the
Premises. For purposes of this Lease, the term "Common Areas" shall mean all areas and facilities outside the Premises and within the exterior boundary line of the Project that are from time to time
provided and designated by Landlord for the non-exclusive use of Landlord, Tenant and other tenants of the Project and their respective employees, guests and invitees. 



        Landlord
shall cause the construction of the Base Building Improvements in accordance with the terms and conditions of the Base Building Construction Agreement attached hereto as  Exhibit A. Additionally,
Tenant shall cause the construction of certain tenant improvements in the interior of the Premises in accordance with
the terms and conditions of the Premises Construction Agreement attached hereto as Exhibit B.


        Except
as otherwise provided in the last sentence of this Paragraph, Landlord has the right, in its sole discretion, from time to time, to: (a) make changes to the Common Areas,
including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces (provided, however, Landlord shall not have the right, except as otherwise
provided herein, to reduce the total number of parking spaces below the number allocated to Tenant in the Basic Lease Information) parking areas, ingress, egress, direction of driveways, entrances,
corridors and walkways; (b) close temporarily any of the Common Areas for maintenance or construction purposes so long as reasonable access to the Premises remains available; (c) add
additional buildings and improvements to the Common Areas or remove existing buildings or improvements therefrom; (d) use the Common Areas while engaged in making additional improvements,
repairs or alterations to the Project or any portion thereof so long as reasonable access to the Premises remains available; and (e) do and perform any other acts or make any other changes in,
to or with respect to the Common Areas and the Project 


1





 



as
Landlord may, in its sole discretion, deem to be appropriate. Notwithstanding (a), and (c) above, Landlord shall make no material changes or add additional buildings or material improvements
to any portion of the Common Areas described on the Site Plan, as defined in the Base Building Construction Agreement, without obtaining Tenant's consent, which consent shall not be unreasonably
withheld, conditioned or delayed; provided, however, such consent shall not be required if any change or addition is required or requested by a governmental agency having jurisdiction over the Project
or as required by law. 


3.     TERM  


        The term of this Lease (the "Term") shall be for the period of months specified in the Basic Lease Information, commencing on, subject to Paragraph D of  Exhibit B, the earliest to occur of the following dates (the "Commencement Date"): 



        (a)   The
date the Tenant Improvements are approved by the appropriate governmental agency as being in accordance with its building code and the building permit issued for
such improvements, as evidenced by the issuance of a final building inspection approval; or 


        (b)   The
date Tenant's Architect and Tenant's Contractor have both certified in writing to Tenant that the Tenant Improvements have been substantially completed in accordance
with the plans and specifications therefor; or 


        (c)   The
date Tenant commences occupancy of the Premises. 




        In
the event the actual Commencement Date, as determined pursuant to the foregoing, is a date other than the Estimated Commencement Date, then Landlord and Tenant shall promptly execute
a Commencement and Expiration Date Memorandum in the form attached hereto as Exhibit D, wherein the parties shall specify the Commencement Date,
the date on which the Term expires (the "Expiration Date") and the date on which Tenant is to commence paying rent. 


4.     RENT


        (a)   Base
Rent and Letter of Credit 



        (1)    Base Rent.    Tenant shall pay to Landlord, in advance on the first day of each month, without further notice
or demand and without offset or deduction, the monthly installments of rent specified in the Basic Lease Information (the "Base Rent"). 


        (2)    Letter of Credit.    Concurrently with execution hereof, Tenant shall deliver to Landlord, at Tenant's sole
cost and expense, the Letter of Credit described below in the amount of Two Million Dollars ($2,000,000) as security for the full and faithful performance of Tenant's covenants and obligations under
this Lease. Upon the earlier of Tenant's delivery to Landlord of a Guaranty by a Qualified Corporate Partner or forty-five (45) days after the expiration of the Term or earlier
termination, the Letter of Credit shall be returned to Tenant, reduced by any amounts that Landlord reasonably estimates to be required to remedy any defaults on the part of Tenant hereunder. The
portion of the Letter of Credit not so estimated to be required shall be paid over to Tenant within two (2) weeks after expiration of the Term. Landlord may (but shall not be required to) draw
upon the Letter of Credit and use the proceeds therefrom (the "Letter of Credit Proceeds") or any portion thereof to cure any default under this Lease and to compensate Landlord for any damage
Landlord incurs as a result of such default, it being understood that any use of the Letter of Credit Proceeds shall not constitute a bar or defense to any of Landlord's remedies set forth in this
Lease. In such event and upon written notice from Landlord to Tenant specifying the amount of the Letter of Credit Proceeds so utilized by Landlord, Tenant shall immediately deliver to Landlord an
amendment to the Letter of Credit or a replacement Letter of Credit in an amount equal to one hundred percent (100%) of the amount specified below. 



2





 




Tenant's
failure to deliver such replacement Letter of Credit to Landlord within ten (10) days of Landlord's notice shall constitute a default hereunder. 



        As
used herein, Letter of Credit shall mean an unconditional, stand-by irrevocable letter of credit (hereinafter referred to as the "Letter of Credit") issued by a major
national bank mutually satisfactory to Landlord and Tenant (collectively, the "Bank"), naming Landlord as beneficiary, in the amount of Two Million Dollars ($2,000,000). During the period from the
Commencement Date through the last day of the sixth Lease Year, the amount of the Letter of Credit shall be reduced by Eighty Thousand Dollars ($80,000) on the last day of each such Lease Year. During
the period from the seventh Lease Year through the Expiration Date, the amount of the Letter of Credit shall be reduced by Two Hundred Fifty Three Thousand Three Hundred Thirty-Four
Dollars ($253,334) on the last day of each such lease Year. The Letter of Credit shall be for a one-year term and in any event shall be maintained in effect from the date hereof through
the date that is forty-five (45) days after expiration of the Term or earlier termination. The Letter of Credit shall provide: (i) that Landlord may make partial and multiple
draws thereunder, up to the face amount thereof, (ii) that Landlord may draw upon the Letter of Credit up to the full amount thereof, as determined by Landlord, and the Bank will pay to
Landlord the amount of such draw upon receipt by the Bank of a sight draft signed by Landlord, accompanied by a written statement from Landlord that Tenant is in default under the Lease; and
(iii) that, in the event of Landlord's assignment or other transfer of its interest in this Lease, the Letter of Credit shall be freely transferable (with Tenant paying all costs and expenses
charged by the Bank in connection with any such transfer) Landlord, without recourse, to the assignee or transferee of such interest and the Bank shall confirm the same to Landlord and such assignee
or transferee. In the event that the Bank shall fail to notify Landlord at least forty-five (45) days prior to expiration of the Letter of Credit that the Letter of Credit will be
renewed for at least one(1) year beyond the then applicable expiration date, and deliver to Landlord a replacement Letter of Credit or a modification to the existing Letter of Credit effectuating such
renewal at least forty-five (45) days prior to expiration of the Letter of Credit, and Tenant shall not have otherwise delivered to Landlord, at least forty-five
(45) days prior to the relevant annual expiration date, a replacement Letter of Credit in the amount required hereunder and otherwise meeting the requirements set forth above, then Landlord
shall be
entitled to draw on the Letter of Credit as provided above, and shall hold the proceeds of such draw as security for the full and faithful performance of Tenant's obligations hereunder, until Tenant
shall have provided a new Letter of Credit, in which event Landlord shall promptly return the proceeds of such draw, not otherwise used in accordance with the terms of the Lease, to Tenant. 




        Notwithstanding
the foregoing, at any time after the commencement of the Term, Landlord agrees to allow Tenant to replace the Letter of Credit as required hereunder with an unconditional
guaranty of Tenant's obligations under this Lease in the form of Exhibit C (the "Guaranty"), from a Qualified Corporate Partner. A Qualified
Corporate Partner shall mean an Affiliate, as that term is defined in Paragraph 23 below, that, at the time of executing the Guaranty, has: (i) a rating from Moody's of "Baa" or better,
or a rating from Standard & Poor's of "A-" or better, or (ii) cash and cash equivalents in excess of Two Hundred Fifty Million Dollars ($250,000,000), revenues in excess of
Two Hundred Fifty Million Dollars ($250,000,000) and net profits in excess of Twenty Million Dollars ($20,000,000). 


        As
used in the preceding paragraph, the following terms shall have the meanings set forth below: 



        "cash
and cash equivalents" shall mean the aggregate amount of the following, to the extent owned by the Guarantor free and clear of all loans, repayment obligations, encumbrances and
rights of others: (i) cash on hand; (ii) dollar demand deposits maintained in the United States with any commercial bank and dollar time deposits maintained in the United States with, or
certificates of deposit having a maturity of one year or less issued by, any commercial bank or other financial institution acceptable to the Landlord; (iii) direct obligations of, or
unconditionally guaranteed by, 



3





 

the
United States and having a maturity of one year or less; and (iv) readily marketable commercial paper having a maturity of one year or less, issued by any corporate organized and existing
under the laws of the United States or any state thereof or the District of Columbia and rated by Standard & Poor's or Moody's (or, if neither such organization shall rate such commercial paper
at any time, rated by any nationally recognized rating organization in the United States) with the highest rating assigned by such organization. 


        "revenues"
shall mean increases in assets or decreases in liabilities from operation of Guarantor's business for the twelve (12) month period prior to the execution of the
Guaranty, calculated in accordance with generally accepted accounting principles, consistently applied. 


        "net
profits" shall mean revenues, less the sum of expenses (including taxes, but excluding amortization and depreciation) and return of owners' equity, calculated in accordance with
generally accepted accounting principles, consistently applied. 


        "net
profits" shall mean revenues, less the sum of expenses (including taxes, but excluding amortization and depreciation) and return of owners' equity, calculated in accordance with
generally accepted accounting principles, consistently applied. 




        As
used in this Lease, the term "Lease Year" shall mean a period of twelve (12) full calendar months commencing on the Commencement Date, and each subsequent sequential twelve
(12) full calendar month period thereafter. 


        (b)    Additional Rent.    This Lease is intended to be a triple-net Lease with
respect to Landlord; and subject to Paragraph 13(b) below, the Base Rent owing hereunder is (1) to be paid by Tenant net of all costs and expenses relating to Landlord's ownership and
operation of the Project and the Building, and (2) not to be reduced, offset or diminished, directly or indirectly, by any cost, charge or expense payable hereunder by Tenant or by others in
connection with the Premises, the Building and/or the Project or any part thereof. The provisions of this Paragraph 4(b) for the payment of Tenant's Proportionate Share(s) of Expenses (as
hereinafter defined) are intended to pass on to Tenant its share of all such costs and expenses. In addition to the Base Rent, Tenant shall pay to Landlord, in accordance with this Paragraph 4,
Tenant's Proportionate Share(s) of all costs and expenses paid or incurred in connection with the operation, maintenance, management and repair of the Premises, the Building and/or the Project or any
part thereof (collectively, the "Expenses"), including, without limitation, all the following items (Tenant's Proportionate Share(s) of the Expenses is hereinafter referred to as "Additional Rent"): 



        (1)   All
supplies, materials and rental equipment used in the operation and maintenance of the Project. 



        (2)   Utilities,
that are not separately metered to Tenant, including, without limitation, water, power, gas, sewer, waste disposal, communication and cable T.V. facilities,
heating, cooling, lighting and ventilation of the Project. 


        (3)   A
management fee equal to three percent (3%) of the annual Base Rent derived from the Building; and all wages, salaries and other compensation for any employees who
provide service to the Building and/or the Project; provided such wages, salaries and other compensation shall not exceed Thirty-Six Thousand Dollars ($36,000) in any given year (the "Wage
Ceiling") (such Wage Ceiling to increase each year by four percent (4%) of the Wage Ceiling for the preceding year). 



        (4)   Legal
and accounting services for the Project, including, but not limited to, the costs of audits by certified public accountants of Basic Operating Cost records;
provided, however, that legal expense shall not include the cost of (i) negotiating lease terms for prospective tenants; (ii) negotiating termination or extension of leases with existing
tenants, (iii) proceedings against 



4





 




any
other specific tenant relating to such tenant's breach of its lease, including without limitation failure to pay rent or other sums due to Landlord from such tenant, or (iv) legal costs
incurred in connection with development and/or construction of the Project. 


        (5)   All
insurance premiums and costs, including but not limited to, the premiums and costs of fire, casualty, liability, rental abatement and earthquake insurance applicable
to the Project and Landlord's personal property used in connection therewith (and all amounts paid as a result of loss sustained that would be covered by such policies but for "deductible" or
self-insurance provisions); provided, however, that Landlord may, but shall not be obligated to, carry earthquake insurance. Notwithstanding the foregoing, if Landlord elects to carry
earthquake insurance, Tenant shall only be obligated to pay the following amounts on account of such earthquake insurance during any calendar year: (i) if the premiums and costs associated with
the earthquake insurance for the Building carried by Landlord for any given year are equal to or less than the Break Point defined below, Tenant shall pay 100% of such premiums and costs as Additional
Rent; or (ii) if the premiums and costs associated with the earthquake insurance for the Building carried by Landlord for any given year exceed the Break Point, Tenant shall only pay 30% of
such premiums and costs as Additional Rent. For purposes of this provision, "Break Point" shall equal $15,000 (such amount to increase each year by four percent (4%) of the Break Point for the
preceding year). By way of example, if the premium and costs for earthquake insurance carried by Landlord in a calendar year are $14,500, Tenant shall be responsible for payment of $14,500 as
Additional Rent; however, if the premiums and costs for earthquake insurance carried by Landlord in a calendar year are $20,000, Tenant shall be responsible for paying $6,000 as Additional Rent. If
for any reason the earthquake insurance carried by Landlord is part of an umbrella or overall insurance policy covering the Building, the Project and other buildings, the determination of premiums and
costs shall be based on the allocated portion of the premium and costs with respect to the Building, as reasonably determined by Landlord. 


        (6)   Repairs,
replacements and general maintenance (except for repairs and replacements (i) paid for from the proceeds of insurance, (ii) paid for directly by
Tenant, other tenants or any third party, or (iii) for the benefit solely of tenants of the Project other than Tenant to the extent that Tenant could not obtain similar services from Landlord
without an obligation to reimburse Landlord for the entire cost thereof under the provisions of this Lease). 


        (7)   All
real estate or personal property taxes, possessory interest taxes, business or license taxes or fees, service payments in lieu of such taxes or fees, annual or
periodic license or use fees ("Real Property Taxes"), including, but not limited to, all of the following: (i) all real estate taxes and assessments, and all other taxes relating to, or levied,
assessed or imposed on, the Project, or any portion thereof, or interest therein; (ii) all taxes, assessments, charges, levies, fees, excises or penalties, general and special, ordinary and
extraordinary, unforeseen as well as foreseen, of any kind and nature imposed, levied upon, measured by or attributable to Landlord's equipment, furniture, fixtures and other property located in, or
used in connection with, the Project, or levied upon, measured by or reasonably attributable to the cost or value of any of the foregoing; (iii) all other taxes, assessments, charges, levies,
fees, or penalties, general and special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind and nature imposed, levied, assessed, charged or collected by any governmental
authority or other entity either directly or indirectly (A) for public improvements, user, maintenance or development fees, transit, housing, employment, police, fire, open space, streets,
sidewalks, utilities, job training, child care or other governmental services or benefits, (B) upon or with respect to the development, possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy of, or business operations in, the Project (C) upon, against, or measured by the area of the Project, or uses made thereof, or leases made to tenants
thereof, or all or any part of the rents collected or collectible from tenants thereof, and (D) for environmental matters or as a result of the imposition of 



5





 




mitigation
measures, including parking taxes, employer parking regulations, or fees, charges or assessments as a result of the treatment of the Project, or any portion thereof or interest therein, as
a source of pollution or storm water runoff; (iv) any tax or excise, however, described imposed in addition to, or in substitution partially or totally of, any or all of the foregoing taxes,
assessments, charges or fees; and (v) any and all costs, expenses and attorneys' fees paid or incurred by Landlord in connection with any proceeding or action to contest in whole or in part,
formally or informally, the imposition, collection or validity of any of the foregoing taxes, assessments, charges or fees. If by law any Real Property Taxes may be paid in installments at the option
of the taxpayer, then Landlord shall include within Real Property Taxes only those installments (including interest, if any) which would become due by exercise of such option. Real estate taxes shall
not include (i) inheritance or estate taxes imposed upon or assessed against the Project, or any part thereof or interest therein, or (ii) taxes computed upon the basis of the net income
derived from the Project by Landlord or the owner of any interest therein. 


        (8)   Amortization
(together with reasonable financing charges) of capital improvements made to the Premises, the Building or the Project subsequent to the Commencement Date
that (i) are or will be required to comply with applicable law, ordinance rule or regulation, enacted or enforced after the Commencement Date, (ii) are replacements of items which
Landlord is obligated to maintain; or (iii) are designed to improve the operating efficiency of the Project ("Limited Capital Improvements"); provided, however, that in the case of Limited
Capital Improvements made solely for efficiency purposes, the amount chargeable as an Expense in any year shall not exceed Landlord's reasonable determination of the efficiency achieved either in
direct cost savings, avoidance of cost increases anticipated to be realized during the Term, or a combination of both. As used in this Paragraph 4(b)(8), "amortization" shall mean allocation of
the cost equally to each year of useful life of the items being amortized or a shorter period equal to the number of years required to recover the cost of said item of capital improvement out of the
savings in operating efficiency derived therefrom. 



        (9)   Capital
improvements to the Premises, the Building or the Project which do not constitute Limited Capital Improvements and which, in the aggregate, do not exceed $5,000
for the year in question. 




        Notwithstanding
any other provision herein to the contrary, if the Project is not fully occupied during any year of the Term, an adjustment shall be made in computing Additional Rent for
such year so that Additional Rent shall be computed as though the Project had been fully occupied during such year; provided, however, that in no event shall Landlord collect in total, from Tenant and
all other tenants of the Project, an amount greater than one hundred percent (100%) of the actual Expenses during any year of the Term. 



        Notwithstanding
anything to the contrary contained in this Lease, the following shall not be treated as Expenses for purposes of this Paragraph 4(b): 



        a.     Leasing
commissions, attorneys' fees, costs, disbursements, and other expenses incurred in connection with negotiations or disputes with tenants (other than Tenant), or
in connection with leasing, renovating, or improving space for tenants or other occupants or prospective tenants or other occupants of the Building. 


        b.     The
cost of any service sold to any tenant (including Tenant) or other occupant for which Landlord is entitled to be reimbursed as an additional charge or rental over and
above the basic rent and escalations payable under the lease with that tenant. 


        c.     Any
depreciation on the Building or Project. 


        d.     Expenses
in connection with services or other benefits of a type that are not provided to Tenant but which are provided another tenant or occupant of the Building or
Project. 



6





 




        e.     Costs
incurred due to Landlord's violation of any terms or conditions of this Lease or any other lease relating to the Building or Project. 


        f.      Overhead
profit increments paid to Landlord's subsidiaries or affiliates for management or other services on or to the Building or for supplies or other materials to the
extent that the cost of the
services, supplies, or materials exceeds the cost that would have been paid had the services, supplies, or materials been provided by unaffiliated parties on a competitive basis. 



        g.     All
interest, loan, fees, and other carrying costs related to any mortgage or deed of trust or related to any capital item, and all rental due under any ground or
underlying lease, or any lease for any equipment ordinarily considered to be of a capital nature (except janitorial equipment which is not affixed to the Building). 


        h.     Any
compensation paid to clerks, attendants, or other persons in commercial concessions operated by Landlord. 


        i.      Advertising
and promotional expenditures. 


        j.      Cost
of repairs and other work occasioned by fire, windstorm, or other casualty that are insured or required to be insured by Landlord hereunder, excluding any
deductible. 


        k.     Any
costs, fines, or penalties incurred due to violations by Landlord of any governmental rule or authority, this Lease or any other lease in the Project, or due to
Landlord's gross negligence or willful misconduct. 


        l.      Costs
for sculpture, paintings, or other objects of art (nor insurance thereon or extraordinary security in connection therewith). 



        m.    Wages,
salaries, or other compensation paid to any executive employees above the grade of building manager; provided however, Landlord may charge as an Expense wages,
salaries and other compensation for any employees who provide service to the Building and/or Project in reasonable proportion to the time spent in providing such service to the Building and/or
Project. 


        n.     The
cost of correcting any building code or other violations which were violations prior to the Commencement Date. 


        o.     The
cost of containing, removing, or otherwise remediating any contamination of the Project (including the underlying land and ground water) by any Hazardous Materials
either (i) where such contamination existed prior to the date of this Lease or (ii) where such costs, in any given calendar year, exceed, in the aggregate, Twenty-five
Thousand Dollars ($25,000). Nothing in this
provision shall be deemed to limit Tenant's liability with respect to Hazardous Materials as set forth in this Lease, including without limitation, Paragraph 16 and Paragraph 32 below. 


        p.     Any
other expense, except as otherwise specifically provided for in this Lease, that under generally accepted accounting principles and practice consistently applied
would not be considered a normal maintenance or operating expense. 




        (c)    Payment of Additional Rent.    



        (1)   Upon
commencement of this Lease, Landlord shall submit to Tenant an estimate of monthly Additional Rent for the period between the Commencement Date and the following
December 31 and Tenant shall pay such estimated Additional Rent on a monthly basis, in advance, on the first day of each month. Tenant shall continue to make said monthly payments until
notified by Landlord of a change therein. By April 1 of each calendar year, Landlord shall endeavor to provide to Tenant a statement (the "Expense Statement") showing the actual Additional Rent
due to Landlord for the prior calendar year, to be prorated during the first year from the Commencement Date. If the total of the monthly payments of Additional Rent that Tenant has 



7





 

made
for the prior calendar year is less than the actual Additional Rent chargeable to Tenant for such prior calendar year, then Tenant shall pay the difference in a lump sum within ten
(10) days after receipt of such statement from Landlord. Any overpayment by Tenant of Additional Rent for the prior calendar year shall be credited towards the Additional Rent next due, or
returned to Tenant in cash if no subsequent Additional Rent will be payable. 



        (2)   Landlord's
then-current annual operating and capital budgets for the Building and the Project or the pertinent part thereof shall be used for purposes of
calculating Tenant's monthly payment of estimated Additional Rent for the current year, subject to adjustment as provided above. Landlord shall make the final determination of Additional Rent for the
year in which this Lease terminates as soon as possible after termination of such year. Even though the Term has expired and Tenant has vacated the Premises, Tenant shall remain liable for payment of
any amount due to Landlord in excess of the estimated Additional Rent previously paid by Tenant, and, conversely, Landlord shall promptly return to Tenant any overpayment. Failure of Landlord to
submit statements as called for herein shall not be deemed a waiver of Tenant's obligation to pay Additional Rent as herein provided. 



        (3)   With
respect to Expenses which Landlord allocates to the Building, Tenant's "Proportionate Share of the Building" shall be the percentage set forth in the Basic Lease
Information as Tenant's Proportionate Share of the Building, as adjusted by Landlord from time to time as a result of changes in the square footage leased by Tenant hereunder. With respect to Expenses
which Landlord allocates to the Project as a whole or to only a portion of the Project, Tenant's "Proportionate Share of the
Project" shall be, with respect to Expenses which Landlord allocates to the Project as a whole, the percentage set forth in the Basic Lease Information as Tenant's Proportionate Share of the Project
and, with respect to Expenses which Landlord allocates to only a portion of the Project, a percentage calculated by Landlord from time to time in its reasonable discretion and furnished to Tenant in
writing (for example, if the Building constitutes the only occupied premises of the Project, Landlord may allocate 100% of such Expenses as lighting, landscaping and Common Area maintenance to
Tenant), in either case as adjusted by Landlord from time to time for changes in the square footage leased by Tenant, addition of improvements to the Project or changes in the physical size of the
Project, whether such changes in size are due to an addition to or a sale or conveyance of a portion of the Project or otherwise. Notwithstanding the foregoing, Landlord may equitably adjust Tenant's
Proportionate Share of the Building or of the Project, as applicable, for all or part of any item of expense or cost reimbursable by Tenant that relates to a repair, replacement, or service that
benefits only the Premises. 




        (d)    General Payment Terms.    The Base Rent, Additional Rent and all other sums payable by
Tenant to Landlord hereunder, including, without limitation, any Late Charges, as defined below, assessed pursuant to Paragraph 6 below and any interest assessed pursuant to Paragraph 44
below, are referred to as the "Rent". All Rent shall be paid without deduction, offset or abatement in lawful money of the United States of America. Checks are to be made payable to HMS Gateway
Office, L.P. and shall be mailed: c/o Hines Interests Limited Partnership, 101 California Street, Suite 1000, San Francisco, 94111-5848, Attn: Tom Kruggel or to such other person or place
as Landlord may, from time to time, designate to Tenant in writing. The Rent for any fractional part of a calendar month at the commencement or termination of the Lease term shall be a prorated amount
of the Rent for a full calendar month based upon the number of days in the month of the commencement or termination of the Lease term, as applicable. 


        (e)    Audit.    Provided Tenant is not in Default under the terms of this Lease, Tenant, at
its sole cost and expense, shall have the right within ninety (90) days after the delivery of each Expense Statement to review and audit Landlord's books and records regarding such Expense
Statement for the sole purpose of determining the accuracy of such Expense Statement. Such review or audit shall be 


8





 



performed
by a nationally recognized accounting firm that calculates its fees with respect to hours actually worked and that does not discount its time or rate (as opposed to a calculation based upon
percentage of recoveries or other incentive arrangement), shall take place during normal business hours in the office of Landlord or Landlord's property manager and shall be completed within three
(3) business days after the commencement thereof provided that Landlord or Landlord's property manager has made the books and records regarding the Expense Statement available for review. If
Tenant does not so review or audit Landlord's books and records, Landlord's Expense Statement shall be final and binding upon Tenant. In the event that Tenant determines on the basis of its review of
Landlord's books and records that the amount of Expenses paid by Tenant pursuant to this Paragraph 4 for the period covered by such Expense Statement is less than or greater than the actual
amount properly payable by Tenant under the terms of this Lease, Tenant shall promptly pay any deficiency to Landlord or Landlord shall promptly refund any excess payment to Tenant and pay for any
reasonable audit expenses, if such excess payment exceeds the aggregate Expenses in Landlord's Expense Statement by ten percent (10%), as the case may be. 


5.     UTILITY EXPENSES  


        (a)   Tenant
shall pay the cost of all water; sewer use, sewer discharge fees, gas, heat, electricity, refuse pick-up, janitorial service (including, without
limitation, exterior and interior window washing), telephone and all materials and services or other utilities (collectively, "Utilities") billed or metered separately to the Premises and/or Tenant,
together with all taxes, assessments, charges and penalties added to or included within such cost. Tenant acknowledges that the Premises, the Building and/or the Project may become subject to the
rationing of Utility services or restrictions on Utility use as required by a public utility company, governmental agency or other similar entity having jurisdiction thereof. Tenant acknowledges and
agrees that its tenancy and occupancy hereunder shall be subject to such rationing or restrictions as may be imposed upon Landlord, Tenant, the Premises, the Building and/or the Project, and Tenant
shall in no event be excused or relieved from any covenant or obligation to be kept or performed by Tenant by reason of any such rationing or restrictions. Tenant agrees to comply with energy
conservation programs implemented by Landlord by reason of rationing or restrictions. Tenant agrees to comply with energy conservation programs implemented by Landlord by reason of rationing,
restrictions or Laws. 


        (b)   Landlord
shall not be liable for any loss, injury or damage to property caused by or resulting from any variation, interruption, or failure of Utilities due to any cause
whatsoever, or from failure to make any repairs or perform any maintenance. No temporary interruption or failure of such services incident to the making of repairs, alterations, improvements, or due
to accident, strike, or conditions or other events shall be deemed an eviction of Tenant or relieve Tenant from any of its obligations hereunder. In no event shall Landlord be liable to Tenant for any
damage to the Premises or for any loss, damage or injury to any property therein or thereon occasioned by bursting, rupture, leakage or overflow of any plumbing or other pipes (including, without
limitation, water, steam, and/or refrigerant lines), sprinklers, tanks, drains, drinking fountains or washstands, or other similar cause in, above, upon or about the Premises, the Building, or the
Project, unless caused by Landlord's gross negligence or willful misconduct. 


6.     LATE CHARGE  


        Notwithstanding any other provision of this Lease, Tenant hereby acknowledges that late payment to Landlord of Rent, or other amounts due hereunder will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. If any Rent or other sums due from Tenant are not received by Landlord or by
Landlord's designated agent when due, then Tenant shall pay to Landlord a late charge equal to ten percent (10%) of such overdue amount (the "Late Charge"), plus any costs and reasonable attorneys'
fees incurred by Landlord by 


9





 



reason
of Tenant's failure to pay Rent and/or other charges when due hereunder; provided however, Landlord hereby waives its right to collect the first two (2) Late Charges payable by Tenant
hereunder during the Term. Landlord and Tenant hereby agree that such late charges represent a fair and reasonable estimate of the cost that Landlord will incur by reason of Tenant's late payment and
shall not be construed as a penalty. Landlord's acceptance of such late charges shall not constitute a waiver of Tenant's default with respect to such overdue amount or estop Landlord from exercising
any of the other rights and remedies granted under this Lease. 



	Initials:	 	Landlord	 	/s/ JCB
	 	Tenant	 	/s/ WGH







7.     SECURITY DEPOSIT  


        Concurrently with Tenant's execution of the Lease, Tenant shall deposit with Landlord the Security Deposit specified in the Basic Lease Information as security
for the full and faithful performance of each and every term, covenant and condition of this Lease. Landlord may use, apply or retain the whole or any part of the Security Deposit as may be reasonably
necessary (a) to remedy Tenant's default in the payment of any Rent, (b) to repair damage to the Premises caused by Tenant, (c) to clean the Premises upon termination of this
Lease; provided that Tenant has, in the reasonable judgment of Landlord, not cleaned the Premises in accordance with Paragraph 11, (d) to reimburse Landlord for the payment of any amount
which Landlord may reasonably spend or be required to spend by reason of Tenant's default, or (e) to compensate Landlord for any other loss or damage which Landlord may suffer by reason of
Tenant's default. Should Tenant faithfully and fully comply with all of the terms, covenants and conditions of this Lease, within thirty (30) days following the expiration of the Term, the
Security Deposit or any balance thereof shall be returned to Tenant or, at the option of Landlord, to the last assignee of Tenant's interest in this Lease. Landlord shall keep the Security Deposit
separate from its general funds and shall deposit such in a financial institution selected by Landlord and Tenant
shall be entitled to any interest paid by such Bank on the Security Deposit and such interest shall be paid on an annual basis to Tenant by Landlord concurrently with the delivery of the Expense
Statement or credited against any amounts owed by Tenant to Landlord as shown on such Expense Statement. If Landlord so uses or applies all or any portion of said deposit, within five (5) days
after written demand therefore Tenant shall deposit cash with Landlord in an amount sufficient to restore the Security Deposit to the full extent of the above amount, and Tenant's failure to do so
shall be a default under this Lease. In the event Landlord transfers its interest in this Lease, Landlord shall transfer the then remaining amount of the Security Deposit to Landlord's successor in
interest, and thereafter Landlord shall have no further liability to Tenant with respect to such Security Deposit. 


8.     POSSESSION  


        (a)    Tenant's Right of Possession.    Subject to Paragraph 8(b), Tenant shall be
entitled to possession of the Premises upon commencement of the Term. 



        (b)    Delay in Delivering Possession.    If for any reason whatsoever, Landlord cannot
deliver possession of the Premises to Tenant on or before the Estimated Commencement Date, this Lease shall not be void or voidable (except as otherwise expressly provided in Paragraph 8(c) and
(d) below), nor shall Landlord, or Landlord's agents, advisors, employees, partners, shareholders, directors, invitees or independent contractors (collectively, "Landlord's Agents"), be liable
to Tenant for any loss or damage resulting therefrom. Subject to Paragraph D of Exhibit B, Tenant shall not be liable for Rent until
Landlord delivers possession of the Premises to Tenant. The Expiration Date shall be extended by the same number of days that Tenant's possession of the Premises was delayed beyond the Estimated
Commencement Date. 


10





 



        (c)    Time for Performance.    The parties have set forth on  Exhibit Hcertain events which
must occur prior to or during the construction of the Base Building Improvements (each a "Condition"), together
with certain dates upon which each condition must be satisfied ("Initial Window Date"); provided however, if Landlord is delayed in satisfying any Condition due to Tenant Delays or Force Majeure
Events (as defined in Exhibit B), all of the Initial Window Dates set forth on Exhibit H
shall be extended for a period equal to the length of such delay. If any condition is not satisfied on or before its Initial Window Date, Tenant shall have the right to terminate this Lease by
delivering written notice to Landlord within five (5) business days after expiration of the applicable Initial Window Date. If Tenant does not deliver written notice of termination to Landlord
within such five day period, Tenant shall have waived its right to terminate as a result of Landlord's failure to satisfy the particular Condition in question, all rights and obligations of Landlord
and Tenant shall continue in full force and effect, including satisfaction of the remaining Conditions. If Tenant timely elects to terminate this Lease, the
Lease shall terminate and Landlord shall promptly refund to Tenant all sums paid to Landlord by Tenant, including without limitation Carry Costs, if any. 


        (d)    Outside Completion Date.    Notwithstanding anything in this Lease to the contrary, if
Landlord has not obtained a temporary certificate of occupancy relating to the Base Building Improvements on or before June 1, 1999, either Tenant or Landlord shall have the right to terminate
this Lease by delivering written notice to the other on or before June 7, 1999; provided, however, if Landlord is delayed in obtaining the temporary certificate of occupancy relating to the
Base Building Improvements as a result of Tenant Delays, such date shall be extended for a period equal to the length of any such Tenant Delay. If neither party delivers written notice of termination
to the other within such time period, each party shall have waived its right to terminate and all rights and obligations of Landlord and Tenant shall continue in full force and effect, including
satisfaction of the remaining Conditions. If either Tenant or Landlord timely elects to terminate this Lease, the Lease shall terminate and Landlord shall promptly refund to Tenant all sums paid to
Landlord by Tenant, including without limitation Carry Costs, if any. 


9.     USE OF PREMISES



        (a)    Permitted Use.    The use of the Premises by Tenant and Tenant's agents, advisors,
employees, partners, shareholders, directors, invitees and independent contractors (collectively, "Tenant's Agents") shall be solely for the Permitted Use specified in the Basic Lease Information and
for no other use. Tenant shall not permit any objectionable or unpleasant odor, smoke, dust, gas, noise or vibration to emanate from or near the Premises. The Premises shall not be used to create any
nuisance or trespass, for any illegal purpose, for any purpose not permitted by Laws, for any purpose that would invalidate the insurance or increase the premiums for insurance on the Premises, the
Building or the Project or for any purpose or in any manner that would interfere with other tenants' use or occupancy of the Project. Tenant agrees to pay to Landlord, as Additional Rent, any
increases in premiums on policies resulting from Tenant's Permitted Use or any other use or action by Tenant or Tenant's Agents which increases Landlord's premiums or requires additional coverage by
Landlord to insure the Premises. Tenant agrees not to overload the floor(s) of the Building. 


        (b)    Compliance with Governmental Regulations and Private Restrictions.    Tenant and
Tenant's Agents shall, at Tenant's expense, faithfully observe and comply with (1) all municipal, state and federal laws, statutes, codes, rules, regulations, ordinances, requirements, and
orders (collectively, "Laws"), except such laws applicable to the construction of the Base Building Improvements now in force or which may hereafter be in force pertaining to the Premises or Tenant's
use of the Premises, the Building or the Project, including without limitation, any Laws requiring installation of fire sprinkler systems, seismic reinforcement and related alterations, whether
substantial in cost or otherwise, provided, however, that except as provided in Paragraph 9(c) below, Tenant shall not be required to make or, except as provided in Paragraph 4 above,
pay for, structural changes to the Premises or the 


11





 



Building
not related to Tenant's specific use of the Premises unless the requirement for such changes is imposed as a result of any improvements or additions made or proposed to be made at Tenant's
request; (2) all recorded covenants, conditions and restrictions affecting the Project ("Private Restrictions") now in force or which may hereafter be in force; and (3) any and all rules
and regulations set forth in Exhibit E and any other rules and regulations now or hereafter promulgated by Landlord related to parking or the
operation of the Premises, the Building and/or the Project (collectively, the "Rules and Regulations"). The judgment of any court of competent jurisdiction, or the admission of Tenant in any action or
proceeding against Tenant, whether Landlord be a party thereto or not, that Tenant has violated any such Laws or Private Restrictions, shall be conclusive of that fact as between Landlord and Tenant. 


        (c)    Compliance with Americans with Disabilities Act.    Landlord and Tenant hereby agree
and acknowledge that the Premises, the Building and/or the Project may be subject to, among other Laws, the requirements of the Americans with Disabilities Act, a federal law codified at 42 U.S.C.
12101 et seq., including, but not limited to Title III thereof, and all regulations and guidelines related thereto, together with any and all laws,
rules, regulations, ordinances, codes and statutes now or hereafter enacted by local or state agencies having jurisdiction thereof, including all requirements of Title 24 of the State of California,
as the same may be in effect on the date of this Lease and may be hereafter modified, amended or supplemented (collectively, the "ADA"). Landlord shall cause the Base Building Improvements to be
constructed in compliance with the ADA. Any Tenant Improvements to be constructed hereunder shall be in compliance with the requirements of the ADA, and all costs incurred for purposes of compliance
therewith shall be a part of and included in the costs of the Tenant Improvements. Tenant shall be solely responsible for conducting its own independent investigation of this matter and for ensuring
that the design of all Tenant Improvements strictly complies with all requirements of the ADA. Subject to reimbursement pursuant to Paragraph 4 above, if any barrier removal work or other work
is required to the Building, the Common Areas or the Project under the ADA, then such work shall be the responsibility of Landlord; provided, if such work is required under the ADA as a result of
Tenant's use of the Premises or any work or Alteration (as hereinafter defined) made to the Premises by or on behalf of Tenant, then such work shall be performed by Landlord at the sole cost and
expense of Tenant. Except as otherwise expressly provided in this provision, Tenant shall be responsible at its sole cost and expense for fully and faithfully complying with all applicable
requirements of the ADA, including without limitation, not discriminating against any disabled persons in the operation of Tenant's business in or about the Premises, and offering or otherwise
providing auxiliary aids and services as, and when, required by the ADA. Within ten (10) days after receipt, Tenant shall advise Landlord in writing, and provide Landlord with copies of (as
applicable), any notices alleging violation of the ADA relating to any portion of the Premises, the Building or the Project; any claims made or threatened orally or in writing regarding noncompliance
with the ADA and relating to any portion of the Premises, the Building, or the Project; or any governmental or regulatory actions or investigations instituted or threatened regarding noncompliance
with the ADA and relating to any portion of the Premises, the Building or the Project. Tenant shall and hereby agrees to protect, defend (with counsel acceptable to Landlord) and hold Landlord and
Landlord's Agents harmless and indemnify Landlord and Landlord's Agents from and against all liabilities, damages, claims, losses, penalties, judgments, charges and expenses (including attorneys'
fees, costs of court and expenses necessary in the prosecution or defense of any litigation including the enforcement of this provision) arising from or in any way related to, directly or indirectly,
Tenant's or Tenant's Agents' violation or alleged violation of the ADA. Landlord shall and hereby agrees to protect, defend (with counsel acceptable to Tenant) and hold Tenant and Tenant's Agents
harmless and indemnify Tenant and Tenant's Agents from and against all liabilities, damages, claims, losses, penalties, judgments, charges and expenses (including attorneys' fees, costs of court and
expenses necessary in the prosecution or defense of any litigation including the enforcement of this provision) arising from or in any way related 


12





 



to,
directly or indirectly, Landlord's failure to have the Building Improvements constructed in compliance with the ADA. 


10.   ACCEPTANCE OF PREMISES  


        By taking possession of the Premises hereunder Tenant accepts the Premises as suitable for Tenant's intended use and as being in good and sanitary operating
order, condition and repair, AS IS, and without representation or warranty by Landlord as to the condition, use or occupancy which may be made thereof, except for Landlord's express obligations
described in Exhibit A. Any exceptions to the foregoing must be by written agreement executed by Landlord and Tenant. 


11.   SURRENDER  


        (a)   Tenant
agrees that on the last day of the Term, or on the sooner termination of this Lease, Tenant shall surrender the Premises to Landlord (i) in good condition
and repair (damage by acts of God, fire, and normal wear and tear excepted), but with all interior walls painted or cleaned so they appear painted and, where appropriate, patched, any carpets cleaned,
all floors cleaned and waxed, and all plumbing fixtures in good condition and working order and, where appropriate, capped, and (ii) otherwise in accordance with Paragraph 32(h). Normal
wear and tear shall not include any damage or deterioration that would have been prevented by proper maintenance by Tenant, or Tenant otherwise performing all of its obligations under this Lease. On
or before the expiration or sooner termination of this Lease, Tenant shall, in accordance with this Paragraph 11, and at Tenant's sole cost and expense, remove, and repair any damage caused by
such removal, (A) all of Tenant's Property (as hereinafter defined) and Tenant's signage from the Premises, the Building and the Project and (B) all Tenant Improvements and all
Alterations required to be removed pursuant to Paragraph 12 and Exhibit A. Any of Tenant's Property not so removed by Tenant as required herein shall be deemed abandoned and may be
stored, removed, and disposed of by Landlord at Tenant's expense, and Tenant waives all claims against Landlord for any damages resulting from Landlord's retention and disposition of such property;
provided, however, that Tenant shall remain liable to Landlord for all costs incurred in storing and disposing of such abandoned property of Tenant. All Tenant Improvements and Alterations except
those which Tenant is required to remove pursuant to Paragraph 12 and Exhibit A shall remain in the Premises as the property of Landlord. If the Premises are not surrendered at the end
of the Term or sooner termination of this Lease, and in accordance with the provisions of this Paragraph 11 and Paragraph 32(h) below, Tenant shall indemnify, defend and hold Landlord
harmless from and against any and all loss or liability resulting from delay by Tenant in so surrendering the Premises including, without limitation, any loss or liability resulting from any claim
against Landlord made by any succeeding tenant or prospective tenant founded on or resulting from such delay and losses to Landlord due to lost opportunities to lease any portion of the Premises to
any such succeeding tenant or prospective tenant, together with, in each case, actual attorneys' fees and costs. 


        (b)   Notwithstanding
Paragraph 11(a) above, with respect to all R&D Space, as defined below, within the Premises, Tenant shall, on the last day of the Term or on the
sooner termination of this Lease, surrender such space to Landlord as follows: 




	1
	The
Allowable R&D Space, as defined below, shall be surrendered to Landlord in the condition specified in Paragraphs 11(a)(i) and (ii), above, except that Tenant shall not be
required to paint or patch any interior walls located within the Allowable R&D Space.



	2
	The
Additional R&D Space, as defined below, shall be surrendered to Landlord in the conditions specified in Paragraphs 11(a)(i) and (ii), above. In addition, Tenant shall pay to
Landlord on or before the last day of the Term or on the sooner termination of this Lease, the costs, as reasonably determined by Landlord, necessary to remove all Tenant Improvements and Alterations
required to be removed under Paragraph 12 and 




13





 



Exhibit A,
and otherwise to surrender the Premises in a condition ready for Landlord to commence build-out of such space for a succeeding tenant. 



	3.
	The
Converted Office Space, as defined below, shall be surrendered to Landlord in the condition required of Additional R&D Space, as provided in Paragraph 11(b)(2) above;
provided, however, Tenant shall also pay to Landlord on or before the last day of the Term or the sooner termination of this Lease, the Conversion Allowance, as defined below. 





        (c)   For
the purposes of this Paragraph 11, the following definitions shall apply: 




	1
	Allowable R&D Space shall mean (i) that portion of R&D Space within the original Premises (specifically excluding the Expansion
Space, as defined below) (the "Original Premises") that, in the aggregate, does not exceed ten thousand (10,000) square feet and (ii) that
portion of R&D Space within the Expansion Space that, in the aggregate, does not exceed twenty-five thousand (25,000) square feet, the location of which shall be reasonably designated by
Landlord in a notice to Tenant given not later than ninety (90) days prior to the Expiration Date (except in the event of termination of this Lease prior to the scheduled Expiration Date, in
which event, no advance notice shall be required).



	2
	Additional R&D Space shall mean that portion of R&D space within the Original Premises in excess of the maximum Allowable R&D Space under
Paragraph 11(c)(1) above; provided that the Additional R&D Space shall not exceed an aggregate of ten thousand (10,000) square feet. The location of the Additional R&D Space shall be reasonably
designated by Landlord in a notice to Tenant given not later than ninety (90) days prior to the Expiration Date (except in the event of a termination of this Lease prior to the scheduled
Expiration Date, in which event, no advance notice shall be required);



	3
	Converted Office Space shall mean (i) that portion of R&D Space within the Original Premises in excess of the maximum Additional
R&D Space for the Original Premises and (ii) that portion of R&D Space within the Expansion Space in excess of the maximum Allowable R&D Space for the Expansion Space.



	4
	R&D Space shall mean space that has been improved for research, development, engineering, evaluation and testing activities and that,
without reconfiguration, cannot be used for standard office use, all as determined by Landlord in its reasonable discretion based upon market conditions generally existing at the time.



	5
	Conversion Allowance shall be an amount, calculated upon termination of the Lease, equal to the greater of (i) Five Dollars
($5.00) multiplied by the total square feet of Converted Office Space or (ii) Thirty Dollars ($30), minus the product of $2.50 multiplied by the number of full Lease Years expired at the
termination of the Lease, multiplied by the total square feet of Converted Office Space. By way of example, if the Lease is terminated in the 7th Lease Year and the Converted Office
Space is 10,000 square feet, then the Conversion Allowance would be $150,000 or ($30 - (2.5 × 6)) × 10,000=$150,000 which
is greater than ($5 × 10,000)=$50,000. 





        (d)   If
at any time during the Term, the total square footage of the R&D Space in (i) the Original Premises exceeds 20,000 square feet or (ii) the Expansion
Space exceeds 25,000 square feet (each excess amount being referred to as the "Excess R&D Space Square Footage"), Tenant shall deposit with Landlord, as security for Tenant's surrender obligations
under this Paragraph 11, an amount equal to the sum of Five Dollars ($5.00) multiplied by the Excess R&D Space Square Footage. Such amount shall be held by Landlord in an interest bearing
account, with all interest earned thereon to be held by 


14





 



Landlord,
and such amount, including interest, shall be subsequently applied or disbursed in accordance with Paragraph 7. 



12.   ALTERATIONS AND ADDITIONS  


        (a)   Tenant
shall not make, or permit to be made, any alteration, addition or improvement (hereinafter referred to individually as an
"Alteration" and collective as the "Alterations") to the Premises or any part thereof with the prior
written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that Landlord shall have the right in its sole and absolute discretion to
consent or to withhold its consent to any Alteration which affects the structural portions of the Premises, the Building or the Project or the mechanical, electrical or life-safety systems
serving the Premises, the Building and/or the Project or any portion thereof (the "Systems"). Notwithstanding the foregoing, but subject to the
conditions set forth below, Tenant may, without Landlord's consent, make Alterations within the Premises provided that such Alterations (i) do not affect the structural portions of the
Premises, the Building or the Project or the Systems, and (ii) the cost, on an individual project basis, of any Alteration is less than $50,000 and, in the aggregate for the Term, does not
exceed $500,000. 


        (b)   Any
Alteration to the Premises shall be at Tenant's sole cost and expense, in compliance with all applicable Laws and all requirements requested by Landlord, including,
without limitation, the requirements of any insurer providing coverage for the Premises or the Project or any part thereof, and in accordance with plans and specifications approved in writing by
Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, with respect to Alterations that may be made without Landlord's prior consent as
permitted above, Landlord agrees that Tenant shall not be required to submit plans and specifications for prior approval of the Landlord and that Landlord shall not require prior approval of the
installing contractor; provided, however, if Tenant does not obtain the prior approval of plans and specifications for any Alteration, then subject to the terms of this Paragraph 12(b),
Landlord may, by notice to Tenant given not later than ninety (90) days prior to the Expiration Date (except in the event of a termination of this Lease prior to the scheduled Expiration Date,
in which event no advance notice shall be required), require Tenant, at Tenant's expense, to remove, and repair any damage caused by removal of, any and all such Alterations. If Tenant does not obtain
Landlord's prior consent as to the installing contractor, Tenant shall be responsible for maintaining a harmonious labor relations with all contractors and service providers servicing the Premises,
Building and/or Project. In addition, with respect to any Alterations made without Landlord's prior consent as permitted above, Tenant agrees to meet with Landlord, at Landlord's request, not more
than once in every calendar year, to discuss any such Alterations that have been made to the Premises. In such meeting, Tenant shall provide Landlord with "as-built" plans and, if
requested by Tenant, Landlord shall within 30 days of such meeting, provide Tenant with a list of those Alterations reviewed by Landlord that will be required to be removed upon termination of
the Lease. Any Alterations requiring the prior consent of Landlord shall contain a request that Landlord specify in writing to Tenant those Alterations that Tenant will be required to remove in
accordance with Paragraph 11(a) upon expiration or sooner termination of this Lease. Upon receipt of such request, Landlord shall make such determination and respond to Tenant within five
(5) business days of such request. Before Alterations may begin, valid building permits or other permits or licenses required must be furnished to Landlord, and, once the Alterations begin,
Tenant will diligently and continuously pursue their completion. Landlord may monitor construction of the Alterations and Tenant shall reimburse Landlord for its costs (including, without limitation,
the costs of any construction manager retained by Landlord) in reviewing plans and documents and in monitoring construction. Tenant shall maintain during the course of construction, at its sole cost
and expense, builders' risk insurance for the amount of the completed value of the Alterations on an all-risk non-reporting form covering all improvements under construction,
including building materials, and other insurance in amounts and against such risks as Landlord shall reasonably require in connection with the Alterations. In addition 


15





 



to
and without limitation on the generality of the foregoing, Tenant shall ensure that its contractor(s) procure and maintain in full force and effect during the course of construction a "broad form"
commercial general liability and property damage policy of insurance naming Landlord, Tenant and Landlord's lenders as additional insureds. The minimum limit of coverage of the aforesaid policy shall
be in the amount of not less than Three Million Dollars ($3,000,000) for injury or death of one person in any one accident or occurrence and in the amount of not less than Three Million Dollars
($3,000,000) for injury or death of more than one person in any one accident or occurrence, and shall contain a severability of interest clause or a cross liability endorsement. Such insurance shall
further insure Landlord and Tenant against liability for property damage of at least One Million Dollars ($1,000,000). 


        (c)   Except
as otherwise expressly stated herein or agreed to between the parties, all Alterations, including, but not limited to, heating, lighting, electrical, air
conditioning, fixed partitioning, drapery, wall covering and paneling, built-in cabinet work and carpeting installations made by Tenant, together with all property that has become an
integral part of the Premises or the Building, shall at once be and become the property of Landlord, and shall not be deemed trade fixtures or Tenant's Property. 


        (d)   No
private telephone systems, utilities and/or other related computer, utility or telecommunications equipment or lines may be installed without Landlord's prior written
consent, which consent shall not be unreasonably withheld, conditioned or delayed. If Landlord gives such consent, all equipment must be installed within the Premises and, unless Landlord, at the time
of installation, notified Tenant in writing that removal would not be required, removed upon the expiration or sooner termination of this Lease and the Premises restored to the same condition as
before such installation. 


        (e)   Notwithstanding
anything herein to the contrary, before installing any equipment or lights which generate an undue amount of heat in the Premises, or if Tenant plans to
use any high-power usage equipment in the Premises, Tenant shall obtain the written permission of Landlord which permission shall not be unreasonably withheld, conditioned or delayed.
Landlord may refuse to grant such permission unless Tenant agrees to pay the costs to Landlord for installation of supplementary air conditioning capacity or electrical systems necessitated by such
equipment. 


        (f)    Tenant
agrees not to proceed to make any Alterations, notwithstanding consent from Landlord to do so, until Tenant notifies Landlord in writing of the date Tenant
desires to commence construction or installation of such Alterations and Landlord has approved such date in writing, in order that Landlord may post appropriate notices to avoid any liability to
contractors or material suppliers for payment for Tenant's improvements. Tenant will at all times permit such notices to be posted and to remain posted until the completion of work. 


13.   MAINTENANCE AND REPAIRS OF PREMISES  


        (a)    Maintenance by Tenant.    Throughout the Term, Tenant shall, at its sole expense,
(1) keep and maintain in good order and condition the Premises, and repair and replace every part thereof, including interior glass, windows, window frames and casements, interior doors and
door frames and door closers; interior lighting (including, without limitation, light bulbs and ballasts), the plumbing and electrical systems exclusively serving the Premises, all communications
systems serving the Premises, signage, interior demising walls and partitions, equipment, interior painting and interior walls and floors, and the roll-up doors, ramps and dock equipment,
including, without limitation, dock bumpers, dock plates, dock seals, dock levelers and dock lights located in or on the Premises (excepting only those portions of the Building or the Project to be
maintained by Landlord, as provided in Paragraph 13(b) below), (2) furnish all expendables, including light bulbs, paper goods and soaps, used in the Premises, and (3) keep and
maintain in good order and condition, repair and replace all of Tenant's security systems in or about or serving the Premises. Tenant shall not do nor shall Tenant allow Tenant's Agents to do 


16





 

anything
to cause any damage, deterioration or unsightliness to the Premises, the Building or the Project. 


        (b)    Maintenance by Landlord.    Subject to the provisions of Paragraphs 13(a), 21 and 22,
and further subject to Tenant's obligation under Paragraph 4 to reimburse Landlord, in the form of Additional Rent, for Tenant's Proportionate Share of the Project and the Building, as
applicable, of the cost and expense of the following items; Landlord agrees to repair and maintain the following items: exterior glass, windows, window frames and casements, exterior doors and door
frames and door closers; the roof coverings (provided that Tenant installs no additional air conditioning or other equipment on the roof that damages the roof coverings, in which event Tenant shall
pay all costs resulting from the presence of such additional equipment); the Systems serving the Premises and the Building, excluding the plumbing and electrical systems exclusively serving the
Premises; and the Parking Areas, pavement, landscaping, sprinkler systems, sidewalks, driveways, curbs, and lighting systems in the Common Areas. Subject to the provisions of Paragraphs 13(a), 21 and
22, Landlord, at its own cost and expense, agrees to repair and maintain the following items: the structural portions of the roof (specifically excluding the roof coverings), the foundation, the
footings, the floor slab, and the load bearing walls and exterior walls of the Building (excluding any glass and any routine maintenance, including, without limitation, any painting, sealing, patching
and waterproofing of such walls). Notwithstanding anything in this Paragraph 13 to the contrary, Landlord shall have the right to either repair or to require Tenant to repair any damage to any
portion of the Premises, the Building and/or the Project caused by or created due to any act, omission, negligence or willful misconduct of Tenant or Tenant's Agents and to restore the Premises, the
Building and/or the Project, as applicable, to the condition existing prior to the occurrence of such damage; provided, however, that in the event Landlord elects to perform such repair and
restoration work, Tenant shall reimburse Landlord upon demand for all costs and expenses incurred by Landlord in connection therewith. Landlord's obligation hereunder to repair and maintain is subject
to the condition precedent that Landlord shall have received written notice of the need for such repairs and maintenance and a reasonable time to perform such repair and maintenance. Tenant shall
promptly report in writing to Landlord any defective condition known to it which Landlord is required to repair, and failure to so report such defects shall make Tenant responsible to Landlord for any
liability incurred by Landlord by reason of such condition. 


        (c)    Tenant's Waiver of Rights.    Tenant hereby expressly waives all rights to make repairs
at the expense of Landlord or to terminate this Lease, as provided for in California Civil Code Sections 1941 and 1942, and 1932(I), respectively, and any similar or successor statute or law in effect
or any amendment thereof during the Term. 


14.   LANDLORD'S INSURANCE  


        Landlord shall purchase and keep in force "all risk" property insurance covering the Building and the Project. Tenant shall, at its sole cost and expense, comply
with any and all reasonable requirements pertaining to the Premises, the Building and the Project of any insurer necessary for the maintenance of reasonable fire and commercial general liability
insurance, covering the Building and the Project. Landlord, at Tenant's cost, may maintain "Loss of Rents" insurance, insuring that the Rent will be paid in a timely manner to Landlord for a period of
at least twelve (12) months if the Premises, the Building or the Project or any portion thereof are destroyed or rendered unusable or inaccessible by any cause insured against under this Lease.
Notwithstanding the foregoing, in the event Tenant provides satisfactory evidence to Landlord that Tenant maintains insurance reasonably acceptable to Landlord insuring that the Rent will be paid in a
timely manner to Landlord for a period of at least twelve (12) months if the Premises, the Building or the Project or any portion thereof are destroyed or rendered unusable or inaccessible by
any cause insured against under this Lease, Landlord will not charge Tenant for the cost of maintaining "Loss of Rents" insurance; provided, however, if for any 


17





 



reason
Tenant fails to maintain such insurance, Tenant shall be responsible for payment of the Rent that would have been paid to Landlord had Tenant maintained insurance for such lost Rent. 


15.   TENANT'S INSURANCE  



        (a)    Commercial General Liability Insurance.    Tenant shall, at Tenant's expense, secure
and keep in force a Commercial General Liability insurance policy covering the Premises, insuring Tenant and naming Landlord and its lenders as additional insured, against liability arising out of the
ownership, use, occupancy or maintenance of the Premises. The minimum limit of coverage of such policy shall be in the amount of not less than Three Million Dollars ($3,000,000) for each occurrence
combined single limited for bodily injury and property damage, shall include an extended liability endorsement providing contractual liability coverage (which shall include coverage for Tenant's
indemnification obligations in this Lease), and shall contain a severability of interest clause or a cross liability endorsement. Landlord may from time to time require reasonable increases in any
such limits if Landlord believes that additional coverage is necessary or desirable. The limit of any insurance shall not limit the liability of Tenant hereunder. No policy maintained by Tenant under
this Paragraph 15(a) shall contain a deductible greater than one hundred thousand dollars ($100,000.00). No policy shall be cancelable without thirty (30) days prior written notice to
Landlord. Such policies of insurance shall be issued as primary policies
and not contributing with or in excess of coverage that Landlord may carry, by an insurance company authorized to do business in the State of California for the issuance of such type of insurance
coverage and rated A:XIII or better in Best's Key Rating Guide. 



        (b)    Personal Property Insurance.    Tenant shall maintain in full force and effect on all
of its personal property, furniture, furnishings, trade or business fixtures, equipment and such other items listed on Exhibit I (collectively,
"Tenant's Property") located on the Premises, a policy or policies of fire and extended coverage insurance with water damage and sprinkler leakage
coverage to the extent of the full replacement cost thereof. No such policy shall contain a deductible greater than one hundred thousand dollars ($100,000.00). During the term of this Lease the
proceeds from any such policy or policies of insurance shall be used for the repair or replacement of the fixtures and equipment so insured. Landlord shall have no interest in the insurance upon
Tenant's equipment and fixtures and will sign all documents reasonably necessary in connection with the settlement of any claim or loss by Tenant. Landlord will not carry insurance on Tenant's
possessions. 


        (c)    Worker's Compensation Insurance; Employer's Liability Insurance.    Tenant shall, at
Tenant's expense, maintain in full force and effect worker's compensation insurance with not less than the minimum limits required by law, and employer's liability insurance with a minimum limit of
coverage of One Million Dollars ($1,000,000). 



        (d)    Evidence of Coverage.    Tenant shall deliver to Landlord certificates of insurance and
true and complete copies of any and all endorsements required herein for all insurance required to be maintained by Tenant hereunder at the time of execution of this Lease by Tenant. Tenant shall, at
least thirty (30) days prior to expiration of each policy, furnish Landlord with certificates of renewals or "binders" thereof. Each certificate shall expressly provide that such policies shall
not be cancelable except after thirty (30) days prior written notice to Landlord and the other parties named as additional insureds as required in this Lease (except for cancellation for
nonpayment of premium, in which event cancellation shall not take effect until at least ten (10) days notice has been given to Landlord). 


16.   INDEMNIFICATION  


        (a)    Of Landlord.    Tenant shall indemnify and hold harmless Landlord and Landlord's Agents
against and from any and all claims, liabilities, judgments, costs, demands, causes of action and expenses (including, without limitation, reasonable attorney's fees) arising from (1) the use
of the Premises, the Building or the Project by Tenant or Tenant's Agents, or from any activity done, 


18





 

permitted
or suffered by Tenant or Tenant's Agents in or about the Premises, the Building or the Project, and (2) any act, neglect, fault, willful misconduct or omission of Tenant or Tenant's
Agents, or from any breach or default in the terms of this Lease by Tenant or Tenant's Agents, and (3) any action or proceeding brought on account of any matter in items (1) or (2). If
any action or proceeding is brought against Landlord by reason of any such claim, upon notice from Landlord, Tenant shall defend the same at Tenant's expense by counsel reasonably satisfactory to
Landlord. As a material part of the consideration to Landlord, Tenant hereby releases Landlord and Landlord's Agents from responsibility for, waives its entire claim of recovery for and assumes all
risk of (i) damage to property or injury to persons in or about the Premises, the Building or the Project from any cause whatsoever (except that which is caused by the gross negligence or
willful misconduct of Landlord or Landlord's Agents or by the failure of Landlord to observe any of the terms and conditions of this Lease, if such failure has persisted for an unreasonable period of
time after written notice of such failure), or (ii) loss resulting from business interruption or loss of income at the Premises. The obligations of Tenant under this Paragraph 16 shall
survive any termination of this Lease. 


        (b)    Of Tenant.    Landlord shall indemnify and hold harmless Tenant and Tenant's Agents
against and from any and all claims, liabilities, judgments, costs, demands, causes of action and expenses (including, without limitation, reasonable attorney's fees) relating to the Project and
arising from the gross negligence or willful misconduct of Landlord or Landlord's Agents, and any action or proceeding brought on account of such claims. If any action or proceeding is brought against
Tenant by reason of any such claim, upon notice from Tenant, Landlord shall defend the same at Landlord's expense by counsel reasonably satisfactory to Landlord. The obligations of Landlord under this
Paragraph 16 shall survive any termination of this Lease. 


        (c)    No Impairment of Insurance.    The foregoing indemnity shall not relieve any insurance
carrier of its obligations under any policies required to be carried by either party pursuant to this Lease, to the extent that such policies cover the peril or occurrence that results in the claim
that is subject to the foregoing indemnity. 



17.   SUBROGATION  


        Landlord and Tenant hereby mutually waive any claim against the other and its Agents for any loss or damage to any of their property located on or about the
Premises, the Building or the Project that is caused by or results from perils covered by the property insurance required to be carried by the respective parties in accordance with Paragraphs 14 and
15 of this Lease, whether or not due to the negligence of the other party or its Agents. Because the foregoing waivers will preclude the assignment of any claim by way of subrogation to an insurance
company or any other person, each party now
agrees to immediately give to its insurer written notice of the terms of these mutual waivers and shall have their insurance policies endorsed to prevent the invalidation of the insurance coverage
because of these waivers. Nothing in this Paragraph 17 shall relieve a party of liability to the other for failure to carry insurance required by this Lease. 


18.   SIGNS  


        Landlord shall install, at Landlord's expense, building signage and monument signage reflecting Tenant's occupancy of the Premises mutually acceptable to Landlord
and Tenant and complying with all applicable Laws or any covenants, conditions or restrictions effecting the Project. Tenant shall not place or permit to be placed in, upon, or about the Premises, the
Building or the Project any exterior lights, decorations, balloons, flags, pennants, banners, advertisements or notices, or erect or install any signs, windows or door lettering, placards,
decorations, or advertising media of any type which can be viewed from the exterior the Premises without obtaining Landlord's prior written consent. 


19





 



19.   FREE FROM LIENS  


        Tenant shall keep the Premises, the Building and the Project free from any liens arising out of any work performed, material furnished or obligations incurred by
or for Tenant in accordance with the provisions of this Paragraph 19. In the event that Tenant shall not, within ten (10) days following the imposition of any such lien, cause the lien
to be released of record by payment or posting of a proper bond, Landlord shall have in addition to all other remedies provided herein and by law the right but not the obligation to cause the same to
be released by such means as it shall deem proper, including payment of the claim giving rise to such lien. All such sums paid by Landlord and all expenses incurred by it in connection therewith
(including, without limitation, attorneys' fees) shall be payable to Landlord by Tenant upon demand. Landlord shall have the right at all times to post and keep posted on the Premises any notices
permitted or required by law or that Landlord shall deem proper for the protection of Landlord, the Premises, the Building and the Project, from mechanics' and materialmen's liens. Tenant shall give
to Landlord at least five (5) business days' prior written notice of commencement of any repair or construction on the Premises. 


20.   ENTRY BY LANDLORD  


        Tenant shall permit Landlord and Landlord's Agents to enter into and upon the Premises at all reasonable times, upon reasonable notice (except in the case of an
emergency, for which no notice shall be required), and subject to Tenant's reasonable security arrangements, for the purpose of inspecting the same or showing the Premises to prospective purchasers,
lenders or tenants or to alter, improve,
maintain and repair the Premises or the Building as required or permitted of Landlord under the terms hereof, or for any other business purpose, without any rebate of Rent and without any liability to
Tenant for any of loss of occupation or quiet enjoyment of the Premises thereby occasioned (except for actual damages resulting from the gross negligence or willful misconduct of Landlord); and Tenant
shall permit Landlord to post notices of non-responsibility and ordinary "for sale" or "for lease" signs. No such entry shall be construed to be a forcible or unlawful entry into, or a
detainer of, the Premises, or an eviction of Tenant from the Premises. Landlord may temporarily close entrances, doors, corridors, elevators or other facilities without liability to Tenant by reason
of such closure in the case of an emergency and when Landlord otherwise reasonably deems such closure necessary. 



21.   DESTRUCTION AND DAMAGE  


        (a)   If
the Premises are damaged by fire or other perils covered by extended coverage insurance, Landlord shall, at Landlord's option: 



        (1)   In
the event of total destruction (which shall mean destruction or damage in excess of twenty-five percent (25%) of the full insurable value thereof) of the
Premises, elect either to commence promptly to repair and restore the Premises and prosecute the same diligently to completion, in which event this Lease shall remain in full force and effect; or not
to repair or restore the Premises, in which event this Lease shall terminate. Landlord shall give Tenant written notice of its intention within sixty (60) days after the date (the
"Casualty Discovery Date") Landlord obtains actual knowledge of such destruction. If Landlord elects not to restore the Premises, this Lease shall be
deemed to have terminated as of the date of such total destruction. 


        (2)   In
the event of a partial destruction (which shall mean destruction or damage to an extent not exceeding twenty-five percent (25%) of the full insurable
value thereof) of the Premises for which Landlord will receive insurance proceeds sufficient to cover the cost to repair and restore such partial destruction and, if the damage thereto is such that
the Premises may be substantially repaired or restored to its condition existing immediately prior to such damage or destruction within one hundred eighty (180) days from the Casualty Discovery
Date, Landlord shall commence and proceed diligently with the work of repair and restoration, in which event the 



20





 




Lease
shall continue in full force and effect. If such repair and restoration requires longer than one hundred eighty (180) days or if the insurance proceeds therefore (plus any amounts Tenant
may elect or is obligated to contribute) are not sufficient to cover the cost of such repair and restoration, Landlord may elect either to so repair and restore, in which event the Lease shall
continue in full force and effect, or not to repair or restore, in which event the Lease shall terminate. In either case, Landlord shall give written notice to Tenant of its intention within sixty
(60) days after the Casualty Discovery Date. If Landlord elects not to restore the Premises, this Lease shall be deemed to have terminated as of the date of such partial destruction. 




        (b)   If
the Premises are damaged by any peril not covered by extended coverage insurance, and the cost to repair such damage exceeds any amount Tenant may agree to
contribute, Landlord may elect either to commence promptly to repair and restore the Premises and prosecute the same diligently to completion, in which event this Lease shall terminate. Landlord shall
give Tenant written notice of its intention within sixty (60) days after the Casualty Discovery Date. If Landlord elects not to restore the Premises, this Lease shall be deemed to have
terminated as of the date on which Tenant surrenders possession of the Premises to Landlord, except that if the damage to the Premises materially impairs Tenant's ability to continue its business
operations in the Premises, then this Lease shall be deemed to have terminated as of the date such damage occurred. 


        (c)   Notwithstanding
anything to the contrary in this Paragraph 21, Landlord shall have the option to terminate this Lease, exercisable by notice to Tenant within
sixty (60) days after the Casualty Discovery Date, in each of the following instances: 



        (1)   If
more than twenty-five percent (25%) of the full insurable value of the Building is damaged or destroyed, regardless of whether or not the Premises are
destroyed. 


        (2)   If
the Building or the Project or any portion thereof is damaged or destroyed and the repair and restoration of such damage requires longer than one hundred eighty
(180) days from the Casualty Discovery Date. 


        (3)   If
the Building or the Project or any portion thereof is damaged or destroyed and the insurance proceeds therefore are not sufficient to cover the costs of repair and
restoration. 


        (4)   If
the Building or the Project or any portion thereof is damaged or destroyed during the last twelve (12) months of the Term. 




        (d)   In
the event of repair and restoration as herein provided, the monthly installments of Base Rent shall be abated proportionately in the ration which Tenant's use of the
Premises is impaired during the period of such repair or restoration, but only to the extent of rental abatement insurance proceeds received by Landlord, provided, however, that Tenant shall not be
entitled to such abatement to the extent that such damage or destruction was caused by the acts or inaction of Tenant or Tenant's Agents. The number of parking spaces allocated to Tenant hereunder
shall be reduced on a proportionate basis in the event any of the parking spaces in the Parking Areas are eliminated as a result of such damage or destruction affecting such Parking Areas. Except as
expressly provided in the immediately preceding sentence with respect to abatement of Base Rent, Tenant shall have no claim against Landlord for, and hereby releases Landlord and Landlord's Agents
from responsibility for and waives its entire claim of recovery for any cost, loss or expense suffered or incurred by Tenant as a result of any damage to or destruction of the Premises, the building
or the Project or the repair or restoration thereof, including, without limitation, any cost, loss or expense resulting from any loss of use of the whole or any part of the Premises, the Building or
the Project and/or any inconvenience or annoyance occasioned by such damage, repair or restoration unless caused by the gross negligence or the willful misconduct of Landlord. 


21







   
        (e)   If Landlord is obligated to or elects to repair or restore as herein provided, Landlord shall repair or restore only the initial Tenant Improvements constructed in the
Premises pursuant to the terms of this Lease, substantially to their condition existing immediately prior to the occurrence of the damage or destruction; and Tenant may, but shall not be obligated to,
promptly repair and restore, at Tenant's expense, Tenant's Alterations which were not constructed by Landlord. 



        (f)    Tenant
hereby waives the provisions of California Civil Code Section 1932(2) and Section 1933(4) which permit termination of a lease upon destruction of
the leased premises, and the provisions of any similar law now or hereinafter in effect, and the provisions of this Paragraph 21 shall govern exclusively in case of such destruction. 


        (g)   If
Landlord elects to repair or restore the Premises in accordance with the terms and conditions set forth in this Paragraph 21 but fails to substantially
complete such repair or restoration within two hundred and seventy (270) days after the Casualty Discovery Date (the "Repair Period") and such damage to the Premises materially and adversely
affects Tenant in the conduct of its business operations, Tenant shall have the right to terminate this Lease by providing written notice to Landlord within five (5) business days after the end
of the Repair Period, in which event this Lease shall terminate as of the date of such casualty. 


22.   CONDEMNATION  


        (a)   If
twenty-five percent (25%) or more of the Premises or the Building or the parking areas for the Building as shown on the Site Plan is taken for any public
or quasi-public purpose by any lawful governmental power or authority, by exercise of the right of appropriation, inverse condemnation, condemnation or eminent domain, or sold to prevent such taking
(each such event being referred to as a "Condemnation"), Landlord may, at its option, terminate this Lease as of the date title vests in the condemning
party. If twenty-five percent (25%) or more of the Premises is taken and if the Premises remaining after such Condemnation and any repairs by Landlord would materially and adversely affect
Tenant in the conduct of its business operations, Tenant shall have the right to terminate this Lease as of the date title vests in the condemning party. If either party elects to terminate this Lease
as provided herein, such election shall be made by written notice to the other party given within thirty (30) days after the nature and extent of such Condemnation have been finally determined.
If neither Landlord nor Tenant elects to terminate this Lease to the extent permitted above, Landlord shall promptly proceed to restore the Premises, to the extent of any Condemnation award received
by Landlord, to substantially the same condition as existed prior to such Condemnation, allowing for the reasonable effects of such Condemnation, and a proportionate abatement shall be made to the
Base Rent corresponding to the time during which, and to the portion of the floor area of the Premises (adjusted for any increase thereto resulting from any reconstruction) of which, Tenant is
deprived on account of such Condemnation and restoration, as reasonably determined by Landlord. In addition, the number of parking spaces allocated to Tenant hereunder shall be reduced on a
proportionate basis in the event any of the parking spaces in the Parking Areas are taken or otherwise eliminated as a result of any Condemnation affecting such Parking Areas. Except as expressly
provided in the immediately preceding sentence with respect to abatement of Base Rent, Tenant shall have no claim against Landlord for, and hereby releases Landlord and Landlord's Agents from
responsibility for and waives its entire claim of recovery for any cost, loss or expense suffered or incurred by Tenant as a result of any Condemnation or the repair or restoration of the Premises,
the Building or the Project or the parking areas for the Building or the Project following such Condemnation, including, without limitation, any cost, loss or expense resulting from any loss of use of
the whole or any part of the Premises, the Building, the Project or the parking areas and/or any inconvenience or annoyance occasioned by such Condemnation, repair or restoration. The provisions of
California Code of Civil Procedure Section 1265.130, which allows either party to petition the Superior Court to terminate the Lease in the event of a partial 


22





 

taking
of the Premises, the Building or the Project or the parking areas for the Building or the Project, and any other applicable law now or hereafter enacted, are hereby waived by Tenant. 


        (b)   Landlord
shall be entitled to any and all compensation, damages, income, rent, awards, or any interest therein whatsoever which may be paid or made in connection with
any Condemnation, and Tenant shall have no claim against Landlord for the value of any unexpired term of this Lease or otherwise; provided, however, that Tenant shall be entitled to receive any award
separately allocated by the condemning authority to Tenant for Tenant's relocation expenses or the value of Tenant's Property (specifically excluding fixtures, Alterations and other components of the
Premises which under this Lease or by law are or at the expiration of the Term will become the property of Landlord), provided that such award does not reduce any award otherwise allocable or payable
to Landlord. 


23.   ASSIGNMENT AND SUBLETTING  


        (a)   Except
as specifically provided for in (b) below, Tenant shall not voluntarily or by operation of law, (1) mortgage, pledge, hypothecate or encumber this
Lease or any interest herein, (2) assign or transfer this Lease or any interest herein, sublease the Premises or any part thereof, or any right or privilege appurtenant thereto, or allow any
other person (the employees and invitees of Tenant excepted) to occupy or use the Premises, or any portion thereof, without first obtaining the written consent of Landlord, which consent shall not be
unreasonably withheld, conditioned or delayed provided that Tenant is not then in Default under this Lease nor is any event then occurring which with the giving of notice or the passage of time, or
both, would constitute a Default hereunder. When Tenant requests Landlord's consent to such assignment or subletting, it shall notify Landlord in writing of the name and address of the proposed
assignee or subtenant and the nature and character of the business of the proposed assignee or subtenant and shall provide current and prior financial statements for the proposed assignee or subtenant
prepared in accordance with generally accepted accounting principles, consistently applied. Tenant shall also provide Landlord with a copy of the proposed sublease or assignment agreement, including
all material terms and conditions thereof. In the event Tenant wishes to assign or sublet the entire Premises for the remainder of the Term (except in either event in connection with a Permitted
Transfer) Landlord shall have the option, to be exercised within thirty (30) days of receipt of the foregoing, to (1) terminate this Lease in its entirety, (2) sublease or take an
assignment, as the case may be, from Tenant of the interest, in this Lease and/or the Premises that Tenant proposes to assign or sublease, on the same terms and conditions as stated in the proposed
sublet or assignment agreement, (3) consent to the proposed assignment or sublease, or (4) refuse its consent to the proposed assignment or sublease, providing that such consent shall
not be unreasonably withheld, conditioned or delayed so long as Tenant is not then in Default under this Lease nor is any event then occurring which with the giving of notice or the passage of time,
or both, would constitute a Default hereunder. In the event Landlord elects to terminate this Lease or sublease or take an assignment from Tenant of the interest in the Lease and/or the Premises that
Tenant proposes to assign or sublease as provided in the foregoing clauses (1) and (2), respectively, then Landlord shall have the additional right to negotiate directly with Tenant's proposed
assignee or subtenant and to enter into a direct lease or occupancy agreement with such party on such terms as shall be acceptable to Landlord in its sole and absolute discretion, and Tenant hereby
waives any claims against Landlord related thereto, including, without limitation, any claims for any compensation on profit related to such lease or occupancy agreement. 



        (b)   Without
otherwise limiting the criteria upon which Landlord may withhold its consent, Landlord shall be entitled to consider all reasonable criteria including, but not
limited to, the following: (1) whether or not the proposed subtenant or assignee is engaged in a business which, and the use of the Premises will be in an manner which, is in keeping with the
then character and nature of all other tenancies in the Project, (2) whether the use to be made of the Premises by the proposed subtenant or assignee will conflict with any
so-called "exclusive" use then in favor of any other tenant of the 


23





 



Building
or the Project, and whether such use would be prohibited by any other portion of this Lease, including, but not limited to, any rules and regulations then in effect, or under applicable Laws,
and whether such use imposes an unreasonable load upon he Premises and the Building and Project services, (3) the business reputation of the proposed individuals who will be managing and
operating the business operations of the assignee or subtenant, and the long-term financial and competitive business prospects of the proposed assignee or subtenant, and (4) the
creditworthiness and financial stability of the proposed assignee or subtenant in light of the responsibilities involved. In any event, Landlord may withhold its consent to any assignment or sublease,
if the actual use proposed to be conducted in the Premises or portion thereof conflicts with the provisions of Paragraph 9(a) or (b) above or with any other lease which restricts the use
to which any space in the Building or the Project may be put. Notwithstanding the foregoing, Tenant may, without Landlord's consent, but upon notice and delivery of evidence documenting such
assignment or subletting, assign or sublet to an Affiliate (as defined below) of the original Tenant, provided that such Affiliate has a net worth (calculated in accordance with generally accepted
accounting principles, consistently applied) equal to or greater than the net worth of the original Tenant on the Commencement Date or the date of the proposed assignment or subletting, whichever is
higher (such assignment or subletting being referred to as a "Permitted Transfer"). For purposes hereof,  "Affiliate" shall mean any person, firm or
corporation (i) which shall be controlled by, under the control of, or under common control with the
original Tenant, (ii) which results from a merger of, reorganization of, or consolidation with the original Tenant or (iii) which acquires substantially all of the stock or assets of the
original Tenant. For purposes hereof, "control" shall mean the possession, direct or indirect, of the power to direct or cause the direction of the
management and policies of a person, firm or corporation, whether through the ownership of voting securities, by contract or otherwise. 


        (c)   If
Landlord approves an assignment or subletting as herein provided, Tenant shall pay to Landlord, as Additional Rent, all of the difference, if any, between
(1) the Base Rent plus Additional Rent allocable to that part of the Premises affected by such assignment or sublease pursuant to the provisions of this Lease, and (2) the rent and any
additional rent payable by the assignee or sublessee to Tenant, less actual leasing commissions, reasonable attorneys' fees, tenant improvement costs and other reasonable
out-of-pocket expenses, if any, incurred by Tenant in connection with such assignment or sublease as evidenced by written records reasonably satisfactory to Landlord. The
assignment or sublease agreement, as the case may be, after approval by Landlord, shall not be amended without Landlord's prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed, and shall contain a provision directing the assignee or subtenant to pay the rent and other sums due thereunder directly to Landlord upon receiving written notice from Landlord
that Tenant is in default under this Lease with respect to the payment of Rent. In the event that, notwithstanding the giving of such notice, Tenant collects any rent or other sums from the assignee
or subtenant, then Tenant shall hold such sums in trust for the benefit of Landlord and shall immediately forward the same to Landlord. Landlord's collection of such rent and other sums shall not
constitute an acceptance by Landlord of attornment by such assignee or subtenant. A consent to one assignment, subletting, occupation or use shall not be deemed to be a consent to any other or
subsequent assignment, subletting occupation or use, and consent to any assignment or subletting shall in no way relieve Tenant of any liability under this Lease. Any assignment or subletting without
Landlord's consent shall be void, and shall, at the option of Landlord, constitute a Default under this Lease. 


        (d)   Notwithstanding
any assignment or subletting, Tenant and any guarantor or surety of Tenant's obligations under this Lease shall at all times remain fully responsible and
liable for the payment of the Rent and for compliance with all of Tenant's other obligations under this Lease (regardless of whether Landlord's approval has been obtained for any such assignment or
subletting). 


24





 



        (e)   Tenant
shall pay Landlord's reasonable fees (including, without limitation, the fees of Landlord's counsel), incurred in connection with Landlord's review and processing
of documents regarding any proposed assignment or sublease, which fees shall not exceed $1,500. 



        (f)    Notwithstanding
anything in this Lease to the contrary, in the event Landlord consents to an assignment or subletting by Tenant in accordance with the terms of this
Paragraph 23, Tenant's assignee or subtenant shall have no right to further assign this Lease or any interest therein or thereunder or to further sublease all or any portion of the Premises
except in accordance with the terms of this Paragraph 23. 


        (g)   Tenant
acknowledges and agrees that the restrictions, conditions and limitations imposed by this Paragraph 23 on Tenant's ability to assign or transfer this Lease
or any interest herein, to sublet the Premises or any part thereof, to transfer or assign any right or privilege appurtenant to the Premises, or to allow any other person to occupy or use the Premises
or any portion thereof, are, for the purposes of California Civil Code Section 1951.4, as amended from time to time, and for all other purposes, reasonable at the time that the Leas was entered
into, and shall be deemed to be reasonable at the time that Tenant seeks to assign or transfer this Lease or any interest herein, to sublet the Premises or any part thereof, to transfer or assign any
right or privilege appurtenant to the Premises, or to allow any other person to occupy or use the Premises or any portion thereof. 


24.   TENANT'S DEFAULT  


        The occurrence of any one of the following events shall constitute an event of default on the part of Tenant ("Default"): 



        (a)   The
vacation of the Premises for a period, in the aggregate, of six (6) months or abandonment of the Premises by Tenant for a period of ten
(10) consecutive days or any vacation or abandonment of the Premises by Tenant which would cause any insurance policy to be invalidated or otherwise lapse, or the failure of Tenant to
continuously operate Tenant's business in the Premises, in each of the foregoing cases irrespective of whether or not Tenant is then in monetary default under this Lease. Tenant agrees to notice and
service of notice as provided for in this Lease and waives any right to any other or further notice or service of notice which Tenant may have under any statute or law now or hereafter in effect; 



        (b)   Failure
to pay any installment of Rent or any other monies due and payable hereunder, said failure continuing for a period three (3) days after Landlord's notice
of such failure; 


        (c)   A
general assignment by Tenant or any guarantor or surety of Tenant's obligations hereunder (collectively, "Guarantor") for the benefit of creditors; 


        (d)   The
filing of a voluntary petition in bankruptcy by Tenant or any Guarantor, the filing by Tenant or any Guarantor of a voluntary petition for an arrangement, the filing
by or against Tenant or any Guarantor of a petition, voluntary or involuntary, for reorganization, or the filing of an involuntary petition by the creditors of Tenant or any Guarantor, said
involuntary petition remaining undischarged for a period of sixty (60) days. 


        (e)   Receivership,
attachment, or other judicial seizure of substantially all of Tenant's assets on the Premises, such attachment or other seizure remaining undismissed or
undischarged for a period of sixty (60) days after the levy thereof; 


        (f)    Death
or disability of Tenant or any Guarantor, if Tenant or such Guarantor is a natural person, or the failure by Tenant or any Guarantor to maintain its legal
existence, if Tenant or such Guarantor is a corporation, partnership, limited liability company, trust or other legal entity; 



25





 




        (g)   Failure
of Tenant to execute and deliver to Landlord any estoppel certificate, subordination agreement, or lease amendment in the time periods and manner required by
Paragraphs 30 or 31 or 42; 


        (h)   An
assignment or sublease, or attempted assignment or sublease, of this Lease or the Premises by Tenant contrary to the provision of Paragraph 24, unless such
assignment or sublease is expressly conditioned upon Tenant having received Landlord's consent thereto; 


        (i)    Failure
of Tenant to restore the Security Deposit to the amount and within the time period provided in Paragraph 7 above; 


        (j)    Failure
in the performance of any of Tenant's covenants, agreements or obligations hereunder (except those failures specified as events of Default in subparagraphs (b),
(l) or (m) above or any other subparagraphs of this Paragraph 25, which shall be governed by such other Paragraphs),which failure continues for ten (10) days after written
notice thereof from Landlord to Tenant, provided that, if Tenant has exercised reasonable diligence to cure such failure and such failure cannot be cured within such ten (10) day period despite
reasonable diligence, Tenant shall not be in default under this subparagraph so long as Tenant thereafter diligently and continuously prosecutes the cure to completion and actually completes such cure
within a reasonable time after the giving of the aforesaid written notice; 


        (k)   Chronic
delinquency by Tenant in the payment of Rent, or any other periodic payments required to be paid by Tenant under this Lease. "Chronic
delinquency" shall mean failure by Tenant to pay Rent, or any other periodic payments required to be paid by Tenant under this Lease and Landlord's delivery of written notice
of such failure (i) for any here (3) months (consecutive or nonconsecutive) during any period of twelve (12) months or (ii) for any six (6) months (consecutive or
nonconsecutive) during the Term. In the event of a Chronic Delinquency, in addition to Landlord's other remedies for Default provided in this Lease, at Landlord's option, Landlord shall have the right
to require that Rent be paid by Tenant quarterly, in advance; 


        (l)    Chronic
overuse by Tenant or Tenant's Agents of the number of undesignated parking spaces set forth in the Basic Lease Information. "Chronic
Overuse" shall mean use by Tenant or Tenant's Agents of a number of parking spaces greater than the number of parking spaces set forth in the Basic Lease
Information more than three (3) times during any twelve (12) month period after written notice by Landlord; 


        (m)  Any
insurance required to be maintained by Tenant pursuant to this Lease shall be canceled or terminated or shall expire or be reduced or materially changed, except as
permitted in this Lease; and 


        (n)   Any
failure by Tenant to discharge any lien or encumbrance placed on the Project or any part thereof in violation of this Lease within ten (10) days after the
date such lien or encumbrance is filed or recorded against the Project or any part thereof. 




        Tenant
agrees that any notice given by Landlord pursuant to Paragraph 25(j), (k) or (l) above shall satisfy the requirements for notice under California Code of
Civil Procedure Section 1161, and Landlord shall not be required to give any additional notice in order to be entitled to commence an unlawful detainer proceeding. 



        Notwithstanding
anything in this Paragraph 24 to the contrary, Tenant may cure a Default under Paragraph 24(c), (d) or (f) above relating to the Guarantor (or
an event which with the giving of notice or the passing of time or both, would constitute such a Default hereunder) ("Potential Default"), by delivering
to Landlord a Letter of Credit in accordance with Paragraph 4 of this Lease within ten (10) days after written notice from Landlord of such Default or Potential Default. 


26





 



25.   LANDLORD'S REMEDIES  


        (a)    Termination.    In the event of any Default by Tenant, then in addition to any other
remedies available to Landlord at law or in equity and under this Lease, Landlord shall have the immediate option to terminate this Lease and all rights of Tenant hereunder by giving written notice of
such intention to terminate. In the event that Landlord shall elect to so terminate this Lease then Landlord may recover from Tenant: 



        (1)   the
worth at the time of award of any unpaid Rent and any other sums due and payable which have been earned at the time of such termination; plus; 


        (2)   the
worth at the time of award of the amount by which the unpaid Rent and any other sums due and payable which would have been earned after termination until the time of
award exceeds the amount of such rental loss Tenant proves could have been reasonably avoided; plus 



        (3)   the
worth at the time of award of the amount by which the unpaid Rent and any other sums due and payable for the balance of the term of this Lease after the time of
award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; plus 


        (4)   any
other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease or which in
the ordinary course would be likely to result therefrom, including, without limitation, (A) any costs or expenses incurred by Landlord (1) in retaking possession of the Premises;
(2) in maintaining, repairing, preserving, restoring, replacing, cleaning, altering, remodeling or rehabilitating the Premises or any affected portions of the Building or the Project, including
such actions undertaken in connection with the reletting or attempted reletting of the Premises to a new tenant or tenants; (3) for leasing commissions, advertising costs and other expenses of
reletting the Premises; or (4) in carrying the Premises, including taxes, insurance premiums, utilities and security precautions; (B) any unearned brokerage commissions paid in
connection with this Lease; (C) reimbursement of any previously waived or abated Base Rent or Additional Rent or any free rent or reduced rental rate granted hereunder; and (D) any
concession made or paid by Landlord to the benefit of Tenant in consideration of this Lease including, but not limited to, any moving allowances, contributions, payments or loans by Landlord for
tenant improvements or build-out allowances (including without limitation, any unamortized portion of the Tenant Improvement Allowance (such Tenant Improvement Allowance to be amortized
over the Term in the manner reasonably determined by Landlord), if any, and any outstanding balance (principal and accrued interest) of the Tenant Improvement Loan, if any), or assumptions by Landlord
of any of Tenant's previous lease obligations; plus 


        (5)   such
reasonable attorneys' fees incurred by Landlord as a result of a Default, and costs in the event suit is filed by Landlord to enforce such remedy; and plus 


        (6)   at
landlord's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable law. 




As
used in subparagraphs (1) and (2) above, the "worth at the time of award" is computed by allowing interest at an annual rate equal to
twelve percent (12%) per annum or the maximum rate permitted by law, whichever is less. As used in subparagraph (3) above, the "worth at the time of
award" is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award, plus one percent (1%). Tenant waives
redemption or relief from forfeiture under California Code of Civil Procedure Sections 1174 and 1179, or under any other pertinent present or future Law, in the event Tenant is evicted or Landlord
takes possession of the Premises by reason of any Default of Tenant hereunder. 


27





 

        (b)    Continuation of Lease.    In the event of any Default by Tenant, then in addition to
any other remedies available to Landlord at law or in equity and under this Lease, Landlord shall have the remedy described in California Civil Code Section 1951.4 (Landlord may continue this
Lease in effect after Tenant's Default and abandonment and recover Rent as it becomes due, provided Tenant has the right to sublet or assign, subject only to reasonable limitations). In addition,
Landlord shall not be liable in any way whatsoever for its failure or refusal to relet the Premises. For purposes of this Paragraph 25(b), the following acts by Landlord will not constitute the
termination of Tenant's right to possession of the Premises: 



        (1)   Acts
of maintenance or preservation or efforts so relet the Premises, including, but not limited to, alterations, remodeling, redecorating, repairs, replacements and/or
painting as Landlord shall consider advisable for the purpose of reletting the Premises or any part thereof; or 


        (2)   The
appointment of a receiver upon the initiative of Landlord to protect Landlord's interest under this Lease or in the Premises. 




        (c)    Re-entry.    In the event of any Default by Tenant, Landlord shall also
have the right, with or without terminating this Lease, in compliance with applicable law, to re-enter the Premises and remove all persons and property from the Premises; such property may
be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant. 


        (d)    Reletting.    In the event of the abandonment of the Premises by Tenant or in the event
that Landlord shall elect to re-enter as provided in Paragraph 25(c) or shall take possession of the Premises pursuant to legal proceeding or pursuant to any notice provided by law,
then if Landlord does not elect to terminate this Lease as provided in Paragraph 25(a), Landlord may from time to time, without terminating this Lease, relet the Premises or any part thereof
for such term of terms and at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable with the right to make alterations and repairs to
the Premises in Landlord's sole discretion. In the event that Landlord shall elect to so relet, then rentals received by Landlord from such reletting shall be applied in the following order:
(1) to reasonable attorneys' fees incurred by
Landlord as a result of a Default and costs in the event suit is filed by Landlord to enforce such remedies; (2) to the payment of any indebtedness other than Rent due hereunder from Tenant to
Landlord; (3) to the payment of any costs of such reletting; (4) to the payment of the costs of any alterations and repairs to the Premises; (5) to the payment of Rent due and
unpaid hereunder; and (6) the residue, if any, shall be held by Landlord and applied in payment of future Rent and other sums payable by Tenant hereunder as the same may become due and payable
hereunder. Should that portion of such rentals received from such reletting during any month, which is applied to the payment of Rent hereunder, be less than the Rent payable during the month by
Tenant hereunder, then Tenant shall pay such deficiency to Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, any costs and
expenses incurred by Landlord in such reletting or in making such alterations and repairs not covered by the rentals received from such reletting. 


        (e)    Termination.    No re-entry or taking of possession of the Premises by
Landlord pursuant to this Paragraph 25 shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination thereof
is decreed by a court of competent jurisdiction. Notwithstanding any reletting without termination by Landlord because of any Default by Tenant, Landlord may at any time after such reletting elect to
terminate this Lease for any such Default. 


        (f)    Cumulative Remedies.    The remedies herein provided are not exclusive and Landlord
shall have any and all other remedies provided herein or by law or in equity. 


        (g)    No Surrender.    No act or conduct of Landlord, whether consisting of the acceptance of
the keys to the Premises, or otherwise, shall be deemed to be or constitute an acceptance of the surrender 


28





 



of
the Premises by Tenant prior to the expiration of the Term, and such acceptance by Landlord of surrender by Tenant shall only flow from and must be evidenced by a written acknowledgment of
acceptance of surrender signed by Landlord. The surrender of this Lease by Tenant, voluntary or otherwise, shall not work a merger unless Landlord elects in writing that such merger take place, but
shall operate as an assignment to Landlord of any and all existing subleases, or Landlord may, at its option, elect in writing to treat such surrender as a merger terminating Tenant's estate under
this Lease, and thereupon Landlord may terminate any or all such subleases by notifying the sublessee of its election so to do within five (5) days after such surrender. 


26.   LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS  


        (a)   Without
limiting the rights and remedies of Landlord contained in Paragraph 25 above, if Tenant shall be in Default in the performance of any of the terms,
provisions, covenants or conditions to be performed or complied with by Tenant pursuant to this Lease, then Landlord may at Landlord's option, without any obligation to do so, and without notice to
Tenant perform any such term, provision, covenant, or condition, or make any such payment and Landlord by reason of so doing shall not be liable or responsible for any loss or damage thereby sustained
by Tenant or anyone holding under or through Tenant or any of Tenant's Agents, unless caused by Landlord's gross negligence or willful misconduct. 


        (b)   Without
limiting the rights of Landlord under Paragraph 25(a) above, Landlord shall have the right at Landlord's option, without any obligation to do so, to
perform any of Tenant's covenants or obligations under this Lease without notice to Tenant in the case of an emergency, as determined, by Landlord in its sole and absolute judgment, or if Landlord
otherwise determines in its reasonable discretion that such performance is necessary or desirable for the proper management and operation of the Building or the Project or for the preservation of the
rights and interests or safety of other tenants of the Building or the Project. 


        (c)   If
Landlord performs any of Tenant's obligations hereunder in accordance with this Paragraph 26, the full amount of the cost and expense incurred or the payment
so made or the amount of the loss so sustained shall immediately be owing by-Tenant to Landlord, and Tenant shall promptly pay to Landlord upon demand, as Additional Rent, the full amount
thereof with interest thereon from the date of payment by Landlord at the lower of (1) ten percent (10%) per annum, or (2) the highest rate permitted by applicable law. 


27.   ATTORNEY'S FEES  


        (a)   If
either party hereto fails to perform any of its obligations under this Lease or if any dispute arises between the parties hereto concerning the meaning or
interpretation of any provision of this Lease, then the defaulting party or the party not prevailing in such dispute, as the case may be, shall pay any and all costs and expenses incurred by the other
party on account of such default and/or in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a judgment in its favor under this Lease shall be recoverable separately from and in addition to any other amount included in
such judgment, and such attorneys' fees obligation is intended to be severable from the other provisions of this Lease and to survive and not be merged into any such judgment. 


        (b)   Without
limiting the generality of Paragraph 27(a) above, if Landlord utilizes the services of an attorney for the purpose of collecting any Rent due and unpaid
by Tenant or in connection with any other breach of this Lease by Tenant, Tenant agrees to pay Landlord reasonable attorneys' fees as determined by Landlord for such services, regardless of the fact
that no legal action may be commenced or filed by Landlord. 


29





 



28.   TAXES  


        Tenant shall be liable for and shall pay, prior to delinquency, all taxes levied against Tenant's Property. If any Alteration installed by Tenant pursuant to
Paragraph 12 or any of Tenant's Property is assessed and taxed with the Project or Building, Tenant shall pay such taxes to Landlord within ten (10) days after delivery to Tenant of a
statement therefor. 


29.   EFFECT OF CONVEYANCE  


        The term "Landlord" as used in this Lease means, from time to time, the then current owner of the Building or the Project containing the Premises, so that, in the
event of any sale of the Building or the Project, Landlord shall be and hereby is entirely freed and relieved of all covenants and obligations of Landlord arising hereunder from and after the date of
such transfer, and it shall be deemed and construed, without further agreement between the parties and the purchaser at any such sale, that the purchaser of the Building or the Project has assumed and
agreed to carry out any and all covenants and obligations of Landlord hereunder. 


30.   TENANT'S ESTOPPEL CERTIFICATE  


        From time to time, upon written request of either party (the "Requesting Party"), the other party (the  "Responding
Party") shall execute, acknowledge and deliver to the Requesting Party or its designee, a written certificate stating (a) the date
this Lease was executed, the Commencement Date of the Term and the date the Term expires; (b) the date Tenant entered into occupancy of the Premises; (c) the amount of Rent and the date
to which such Rent has been paid; (d) that this Lease is in full force and effect and has not been assigned, modified, supplemented or amended in any way (or, if assigned, modified,
supplemented or amended, specifying the date and terms of any agreement so affecting this Lease); (e) that this Lease represents the entire agreement between the parties with respect to
Tenant's right to use and occupy the Premises (or specifying such other agreements, if any); (f) that all obligations under this Lease to be performed by the Requesting Party as of the date of
such certificate have been satisfied (or specifying those as to which the Responding Party claims that the Requesting Party has yet to perform); (g) that all required contributions by Landlord
to Tenant on account of
Tenant's improvements have been received (or stating exceptions thereto); (h) that on such date there exist no defenses or offsets that Tenant has against the enforcement of this Lease by
Landlord (or stating exceptions thereto); (i) that no Rent or other sum payable by Tenant hereunder has been paid more than one (l) month in advance (or stating exceptions thereto):
(j) that a currently valid letter of credit and security deposit have been deposited with Landlord, stating the original amount thereof and any increases or decreases thereto and (k) any
other matters evidencing the status of this Lease that may be required either by a lender making a loan to Landlord to be secured by a deed of trust covering the Building or the Project or by a
purchaser of the Building or the Project or a purchase of Tenant's stock or assets. Any such certificate delivered pursuant to his Paragraph 30 may be relied upon by a prospective purchaser of
Landlord's interest or a mortgagee of Landlord's interest or assignee of any mortgage upon Landlord's interest in the Premises. If the Responding Party shall fail to provide such certificate within
ten (10) days of receipt by the Responding Party of a written request by the Requesting Party as herein provided, such failure shall, at the Requesting Party's election, constitute a Default
under this Lease. 


31.   SUBORDINATION  


        Landlord shall have the right to cause this Lease to be and remain subject and subordinate to any and all mortgages, deeds of trust and ground leases, if any
("Encumbrances") that are now or may hereafter be executed covering the Premises, or any renewals, modifications, consolidations, replacements or extensions thereof, for the full amount of all
advances made or to be made thereunder and without regard to the time or character of such advances, together with interest thereon and 


30





 



subject
to all the terms and provisions thereof; provided only, and as an express condition precedent to such subordination, that in the event of termination of any such ground lease or upon the
foreclosure of any such mortgage or deed of trust, so long as Tenant is not in default, the holder thereof ("Holder") shall agree to recognize Tenant's rights under this Lease as long as long as
Tenant shall pay the Rent and observe and perform all the provisions of this Lease to be observed and performed by Tenant. Within ten (10) days after Landlord's written request, Tenant shall
execute, acknowledge and deliver any and all reasonable documents required by Landlord or the Holder to effectuate such subordination. If Tenant fails to do so, such failure shall constitute a Default
by Tenant under this Lease. Notwithstanding anything to the contrary set forth in this Paragraph 31, Tenant hereby attorns and specifying the date and terms of any agreement so affecting this
Lease); (e) that this Lease represents the entire agreement between the parties with respect to Tenant's right to use and occupy the Premises (or specifying such other agreement, if any);
(f) that all obligations under this Lease to be performed by the Requesting Party as of the date of such certificate have been satisfied (or specifying those as to which the Responding Party
claims that the Requesting Party has yet to perform); (g) that all required contributions by Landlord to Tenant on account of Tenant's improvements have been received (or stating exceptions
thereto); (h) that on such date there exist no defenses or offsets that Tenant has against the enforcement of this Lease by Landlord (or stating exceptions thereto); (i) that no Rent or
other sum payable by Tenant hereunder has been paid more than one (i) months in advance (or stating exceptions thereto); (j) that a currently valid letter of credit and security deposit
have been deposited with Landlord, stating the original amount thereof and any increases and decreases thereto; and (k) any other matters evidencing the status of this Lease that may be
required either by a lender making a loan to Landlord to be secured by a deed of trust covering the Building or the Project or a purchase of Tenant's stock or assets. Any such certificate delivered
pursuant to this Paragraph 30 may be relied upon by a prospective purchaser of Landlord's interest or a mortgagee of Landlord's interest or assignee of any mortgage upon Landlord's interest in
the Premises. If the Responding Party shall fail to provide such certificate within ten (10) days of receipt by the Responding Party of a written request by the Requesting Party as herein
provided, such failure shall, at the Requesting Party's election, constitute a Default under this Lease. 


32.   ENVIRONMENTAL COVENANTS  


        (a)   Prior
to executing this Lease, Tenant has completed, executed and delivered to Landlord a Hazardous Materials Disclosure Certificate ("Initial Disclosure Certificate"),
a fully completed copy of which is attached hereto as Exhibit F and incorporated herein by this reference. Tenant covenants, represents and
warrants to Landlord that the information on the Initial Disclosure Certificate is, to the best of Tenant's knowledge, true and correct and accurately describes the Hazardous Materials which will be
manufactured, treated, used or stored on or about the Premises by Tenant or Tenant's Agents. Tenant shall, on an annual basis, complete, execute and deliver to Landlord an updated Disclosure
Certificate (each, an "Updated Disclosure Certificate") describing Tenant's then current and proposed future uses of Hazardous Materials on or about the Premises, which Updated Disclosure Certificates
shall be in the same format as that which is set forth in Exhibit For in such updated format as Landlord may reasonably require from time to
time. Tenant shall deliver to Landlord copies of any and all filings (a "Filing") made after the Commencement Date with any state, local or federal governmental agencies relating to Hazardous
Materials used or to be used on or about the Premises and Tenant shall promptly upon Landlord's request make appropriate representatives of Tenant available to discuss with Landlord any such Filing.
Tenant shall make no use of Hazardous Materials on or about the Premises except as described in the Initial Disclosure Certificate or an Updated Disclosure Certificate, as required hereunder. 


        (b)   As
used in this Lease, the term "Hazardous Materials" shall mean and include any substance that is or contains (1) any "hazardous substance" as now or hereafter
defined in § 101(14) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended 


31





 



("CERCLA")
(42 U.S.C. § 9601 et seq.) or any regulations promulgated under CERCLA; (2) any "hazardous waste" as now or hereafter
defined in the Resource Conservation and Recovery Act, as amended ("RCRA") (42 U.S.C. §6901 et seq.) or any regulations promulgated under
RCRA; (3) any substance now or hereafter regulated by the Toxic Substances Control Act, as amended ("TSCA") (15 U.S.C. § 2601 et
seq.) or any regulations promulgated under TSCA; (4) petroleum, petroleum by-products, gasoline, diesel fuel, or other petroleum hydrocarbons;
(5) asbestos and asbestos-containing material, in any form, whether friable or non-friable; (6) polychlorinated biphenyls; (7) lead and lead-containing
materials; or (8) any additional substance, material or waste (A) the presence of which on or about the Premises (i) requires reporting, investigation or remediation under any
Environmental Laws (as hereinafter defined), (ii) causes or threatens to cause a nuisance on the Premises or any adjacent area or property or poses or threatens to pose a hazard to the health
or safety of persons on the Premises or any adjacent area or property, or (iii) which, if it emanated or migrated from the Premises, could constitute a trespass, or (B) which is now or
is hereafter classified or considered to be hazardous or toxic under any Environmental Laws. 


        (c)   As
used in this Lease, the term "Environmental Laws" shall mean and include (1) CERCLA, RCRA and TSCA; and (2) any other federal, state or local laws,
ordinances, statutes, codes, rules, regulations, orders or decrees now or hereinafter in effect relating to (A) pollution, (B) the protection or regulation of human health, natural
resources or the environment, (C) the treatment, storage or disposal of Hazardous Materials, or (D) the emission, discharge, release or threatened release of Hazardous Materials into the
environment. 


        (d)   Tenant
agrees that during its use and occupancy of the Premises it will (1) not (A) permit Hazardous Materials to be present on or about the Premises
except in a manner and quantity necessary for the ordinary performance of Tenant's business or (B) release, discharge or dispose of any Hazardous Materials on, in, at, under, or emanating from,
the Premises, the Building or the Project; (2) comply with all Environmental Laws relating to Tenant's use of Hazardous Materials in, on or about the Premises in violation of any Environmental
Laws; and (3) immediately notify Landlord of (A) any inquiry, test, investigation or enforcement proceeding by any governmental agency or authority against Tenant, Landlord or the
Premises, Building or Project relating to any Hazardous Materials or under any Environmental Laws or (B) the occurrence of any event or existence of any condition that would cause a breach of
any of the covenants set forth in this Paragraph 32. 


        (e)   If
Tenant's use of Hazardous Materials on or about the Premises results in a release, discharge or disposal of Hazardous Materials on, in, at, under, or emanating from,
the Premises, the Building or the Project, Tenant agrees to investigate, clean up, remove or remediate such Hazardous Materials in full compliance with (1) the requirements of (A) all
Environmental Laws and (B) any governmental agency or authority responsible for the enforcement of any Environmental Laws; and (2) any additional requirements of Landlord that are
reasonably necessary to protect the value of the Premises, the Building or the Project. 


        (f)    Upon
reasonable notice to Tenant, Landlord may inspect the Premises and surrounding areas for the purpose of determining whether there exists on or about the Premises
any Hazardous Material or other condition or activity that is in violation of the requirements of this Lease or of any Environmental Laws. Such inspections may include, but are not limited to,
entering upon the property adjacent to or surrounding the Premises with drill rigs or other machinery for the purpose of obtaining laboratory samples. Landlord shall not be limited in the number of
such inspections during the Term of this Lease but such inspections shall be reasonable in light of the circumstances. In the event (1) such inspections reveal the presence of any such
Hazardous Material or other condition or activity caused by Tenant or its Agents in violation of the requirements of this Lease or of any Environmental Laws, or (2) Tenant or its Agents
contribute or knowingly consent to the importation of any Hazardous Materials in, on, under, through or about the Premises, the Building or the Project or knowingly exacerbate the condition of or the
conditions caused by any Hazardous Materials in, on, under, through 


32





 



or
about the Premises, the Building or the Project, Tenant shall reimburse Landlord for the cost of such inspections within ten (10) days of receipt of a written statement therefore. Tenant
will supply to Landlord such historical and operational information regarding the Premises and surrounding areas as may be reasonably requested to facilitate any such inspection and will make
available for meetings appropriate personnel having knowledge of such matters. Tenant agrees to give Landlord at least sixty (60) days' prior notice of its intention to vacate the Premises so
that Landlord will have an opportunity to perform such an inspection prior to such vacation. The right granted to Landlord herein to perform inspections shall not create a duty on Landlord's part to
inspect the Premises, or liability on the part of Landlord for Tenant's use, storage, treatment or disposal of Hazardous Materials, it being understood that Tenant shall be solely responsible for all
liability in connection therewith. 


        (g)   Landlord
shall have the right, but not the obligation, prior or subsequent to a Default, without in any way limiting Landlord's other rights and remedies under this
Lease, to enter upon the Premises, or to take such other actions as it deems necessary or advisable, to investigate, clean up, remove or remediate any Hazardous Materials or contamination by Hazardous
Materials present on, in, at, under, or emanating from, the Premises, the Building or the Project in violation of Tenant's obligations under this Lease or under any Environmental Laws. Notwithstanding
any other provision of this Lease, Landlord shall also have the right, at its election, in its own name or as Tenant's agent, to negotiate, defend, approve and appeal, at Tenant's expense, any action
taken or order issued by any governmental agency or authority with regard to any such Hazardous Materials or contamination by Hazardous Materials. All costs and expenses paid or incurred by Landlord
in the exercise of the rights set forth in this Paragraph 32 shall be payable by Tenant upon demand. 


        (h)   Tenant
shall surrender the Premises to Landlord upon the expiration or earlier termination of this Lease free of debris, waste or Hazardous Materials placed on, about or
near the Premises by Tenant or Tenant's Agents, and in a condition which complies with (i) all Environmental Laws relating to Hazardous Materials placed on, about or near the Premises by Tenant
or Tenant's Agents and (ii) any additional requirements of Landlord that are reasonably necessary to protect the value of the Premises, the Building or the Project, including, without
limitation, the obtaining of any closure permits or other governmental permits or approvals related to Tenant's use of Hazardous Materials in or about the Premises. Tenant's obligations and
liabilities pursuant to the provisions of this Paragraph 32 shall survive the expiration or earlier termination of this Lease. If it is determined by Landlord that the condition of all or any
portion of the Premises, the Building, and/or the Project is not in compliance with the provisions of this Lease with respect to Hazardous Materials, including, without limitation, all Environmental
Laws, at the expiration or earlier termination of this Lease, then at Landlord's sole option, Landlord may require Tenant to hold over possession of the Premises until Tenant can surrender the
Premises to Landlord in the condition in which the Premises existed as of the Commencement Date and prior to the appearance of such Hazardous Materials which Tenant or Tenant's Agents caused to be
present except for normal wear and tear, including, without limitation, the conduct or performance of any closures as required by any Environmental Laws. The burden of proof hereunder shall be upon
Tenant. For purposes hereof, the term "normal wear and tear" shall not include any deterioration in the condition or diminution of the value of any portion of the Premises, the Building, and/or the
Project in any manner whatsoever related to directly, or indirectly, Hazardous Materials. Any such holdover by Tenant will be with Landlord's consent, will not be terminable by Tenant in any event or
circumstance and will otherwise be subject to the provisions of Paragraph 35 of this Lease. 



        (i)    Tenant
agrees to indemnify and hold harmless Landlord from and against any and all claims, losses (including, without limitation, loss in value of the Premises, the
Building or the Project, liabilities and expenses (including attorneys' fees)) sustained by Landlord attributable to (1) any Hazardous Materials placed on or about the Premises, the Building or
the Project by Tenant or Tenant's Agents, or (2) Tenant's breach of any provision of this Paragraph 32. 


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        (j)    Landlord
agrees to indemnify and hold harmless Tenant from and against any and all claims, losses (including, without limitation, liabilities and expenses (including
attorneys' fees)) actually sustained by Tenant attributable to any Hazardous Materials placed on or about the Premises, the Building or the Project by Landlord or Landlord's Agents, but specifically
excluding any other third parties. 


        (k)   The
provisions of this Paragraph 32 shall survive the expiration or earlier termination of this Lease. 



33.   NOTICES  


        All notices and demands which are required or may be permitted to be given to either party by the other hereunder shall be in writing and shall be sent by United
States mail, postage prepaid, certified, or by personal delivery or overnight courier, addressed to the addressee at Tenant's Address or Landlord's Address as specified in the Basic Lease Information,
or to such other place as either party may from time to time designate in a notice to the other party given as provided herein. Copies of all notices and demands given to Landlord shall additionally
be sent to Landlord's property manager at the address specified in the Basic Lease Information or at such other address as Landlord may specify in writing from time to time. Notice shall be deemed
given upon actual receipt (or attempted delivery if delivery is refused), if personally delivered, or one (1) business day following deposit with a reputable overnight courier that provides a
receipt, or on the third (3rd) day following deposit in the United States mail in the manner described above. 


34.   WAIVER  


        The waiver of any breach of any term, covenant or condition of this Lease shall not be deemed to be a waiver of such term, covenant or condition or of any
subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of Rent by Landlord shall not be deemed to be a waiver of any preceding breach by
Tenant, other than the failure of Tenant to pay the particular rental so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such Rent. No delay or
omission in the exercise of any right or remedy of Landlord in regard to any Default by Tenant shall impair such a right or remedy or be construed as a waiver. Any waiver by Landlord of any Default
must be in writing and shall not be a waiver of any other Default concerning the same or any other provisions of this Lease. 


35.   HOLDING OVER  


        Any holding over after the expiration of the Term, without the express written consent of Landlord, shall constitute a Default and, without limiting Landlord's
remedies provided in this Lease, such holding over shall be construed to be a tenancy at sufferance, at a rental rate of one hundred fifty percent (150%) of the Base Rent last due in this Lease, plus
Additional Rent, and shall otherwise be on the terms and conditions herein specified, so far as applicable; provided, however, in no event shall any renewal or expansion option or other similar right
or option contained in this Lease be deemed applicable to any such tenancy at sufferance. I the Premises are not surrendered at the end of the Term or sooner termination of this Lease, and in
accordance with the provisions of Paragraphs 11 and 32(h), Tenant shall indemnify, defend and hold Landlord harmless from and against any and all loss or liability resulting from delay by Tenant in so
surrendering the Premises including, without limitation, any loss or liability resulting from any claim against Landlord made by any succeeding tenant or prospective tenant caused by such delay and
losses to Landlord due to lost opportunities to lease any portion of the Premises to any such succeeding tenant or prospective tenant, together with, in each case, actual attorneys' fees and costs. 


34





 



36.   SUCCESSORS AND ASSIGNS  


        (a)   The
terms, covenants and conditions of this Lease shall, subject to the provisions as to assignment, apply to and bind the heirs successors, executors, administrators
and assigns of all of the parties hereto. If Tenant shall consist of more than one entity or person, the obligations of Tenant under this Lease shall be joint and several. 


        (b)   Notwithstanding
anything in this Lease to the contrary, Landlord shall have the right to sell, transfer or otherwise convey, either separately or jointly, its interest
in the Building and/or Expansion Land and/or Expansion Building, and all of Landlord's related rights hereunder, to any Person, provided that the original Landlord hereunder retains the obligation to
construct and deliver the Building and, if Tenant exercises the Expansion Option, the Expansion Building, in accordance with the terms hereof. By way of example only (and without limiting Landlord's
rights under this Paragraph 36(b)), subject to compliance with applicable zoning and subdivision laws, Landlord shall have the right to convey its interest in the Building and retain its
interest in and rights and obligations hereunder with respect to the Expansion Land and/or the Expansion Building. Tenant agrees to cooperate with Landlord at Landlord's request and at Landlord's sole
cost and expense (except as limited below) and to enter into such substitute or replacement lease and option documents (the "Substitute Lease Documents") as Landlord shall reasonably request to
effectuate the intent of this subparagraph 36(b), (including any provision relating to payment of the Carry Costs, as hereinafter defined, to the original Landlord), provided that the obligations of
Tenant under this Lease shall not be increased nor shall Tenant's rights under this Lease be diminished as a result of the execution and delivery of such Substitute Lease Documents, and provided
further that Landlord shall pay Tenant's reasonable legal fees incurred in connection with such Substitute Lease Documents. 


37.   TIME  


        Time is of the essence of this Lease and each and every term, condition and provision herein. 


38.   BROKERS  


        Landlord and Tenant each represents and warrants to the other that neither it nor its officers or agents nor anyone acting on its behalf has dealt with any real
estate broker except the Broker(s) specified in the Basic Lease Information in the negotiating or making of this Lease, and each party agrees to indemnify and hold harmless the other from any claim or
claims, and costs and expenses, including attorneys' fees, incurred by the indemnified party in conjunction with any such claim or claims of any other broker or brokers to a commission in connection
with this Lease as a result of the actions of the indemnifying party. Landlord shall pay the brokerage commissions due to the Brokers listed in the Basic Lease Information. 


39.   LIMITATION OF LIABILITY  


        Tenant agrees that, in the event of any default or breach by Landlord with respect to any of the terms of the Lease to be observed and performed by Landlord or
with respect to the enforcement of an indemnity obligation of Landlord under this Lease (1) Tenant shall look solely to the then-current landlord's interest in the Building for the
satisfaction of such indemnity obligation of Landlord or for satisfaction of Tenant's remedies for the collection of a judgment (or other judicial process) requiring the payment of money by Landlord;
(2) no other property or assets of Landlord, its partners, shareholders, officers, directors, employees, investment advisors, or any successor in interest of any of them (collectively, the
"Landlord Parties") shall be subject to levy, execution or other enforcement procedure for the satisfaction of Tenant's remedies; (3) no personal liability shall at any time be asserted or
enforceable against the Landlord Parties, and (4) no judgment will be taken against the Landlord Parties (except for a judgment against Landlord which is enforceable only to the extent of 


35





 



Landlord's
interest in the Building). The provisions of this Paragraph shall apply only to the Landlord and the parties herein described, and shall not be for the benefit of any insurer nor any other
third party. 


40.   FINANCIAL STATEMENTS  


        Within ten (10) days after Landlord's request, Tenant shall deliver to Landlord the then current financial statements of Tenant (including interim periods
following the end of the last fiscal year for which annual statements are available), prepared or compiled by a certified public accountant, including a balance sheet and profit and loss statement for
the most recent prior year, all prepared in accordance with generally accepted accounting principles consistently applied. 



41.   RULES AND REGULATIONS  


        Tenant agrees to comply with such reasonable rules and regulations as Landlord may adopt from time to time for the orderly and proper operation of the Building
and the Project. Such rules may include but shall not be limited to the following: (a) restriction of employee parking to a limited, designated area or areas; and (b) regulation
of the removal, storage and disposal of Tenant's refuse and other rubbish at the sole cost and expense of Tenant. The then current rules and regulations shall be binding upon Tenant upon delivery of a
copy of them to Tenant. Landlord shall not be responsible to Tenant for the failure of any other person to observe and abide by any of said rules and regulations; provided however, Landlord shall
enforce such rules and regulation in a non-discriminatory manner. Landlord's current rules and regulations are attached to this Lease as  Exhibit E.


42.   MORTGAGEE PROTECTION  


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


        (b)    Rights to Cure.    Tenant agrees to give to any trust deed or mortgage holder
("Holder"), by registered mail, at the same time as it is given to Landlord, a copy of any notice of default given to Landlord, provided that prior to such notice Tenant has been notified, in writing,
(by way of notice of assignment of rents and leases, or otherwise) of the address of such Holder. Tenant further agrees that if Landlord shall have failed to cure such default within the time provided
for in this Lease, then the Holder shall have an additional twenty (20) days after expiration of such period, or after receipt of such notice from Tenant (if such notice to the Holder is
required by this Paragraph 42(b)), whichever shall last occur within which to cure such default or if such default cannot be cured within that time, then such additional time as may be
necessary if within such twenty (20) days, any Holder has commenced and is diligently pursuing the remedies necessary to cure such default (including but not limited to commencement of
foreclosure proceedings, if necessary to effect such cure), in which event this Lease shall not be terminated. 


43.   ENTIRE AGREEMENT  


        This Lease, including the Exhibits and any Addenda attached hereto, which are hereby incorporated herein by this reference, contains the entire agreement of the
parties hereto, and no representations, inducements, promises or agreements, oral or otherwise, between the parties, not embodied herein or therein, shall be of any force and effect. 


36





 



44.   INTEREST  


        Any installment of Rent and any other sum due from Tenant under this Lease which is not received by Landlord when due shall bear interest from the date such
payment was originally due under this Lease until paid at an annual rate equal to the maximum rate of interest permitted by law; provided, however, Landlord hereby waives its right to collect interest
on the first two (2) such sums not paid to Landlord as required hereunder. Payment of such interest shall not excuse or cure any Default by Tenant. In addition, Tenant shall pay all costs and
reasonable attorneys' fees incurred by Landlord in collection of such amounts. 


45.   INTERPRETATION  


        This Lease shall be construed and interpreted in accordance with the laws of the State of California. The parties acknowledge and agree that no rule of
construction to the effect that any ambiguities are to be resolved against the drafting party shall be employed in the interpretation of this Lease, including the Exhibits and any Addenda attached
hereto. All captions in this Lease are for reference only and shall not be used in the interpretation of this Lease. Whenever required by the context of this Lease, the singular shall include the
plural, the masculine shall include the feminine, and vice versa. If any provision of this Lease shall be determined to be illegal or unenforceable, such determination shall not affect any other
provision of this Lease and all such other provisions shall remain in full force and effect. As used herein, the term "gross negligence" shall mean any action or inaction taken with a reckless
disregard for the consequences. Unless otherwise specifically stated herein to the contrary, Landlord's consent may be given or withheld in Landlord's sole and absolute discretion. 


46.   REPRESENTATIONS AND WARRANTIES  


        (a)    Of Tenant.    Tenant hereby makes the following representations and warranties, each of
which is material and being relied upon by Landlord, is true in all respects as of the date of this Lease, and shall survive the expiration or termination of the Lease. 



        (1)   If
Tenant is an entity, Tenant is duly organized, validly existing and in good standing under the laws of the state of its organization and the persons executing this
Lease on behalf of Tenant have the full right and authority to execute this Lease on behalf of Tenant and to bind Tenant without the consent or approval of any other person or entity. Tenant has full
power, capacity, authority and legal right to execute and deliver this Lease and to perform all of its obligations hereunder. This Lease is a legal, valid and binding obligation of Tenant, enforceable
in accordance with its terms. 


        (2)   Tenant
has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an
involuntary petition by any creditors, (iii) suffered the appointment of a receiver to take possession of all or substantially all of its assets, (iv) suffered the attachment or other
judicial seizure of all or substantially all of its assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or
composition to its creditors generally. 




        (b)    Of Landlord.    Landlord hereby makes the following representations and warranties,
each of which is material and being relied upon by Tenant, is true in all respects as of the date of this Lease, and shall survive the expiration or termination of the Lease. 



        (1)   If
Landlord is an entity, Landlord is duly organized, validly existing and in good standing under the laws of the state of its organization and the persons executing
this Lease on behalf of Landlord have the full right and authority to execute this Lease on behalf of Landlord and to bind Landlord without the consent or approval of any other person or entity.
Landlord has full power, 



37





 

capacity,
authority and legal right to execute and deliver this Lease and to perform all of its obligations hereunder. This Lease is a legal, valid and binding obligation of Landlord, enforceable in
accordance with its terms. 


        (2)   Landlord
has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an
involuntary petition by any creditors, (iii) suffered the appointment of a receiver to take possession of all or substantially all of its assets, (v) admitted in writing its inability to
pay its debts as they come due, or (vi) made an offer of settlement, extension or composition to its creditors generally. 




47.   SECURITY  


        (a)   Tenant
acknowledges and agrees that, while Landlord may engage security personnel to patrol the Building or the Project, Landlord is not providing any security services
with respect to the Premises, the Building or the Project and that Landlord shall not be liable to Tenant for, and Tenant waives any claim against Landlord with respect to, any loss by theft or any
other damage suffered or incurred by Tenant in connection with any unauthorized entry into the Premises or any other breach of security with respect to the Premises, the Building or the Project. 


        (b)   Tenant
hereby agrees to the exercise by Landlord and Landlord's Agents, within their sole discretion, of such security measures as, but not limited to, the evacuation of
the Premises, the Building or the Project for cause, suspected cause or for drill purposes, the denial of any access to the Premises, the Building or the Project and other similarly related actions
that it deems necessary to prevent any threat of property damage or bodily injury. The exercise of such security measures by Landlord and Landlord's Agents, and the resulting interruption of service
and cessation of Tenant's business, if any, shall not be deemed an eviction or disturbance of Tenant's use and possession of the Premises, or any part hereof, or render Landlord or Landlord's Agents
liable to Tenant for any resulting damages, unless caused by the gross negligence or willful misconduct of Landlord, or relieve Tenant from Tenant's obligations under this Lease. 



48.   JURY TRIAL WAIVER  


        Tenant hereby waives any right to trial by jury with respect to any action or proceeding (i) brought by Landlord, Tenant or any other party, relating to
(A) this Lease and/or any understandings or prior dealings between the parties hereto, or (B) the Premises, the Building or the Project or any part thereof, or (ii) to which
Landlord is a party. Tenant hereby agrees that this Lease constitutes a written consent to waiver of trial by jury pursuant to the provisions of California Code of Civil Procedure Section 631. 



49.   OPTION TO RENEW  


        Tenant shall have two (2) options (each a "Renewal Option") to extend the Term of this Lease with respect to either the Building or the Expansion Space, or
both, each for a five (5) year extended term (the "Renewal Term"). If Tenant has exercised the Expansion Option set forth in Paragraph 52 below, Tenant may exercise the Renewal Option
with respect to all of the original Premises and/or the Expansion Space; provided however, as a condition to exercising such Renewal Option, Tenant must be in possession of at least fifty percent
(50%) of the square footage of the building for which Tenant desires to exercise the Renewal Option. Each Renewal Option shall be effective only if Tenant is not in Default under this Lease, nor has
any event occurred which with the giving of notice or the passage of time, or both, would constitute a Default hereunder, either at the time of exercise of the Renewal Option or the time of
commencement of the Renewal Term. If Tenant exercise the first Renewal Option in accordance herewith, the first Renewal Term shall commence on the day following the last day of the initial Term and
end on the day preceding the fifth anniversary thereof. If Tenant exercises 


38





 



the
second Renewal Option, the second Renewal Term shall commence on the day following the last day of the first Renewal Term and end on the day preceding the fifth anniversary thereof. The second
Renewal Option may not be exercised unless Tenant has previously exercised the first Renewal Option. Each Renewal Term, if properly exercised, shall be upon the same terms and conditions as the Lease
except for Base Rent (which shall be determined as provided in the following provisions of this Paragraph) and the size of the Premises (which shall be determined based upon the square footage of the
space subject to the Renewal Notice). The Renewal Option shall be personal to Tenant and any transferee of a Permitted Transfer and shall not be assignable or otherwise transferable to any other
permitted assignee, subtenant or other third parties and there shall be no further Renewal Option beyond the expiration of the second Renewal Term. In order to exercise a Renewal Option, Tenant shall
give written notice to Landlord of Tenant's exercise of such election ("Tenant's Notice") at least ten (10) months prior to expiration of the then current Term and if such notice is not so
given, the Renewal Option shall lapse; the Tenant hereby expressly acknowledges and agrees that time is of the essence for purposes of notice of exercise of a Renewal Option and that Tenant's failure
to do so by said date will relieve Landlord of any obligation under this Paragraph. If Tenant gives such notice within the time prescribed, Landlord and Tenant shall be deemed to have entered into an
extension of this lease with respect to the entirety of the Premises for a five (5) year extended term on the terms and conditions set forth herein. 


        The
monthly Base Rent payable during any Renewal Term shall be an amount equal to the greater of (i) the monthly Base Rent payable for the last month of the then expiring Term, or
(ii) the Fair Market Rent (as hereinafter defined), multiplied by the number of square feet constituting the Premises. "Fair Market Rent" shall mean the rate being charged for comparable
Office/R&D space in the Northern Peninsula market area (excluding the City of San Francisco), taking into consideration: tenant credit, tenant improvements or allowances provided or to be provided and
leasing commissions but excluding tenant improvements paid for by Tenant. Landlord and Tenant shall meet and attempt in good faith to mutually determine Fair Market Rent for the purposes of the
foregoing. If the parties have not reached agreement on Fair Market Rent by the date that is thirty (30) days after Tenant's Notice, each party shall appoint an appraiser and shall give to the
other party the identity of the appraiser no later than the date that is forty (40) days after the Tenant's Notice. If either party fails to appoint an appraiser by the date that is forty
(40) days after Tenant's Notice, the sole appraiser appointed, if any, shall determine the Fair Market Rent. If two appraisers are appointed, they shall immediately meet and attempt to agree
upon such Fair Market Rent. If the appraisers cannot reach agreement on the Fair Market Rent by the date that is sixty (60) days after Tenant's Notice, each appraiser shall submit a
determination of Fair Market Rent to Landlord and Tenant. If the determinations of Fair Market Rent made by these two appraisers vary by five percent (5%) or less, the Fair Market Rent shall be the
average of the two determinations. If the determinations vary by more than five percent (5%), the two appraisers shall within ten (10) days after submission of their determinations, appoint a
third appraiser. If the two appraisers shall be unable to agree on the selection of a third appraiser within the 10-day period, then either Tenant or Landlord may request such appointment
by petitioning the presiding judge of the Superior Court in and for the County of San Mateo. Such third appraiser shall, within thirty (30) days after appointment, make a determination of the
Fair Market Rent and submit such determination to Landlord and Tenant. The Fair Market Rent shall be the determination of Fair Market Rent submitted by the original two appraisers that is closer to
the Fair Market Rent determination of the third appraiser. If the third appraiser's determination is exactly between the Fair Market Rent determination of the original two appraisers, then Fair Market
Rent shall be the average of the original two determinations. For purposes of this Paragraph, "appraiser" shall mean a licensed commercial real estate broker or MAI designated appraiser with not less
than 5 years of full-time commercial appraisal or brokerage experience in the Northern Peninsula market area. Each party shall bear the fees and costs incurred by each party's
appraiser in connection with the determination of Fair Market Rent and all fees and costs incurred by the third appraiser, if 


39





 



any,
in connection with the determination of Fair Market Rent shall be shared equally by Landlord and Tenant. If the determination of Fair Market Rent has not been made by the expiration of the then
expiring Term, Tenant shall (i) continue to pay monthly Base Rent at the monthly Base Rent for the last month of the Term (the "Arbitration Period Base Rent") as well as any additional rent due
under the Lease and (ii) pay to Landlord, or receive as a refund from Landlord, as applicable, on the first day of the month after the determination of Fair Market Rent is made, an amount, if
any, equal to the difference between the Arbitration Period Base Rent that was paid to Landlord and the monthly Base rent for the Renewal Term that should have been paid to Landlord as the monthly
Base Rent for the Renewal Term as determined hereunder. 


50.   RIGHT OF FIRST NEGOTIATION  


        Provided Tenant is not then in Default hereunder, Landlord shall notify Tenant of the availability of any existing rentable space available within the Project
during the Term, (the "Negotiation Space"). Landlord agrees to review and negotiate in good faith with Tenant any proposals submitted by Tenant with respect to leasing the Negotiation Space prior to
entering into any final lease agreement for the Negotiation Space with third parties. Tenant's rights under this Paragraph are subject and subordinate to any extension or expansion options of other
tenants of the Project, whether now existing or hereafter granted. If Landlord and Tenant are unable to execute a final lease agreement for the Negotiation Space within 20 days of Landlord's
notice to Tenant of the availability of the Negotiation Space, Landlord shall have no further obligation to Tenant under this Paragraph and shall be free to lease the space to any third parties.
Tenant hereby expressly acknowledges and agrees that time is of the essence for purposes of this Paragraph. Notwithstanding anything in this paragraph to the contrary, Landlord shall have no
obligation to lease to Tenant and Tenant shall have no obligation to lease from Landlord the Negotiation Space and as such, each party may act in its sole and absolute discretion in connection with
this Paragraph. 


51.   RIGHT OF FIRST OFFER  


        If subsequent to full execution of this Lease, Landlord desires to sell the Building and/or, if Tenant has exercised the expansion Option, the Expansion Building,
Landlord shall notify Tenant in writing of such intent to sell (the "Offer Notice"); provided however, Landlord shall not be required to provide Tenant with the Offer Notice with respect to the
Building or Expansion Building if Landlord has previously terminated this Lease with respect to, or recaptured, all or any portion of the Premises or the Expansion Space, respectively. Tenant's right
to receive the Offer Notice shall further be effective only if Tenant is not in Default under this Lease, nor has any event occurred which with the giving of notice or the passage of time, or both,
would constitute a Default hereunder. In the event Tenant desires to purchase the Building and/or the Expansion Building, Tenant shall notify Landlord in writing of its election to purchase the
Building and/or the Expansion Building (the "Election Notice") within thirty (30) days following Tenant's receipt of the Offer Notice. In the event Tenant timely delivers the Election Notice to
Landlord, the parties shall thereafter execute a purchase and sale agreement (the "Purchase and Sale Agreement") reasonably acceptable to both Landlord and Tenant with the purchase price of the
building and/or the Expansion Building equal to the quotient of the Net Operating Income (as defined below) of the building and/or the Expansion Building divided by nine one hundredths (.09) and with
a closing to be held on or before the date that is one hundred and eighty (180) days after delivery of the Offer Notice. If Tenant fails to deliver an Election Notice within the
30-day time period, or if Tenant has not executed the Purchase and Sale Agreement within thirty (30) days after the date of Landlord's receipt of the Election Notice, Tenant's right
to purchase the Building and/or the Expansion Building hereunder shall automatically terminate and be of no further force and effect with respect to Landlord or any subsequent purchaser and Landlord
shall thereafter have the right to sell the Building and/or the Expansion Building at anytime to any third party. Tenant hereby expressly acknowledges and agrees that time is of the essence of
purposes of the Election Notice and that Tenant's failure to deliver 


40





 



such
Election Notice as specified herein will relieve Landlord of any obligation under this Paragraph. As used herein, Net Operating Income shall mean the Base rent due under the lease with respect to
the Building or the Expansion Building, as applicable, for the (12) full calendar months following the Offer Notice. Notwithstanding anything in this Paragraph to the contrary, this Paragraph
shall be inapplicable to, and Landlord shall have no obligation to provide an Offer notice to Tenant in connection with any sale or proposed sale of the Building and/or the Expansion Building to any
Person (as defined below) who is the owner of at least a fifty-one percent (51%) legal or beneficial interest and holder of a controlling interest in Landlord as of the date of this Lease
or at anytime in the future. As used herein "Person" shall mean any natural person, corporation, firm, association or other entity, whether acting in an individual, fiduciary or other capacity.
Tenant's rights under this Paragraph 51 shall survive Landlord's transfer to such Person. 


52.   RIGHT TO EXPAND  


        (a)   Tenant
shall have one (1) option to expand (the "Expansion Option") the Premises to include an approximately 50,400 square feet Building (the "Expansion Space")
to be constructed in the Project in the area shown on the attached Exhibit G (the "Expansion Land"). The Expansion Option shall be effective only
if Tenant is not in Default under this Lease, nor has any event occurred which with the giving of notice or the passage of time, or both, would constitute a default hereunder, either at the time of
exercise of the Expansion Option or the time of delivery of the Expansion Space. The Expansion option shall be personal to Tenant and any transferee of a permitted transfer and shall not be assignable
or otherwise transferable to any other permitted assignee, subtenant or other third parties. in order to exercise the expansion option, Tenant shall give written notice to Landlord (the "Expansion
Notice") on or before the date (the "Final Expansion Notice Date") that is the last day of the first Lease Year. If the Expansion Notice is not so given, the Expansion Option shall, except as provided
in (b) below, automatically lapse; Tenant hereby expressly acknowledges and agrees that time is of the essence for purposes of delivering the Expansion Notice and that Tenant's failure to do so
by the Final Expansion Notice Date will relieve Landlord of any obligation under this Paragraph 52. 


        (b)   Notwithstanding
the terms of Paragraph 52(a) above, Tenant shall have the right to extend the Final Expansion Notice Date to the last day of the second Lease
Year, provided that, on or before the expiration of the first Lease Year Tenant delivers written notice of such election to Landlord (the "Extension Notice"). If the Extension Notice is not so given,
the Expansion Option shall automatically lapse; Tenant hereby expressly acknowledges and agrees that time is of the essence for purposes of delivering the Extension Notice and that Tenant's failure to
do so by said date will relieve Landlord of any obligation under this Paragraph 52. If Tenant delivers the Extension Notice in a timely manner as provided herein, Tenant shall have until the
end of the second Lease Year, (the "extended Expansion Notice Date") to exercise the Expansion Option by delivering an Expansion Notice to Landlord. If Tenant provides an Extension Notice to Landlord
and thereafter fails to exercise the Expansion Option in accordance with this Paragraph 52(b), the monthly Base Rent then payable under this Lease shall be increased by five cents ($0.05) per
square foot and such increased Base Rent shall thereafter be increased by one hundred and four percent (104%) of the Monthly Base Rent for the preceding Lease Year. By way of example, the monthly Base
Rent payable hereunder on a square footage basis during the third Lease Year shall be adjusted to equal $87,014.59 which amount equals (i) the monthly Base Rent for the Third Lease Year, plus
(ii) five cents ($.05) per square foot and therefore, the monthly Base Rent for the fourth Lease Year shall be $90,495.17. 


        (c)   The
Expansion Notice shall specify the date Tenant desires to occupy the Expansion Space (the "Requested Delivery Date"). The Requested Delivery Date shall be no earlier
than ten (10) months and no later than thirty-six (36) months after the Commencement Date. Upon delivery of the expansion Notice and as a condition precedent to the
effectiveness thereof, Tenant shall (i) increase the security Deposit under this Lease by Seventy-Five Thousand Dollars ($75,000) to a total of One 


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Hundred
Fifty Thousand Dollars ($156,000), and (ii) provide Landlord with detailed financial statements and other information reasonably acceptable to Landlord demonstrating that; as of the
date of the Expansion Notice, Tenant has cash and cash equivalents, as defined in Paragraph 4 above, greater than Ten Million Dollars ($10,000,000) and a current ratio of 1.2 or greater. As
used in this Paragraph, "current ratio" shall mean the number obtained by dividing Tenant's current assets by current liabilities, as such amounts are shown on Tenant's then most recent quarterly
filing (Form 10-Q) with the Securities and Exchange Commission. Notwithstanding the condition in (ii) above, the Expansion Notice shall be effective if Tenant delivers to
Landlord, as additional security for the full and faithful performance of Tenant's covenants and obligations under this Lease, a letter of credit, in the form and subject to the terms and conditions
set forth in Paragraph 4 above, in the amount of Five Hundred Thousand Dollars ($500,000). Notwithstanding the terms of Paragraph 4, during the period from the Expansion Space
Commencement Date through the sixth Lease Year, the amount of such letter of credit shall be reduced by Twenty Thousand Dollars ($20,000) on the last day of each such Lease Year. During the period
from the seventh Lease Year through the Expiration Date, the amount of the letter of credit shall be reduced by Sixty-Three Thousand Three Hundred Thirty-Five Dollars ($63,335) on the last
day of each such Lease Year. 


        (d)   Upon
the Expansion Space Commencement Date (as defined in Exhibit B hereto), the Lease shall be deemed amended
such that the definition of Premises shall include the Expansion Space and the definition of Building shall include the newly constructed building in which the Expansion Space is located (the
"Expansion Building"). Tenant's occupancy of the Expansion Space shall be subject to all of the terms and conditions of this Lease except as specifically provided in Paragraph 52(f) below.
Without limiting the generality of the foregoing, Monthly Base Rent shall be due for the Expansion Space at the same rate per square foot as then being charged for the original Premises (such amount
being determined by dividing the Monthly Base Rent by the original Premises square footage) and shall be subject to the same adjustments as set forth in the Lease, and Tenant's Proportionate Share(s)
shall be adjusted to include the addition of the Expansion Space, provided that any monetary limitation on Expenses set forth in any provision of Paragraph 4 shall apply separately to each
building constituting a part of the Premises hereunder, except that the $265,000 monetary limitation in Paragraph 4(b)(o) shall remain at $25,000. If, for any reason whatsoever, the Expansion
Space Commencement Date does not occur on or before the Requested Delivery Date, the Expansion Option shall not be void or voidable, nor shall Landlord, or Landlord's Agents, be liable to Tenant for
any loss or damage resulting therefrom. Tenant shall not be liable for Rent with respect to the Expansion Space until the Expansion Space Commencement Date. Upon request from Landlord, Tenant shall
enter into a written amendment of the Lease prepared by Landlord and memorializing the expansion of the Premises to include the Expansion Space and the adjustment of the other economic terms of the
Lease. 


        (e)   In
consideration of Landlord's granting the Expansion Option and with the understanding that Landlord would not have otherwise agreed to the Expansion Option, Tenant
shall pay to Landlord upon execution of this Lease and on the first day of each succeeding calendar month the sum of Sixteen Thousand Dollars ($16,000) (the "Carry Costs") until such time as
(i) Tenant notifies Landlord that it has relinquished the Expansion Option, (ii) the Expansion Option expires in accordance with the terms of this Paragraph 52 or, (iii) if
the Tenant delivers an Expansion Notice, until ten (10) months prior to the requested Delivery Date (said amounts to be prorated during any partial calendar months hereunder). Notwithstanding
the foregoing, Tenant may elect, by delivering written notice of such election to Landlord upon execution of this Lease, to pay on the Commencement Date all carry Costs due for the period of time from
the date of this Lease through the Commencement Date, together with interest thereon at the rate of twelve percent (12%) per annum. All Carry Costs due from and after the Commencement Date shall be
paid to Landlord on a monthly basis as set forth above. Any delays in delivery of the Expansion Space beyond the Requested Delivery Date due to Tenant Delays or Force Majeure Events, as such terms are
defined in Exhibit B hereto, shall result in Tenant's continued payment of Carry Costs for the time attributable to the such delay. 


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        (f)    Promptly
after the exercise of the Expansion Option by Tenant, Landlord and Tenant shall enter into a building construction agreement and a premises construction
agreement (collectively, the "Expansion Construction Agreements') in form and content substantially similar to the Building Construction Agreement and Premises Construction Agreement attached hereto
as Exhibit A and Exhibit B, respectively, which Expansion Construction Agreements shall
set forth the rights and obligations of the parties with respect to the construction of the Expansion Building and the Premises. Without limiting the foregoing, the building construction agreement for
the Expansion Space shall include Conditions substantially similar to those set forth on Exhibit H with respect to the Original Premises and
performance periods for the satisfaction of such Conditions of equivalent duration to the performance periods specified on said Exhibit H (as
measured by the time periods from the date of this Lease to the respective Initial Window Dates). Landlord shall provide Tenant with a Tenant's Allowance equal to the Expansion Space TI Dollars, as
defined below, multiplied by the Expansion Space square footage, as finally determined. As used in this Paragraph, the "Expansion Space TI Dollars" shall mean an amount equal to Thirty Dollars
($30.00) increased at an annualized rate of four percent (4%) from the date of this Lease until the date the Expansion Notice is properly given. 


53.   MEMORANDUM OF LEASE  


        Promptly after full execution of this Lease, Landlord and Tenant shall execute and cause to be recorded a Memorandum of Lease in the form attached hereto as  Exhibit J. 


(signatures on next page)  


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        Landlord
and Tenant have executed and delivered this Lease as of the Date specified in the Basic Lease Information. 



	 	Landlord:	HMS GATEWAY OFFICE, L.P.

a Delaware limited liability company
	

 	

 	

By:	

Hines Gateway Office, L.P.,

General Partner
	

 	

 	

 	

By:	

Hines Interests Limited Partnership,

General Partner
	

 	

 	

 	

 	

By:	

Hines Holdings, Inc.,

General Partner
	

 	

 	

 	

 	

 	

By:	

/s/  JAMES BUIE      

	

 	

 	

 	

 	

 	

Name:	

James Buie

	

 	

 	

 	

 	

 	

Title:	

EVP

	

 	
Tenant:	

COULTER PHARMACEUTICAL, INC.,

a Delaware corporation
	

 	

 	

By:	

/s/  WILLIAM G. HARRIS      

	

 	

 	

Name:	

William G. Harris

	

 	

 	

Title:	

Vice President and CFO





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Exhibit 10.7