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Exhibit 10.8    
    






 

AMENDED AND RESTATED LEASE AGREEMENT  


BY AND BETWEEN 


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

AS LANDLORD 


and 


ADVANCED MEDICINE, INC.,
  a Delaware corporation 


AS
TENANT 


DATED
January 1, 2001 






 







 
 
 

TABLE OF CONTENTS    
    



	 
	 
	 
	 
	 	Page

	Basic Lease Information	 	viii
	

1.	

Amendment, Restatement, Supersession and Demise	
 	

1
	

2.	

Premises	
 	

1
	

 	

2.1	

Definition of Premises, Building, Project, Parking Areas, Common Areas	
 	

1
	

 	

2.2	

Construction of Base Building Improvements and Tenant Improvements; Special Provisions Relating to Expansion Approvals	
 	

2
	

 	

2.3	

Changes to Common Area	
 	

3
	

3.	

Term	
 	

3
	

 	

3.1	

Commencement Date	
 	

3
	

4.	

Rent	
 	

3
	

 	

4.1	

Monthly Base Rent	
 	

3
	

 	

4.2	

Additional Rent	
 	

4
	

 	

4.3	

Adjustment to Additional Rent	
 	

6
	

 	

4.4	

Payment of Additional Rent	
 	

6
	

 	

 	

4.4.1	

Expense Statement	
 	

6
	

 	

 	

4.4.2	

Calculation of Additional Rent	
 	

7
	

 	

 	

4.4.3	

Tenant's Proportionate Share(s)	
 	

7
	

 	

 	

4.4.4	

Tenant's Audit Rights	
 	

7
	

 	

4.5	

General Payment Terms	
 	

8
	

 	

4.6	

Special Provisions Regarding Bridge	
 	

8
	

5.	

Utility Expenses	
 	

8
	

 	

5.1	

Tenant's Obligation to Pay	
 	

8
	

 	

5.2	

Limitation of Landlord's Liability for Interruption of Utilities	
 	

8
	

6.	

Late Charge	
 	

9
	

7.	

Letter of Credit	
 	

9
	

8.	

Possession	
 	

10
	

 	

8.1	

Tenant's Right of Possession	
 	

10
	

 	

8.2	

Delay in Performance of Covenants Related to Base Building Improvements	
 	

10
	

 	

8.3	

Tenant's Right to Rent Abatement	
 	

10
	

9.	

Use of Premises	
 	

11
	

 	

9.1	

Permitted Use	
 	

11
	

 	

9.2	

Compliance with Governmental Regulations and Private Restrictions	
 	

12
	 	 	 	 	 	 





i







 

	

 	

9.3	

Compliance with Americans with Disabilities Act	
 	

13
	

10.	

Acceptance of Premises	
 	

14
	

11.	

Surrender	
 	

14
	

 	

11.1	

Surrender at Expiration or Termination	
 	

14
	

 	

11.2	

Removal Obligations and Abandonment of Tenant's Property	
 	

14
	

 	

11.3	

Indemnification	
 	

14
	

12.	

Alterations and Additions	
 	

15
	

 	

12.1	

Landlord's Consent Required	
 	

15
	

 	

12.2	

Alterations Permitted Without Landlord's Consent; Removal Requirements	
 	

15
	

 	

12.3	

Alterations at Tenant's Expense	
 	

15
	

 	

12.4	

Requirements of Request for Approval	
 	

16
	

 	

12.5	

Permits Required; Insurance Required	
 	

16
	

 	

 	

12.5.1	

Permits	
 	

16
	

 	

 	

12.5.2	

Insurance	
 	

16
	

 	

12.6	

Title to Improvements; Removal Rights; Financing	
 	

16
	

 	

12.7	

Computer, Utility and Telecommunications Equipment	
 	

17
	

 	

12.8	

Notice and Opportunity to Post Notice of Nonresponsibility	
 	

17
	

13.	

Maintenance and Repairs of Premises	
 	

17
	

 	

13.1	

Maintenance by Tenant	
 	

17
	

 	

13.2	

Maintenance by Landlord	
 	

18
	

 	

13.3	

Landlord's Right to Perform Tenant's Obligations	
 	

18
	

 	

13.4	

Tenant's Waiver of Rights	
 	

18
	

14.	

Landlord's Insurance	
 	

19
	

15.	

Tenant's Insurance	
 	

19
	

 	

15.1	

Commercial General Liability Insurance	
 	

19
	

 	

15.2	

Property Insurance	
 	

19
	

 	

15.3	

Worker's Compensation Insurance; Employer's Liability Insurance	
 	

20
	

 	

15.4	

Business Interruption Insurance	
 	

20
	

 	

15.5	

Insurance Standards and Evidence of Coverage	
 	

20
	

16.	

Indemnification	
 	

20
	

 	

16.1	

Of Landlord	
 	

20
	

 	

16.2	

Of Tenant	
 	

21
	

 	

16.3	

No Impairment of Insurance	
 	

21
	 	 	 	 	 	 



ii







 

	

17.	

Subrogation	
 	

21
	

18.	

Signs	
 	

21
	

19.	

Free from Liens	
 	

22
	

20.	

Entry by Landlord	
 	

22
	

21.	

Destruction and Damage	
 	

22
	

 	

21.1	

Damage Covered by Extended Coverage Insurance	
 	

22
	

 	

 	

21.1.1	

Material Damage; Insured Loss	
 	

22
	

 	

 	

21.1.2	

Minor Damage; Insured Loss	
 	

23
	

 	

 	

21.1.3	

Calculation of Restoration Period	
 	

23
	

 	

21.2	

Uninsured Loss	
 	

23
	

 	

21.3	

Casualty During Last Twelve Months of Term	
 	

23
	

 	

21.4	

Tenant's Right to Terminate Lease	
 	

23
	

 	

21.5	

Rent Abatement	
 	

24
	

 	

21.6	

Restoration of Base Building Improvements and Tenant Improvements	
 	

24
	

 	

21.7	

Waiver	
 	

24
	

22.	

Condemnation	
 	

24
	

23.	

Assignment and Subletting	
 	

25
	

 	

23.1	

Landlord's Consent Required Except for Permitted Transfers	
 	

25
	

 	

23.2	

Requirements of Request for Consent	
 	

25
	

 	

23.3	

Criteria To Be Considered in Connection with Request for Consent	
 	

26
	

 	

23.4	

Permitted Transfers	
 	

26
	

 	

23.5	

Excess Rent	
 	

27
	

 	

23.6	

No Release of Tenant	
 	

27
	

 	

23.7	

Payment of Landlord's Fees	
 	

27
	

 	

23.8	

No Consent to Further Assignment	
 	

27
	

 	

23.9	

Constraints Reasonable	
 	

28
	

24.	

Tenant's Default	
 	

28
	

25.	

Landlord's Remedies	
 	

29
	

 	

25.1	

Termination	
 	

29
	

 	

25.2	

Continuation of Lease	
 	

30
	

 	

25.3	

Re-entry	
 	

31
	

 	

25.4	

Reletting	
 	

31
	

 	

25.5	

Termination	
 	

31
	 	 	 	 	 	 





iii







 

	

 	

25.6	

Cumulative Remedies	
 	

31
	

 	

25.7	

No Surrender	
 	

31
	

26.	

Landlord's Right To Perform Tenant's Obligations	
 	

32
	

 	

26.1	

Landlord's Right to Perform	
 	

32
	

 	

26.2	

In Emergencies	
 	

32
	

 	

26.3	

Tenant's Obligation to Reimburse Landlord	
 	

32
	

27.	

Attorneys' Fees	
 	

32
	

 	

27.1	

Prevailing Party Entitled to Fees	
 	

32
	

 	

27.2	

Costs of Collection	
 	

32
	

28.	

Taxes	
 	

33
	

29.	

Effect of Conveyance	
 	

33
	

30.	

Tenant's Estoppel Certificate	
 	

33
	

31.	

Subordination	
 	

33
	

32.	

Environmental Covenants	
 	

34
	

 	

32.1	

Disclosure Certificate	
 	

34
	

 	

32.2	

Tenant's Obligation to Update Disclosure Certificate	
 	

34
	

 	

32.3	

Definition of Hazardous Materials	
 	

34
	

 	

32.4	

Definition of Environmental Laws	
 	

35
	

 	

32.5	

Tenant's Use of Hazardous Materials	
 	

35
	

 	

32.6	

Tenant's Remediation Obligations	
 	

35
	

 	

32.7	

Landlord's Inspections	
 	

35
	

 	

32.8	

Landlord's Right to Remediate	
 	

36
	

 	

32.9	

Condition of Premises Upon Expiration or Termination	
 	

36
	

 	

32.10	

Tenant's Indemnification of Landlord	
 	

36
	

 	

32.11	

Landlord's Indemnification of Tenant	
 	

37
	

 	

32.12	

Limitation of Tenant's Liability	
 	

37
	

 	

32.13	

Survival	
 	

37
	

33.	

Notices	
 	

37
	

34.	

Waiver	
 	

37
	

35.	

Holding Over	
 	

37
	

36.	

Successors and Assigns	
 	

38
	

 	

36.1	

Binding on Successors, Etc	
 	

38
	

 	

36.2	

Landlord's Right to Sell	
 	

38
	 	 	 	 	 	 



iv







 

	

37.	

Time	
 	

38
	

38.	

Brokers	
 	

38
	

39.	

Limitation of Liability	
 	

38
	

40.	

Financial Statements	
 	

39
	

41.	

Rules and Regulations	
 	

39
	

42.	

Mortgagee Protection	
 	

39
	

 	

42.1	

Modifications for Lender	
 	

39
	

 	

42.2	

Rights to Cure	
 	

39
	

43.	

Entire Agreement	
 	

40
	

44.	

Interest	
 	

40
	

45.	

Interpretation	
 	

40
	

46.	

Representations and Warranties	
 	

40
	

 	

46.1	

Of Tenant	
 	

40
	

 	

46.2	

Of Landlord	
 	

41
	

47.	

Security	
 	

41
	

 	

47.1	

Landlord Not Obligated to Provide Security	
 	

41
	

 	

47.2	

Tenant's Obligation to Comply with Security Measures	
 	

41
	

48.	

Jury Trial Waiver	
 	

42
	

49.	

Option To Renew	
 	

42
	

 	

49.1	

Commencement Dates	
 	

42
	

 	

49.2	

Renewal Option is Personal; Non-Transferable	
 	

42
	

 	

49.3	

Tenant's Notice of Exercise	
 	

42
	

 	

49.4	

Monthly Base Rent During Renewal Term	
 	

42
	

 	

 	

49.4.1	

Fair Market Rent Definition	
 	

43
	

 	

 	

49.4.2	

Determination of Fair Market Rent	
 	

43
	

 	

 	

49.4.3	

Arbitrator Qualifications	
 	

43
	

 	

 	

49.4.4	

Fees and Costs of Arbitrators	
 	

43
	

 	

 	

49.4.5	

Arbitration Period Base Rent	
 	

43
	

50.	

Parking	
 	

44
	

 	

50.1	

Grant of Parking License	
 	

44
	

 	

50.2	

No Assignment of Parking License	
 	

44
	

 	

50.3	

Visitor Parking	
 	

44
	

51.	

Right of First Offer	
 	

44
	 	 	 	 	 	 





v







 

	

 	

51.1	

Offer Notice	
 	

44
	

 	

51.2	

Election Notice	
 	

45
	

 	

51.3	

Purchase and Sale Agreement	
 	

45
	

 	

51.4	

Failure to Exercise or Sign Agreement	
 	

45
	

 	

51.5	

Net Operating Income	
 	

45
	

 	

51.6	

Landlord's Sale to Affiliate; Survival of Option	
 	

46
	

 	

51.7	

Concurrent Exercise of Rights of First Offer with respect to 901 Gateway Boulevard and 951 Gateway Boulevard	
 	

46
	

52.	

Memorandum of Lease	
 	

46




vi







 

Exhibit  


	A
	Base
Building Construction Agreement



	A-1
	Preliminary
Specifications for Base Building Improvements



	A-2
	Site
Plan



	B
	Premises
Construction Agreement



	B-1
	Description
of "Warm Shell" Improvements



	C
	Additional
Operational Guidelines



	D
	Rules
and Regulations



	E
	Hazardous
Materials Disclosure Certificate



	F
	Tenant's
Property



	G
	Memorandum
of Lease



	H
	Deferred
Allowance Amortization Memorandum 


vii








  



 
 

AMENDED AND RESTATED LEASE AGREEMENT    
    
    BASIC LEASE INFORMATION    
    



	Lease Date:	 	January 1, 2001
	

Landlord:	
 	

HMS Gateway Office, L.P. a Delaware limited partnership
	

Landlord's Address:	
 	

c/o Hines

101 California Street, Suite 1000

San Francisco, California 94111-5848

Attention: Tom Kruggel
	

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

 	
 	

 	

Hines

651 Gateway Boulevard, Suite 1140

South San Francisco, California 94080

Attention: Catherine Fogelman
	

Tenant:	
 	

Advanced Medicine, Inc., a Delaware corporation
	

Tenant's Contact Person:	
 	

Marty Glick
	

Tenant's Address:	
 	

901 Gateway Boulevard

South San Francisco, California 94080
	

Premises Square Footage:	
 	

Sixty thousand (60,000) square feet, subject to final determination by Landlord's Architect upon the commencement of the Term, such measurement to be made in accordance with BOMA standard definition of gross square footage.
	

Premises Address:	
 	

951 Gateway Boulevard

South San Francisco, California
	

Project:	
 	

Parcel B as shown on the Final Parcel Map 99-095 dated March 2000, prepared by Kier & Wright, together with all improvements constructed thereon.
	

Building (if not the same as the Project):	
 	

951 Gateway Boulevard

South San Francisco, California
	

Tenant's Proportionate Share of Project:	
 	

100%
	

Tenant's Proportionate Share of Building:	
 	

100%
	

Commencement Date:	
 	

November 1, 2001
	

Expiration Date:	
 	

March 31, 2012
	

Monthly Base Rent:	
 	

1.	

Monthly Base Rent for the period commencing on the Commencement Date and ending March 31, 2002 shall be $159,168.41
	

 	
 	

2.	

Monthly Base Rent for the period commencing April 1, 2002 and ending March 31, 2003 shall be $163,231.76;
	 	 	 	 



viii







 

	

 	
 	

3.	

Monthly Base Rent for the period commencing April 1, 2003 and ending March 31, 2004 shall be $167,417.01;
	

 	
 	

4.	

Monthly Base Rent for the period commencing April 1, 2004 and ending March 31, 2005 shall be $171,727.82;
	

 	
 	

5.	

Monthly Base Rent for the period commencing April 1, 2005 and ending March 31, 2006 shall be $176,167.95;
	

 	
 	

6.	

Monthly Base Rent for the period commencing April 1, 2006 and ending March 31, 2007 shall be $180,741.28;
	

 	
 	

7.	

Monthly Base Rent for the period commencing April 1, 2007 and ending March 31, 2008 shall be $185,451.82;
	

 	
 	

8.	

Monthly Base Rent for the period commencing April 1, 2008 and ending March 31, 2009 shall be $190,303.67;
	

 	
 	

9.	

Monthly Base Rent for the period commencing April 1, 2009 and ending March 31, 2010 shall be $195,301.08;
	

 	
 	

10.	

Monthly Base Rent for the period commencing April 1, 2010 through March 31, 2011 shall be $200,448.41;
	

 	
 	

11.	

Monthly Base Rent for the period commencing April 1, 2011 and ending March 31, 2012 shall be $205,750.16.
	

 	
 	

The above monthly Base Rent calculations are subject to change after final determination of the Premises square footage by Landlord's Architect and any such adjustment shall be based on a monthly base rate calculated from time to time by dividing the
applicable monthly Base Rent specified above by 60,000, and multiplying such monthly base rate by the actual square footage of the Premises.
	

Permitted Use:	
 	

General office and research and development activities associated with biotechnology/pharmaceutical services. All uses must be in accordance with all applicable Laws.
	

Unreserved Parking Spaces:	
 	

One hundred sixty (160) non-exclusive and undesignated parking spaces.
	

 	
 	

Except as otherwise provided in this Lease to the contrary, the foregoing parking calculation shall remain fixed and shall not be adjusted based upon the final determination of the Premises gross square footage.
	

Tenant Improvement Allowance:	
 	

Four Million Three Hundred Fifty-Eight Thousand Four Hundred Dollars ($4,358,400.00) (viz., $72.64 per square foot), subject to adjustment following the final determination of the Premises square footage
by Landlord's Architect upon the commencement of the Term, and any such adjustment shall be based on an amount equal to $72.64 multiplied by the applicable number of square feet involved.
	 	 	 	 





ix







 

	

Deferred Allowance:	
 	

Up to Nine Hundred Thousand Dollars ($900,000.00) (viz., $15.00 per square foot), subject to adjustment upon the final determination of the Premises square footage by Landlord's Architect. Subject to the
right of Tenant to prepay the Deferred Allowance in accordance with and to the extent provided in Section D of Exhibit B, the Deferred Allowance shall be amortized over the initial Term and repaid,
 together with accrued interest thereon, in accordance with said Section D of Exhibit B. Interest shall accrue on the initial Four Hundred Fifty Thousand Dollars ($450,000.00) disbursed by
Landlord at the per annum rate of 14% and on the second Four Hundred Fifty Thousand Dollars ($450,000.00) disbursed by Landlord at the per annum rate of 15%.




x








  



 
 

AMENDED AND RESTATED LEASE AGREEMENT    
    


        THIS AMENDED AND RESTATED LEASE AGREEMENT is made and entered into by and between Landlord and Tenant as of the Lease Date. 


R E C I T A L S  


        A.    Landlord
and Tenant are parties to that certain Lease Agreement, dated July 11, 2000 ("Original 951 Lease")
pursuant to which Landlord agreed to lease to Tenant, and Tenant agreed to lease from Landlord, the Premises which was contemplated to be comprised of a 50,000 square foot building to be constructed
on the Project. 


        B.    Tenant
has requested that Landlord construct a larger Premises consisting of an approximately 60,000 square foot building. 


        C.    Landlord
and Tenant now wish to amend and restate the Original 951 Lease to accommodate Tenant's request for an enlarged Premises, to make corresponding adjustments to
the Tenant Improvement Allowance and Rent and to amend other matters as set forth herein. 



        The
defined terms used in this Amended and Restated Lease Agreement which are defined in the Basic Lease Information attached to this Amended and Restated 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 Amended and Restated Lease Agreement are and shall be construed as a single instrument and are referred to herein as the
"Lease". 


 
 

OPERATIVE PROVISIONS    
    


1.     AMENDMENT, RESTATEMENT, SUPERSESSION AND DEMISE  


        This Lease shall amend and restate the Original 951 Lease in its entirety and shall supersede all provisions thereof. Landlord and Tenant hereby acknowledge and
agree that from and after the date of this Lease, the Original 951 Lease is hereby null, void and of no further force or affect. 



        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  



        2.1    Definition of Premises, Building, Project, Parking Areas, Common
Areas    


        The
"Premises" demised by this Lease consist of that certain building (the "Building") to be constructed in accordance with the provisions
hereof in the area shown on the Site Plan attached hereto as Exhibit A-2, which Building is to be located in that certain real estate
development (the "Project") specified in the Basic Lease Information. Subject to the provisions of this Lease, Landlord shall have the right to revise
the definition of "Project" from time to time as Landlord develops and improves the Project and surrounding real property now or hereafter owned by Landlord or its Affiliates (as hereinafter defined),
or sells to third parties portions of the Project or such adjacent properties. If at any time during the Term, Tenant is leasing, in accordance with the terms and conditions of this Lease, less than
the entire 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 


1







 



Landlord)
to use the Common Areas (as hereinafter defined), except that, with respect to the Project's parking areas (the "Parking Areas"), Tenant shall
have only the rights set forth in Paragraph 50 below. 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 (i) outside the Premises and outside other buildings occupied or intended to be occupied by tenants, and (ii) either
within the exterior boundary line of the Project or within the exterior boundary lines of properties abutting the Project, which areas and facilities are from time to time provided and designated by
Landlord for the non-exclusive use of Landlord, Tenant and other tenants of the Project or of the properties abutting the Project and their respective employees, guests and invitees,
including, without limitation, the Parking Areas. 


        2.2    Construction of Base Building Improvements and Tenant Improvements; Special Provisions Relating
to Expansion Approvals    



        (a)   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. The Base Building Improvements are generally described on  Exhibit A-1 hereto. 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. 


        (b)   Notwithstanding
anything to the contrary contained in this Lease or the Exhibits hereto, Tenant shall be solely responsible for all costs and expenses incurred by
Landlord in connection with the increase in the square footage of the Premises from approximately 50,000 square feet (as contemplated under the Original 951 Lease) to approximately 60,000 square feet
(as provided for hereunder) (the "Additional Expansion Costs"), excluding, however, the costs of constructing the Base Building Improvements to be paid
by Landlord pursuant to Exhibit A hereto. The "Additional Expansion Costs" shall include, without limitation, all architectural and engineering
fees and expenses incurred by Landlord in connection with the expansion of the Premises (including, without limitation, all costs of preparing the Base Building Plans and Specifications (as defined
within Exhibit A attached hereto)), all permitting fees, levies, assessments and other fees imposed by the City, the costs and expenses of
preparing all submissions
required to be made to the City, all costs of preparing and implementing any transportation demand management plan, and all other fees, costs and expenses incurred in connection with the obtaining of
the Expansion Approvals. The Additional Expansion Costs shall be deemed "Additional Rent" hereunder and shall be due and payable by Tenant to Landlord within ten (10) days following demand. 


        (c)   Without
limiting the terms of Paragraph 2.2(b) above, Tenant shall be solely responsible for performing all obligations required by the City to be performed by
Landlord or Tenant prior to or during the Term under the Revised Conditions of Approval (as hereinafter defined), all to the extent that such obligations were not imposed by the Original Conditions of
Approval (as hereinafter defined). Without limiting the generality of the foregoing, Tenant shall (i) implement the Transportation Demand Management Program, dated December 4, 2000,
prepared by Sequoia Solutions Consulting (the "TDM"), including, without limitation, conducting quarterly employee surveys, preparing and submitting to
the City an annual TDM Report and, if necessary, cooperating with the City and the Peninsula Congestion Relief Alliance in identifying and implementing changes to the TDM Program from time to time,
all as required by Section A.4 of the Revised Conditions of Approval, (ii) pay all costs associated with the TDM, including, without limitation, the actual costs of preparing the TDM and
the costs of installing an electric vehicle charging station and designated and protected motorcycle parking, and (iii) pay any additional Oyster Point Overpass fees assessed by the City in
connection with the issuance of the Expansion Approvals, including, without limitation, Oyster Point Overpass fees assessed pursuant to Section B.3 of the Revised Conditions of Approval. Tenant
shall pay all costs due under this Paragraph 2.2(c) directly to the party or parties to whom said amounts are owed. In the event that 



2







 




Landlord
shall pay any such amounts, then said sums shall be deemed Additional Rent hereunder and shall be paid to Landlord within ten (10) days of demand. As used herein,
"Original Conditions of Approval" means the "Proposed Conditions of Approval," PP-97-063/Mod 1; Neg. Dec. No.
ND-97-063/Mod 1, adopted at the September 9, 1998 Redevelopment Agency meeting, and "Revised Conditions of Approval"
means the "Proposed Conditions of Approval," PP-97-063/Mod 3 & V-97-063/Mod 3, adopted at the December 13, 2000 Redevelopment Agency
meeting. 




        2.3    Changes to Common Area    



        (a)   Landlord
has the right, in its sole and absolute discretion, from time to time, to: (i) make changes to the Common Areas, including, without limitation, changes
in the location, size, shape and number of driveways, entrances, parking spaces (provided, however, that 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;
(ii) close temporarily any of the Common Areas for maintenance or construction purposes so long as reasonable access to the Premises remains available; (iii) add additional buildings and
improvements to the Common Areas or remove existing buildings or improvements therefrom; (iv) 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 and the loading area serving the Premises remains available; and (v) do and perform any other acts or make any
other changes in, to or with respect to the Common Areas and the Project as Landlord may, in its sole and absolute discretion, deem to be appropriate. 


        (b)   Notwithstanding
the terms of Paragraph 2.3 (a) above, Tenant understands and acknowledges that Landlord will during the Term be developing the Project and
other lands owned by Landlord for Tenant and other tenants or occupants and that from time to time, whether during periods of construction or otherwise, Landlord may be unable to provide the full
number of parking spaces allocated to Tenant under this Lease in the Parking Areas. During such periods, Landlord shall have the right to provide parking to Tenant on properties reasonably proximate
to the Project (the "Adjacent Properties") or through the use of valets or parking attendants on the Parking Areas or the Adjacent Properties, provided
only that Tenant shall at all times have parking for the number of automobiles contemplated under this Lease. 




3.     TERM  


        3.1    Commencement Date    


        The
term of this Lease (the "Term") shall commence on November 1, 2001 (the "Commencement
Date") and shall expire on March 31, 2012 (the "Expiration Date"). 



4.     RENT  


        4.1    Monthly Base Rent    


        Commencing
on the Commencement Date 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 "Monthly Base Rent"). If the actual expiration or termination of the Term of this
Lease is not the last day of a calendar month, a prorated installment of Rent based on a per diem calculation shall be paid for the fractional calendar month during which the Rent commences or the
Term expires or terminates. 


3







 



        4.2    Additional Rent    


        This
Lease is intended to be a triple-net Lease with respect to Landlord; and subject to Paragraph 13.2 below, the Base Rent owing hereunder is (1) to be paid
by Tenant absolutely 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 4.2 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 by Landlord in connection with the
ownership, 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 (the "Additional Rent"): 



        1.    Taxes and Assessments.    All real estate taxes and assessments, which shall include any form of tax,
assessment, fee, license fee, business license fee, levy, penalty (if a result of Tenant's delinquency), or tax (other than net income, estate, succession, inheritance, transfer or franchise taxes),
imposed by any authority having the direct or indirect power to tax, or by any city, county, state or federal government or any improvement or other district or division thereof, whether such tax is
(i) determined by the area of the Premises, the Building and/or the Project or any part thereof, or the Rent and other sums payable hereunder by Tenant or by other tenants, including, but not
limited to, any gross income or excise tax levied by any of the foregoing authorities with respect to receipt of Rent and/or other sums due under this Lease; (ii) upon any legal or equitable
interest of Landlord in the Premises, the Building and/or the Project or any part thereof; (iii) upon this transaction or any document to which Tenant is a party creating or transferring any
interest in the Premises, the Building and/or the Project; (iv) levied or assessed in lieu of, in substitution for, or in addition to, existing or additional taxes against the Premises, the
Building and/or the Project, whether or not now customary or within the contemplation of the parties; or (v) surcharged against the parking area. Tenant and Landlord acknowledge that
Proposition 13 was adopted by the voters of the State of California in the June, 1978 election and that assessments, taxes, fees, levies and charges may be imposed by governmental agencies for such
purposes as fire protection, street, sidewalk, road, utility construction and maintenance, refuse removal and for other governmental services which may formerly have been provided without charge to
property owners or occupants. It is the intention of the parties that all new and increased assessments, taxes, fees, levies and charges due to any cause whatsoever are to be included within the
definition of real property taxes for purposes of this Lease. "Taxes and assessments" shall also include legal and consultants' fees, costs and disbursements incurred in connection with proceedings to
contest, determine or reduce taxes, Landlord specifically reserving the right, but not the obligation, to contest by appropriate legal proceedings the amount or validity of any taxes. In the event
Landlord elects not to contest the real property taxes and assessments levied against the Building with respect to any calendar year during the Term, and if Tenant demonstrates to Landlord's
reasonable satisfaction that such a contest would likely result in a reduction of such taxes and assessments, then Tenant shall have the right to retain a consultant to prosecute such contest, subject
to Landlord's reasonable approval of the identity of such consultant. Such contest shall be conducted at Tenant's sole cost and expense, provided that if Tenant prevails in such contest, the
reasonable fees and costs of Tenant's consultants shall, to the extent of any actual savings resulting from such contest, be equitably shared by Tenant and other tenant(s) who receive the benefit of
such savings. Tenant shall have the right to deduct from its payments of Additional Rent the shares of such fees and costs to be charged to other tenants, as reasonably determined by Landlord, and
Landlord shall cause such amounts to be billed or charged to the other benefited tenant(s). 



4







 

        2.    Insurance.    All insurance premiums for the Building and/or the Project or, subject to clause (i) of the
paragraph immediately following Paragraph 4.2(8) below, any part thereof, including premiums for "all risk" fire and extended coverage insurance, commercial general liability insurance, rent
loss or abatement insurance, earthquake insurance, flood or surface water coverage, and other insurance as Landlord deems necessary in its sole discretion, and any deductibles paid under policies of
any such insurance. 


        3.    Utilities.    The cost of all Utilities (as hereinafter defined) serving the Premises, the Building and the
Common Areas that are not separately metered to Tenant, any assessments or charges for Utilities or
similar purposes included within any tax bill for the Building or the Common Areas, including, without limitation, entitlement fees, allocation unit fees, and/or any similar fees or charges and any
penalties (if a result of Tenant's delinquency) related thereto, and any amounts, taxes, charges, surcharges, assessments or impositions levied, assessed or imposed upon the Building or the Common
Areas, or any part thereof, or upon Tenant's use and occupancy thereof, as a result of any rationing of Utility services or restriction on Utility use affecting the Building and/or the Common Areas,
as contemplated in Paragraph 5 below (collectively, "Utility Expenses"). 


        4.    Common Area Expenses.    All costs to operate, maintain, repair, replace, supervise, insure and administer the
Common Areas, including supplies, materials, labor and equipment used in or related to the operation and maintenance of the Common Areas, including parking areas (including, without limitation, all
costs of resurfacing and restriping parking areas), signs and directories on the Building and/or the Project, landscaping (including maintenance contracts and fees payable to landscaping consultants),
amenities, sprinkler systems, sidewalks, walkways, driveways, curbs, lighting systems and security services, if any, provided by Landlord for the Common Areas. 


        5.    Parking Charges.    Any parking charges or other costs levied, assessed or imposed by, or at the direction of,
or resulting from statutes or regulations, or interpretations thereof, promulgated by any governmental authority or insurer in connection with the use or occupancy of the Building or the Project. 



        6.    Maintenance and Repair Costs.    Except for costs which are the responsibility of Landlord pursuant to
Paragraph 13.2 below, all costs to maintain, repair, and replace the Premises, the Building and/or the Common Areas or any part thereof, including, without limitation, (i) all costs paid
under maintenance, management and service agreements such as contracts for janitorial, security and refuse removal, (ii) all costs to maintain, repair and replace the roof coverings of the
Building, (iii) all costs to maintain, repair and replace the heating, ventilating, air conditioning, plumbing, sewer, drainage, electrical, fire protection, life safety and security systems
and other mechanical and electrical systems and equipment serving the Premises, the Building and/or the Common Areas or any part thereof (collectively, the "Systems"), all to the extent that Landlord
or Landlord's Agents perform such tasks. 


        7.    Life Safety Costs.    All costs to install, maintain, repair and replace all life safety systems, including,
without limitation, all fire alarm systems, serving the Premises, the Building and/or the Common Areas or any part thereof (including all maintenance contracts and fees payable to life safety
consultants) whether such systems are or shall be required by Landlord's insurance carriers, Laws (as hereinafter defined) or otherwise, all to the extent that Landlord or Landlord's Agents perform
such tasks. 


        8.    Management and Administration.    All costs for management and administration of the Premises, the Building
and/or the Project or any part thereof, including, without limitation, a property management fee equal to two percent (2%) of the annual Rent derived from the Building, accounting, auditing, billing,
postage, legal and accounting costs and fees for licenses and 



5







 




permits
related to the ownership and operation of the Project (but specifically excluding any salaries and benefits of employees of Landlord or the property manager of the Building). 


        9.    Operational Fees Related To Expansion Approvals.    Any charges or other costs which are paid or incurred by
Landlord during the Term in relation to, as a result of, or as a condition to obtaining the Expansion Approvals (as defined in Exhibit A attached
hereto), including, without limitation, (i) any fees, levies or assessments charged by the City, (ii) the salaries of any parking administrators or managers and all other employees or
independent contractors who have been hired in response to any condition or obligation imposed in connection with the issuance of the Expansion Approvals, (iii) the costs and expenses incurred
in the establishment, management and administration of any transportation demand management plan, (iv) the costs and expenses incurred in the management, administration and operation of any
shuttle service, and (v) any similar costs and expenses incurred in relation to any program instituted as a result of, or as a condition to, obtaining the Expansion Approvals, whether or not
such charges, costs and/or expenses relate solely to the Project. 


        10.    Gateway Operational Expenses.    All charges, assessments, costs or fees levied by any association or entity of
which the Project or any part thereof is a member or to which the Project or any part thereof is subject (including, without limitation, the Gateway Property Owners' Association), or levied under or
imposed by any reciprocal easement agreement, joint operating agreement or other document, instrument or agreement to which the Project or any part thereof is subject. 




        Notwithstanding
anything in this Paragraph 4.2 to the contrary, (i) Tenant shall not be responsible for the payment of any Expenses which relate to or benefit solely
another building within the Project occupied or intended to be occupied by tenants or for which Landlord receives full reimbursement from other tenants, and (ii) with respect to all sums
payable by Tenant as Additional Rent under this Paragraph 4.2 for the replacement of any item or the construction of any new item in connection with the physical operation of the Premises, the
Building or the Project (i.e., HVAC, roof membrane or coverings and parking area) which is a capital item the replacement of which would be capitalized under generally accepted accounting principles
consistently applied, Tenant shall be required to pay only the prorata share of the cost of the item falling due within the Term (including any Renewal Term) based upon the amortization of the same
over the useful life of such item, as reasonably determined by Landlord. Such share shall be paid by Tenant on a monthly basis throughout the Term (rather than in a lump sum when incurred by
Landlord). 


        4.3    Adjustment to Additional Rent    


        Notwithstanding
any other provision herein to the contrary, if the Building 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 Building 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 Building, an amount greater than one hundred percent (100%) of the actual Expenses during any year of the Term. 



        4.4    Payment of Additional Rent    



        4.4.1    Expense Statement    




        Upon
the Commencement Date, 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 


6







 

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 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. 



        4.4.2    Calculation of Additional Rent    




        Landlord's
then-current annual operating and capital budgets for the Building and the Project shall be used for purposes of calculating Tenant's monthly payment of estimated
Additional Rent for the current year. 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. 



        4.4.3    Tenant's Proportionate Share(s)    




        With
respect to Expenses which Landlord allocates to the Building, Tenant's "Proportionate Share" 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 for a remeasurement of or changes in the physical size of the Premises or the
Building. With respect to Expenses which Landlord allocates to the Project, Tenant's "Proportionate Share" shall be the percentage set forth in the
Basic Lease Information as Tenant's Proportionate Share of the Project as adjusted by Landlord from time to time in connection with the construction of additional buildings within the Project or a
remeasurement of or changes in the physical size of the Premises or 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(s) 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 or only a portion of the Building and/or the Project or that varies with the occupancy of the Building and/or the Project; provided, however,
that Tenant's prorata allocation of any such Expense shall not be disproportionate to any other tenant's prorata allocation of such Expense. 



        4.4.4    Tenant's Audit Rights    




        Provided
that Tenant is not in Default under the terms of this Lease, Tenant, at its sole cost and expense, shall have the right within sixty (60) 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 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. 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, if
Landlord concurs with the results of Tenant's audit, Landlord shall promptly refund any excess payment to Tenant, as the case may be. 


7







 

Landlord
shall pay for any reasonable audit expenses if such excess payment exceeds the aggregate Expenses in Landlord's Expense Statement by seven percent (7%). 



        4.5    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, any interest assessed pursuant to Paragraph 44 below, and any repayments of the Deferred Allowance, are referred to collectively as the
"Rent." All Rent shall be paid without deduction, offset or abatement (except as specifically provided in this Lease) 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, 101 California Street, Suite 1000, San Francisco, California 94111-5848,
Attention: 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. 


        4.6    Special Provisions regarding Bridge    



        Notwithstanding
anything in this Section 4 to the contrary, Tenant shall not be required to pay Base Rent or Additional Rent on the Bridge (as defined in  Exhibit A hereto), if any, and the square
footage of the Bridge shall not be taken into account in determining Tenant's Proportionate Shares of
the Building and the Project. 


5.     UTILITY EXPENSES  


        5.1    Tenant's Obligation to Pay    



        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, cable T.V., telecommunications facilities 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, restrictions
or Laws. 


        5.2    Limitation of Landlord's Liability for Interruption of
Utilities    



        (a)   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; provided, however, that Landlord shall give Tenant not
less than forty-eight (48) hours' notice of any interruption of Utilities planned in advance by Landlord. Landlord shall also use reasonable efforts to notify Tenant of any planned interruption
of Utilities by any Utility service provider, provided that Landlord obtains actual knowledge of such planned interruption. 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 



8







 

bursting,
rupture, leakage, failure 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. 



        (b)   Notwithstanding
the provisions of Paragraph 5.2(a) above, if any Utility Services to the Premises are interrupted or interfered with as the result of the
negligence or willful misconduct of any contractors engaged by Landlord to perform services at the Project, then Landlord shall use commercially reasonable efforts to pursue any claims for
compensation or reimbursement available to Landlord against such contractors to the extent of any losses suffered by Tenant and shall make any monies received available to Tenant after allowance for
Landlord's costs of collection. In addition to the foregoing, if any policy of insurance maintained by Landlord with respect to the Premises provides coverage for losses incurred due to the failure of
Utilities, then Landlord shall make a claim under such policy to the extent of any losses suffered by Tenant, and shall make the proceeds received, if any, available to Tenant after allowance for
Landlord's costs of collection. 




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, and if Tenant does not cure such failure within five (5) days after the due date (the "Grace Period"), then
Tenant shall pay to Landlord a late charge equal to five percent (5%) of such overdue amount (the "Late Charge"), plus any costs and reasonable
attorneys' fees incurred by Landlord by reason of Tenant's failure to pay Rent and/or other charges when due hereunder; provided, however, that Tenant shall have the right to pay Rent during the Grace
Period only five (5) times during the Term and, after Tenant has paid Rent during the Grace Period an aggregate of five (5) times, Tenant shall pay
to Landlord a Late Charge on any Rent or other sums due hereunder that are not received by Landlord or Landlord's designated agent when due. Notwithstanding the foregoing, if Tenant establishes and
maintains throughout the Term a direct payment or debit arrangement with a bank or financial institution pursuant to which the Rent due hereunder is automatically paid to Landlord by electronic
transfer on the first day of each month, and if Tenant provides Landlord with evidence of such arrangement, then Landlord shall provide Tenant with notice of any late payment of Rent prior to the
imposition of a Late Charge. Landlord and Tenant hereby agree that such Late Charge 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 Charge 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	 	
 Tenant






7.     LETTER OF CREDIT  


        (a)    Delivery of Letter of Credit.    Tenant has previously delivered to Landlord the letter of credit (the
"Letter of Credit") in the amount of Three Million Seven Hundred Fifty Thousand Dollars ($3,750,000.00) described in the 901 Gateway Lease (as
hereinafter defined). As more particularly described in the 901 Gateway Lease, the Letter of Credit serves as security for the full and faithful performance of Tenant's covenants and obligations under
the 901 Gateway Lease and this Lease. Landlord shall have the right to draw upon the Letter of Credit and use the proceeds therefrom for the purposes specified in the 901 Gateway Lease. The rights and
obligations of the parties with respect to the Letter of Credit shall be as set forth in the 901 Gateway Lease. As used herein, the "901 Gateway Lease"
means the Lease Agreement by and between Landlord and Tenant, dated as of January 1, 2001, relating to certain premises (the "901 Gateway Premises") commonly known as 901 Gateway Boulevard,
South San Francisco, California, as more particularly described therein. 


9









   
        (b)    Bifurcation of Letter of Credit.    Notwithstanding anything to the contrary contained herein or in the 901
Gateway Lease, if requested by Landlord at any time following the date of this Lease, Tenant shall cause the LC Issuing Bank (as defined in the 901 Gateway Lease) to bifurcate the Letter of Credit
into two separate letters of credit, one securing Tenant's obligations under the 901 Gateway Lease and the other securing Tenant's obligations under this Lease. Such bifurcated letters of credit shall
each be in an amount specified by Landlord, provided that the aggregate amount of such letters of credit shall equal the amount of the Letter of Credit immediately prior to such bifurcation.
Concurrently with the bifurcation of the Letter of Credit, Landlord and Tenant shall enter into a modification of the 901 Gateway Lease and a modification of this Lease, which modifications shall
amend Paragraph 7 of the 901 Gateway Lease and this Paragraph 7 to provide for separate, stand-alone letter of credit provisions in the 901 Gateway Lease and this Lease. 



8.     POSSESSION  


        8.1    Tenant's Right of Possession    


        Subject
to Paragraph 8.2, Tenant shall be entitled to possession of the Premises upon the substantial completion of the Base Building Improvements. 


        For
the purposes of this Lease, the Base Building Improvements shall be deemed to be "substantially completed" when Landlord's Architect and Contractor have both certified in writing
that the Base Building Improvements have been substantially completed in accordance with the plans and specifications therefor, subject only to items of a "punch-list" nature which do not
materially affect the use or functionality of the space. 


        8.2    Delay in Performance of Covenants Related to Base Building
Improvements    


        Except
as expressly provided in Paragraph 8.3 below, if for any reason whatsoever Landlord cannot perform any covenant contained in this Lease or in any exhibit hereto relating to
the design and construction of the Base Building Improvements, this Lease shall not be void or voidable and shall not
entitle Tenant to terminate this Lease, 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, nor shall such failure affect the obligations of Tenant under this
Lease, including, without limitation, the obligation to pay Rent commencing on the Commencement Date. 


        8.3    Tenant's Right to Rent Abatement    



        (a)   Subject
to Paragraph 8.3(b) below, if for any reason Landlord fails to complete the milestones set forth below (each, a
"Milestone") on or before the outside date for performance specified below (each, a "Milestone Date"),
and if as a direct result of such failure, Tenant's Contractor is delayed in the substantial completion of the Tenant Improvements (as defined within  Exhibit B attached hereto) which delay
would not have occurred but for Landlord's failure to meet such Milestone Date, then Tenant shall be
entitled to an abatement of Monthly Base Rent in an amount equal to the proportionate Monthly Base Rent payable per day, multiplied by a number equal to one day for each day that Tenant's Contractor
has been so delayed by Landlord's failure to meet such Milestone Dates. For the purposes herein, the Tenant Improvements shall be deemed to be substantially completed on the earlier date to occur of
(i) the date Tenant occupies any portion of the Building, (ii) the date when the Tenant Improvements have been 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 certificate of occupancy or final building inspection approval, as applicable, and
(iii) the date that Tenant's Architect and Tenant's Contractor have both certified in writing that the Tenant Improvements have been substantially completed in accordance with the plans and
specifications therefor, subject only to 



10







 

items
of a "punch-list" nature which do not materially affect the use or functionality of the space. The Milestones and Milestone Dates are as follows: 



	Milestone
 
	 	Milestone Date

	Certificate from Landlord's Architect that the foundation of the Building has been completed ("Initial Milestone").	 	September 8, 2001
	

Concrete for the metal deck located on the top floor of the Building has been poured ("Secondary Milestone").	
 	

November 22, 2001






        (b)   Notwithstanding
anything to the contrary contained in Paragraph 8.3(a) above, if Landlord is delayed in completing any Milestone due to Tenant Delays or Force
Majeure Events (as hereinafter defined), the Milestone Dates shall be extended for a period equal to the length of such delay. As used herein, "Tenant
Delays" means any delays caused by Tenant or any employee, agent or representative of Tenant, including, without limitation, delays caused by (i) failure to furnish
information in accordance with Exhibit A and/or Exhibit B of this Lease, whichever is
applicable; (ii) Tenant's request for any special, long lead time materials or installations as part of the Tenant Improvements or the Tenant Requested Base Building Improvements (as defined in  Exhibit A hereto); (iii) Tenant's changes in the Approved Plans (as defined in  Exhibit B hereto); (iv) any changes initiated by reason
of the disapproval of any plans or drawings or any cost proposals or
authorizations resulting in the preparation of revised plans, drawings, cost proposals or authorizations; (v) field changes to construction work; (vi) the delivery, installation or
completion of the Tenant Improvements work performed by Contractor (as defined in Exhibit B hereto); (vii) Tenant's request for any Tenant
Requested Base Building Improvements; or (viii) any other act or omission of Tenant. As used herein, "Force Majeure Events" means strikes,
embargoes, governmental regulations, acts of God, war, civil commotion or other strife, and other events beyond the reasonable control of the party whose performance is affected thereby. 




9.     USE OF PREMISES  


        9.1    Permitted Use    



        (a)   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 smoke, dust, gas, noise or vibration to emanate from or near the Premises, and shall use its best efforts to prevent any objectionable odor from emanating from or near the
Premises. Tenant shall strictly comply with the measures set forth on Exhibit C hereto and any additional measures reasonably required by
Landlord from time to time to eliminate the emanation of objectionable odors. Tenant shall promptly provide Landlord with copies of all permits issued to Tenant by the Bay Area Air Quality Management
District (the "Air Management District") and any other governmental agency responsible for or having jurisdiction over matters related to air quality,
together with copies of all correspondence between Tenant and the Air Management District or such other agencies. Tenant acknowledges that The Gateway, the real estate development in which the Project
is located, is a first-class office and R&D campus and that "objectionable odors" is a subjective standard. Accordingly, Tenant agrees that if odors in the area of the Building lead to complaints from
other tenants and occupants of The Gateway, and if Landlord reasonably determines, based upon observation and/or a review of Tenant's records, that such odors emanated from the Premises, Tenant shall
promptly use its best efforts to correct the situation at Tenant's sole cost and expense. Such measures to be taken by Tenant shall include, without limitation, the hiring of special consultants and
the making of capital improvements to the Premises. Tenant shall make its laboratory records available to Landlord for review in connection with any complaints by tenants or occupants of the Gateway
and as otherwise 



11







 

reasonably
requested by Landlord. Any failure of Tenant to comply with its obligations under this Paragraph 9.1(a) shall constitute an immediate Default under this Lease. 



        (b)   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 unreasonably 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. 




        9.2    Compliance with Governmental Regulations and Private
Restrictions    



        (a)   Subject
to the terms and conditions of the Lease, Landlord covenants that the Base Building Improvements shall be constructed in compliance with all applicable building
code requirements in effect and actively being enforced by the City of South San Francisco (the "City") on the date the building permits are issued to
the Contractor therefor and substantially in accordance with the Base Building Plans and Specifications. Any claims by Tenant under this Paragraph 9.2 shall be made in writing not later than
one (1) year after the Commencement Date of the Lease. In the event Tenant fails to deliver a written claim to Landlord on or before such date, then Landlord shall be conclusively deemed to
have satisfied its obligations under this paragraph. The covenants contained in this
paragraph are subject to Paragraph 39 below of the Lease and are made specifically and exclusively for the benefit of the original Tenant and any assignee or sublessee under a Permitted
Transfer pursuant to Paragraph 23.4 below. 


        (b)   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"), 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 9.3 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 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, Landlord hereby specifically reserving the right to hereafter adopt such Private Restrictions and to impose the
same on the Project or any portion thereof, provided that such Private Restrictions adopted after the date hereof shall not unreasonably impair Tenant's use of the Premises for any Permitted Use; and
(3) any and all rules and regulations set forth in Exhibit D and any other rules and regulations now or hereafter promulgated by Landlord
(collectively, the "Rules and Regulations"). Without limiting the generality of the foregoing, Tenant hereby covenants and agrees for itself, its
successors and assigns, and all persons claiming under or through it, that this Lease is made and accepted upon and subject to the condition that there shall be no discrimination against, or
segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy,
tenure or enjoyment of the Premises herein leased, nor shall Tenant, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the premises herein leased. 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 



12







 




thereto
or not, that Tenant has violated any such Laws or Private Restrictions, shall be conclusive of that fact as between Landlord and Tenant. 




        9.3    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 as currently administered by the City. Any
Tenant Improvements to be constructed hereunder or Alterations (as hereinafter defined) made during the Term 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 or the Alterations, as applicable. 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, however, that if such work is required under the ADA as a result of Tenant's use of the Premises or any work or Alteration 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; and provided, further, that if any such work is required under the ADA as a result of another tenant's specific use of its
premises or improvements made by another tenant to its premises, then the cost of such work shall be solely chargeable to such tenant and Tenant shall have no responsibility therefor. 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 to, directly or indirectly, Landlord's failure to have the Base Building Improvements constructed in
compliance with the ADA as currently administered by the City. 


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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, and Landlord's covenant set forth in Paragraph 9.2(a) above. Any exceptions to the foregoing must be by written agreement executed by Landlord and Tenant. 


11.   SURRENDER  


        11.1    Surrender at Expiration or Termination    



        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 32.9. 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. 



        11.2    Removal Obligations and Abandonment of Tenant's Property    


        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 Alterations required to be removed pursuant to Paragraph 12 below and Section B.5 of Exhibit B hereto, whichever is applicable.
In addition to the foregoing, upon the written request of Landlord, which request may be given at any time prior to the expiration or sooner termination of this Lease, Tenant shall, at its sole cost
and expense, on the expiration or sooner termination of this Lease, remove the Bridge, if any, restore the facades of the Building and the 901 Gateway Premises to a condition required by Landlord, and
repair any damage caused by such removal and restoration. 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 below hereto shall remain in the Premises as the property of Landlord. 


        11.3    Indemnification    


        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 32.9 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, reasonable attorneys' fees and costs. 


14







 



12.   ALTERATIONS AND ADDITIONS  


        12.1    Landlord's Consent Required    


        Tenant
shall not make, or permit to be made, any alteration, addition or improvement (hereinafter referred to individually as an
"Alteration" and collectively as the "Alterations") to the Premises or any part thereof without 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 Systems serving the Premises, the Building and/or the
Project or any portion thereof. 


        12.2    Alterations Permitted Without Landlord's Consent; Removal
Requirements    


        Notwithstanding
the foregoing, but subject to the conditions set forth below, Tenant may, without Landlord's consent, make Alterations within the Premises, provided that (i) such
Alterations 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 or related series of Alterations
is less than Thirty Thousand Dollars ($30,000.00), and all Alterations in the aggregate do not exceed Two Hundred Thirty Thousand Dollars ($230,000.00) over the Term. The Alterations made by Tenant
without the consent of Landlord in accordance with this Paragraph 12.2 shall be herein referred to as the "Permitted Alterations." 



        12.3    Alterations at Tenant's Expense    


        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
(except for Permitted Alterations), 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, that if Tenant does not obtain the prior approval of plans and specifications for any Alteration, then subject to the terms of
Paragraph 12.4(b) below, 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 harmonious labor relations with all contractors and service
providers servicing the Premises, Building and/or Project. In addition, with respect to any Permitted 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 Permitted Alterations that have been made to the Premises (each such meeting being herein referred to as
an "Alterations Meeting"). Tenant shall provide to Landlord within forty five (45) days after written request as-built plans and
specifications for any Alterations (including, without limitation, any Permitted Alterations) made by Tenant to the Premises. Notwithstanding anything in this Lease to the contrary, any approval by
Landlord of any drawings, plans or specifications prepared on behalf of Tenant shall not in any way bind Landlord, create any responsibility or liability on the part of Landlord for the completeness
of the same, their design sufficiency or compliance with applicable statutes, ordinances or regulations or constitute a representation or warranty by Landlord as to the adequacy or sufficiency of such
drawings, plans or specifications, or the improvements to which they relate, but such approval shall merely evidence the consent of Landlord to such drawings, plans or specifications. 


15







 



        12.4    Requirements of Request for Approval    



        (a)   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 11.1 upon expiration or sooner termination of this Lease. Upon receipt of such request, Landlord shall make such determination and respond to Tenant
within twenty (20) business days of such request. Landlord's failure to respond within such time shall be deemed to mean that Tenant shall not be required to remove such Alterations upon the
expiration or sooner termination of this Lease. 


        (b)   In
the event Tenant constructs or installs any Permitted Alterations without the consent of Landlord, then Tenant shall have the right at the next succeeding Alterations
Meeting to request that Landlord specify in writing whether Tenant will be required to remove all or any portion of such Permitted Alterations upon expiration or sooner termination of this Lease. Upon
receipt of such request, Landlord shall make such determination and respond to Tenant within twenty (20) business days of such request. Landlord's failure to respond within such time shall
conclusively be deemed to be an irrevocable waiver of Landlord's right to demand their removal. 




        12.5    Permits Required; Insurance Required    



        12.5.1    Permits    




        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, either through its own employees or through a construction manager retained by Landlord. 



        12.5.2    Insurance    




        Tenant
shall maintain during the course of any construction (including, without limitation, during the construction of the Tenant Improvements and any Alterations), at its sole cost and
expense, builders' risk insurance for the amount of the completed value of the Alterations and Tenant Improvements 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 and Tenant Improvements,
including, without limitation, naming Landlord and Landlord's lender as loss payee under any such policy. In addition 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 ($3,000,000.00) for
injury or death of one person in any one accident or occurrence and in the amount of not less than Three Million Dollars ($3,000,000.00) 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 ($1,000,000.00). 



        12.6    Title to Improvements; Removal Rights; Financing    


        Except
as otherwise expressly stated herein or agreed to in writing between the parties, the Tenant Improvements actually paid for by Tenant and 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 upon installation become the property of Tenant; provided, however, that title to all such Tenant
Improvements, Alterations and property shall 


16







 



automatically
transfer to Landlord upon the expiration of the Term or the sooner termination of this Lease without the payment of any consideration or the execution of any transfer documents.
Notwithstanding the foregoing, Tenant shall retain title to and ownership of Tenant's Property at all times. For purposes of this Paragraph 12.6 and Paragraph 49.4.1 below, Landlord
shall be deemed to have paid for those Tenant Improvements funded out of the Initial Tenant Improvement Allowance (as hereinafter defined) and Tenant shall be deemed to have paid for the remaining
Tenant Improvements, including any Tenant Improvements funded out of the Deferred Allowance. As used herein, "Initial Tenant Improvement Allowance"
means the initial $46.70 per square foot of the Tenant Improvement Allowance provided by Landlord hereunder. 


        12.7    Computer, Utility and Telecommunications Equipment    



        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. If Landlord gives such consent, all equipment must be installed within the Premises and, unless Landlord, at the time of installation, notifies Tenant in
writing that removal will be required, left in the Premises and surrendered to Landlord upon the expiration or sooner termination of this Lease. 


        12.8    Notice and Opportunity to Post Notice of Nonresponsibility    



        Tenant
agrees not to proceed to make any Alterations, notwithstanding consent from Landlord to do so, without fifteen (15) days' prior written notice to Landlord, 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  


        13.1    Maintenance by Tenant    


        Subject
to the provisions of Paragraph 13.2, 21 and 22 below, throughout the Term, Tenant shall, at its sole expense, (1) keep and maintain in good order and condition the
Building and the Premises and repair the Building and the Premises and every part thereof, including interior and exterior glass, windows, window frames and casements, interior and exterior doors and
door frames and door closers; interior and exterior lighting (including, without limitation, light bulbs and ballasts), the roof covering; the Systems serving the Premises and the Building; interior
and exterior 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 13.2 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 and 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 anything to cause any
damage, deterioration or unsightliness to the Premises, the Building or the Project. Tenant shall perform its obligations under this Paragraph 13.1 in accordance with maintenance and repair
standards adopted by Landlord from time to time for the Project. Tenant shall cause to be furnished to Landlord on not less than a quarterly basis maintenance reports on all Systems and the roof of
the Building prepared by a qualified vendor or consultant, and Tenant shall promptly perform any maintenance tasks recommended by such reports or otherwise required by Landlord to cause the Premises
and the Systems to comply with Landlord's maintenance and repair standards. 


17







 



        13.2    Maintenance by Landlord    


        Subject
to the provisions of Paragraphs 13.1, 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(s) of the Project and the Building, as applicable, of the cost and expense of the following items, Landlord agrees to repair and maintain the Common Areas in good order
and condition, including, without limitation, the Parking Areas, pavement, landscaping, sprinkler systems, sidewalks, driveways,
curbs, and lighting systems in the Common Areas. Subject to the provisions of Paragraphs 13.1, 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). 


        13.3    Landlord's Right to Perform Tenant's Obligations    



        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 which Landlord is required to repair, and failure to so report such defects shall make Tenant responsible to Landlord for the costs and expenses of
repairing any Preventable Damage occurring after the date Tenant obtains actual knowledge of such defective condition and any liability incurred by Landlord by reason of Tenant's failure to notify
Landlord of such defective condition in a timely manner as provided herein. As used herein, "Preventable Damage" means any damage or deterioration which
could have been prevented had Landlord received timely notice of the defective condition. Nothing contained herein shall be deemed or construed to limit Tenant's obligations under Paragraph 16
below. 


        13.4    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(1), respectively, and any similar or successor statute or law in effect or any amendment thereof during the Term. 


18









   14.   LANDLORD'S INSURANCE  


        At all times during the Term of this Lease, Landlord shall purchase and keep in force "all risk" property insurance covering the Base Building Improvements, the
Tenant Improvements and all Alterations made to the Premises by Tenant in accordance with the terms of Paragraph 12 above, in accordance with Landlord's customary insurance program for
comparable properties. Tenant shall provide Landlord with such information as may be requested by Landlord or its insurers concerning the value of the Tenant Improvements or any Alterations. Tenant
acknowledges and agrees that Landlord shall have no obligation to maintain property insurance covering any alterations, additions or improvements made to the Premises other than Alterations made in
strict accordance with Paragraph 12 (such other alterations, additions or improvements being herein referred to as "Unpermitted Alterations"),
and Tenant hereby agrees to indemnify and hold harmless Landlord and Landlord's Agents from and against any and all Losses (as hereinafter defined) resulting from or arising out of the making of any
such Unpermitted Alterations. 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 property damage 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 Building or any portion thereof are destroyed or rendered
unusable or inaccessible by any cause insured against under this Lease. 


15.   TENANT'S INSURANCE  



        15.1    Commercial General Liability Insurance    


        At
all times during the Term of this Lease, 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 insureds, 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 ($3,000,000.00) for each occurrence combined single limit for bodily injury and property damage, shall include contractual
liability coverage (which shall include coverage for Tenant's indemnification obligations in this Lease, provided that the amount of such coverage shall not be construed to limit Tenant's
indemnification obligations hereunder), and shall
contain severability of interests and cross liability coverage clauses and/or endorsements. Such insurance shall be endorsed to be primary and non-contributory to any insurance Landlord
may carry. 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 15.1 shall contain a deductible greater than Five Thousand Dollars ($5,000.00). Such policies of
insurance shall be issued as primary policies and not contributing with or in excess of coverage that Landlord may carry. 



        15.2    Property Insurance    


        At
all times during the Term of this Lease, Tenant shall, at Tenant's expense, maintain in full force and effect special form property insurance on all of its personal property,
possessions, furniture, furnishings, trade or business fixtures, equipment and such other items listed on Exhibit F (collectively,
"Tenant's Property") located on the Premises. Such special form property insurance shall be on a full replacement cost basis and shall be written to
cover all risks of direct loss or damage, including, but not be limited to, theft, water damage and sprinkler leakage. No such policy shall contain a deductible greater than Five Thousand Dollars
($5,000.00). 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 Tenant's Property. Landlord shall have no interest
in the insurance upon Tenant's Property and will sign all documents 


19







 



reasonably
necessary in connection with the settlement of any claim or loss by Tenant. Landlord will not carry insurance on Tenant's Property. 



        15.3    Worker's Compensation Insurance; Employer's Liability
Insurance    


        At
all times during the Term of this Lease, 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) per accident. 


        15.4    Business Interruption Insurance    



        Tenant
shall, at all times during the Term of this Lease, maintain in full force and effect loss of income and extra expense insurance in such amounts as will reimburse Tenant for direct
or indirect loss of earnings or extra expenses attributable to or resulting from all perils commonly insured under a special form policy of property insurance. 


        15.5    Insurance Standards and Evidence of Coverage    


        All
insurance required to be carried by Tenant hereunder shall be maintained with insurance companies authorized to do business in the State of California for the issuance of the
applicable type of insurance coverage and rated A:XIII or better in Best's Key Rating Guide. Notwithstanding the foregoing, Landlord hereby approves General Star Indemnity as the carrier of the
insurance required under Paragraph 15.1 above, provided that General Star Indemnity shall at all times during the Term maintain a Best's Key Rating of not less than A++:VIII. 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 and the other parties named as additional insureds with
certificates of renewal 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 and the parties named as additional insureds hereunder). 


16.   INDEMNIFICATION  


        16.1    Of Landlord    



        Tenant
shall indemnify and hold harmless Landlord and Landlord's advisors, employees, partners, shareholders and directors against and from any and all claims, liabilities, judgments,
costs, demands, causes of action and expenses (including, without limitation, reasonable attorneys' fees) (collectively, "Losses") arising from
(1) the use of the Premises, the Building or the Project by Tenant or Tenant's Agents, or from any activity done, 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); provided, however, that in no event shall Tenant be required to indemnify
Landlord against any claims, demands or losses resulting from any failure of Landlord to observe any of the terms and conditions of this Lease, including, without limitation, the covenant set forth in
Paragraph 9.2(a) above, in each case to the extent such failure or breach has persisted for an unreasonable period of time after written notice of such failure or breach. 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 


20







 



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 16.1 shall survive the expiration or earlier termination of this Lease. 


        16.2    Of Tenant    


        Landlord
shall indemnify and hold harmless Tenant and Tenant's employees, partners, shareholders and directors against and from any and all Losses relating to the Project and arising
from (1) the gross negligence or willful misconduct of Landlord or Landlord's Agents, (2) 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, 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 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 16.2 shall survive any termination of this Lease. 


        16.3    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  


        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 of
the Premises without obtaining Landlord's prior written consent or without complying with Landlord's signage program, as the same may be modified by Landlord from time to time, and with all applicable
Laws, and will not conduct, or permit to be conducted, any sale by auction on the Premises or otherwise on the Project. Tenant shall remove any sign, advertisement or notice placed on the Premises,
the Building or the Project by Tenant upon the expiration of the Term or sooner termination of this Lease, and Tenant shall repair any damage or injury to the Premises, the Building or the Project
caused thereby, all at Tenant's expense. If any signs are not removed, or necessary repairs not made, Landlord shall have the right to remove the signs and repair any damage or injury to the Premises,
the Building or the Project at Tenant's sole cost and expense. 


21







 



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 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, reasonable 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
agrees not to proceed to perform any repairs or construction on the Premises without fifteen (15) days' prior written notice to Landlord in order that Landlord may post appropriate notices to
avoid any liability to contractors or material suppliers for payment for Tenant's work. 


20.   ENTRY BY LANDLORD  


        Tenant shall permit Landlord and Landlord's Agents to enter into and upon the Premises at all reasonable times upon twenty-four (24) hours'
notice (except in the case of an emergency, in which event no advance notice shall be required) 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 reasonable business purpose, without any
rebate of Rent and without any liability to Tenant for any loss of occupation or quiet enjoyment of the Premises thereby occasioned; and Tenant shall permit Landlord to post notices of
non-responsibility and ordinary "for sale" or "for lease" signs. Notwithstanding the foregoing, Landlord shall only enter the Premises for the purpose of showing the same to prospective
tenants during the last ten (10) months of the Term. No such entry shall be construed to be a forcible or unlawful entry into, or a detailer of, the Premises, or an eviction of Tenant from the
Premises. Tenant's representatives shall have the right to accompany Landlord on any inspection of the Premises, provided that Tenant's representatives are available at the time of such inspections.
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  


        21.1    Damage Covered by Extended Coverage Insurance    



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



        21.1.1    Material Damage; Insured Loss    




        In
the event of material damage to the Premises (which shall mean damage or destruction of a nature such that all required permits cannot be reasonably obtained and/or the Premises can
not be substantially repaired and restored to the condition existing immediately prior to such damage or destruction within three hundred sixty-five (365) days after the date
Landlord obtains actual knowledge of such destruction (the "Casualty Discovery Date")), 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 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 


22







 

after
the Casualty Discovery Date. If Landlord elects in writing not to restore the Premises, this Lease shall be deemed to have terminated as of the date of such destruction. 



        21.1.2    Minor Damage; Insured Loss    




        In
the event of minor damage to the Premises (which shall mean damage or destruction of a nature such that all required permits can be reasonably obtained and the Premises may be
substantially repaired or restored to the condition existing immediately prior to such damage or destruction within three hundred sixty-five (365) days after the Casualty Discovery
Date) for which Landlord will receive insurance proceeds sufficient to cover the cost to repair and restore such partial destruction, Landlord shall commence and proceed diligently with the work of
repair and restoration, in which event this Lease shall continue in full force and effect. If the insurance proceeds (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 this Lease shall continue in full force and effect, or not to repair or
restore, in which event this 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, in writing, not to restore the Premises, this Lease shall be deemed to have terminated as of the date of such partial destruction. 



        21.1.3    Calculation of Restoration Period    




        Following
the occurrence of any casualty event, Landlord shall obtain from a licensed general contractor selected by Landlord (the "Restoration
Contractor") an estimate of the time required to
obtain all permits and to fully repair and restore the Premises. In the event the Restoration Contractor determines that the work of repair and restoration shall require more than three hundred
sixty-five (365) days to complete, Tenant shall have the right to discuss such timing with the Restoration Contractor and, with the approval of Landlord, to discuss modifications to
the scope of work in an effort to reduce the repair and restoration time to a period of less than three hundred sixty-five days; provided, however, that in the event of any disagreement
between the parties as to the estimated length of the restoration period or the scope of work required, the determination of Landlord and the Restoration Contractor shall control. 


        21.2    Uninsured Loss    


        If
the Premises are damaged by any peril not covered by Landlord's property 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 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 Casualty Discovery Date. If
Landlord elects, in writing, 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. 


        21.3    Casualty During Last Twelve Months of Term    



        If
fifty percent (50%) or more of the Building is damaged or destroyed during the last twelve (12) months of the Term (unless Tenant has remaining extension options and has
previously validly exercised such options or validly exercises such options within ten (10) days after the Casualty Discovery Date), Landlord shall have the option to terminate this Lease,
exercisable by notice to Tenant within sixty (60) days after the Casualty Discovery Date. 


        21.4    Tenant's Right to Terminate Lease    



        If
the Premises is damaged or destroyed to the extent that the Premises cannot be substantially repaired or restored by Landlord within three hundred sixty-five
(365) days after the Casualty Discovery Date, Tenant may terminate this Lease immediately upon notice thereof to Landlord, which 


23







 



notice
shall be given, if at all, not later than fifteen (15) days after Landlord notifies Tenant of Landlord's estimate of the period of time required to repair such damage or destruction. 



        21.5    Rent Abatement    


        In
the event of repair and restoration as herein provided, the monthly installments of Base Rent and Additional Rent shall be abated proportionately to the extent 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 actually received by Landlord. 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 above 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. 



        21.6    Restoration of Base Building Improvements and Tenant
Improvements    


        If
Landlord is obligated to or elects to repair or restore as herein provided, Landlord shall repair or restore only the Base Building Improvements constructed pursuant to the terms of
this Lease, substantially to their condition existing immediately prior to the occurrence of the damage or destruction; and Tenant shall promptly repair and restore, at Tenant's expense, the Tenant
Improvements and Tenant's Alterations. Landlord shall make available to Tenant to pay Restoration Costs (as hereinafter defined) any insurance proceeds actually collected by Landlord allocable to the
Tenant Improvements and Alterations. Such proceeds shall be disbursed by Landlord in accordance with customary construction-lending practices and disbursement procedures (including, without
limitation, the creation of a retention). As used herein, "Restoration Costs" means costs actually incurred by Tenant in repairing and restoring the
Tenant Improvements and any Alterations made by Tenant to the Premises. 


        21.7    Waiver    


        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. 


22.   CONDEMNATION  


        (a)   If
twenty-five percent (25%) or more of the Building or fifty percent (50%) or more of the Designated Parking Areas (as hereinafter defined) 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 be untenantable for
the conduct of Tenant's 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 


24







 

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 and Additional 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.
Except as expressly provided in the immediately preceding sentence with respect to abatement of 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, the Project or the Parking Areas 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 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  


        23.1    Landlord's Consent Required Except for Permitted Transfers    



        Except
as specifically provided for in Paragraph 23.3 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, (3) sublease the Premises or any part thereof, or any right or privilege appurtenant thereto, or
(4) 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. 


        23.2    Requirements of Request for Consent    


        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 ("GAAP"). Tenant shall also provide Landlord with a copy of the proposed sublease or
assignment agreement, including all material terms and conditions thereof, and such additional information concerning the proposed assignee or subtenant as Landlord may request. Landlord shall have
the option, to be exercised within fifteen (15) days of receipt of the foregoing in the case of a proposed assignment or subletting affecting not more than eleven thousand (11,000) square feet
of the Premises, and within thirty (30) days of receipt of the foregoing in the case 


25







 



of
a proposed assignment or subletting affecting more than eleven thousand (11,000) square feet ("Landlord's Review Period"), to (1) consent to
the proposed assignment or sublease, (2) 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 or the 901 Gateway 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 or under the 901 Gateway Lease, or (3) 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. Notwithstanding the foregoing, in the event Tenant wishes to assign or sublet all of
the Premises for all of the remainder of the Term (except in either event in connection with a Permitted Transfer), then in addition to the options specified in the aforesaid clauses (1),
(2) and (3), Landlord shall have the additional right, to be exercised within the aforesaid thirty (30) day period, to terminate this Lease in its entirety. In the event Landlord elects
to terminate this Lease or sublease or take an assignment from Tenant of the interest in this Lease and/or the Premises that Tenant proposes to assign or sublease as provided in the foregoing clauses
of this Paragraph 23.2, 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 such lease or occupancy agreement. 


        23.3    Criteria To Be Considered in Connection with Request for
Consent    


        Without
otherwise limiting the criteria upon which Landlord may withhold its consent to a proposed assignment or sublease, 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 Premises will be used in a 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 Building, the Project, or the Adjacent Properties, 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 the 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 is not a Permitted Use provided for under Paragraph 9 above or a general office use. 


        23.4    Permitted Transfers    


        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 (such assignment or subletting being referred to as a "Permitted Transfer"). In addition, a sale or
transfer of the capital stock of Tenant shall be deemed a Permitted Transfer if (1) such sale or transfer occurs in connection with any bona fide financing or capitalization for the benefit of
Tenant or (2) occurring through a public trade. For purposes of this Lease, "Affiliate" shall mean, as to any Person, any person, firm or
corporation (i) which shall be controlled by, under the control of, or under common control with such person, (ii) which results from a merger of, reorganization of, or consolidation
with, or (iii) which acquires substantially all of the stock or assets with respect to the business that is conducted in the Premises. "Person"
means any natural person, corporation, firm, association, government, governmental agency or any other entity, whether acting in 


26







 



any
individual, fiduciary or other capacity. 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. 



        23.5    Excess Rent    


        If
Landlord approves an assignment or subletting as herein provided, Tenant shall pay to Landlord, as Additional Rent, fifty percent (50%) of the Transfer Profits (as hereinafter
defined), as evidenced by written records satisfactory to Landlord. As used herein, "Transfer Profits" means 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 and reasonable attorneys' fees, if any, incurred by Tenant in connection with such assignment or sublease, and actual tenant improvement costs paid by Tenant in
improving the Premises for the applicable assignee or subtenant up to an aggregate of five dollars ($5.00) per square foot of space subject to the assignment or sublease transaction. 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, shall contain an express assumption by the assignee or subtenant of Tenant's obligations under this Lease 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. 


        23.6    No Release of Tenant    


        Notwithstanding
any assignment or subletting, including, without limitation, a Permitted Transfer, Tenant 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). 



        23.7    Payment of Landlord's Fees    


        Tenant
shall pay Landlord's reasonable fees (including, without limitation, the fees of Landlord's counsel, not to exceed $1,000.00 per transaction), incurred in connection with
Landlord's review and processing of documents regarding any proposed assignment or sublease. 


        23.8    No Consent to Further Assignment    



        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
(specifically excluding any Permitted Transfer), 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. 


27







 



        23.9    Constraints Reasonable    


        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 Lease 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 consecutive period of sixty (60) days or more, without (i) the intention of retaking possession or occupancy, and
(ii) providing for the security of the Building, or the abandonment of the Premises by Tenant or any other vacation which would cause any insurance policy to be invalidated or otherwise lapse; 


        (b)   Failure
to pay any installment of Rent or any other monies due and payable hereunder within five (5) days after the date the same are due; 


        (c)   A
general assignment by Tenant for the benefit of creditors; 


        (d)   The
filing of a voluntary petition in bankruptcy by Tenant, the filing by Tenant of a voluntary petition for an arrangement, the filing by or against Tenant of a
petition, voluntary or involuntary, for reorganization, or the filing of an involuntary petition by the creditors of Tenant, 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, if Tenant is a natural person, or the failure by Tenant to maintain its legal existence, if Tenant is a corporation, partnership, limited
liability company, trust or other legal entity; 


        (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 provisions of Paragraph 23, unless such
assignment or sublease is expressly conditioned upon Tenant having received Landlord's consent thereto; 



        (i)    Failure
of Tenant to deposit the Letter of Credit with Landlord when required under Paragraph 7, and/or failure of Tenant to restore the Letter of Credit to the
amount and within the time period provided in Paragraph 7; 


        (j)    Failure
in the performance of any of Tenant's covenants, agreements or obligations hereunder (except those failures specified as events of Default in any other
subparagraphs of this Paragraph 24, which shall be governed by such other subparagraphs), which failure continues for thirty (30) 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 



28







 




thirty
(30) 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; 


        (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, when due (i) for any three
(3) months (consecutive or nonconsecutive) during any period of twelve (12) months or (ii) for any twelve (12) 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; 


        (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 shall not have been replaced with substitute insurance satisfying the requirements of this Lease within five (5) business days of Tenant's receipt of notice of such
termination, reduction or change; 


        (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; and 


        (o)   Any
Default (as defined in the 901 Gateway Lease) under the terms of the 901 Gateway Lease. 




        Tenant
agrees that any notice given by Landlord pursuant to Paragraph 24(j) 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. 


25.   LANDLORD'S REMEDIES  


        25.1    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 



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        (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
resetting 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 Tenant's lease of the Premises; (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 portion of the Deferred Allowance (including, without limitation, accrued interest thereon),
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. 


        25.2    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 that 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; provided, however, that the
foregoing provision shall not be deemed to relieve Landlord of any duty under applicable law to mitigate Tenant's damages in the event Landlord elects to seek damages for Tenant's breach or default.
For purposes of this Paragraph 25.2, 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 to 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. 



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        25.3    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. 


        25.4    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 25.3 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 25.1, Landlord may from
time to time, without terminating this Lease, relet the Premises or any part thereof for such term or 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. 


        25.5    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. 


        25.6    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. 


        25.7    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 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, voluntarily 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. 


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


        26.1    Landlord's Right to Perform    


        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 further 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. 


        26.2    In Emergencies    



        Without
limiting the rights of Landlord under Paragraph 25 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 good faith and absolute judgment, or if Landlord otherwise determines
in its reasonable discretion that such performance is necessary or desirable for the preservation of the rights and interests or safety of other tenants of the Building or the Project. 


        26.3    Tenant's Obligation to Reimburse Landlord    



        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) twelve percent (12%) per annum, or (2) the highest rate permitted by applicable law. 



27.   ATTORNEYS' FEES  


        27.1    Prevailing Party Entitled to Fees    


        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. 


        27.2    Costs of Collection    


        Without
limiting the generality of Paragraph 27.1 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. 


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28.   TAXES  


        Tenant shall be liable for and shall pay, prior to delinquency, all taxes levied against Tenant's Property. If any Alteration or Tenant Improvement 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, in an amount reasonably determined by
Landlord if such taxes are not separately stated in the applicable tax bill, 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 Landlord, Tenant shall execute, acknowledge and deliver to Landlord 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 Landlord as of the date of such certificate have been satisfied (or specifying those as to which Tenant claims that Landlord 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 (1) month in
advance (or stating exceptions thereto); (j) that a currently valid Letter of Credit has 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. 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 Tenant shall fail to provide such certificate within ten (10) days of
receipt by Tenant of a written request by Landlord as herein provided, such failure shall, at Landlord's election, constitute a Default under this Lease, and Tenant shall be deemed to have given such
certificate as above provided without modification and shall be deemed to have admitted the accuracy of any information supplied by Landlord to a prospective purchaser or mortgagee. 


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 


33







 



and
without regard to the time or character of such advances, together with interest thereon and subject to all the terms and provisions thereof; provided only, and as an express condition precedent
to any such subordination of this Lease to an Encumbrance hereafter executed covering the Premises, that the holder of such Encumbrance ("Holder") shall
agree to recognize Tenant's rights under this Lease upon the foreclosure or termination, as applicable, of such Encumbrance 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, provided that, concurrently with the execution of such subordination documents, the Holder shall execute a nondisturbance
agreement in favor of Tenant consistent with the terms of this Paragraph 31. 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 agrees to attorn to any person or entity purchasing or otherwise acquiring the Premises at any sale or other
proceeding or pursuant to the exercise of any other rights, powers or remedies under such Encumbrance. 


32.   ENVIRONMENTAL COVENANTS  


        32.1    Disclosure Certificate    



        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 E 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 treated, used or stored on or about the Premises by Tenant or Tenant's Agents. 



        32.2    Tenant's Obligation to Update Disclosure Certificate    


        Tenant
shall, on a semi-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 F or in such updated format as Landlord may require from time to time. Landlord shall have the
right to approve or disapprove such new or additional Hazardous Materials in its sole and absolute discretion. Tenant shall make no use of Hazardous Materials on or about the Premises except as
described in the Initial Disclosure Certificate or as otherwise approved by Landlord in writing in accordance with this Paragraph 32.2. 


        32.3    Definition of Hazardous Materials    


        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
("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 


34







 



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. Landlord
hereby notifies Tenant in accordance with California Health & Safety Code Section 25359.7 that in 1981-82, the Project was the subject of a state-supervised cleanup of
hazardous waste disposed of on the site by prior occupants. As part of the cleanup approved by the applicable agencies, some soils containing heavy metals were left in place, covered by clean fill.
These soils are managed in accordance with the requirements of the applicable agencies and a Declaration of Covenants, Conditions and Restrictions imposed by Homart Development Co. 


        32.4    Definition of Environmental Laws    


        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. 


        32.5    Tenant's Use of Hazardous Materials    


        Tenant
agrees that during its use and occupancy of the Premises it will (1) not (A) introduce any Hazardous Materials 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 and not engage in or permit Tenant's Agents to
engage in any activity 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. 



        32.6    Tenant's Remediation Obligations    


        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. 


        32.7    Landlord's Inspections    


        Upon
twenty-four (24) hours' notice to Tenant (except in the case of an emergency, in which event no advance notice shall be required), 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. 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 


35







 



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, through their actions, exacerbate the condition of or the conditions caused by any Hazardous Materials in, on, under, through 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 therefor. 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. In the event Tenant vacates the Premises prior to the Expiration Date, Tenant shall 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. 


        32.8    Landlord's Right to Remediate    


        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 reasonable 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. 



        32.9    Condition of Premises Upon Expiration or Termination    


        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, 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. 


        32.10    Tenant's Indemnification of Landlord    


        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 and any losses to Landlord due to lost opportunities to lease any portions of the Premises to succeeding tenants due to the failure of Tenant to surrender the Premises upon the expiration or
sooner termination of this Lease in accordance with the provisions of Paragraph 32.9 above), 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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        32.11    Landlord's Indemnification of Tenant    



        Landlord
agrees to indemnify and hold harmless Tenant from and against any and all claims, losses, liabilities and expenses (including attorneys' fees, but specifically excluding lost
profits and consequential damages) 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,
except to the extent the condition thereof has been exacerbated by Tenant or Tenant's Agents. 


        32.12    Limitation of Tenant's Liability    



        Notwithstanding
anything in this Lease to the contrary, Tenant shall not be responsible for the clean up or remediation of, and shall not be required to indemnify Landlord against any
costs or liabilities attributable to, contamination by Hazardous Materials during the Term caused by third parties or Hazardous Materials place on or about the Premises (i) prior to the
Commencement Date by third parties not related to Tenant or Tenant's Agents, or (ii) by Landlord at any time, except in any of the
foregoing cases to the extent that Tenant or Tenant's Agents have contributed to or exacerbated the presence of such Hazardous Materials. 



        32.13    Survival    


        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 equal to the greater of one hundred fifty percent (150%) of (i) the fair
market rental value for the Premises as determined 


37







 



by
Landlord or (ii) 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,
that in no event shall any renewal or extension option or other similar right or option contained in this Lease be deemed applicable to any such tenancy at sufferance. 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 Paragraphs 11 and 32.9, 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. 


36.   SUCCESSORS AND ASSIGNS  


        36.1    Binding on Successors, Etc.    



        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. 


        36.2    Landlord's Right to Sell    


        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 the Project, and all of Landlord's related rights and obligations hereunder, to any Person. 


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 BT Commercial ("Broker") in relation to Tenant's lease of the Premises and/or 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 has paid or will hereafter pay the brokerage commissions due to BT Commercial in relation to
Tenant's lease of the Premises. Nothing contained herein shall restrict Landlord from paying any fees owed by Landlord in connection with Tenant's lease of the Premises and/or the execution of this
Lease to any constituent partner of Landlord (or any Affiliate of any such partner) and to any consultants providing services to Landlord in connection with the Project. 


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 this 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, 


38







 



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 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, or if Tenant is a publicly traded company, the publicly
available financial statements of Tenant (including interim periods following the end of the last fiscal year for which annual statements are available), prepared, compiled or reviewed 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 GAAP. 


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 in reasonable proximity to the
Building; 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, that 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 D. 


42.   MORTGAGEE PROTECTION  


        42.1    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 that such modifications do not materially adversely affect Tenant's rights or increase
Tenant's obligations under this Lease. 


        42.2    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 42.2), 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 there
shall be no default under this Lease. 


39







 


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. Without limiting
the foregoing, the terms and provisions of that certain Option to Lease Agreement dated as of February 17, 1999, entered into by the parties hereto concurrently with the execution of the 901
Gateway Lease, shall be of no further force or effect and shall be deemed superseded in their entirety by the terms and provisions contained in this Lease. 



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. 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. 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  


        46.1    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. 



40







 





        46.2    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, 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, (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. 




47.   SECURITY  


        47.1    Landlord Not Obligated to Provide Security    



        Tenant
acknowledges and agrees that, while Landlord may engage security personnel to patrol the Building or the Project, Landlord is not required to provide 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. 


        47.2    Tenant's Obligation to Comply with Security Measures    



        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 thereof, or render Landlord or Landlord's Agents liable to
Tenant for any resulting damages, or relieve Tenant from Tenant's obligations under this Lease. 


41









   48.   JURY TRIAL WAIVER  


        Landlord and Tenant each hereby waive 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. The parties each hereby agree 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 the entire Premises for successive periods of five (5) years each (each a "Renewal Term"). Each Renewal Option shall be effective only if
(i) Tenant is not in Default under this Lease and no event has 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, and (ii) concurrently with the exercise of each such Renewal Option hereunder, Tenant validly exercises the
corresponding renewal option contained in Paragraph 49 of the 901 Gateway Lease. 


        49.1    Commencement Dates    


        If
Tenant exercises 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 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 hereunder and under the 901 Gateway
Lease. Each Renewal Term, if properly exercised, shall be upon the same terms and conditions as the Lease except for Monthly Base Rent (which shall be determined as provided in the following
provisions of this Paragraph). 


        49.2    Renewal Option is Personal; Non-Transferable    



        The
Renewal Option shall be personal to Tenant, any transferee under a Permitted Transfer, and any assignee to whom Tenant assigns its entire right, title and interest under, or any
sublessee to whom Tenant subleases the entire Premises for the entire remaining Term of, this Lease, and shall not be assignable or otherwise transferable in whole or in part, voluntarily or by
operation of law, 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. 


        49.3    Tenant's Notice of Exercise    



        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 for a five (5) year
extended term on the terms and conditions set forth herein. 


        49.4    Monthly Base Rent During Renewal Term    


        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
(provided that such 


42







 



Monthly
Base Rent shall be increased during each year of the Renewal Term to an amount equal to one hundred three percent (103%) of the Monthly Base Rent payable during the immediately preceding
term), or (ii) ninety-five percent (95%) of the Fair Market Rent (as hereinafter defined) for the Premises during such Renewal Term. 



        49.4.1    Fair Market Rent Definition    




        "Fair Market Rent" shall mean the rate being charged for comparable office/R&D/laboratory space in comparable locations in the South San
Francisco/Brisbane market area, taking into consideration: tenant credit, tenant improvements or allowances provided or to be provided and leasing commissions,
but specifically excluding Tenant's Property, any specialized laboratory improvements or other Tenant Improvements actually paid for by Tenant (as determined in accordance with Paragraph 12.6
above). 



        49.4.2    Determination of Fair Market Rent    




        Landlord
and Tenant shall meet and attempt in good faith to mutually determine the Fair Market Rent for any Renewal Term. If the parties have not reached agreement on the Fair Market
Rent by the date that is thirty (30) days after Landlord's receipt of Tenant's Notice, each party shall appoint an arbitrator and shall give to the other party notice of the identity of the
arbitrator no later than the date that is forty (40) days after Landlord's receipt of Tenant's Notice. If either party fails to appoint an arbitrator by the date that is forty (40) days
after Landlord's receipt of Tenant's Notice, the sole arbitrator appointed, if any, shall determine the Fair Market Rent. If two arbitrators are appointed, they shall immediately meet and attempt to
agree upon such Fair Market Rent. If the arbitrators cannot reach agreement on the Fair Market Rent by the date that is sixty (60) days after Landlord's receipt of Tenant's Notice, each
arbitrator shall submit a determination of Fair Market Rent to Landlord and Tenant. If the determinations of Fair Market Rent made by these two arbitrators vary by ten percent (10%) or less, the Fair
Market Rent shall be the average of the two determinations. If the determinations vary by more than ten percent (10%), the two arbitrators shall within ten (10) days after submission of their
determinations appoint a third arbitrator. If the two arbitrators shall be unable to agree on the selection of a third arbitrator 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 arbitrator 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
arbitrators that is closer to the Fair Market Rent determination of the third arbitrator. If the third arbitrator's determination is exactly between the Fair Market Rent determination of the original
two arbitrators, then the Fair Market Rent shall be the average of the original two determinations. The determination of Fair Market Rent pursuant to this Paragraph 49 shall be final and
binding on Landlord and Tenant. 



        49.4.3    Arbitrator Qualifications    




        For
purposes of this Paragraph, "arbitrator" shall mean a licensed commercial real estate broker or leasing agent with not less than five
(5) years of full-time commercial brokerage experience in San Mateo County. 



        49.4.4    Fees and Costs of Arbitrators    




        Each
party shall bear the fees and costs of its arbitrator in connection with the determination of Fair Market Rent and one-half of the fees and costs of the third
arbitrator, if any. 



        49.4.5    Arbitration Period Base Rent    




        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 


43







 

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.   PARKING  


        50.1    Grant of Parking License    


        Provided
that Tenant shall comply with and abide by Landlord's parking rules and regulations from time to time in effect, Tenant shall have a license to use for the parking of passenger
automobiles the number of non-exclusive and undesignated parking spaces set forth in the Basic Lease Information in the areas designated for parking by Landlord from time to time (the
"Designated Parking Areas"). Notwithstanding the foregoing, Landlord shall not be required to enforce Tenant's right to use any such parking spaces (but
Landlord shall use commercially reasonable efforts to resolve any problems related to parking); and provided, further, that 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 Designated Parking Areas are taken or otherwise eliminated as a result of any Condemnation or casualty event affecting such
Designated Parking Areas. Notwithstanding the foregoing provisions of this Paragraph 50.1, Landlord shall have the right to relocate Tenant's parking from time to time to other areas within the
Project and to provide parking spaces to Tenant in surface parking lots, parking structures or other areas now or hereafter designated by Landlord as the "Project's Parking Areas." All unreserved
spaces will be on a first-come, first-served basis in common with other tenants of and visitors to the Project in parking spaces provided by Landlord from time to time in the Project's
Parking Areas. Tenant's license to use the parking spaces provided for herein shall be subject to such terms, conditions, rules and regulations as Landlord or the operator of the Parking Area may
impose from time to time. 


        50.2    No Assignment of Parking License    



        The
license granted hereunder is for self-service parking only and does not include additional rights or services except to the extent that Landlord elects in its sole and
absolute discretion to provide any such services. 


        50.3    Visitor Parking    


        Tenant
recognizes and agrees that visitors, clients and/or customers (collectively the "Visitors") to the Project and the Premises must
park automobiles or other vehicles only in areas designated by Landlord from time to time as being for the use of such Visitors and Tenant hereby agrees to ask its Visitors to park only in the areas
designated by Landlord from time to time for the use of Tenant's Visitors. 


51.   RIGHT OF FIRST OFFER  


        51.1    Offer Notice    


        If
subsequent to the full execution of this Lease, Landlord desires to sell the Building, Landlord shall notify Tenant in writing of such intent to sell (the
"Offer Notice"); provided, however, that Landlord shall not be required to provide Tenant with the Offer Notice with respect to the Building if Landlord
has previously terminated this Lease or recaptured the Premises. This Right of First Offer shall be personal to Tenant and any transferee under a Permitted Transfer and shall not be assignable or
otherwise transferable in whole or in part, voluntarily or by operation of law, to any other permitted assignee, subtenant or other third parties. Tenant's right to receive the Offer Notice shall
further be 


44







 



effective
only if Tenant is not in Default under this Lease and no event has occurred which with the giving of notice or the passage of time, or both, would constitute a Default hereunder. Subject to
Paragraph 51.4 below, Tenant's right to receive an Offer Notice in accordance with this Paragraph 51.1 shall be a one-time right. 


        51.2    Election Notice    


        In
the event Tenant desires to purchase the Building, Tenant shall notify Landlord in writing of its election to purchase the Building (the "Election
Notice") within ten (10) days following Tenant's receipt of the Offer Notice. If Tenant delivers an Election Notice to Landlord, Tenant shall acquire the Building on an
"AS IS" basis and without any representations or warranties from Landlord. 


        51.3    Purchase and Sale Agreement    


        In
the event Tenant timely delivers the Election Notice to Landlord, the parties shall thereafter execute a purchase and sale agreement prepared by Seller's counsel (the
"Purchase and Sale Agreement") with the purchase price of the Building (the "Purchase Price") equal to
the quotient of the Net Operating Income (as defined below) of the Building divided by nine one hundredths (.09) and with a closing (the "Closing") to
be held on or before the date that is forty-five (45) days after delivery of the Offer Notice. 


        51.4    Failure to Exercise or Sign Agreement    


        If
Tenant fails to deliver an Election Notice within the 10-day time period, or if for any reason whatsoever Tenant has not executed the Purchase and Sale Agreement within
ten (10) days after its receipt thereof from Landlord, Tenant's right to purchase the Building hereunder shall automatically terminate and be of no further force and effect with respect to
Landlord or any other Person (as hereinafter defined) and Landlord shall thereafter have the right to sell the Building at any time to any Person on terms acceptable to Landlord in its sole and
absolute discretion. Notwithstanding the foregoing, if Landlord fails to enter into a letter of intent or purchase and sale agreement for the sale of the Building to any such Person within two hundred
seventy (270) days after the date Tenant's right to purchase the Building lapses pursuant to this Paragraph 51.4, then Tenant's rights under this Paragraph 51 shall be reinstated
and Landlord shall once again furnish Tenant with an Offer Notice prior to selling the Building to a Person other than a Landlord Affiliate. Tenant hereby expressly acknowledges and agrees that time
is of the essence for purposes of the Election Notice and the ten (10) day period to execute the Purchase and Sale Agreement and that Tenant's failure to deliver such Election Notice or the
executed Purchase and Sale Agreement as specified herein will relieve Landlord of any obligation under this Paragraph. 


        51.5    Net Operating Income    


        As
used herein, "Net Operating Income" shall mean the Monthly Base Rent due under the Lease with respect to the Building being purchased for the twelve (12) full calendar months
following the Offer Notice or, if the Offer Notice is given prior to the Commencement Date, the Monthly Base Rent for the Premises for the twelve (12) full calendar months following the
Commencement Date, and Tenant shall receive a credit against the Purchase Price equal to the cost (calculated as of the date of Closing) reasonably estimated by Landlord to complete the Base Building
Improvements (exclusive of any Tenant Requested Base Building Improvements and any improvements or costs required to be paid by Tenant under the terms of the Lease), assuming for purposes of this
determination that the Base Building Improvements for the Building shall be similar in design and quality to the Base Building Improvements constructed by Landlord under the 901 Gateway Lease. As used
in this Paragraph 51.5, Monthly Base Rent shall mean the scheduled Monthly Base Rent set forth in the Basic Lease Information plus the monthly installment of principal and interest required to
be paid on the Deferred Allowance, if any, pursuant to Section D of Exhibit B. 


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        51.6    Landlord's Sale to Affiliate; Survival of Option    


        Notwithstanding
anything in this Paragraph to the contrary, this Paragraph shall be inapplicable to, and neither Landlord nor any person or entity providing financing to Landlord in
connection with the Building ("Lender") shall have any obligation to provide an Offer Notice to Tenant in connection with (i) any sale,
conveyance or other transfer or proposed sale, conveyance or other transfer of the Building to any Person who controls, is controlled by or is under common control with, Landlord or Lender or any
Person in which Hines Interest Limited Partnership or Morgan Stanley Real Estate Investment Fund maintains an interest (collectively, a "Landlord
Affiliate"), or (ii) any foreclosure sale or deed-in-lieu of foreclosure or the exercise of any similar remedy (collectively, a
"Foreclosure") by any Lender. 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 51.6 shall survive Landlord's transfer pursuant to
clause (i) of this Paragraph 51.6 but shall not survive any Foreclosure. 


        51.7    Concurrent Exercise of Rights of First Offer with respect to 901 Gateway Boulevard and 951
Gateway Boulevard    


        Notwithstanding
anything to the contrary contained in this Paragraph 51, if Landlord concurrently delivers to Tenant an Offer Notice under this Lease and an Offer Notice under
Paragraph 51 of the 901 Gateway Lease, then Tenant shall have the right to exercise the Right of First Offer contained in this Paragraph 51 only if it concurrently and validly exercises
the Right of First Offer granted to Tenant under Paragraph 51 of the 901 Gateway Lease. Any attempt by Tenant to deliver an Election Notice under Paragraph 51.2 above without the
concurrent delivery of an Election Notice under Paragraph 51.2 of the 901 Gateway Lease (assuming that Landlord has delivered to Tenant Offer Notices under both this Lease and the 901 Gateway
Lease) shall be null and void and of no force or effect. 



52.   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 G. 


46







 



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



	LANDLORD:	 	HMS GATEWAY OFFICE, L.P.,

a Delaware limited partnership
	

 	
 	

By:	

Hines Gateway Office, L.P.,

Administrative 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.

	

 	
 	

Its:	

Executive Vice President

	
TENANT:	
 	

ADVANCED MEDICINE, INC.,

a Delaware corporation
	

 	
 	

By:	

/s/  A. GREG STURMER      

	

 	
 	

Name:	

A. Greg Sturmer

	

 	
 	

Its:	

Vice President





47








  



 
 

EXHIBIT A    
    
    BASE BUILDING CONSTRUCTION AGREEMENT    
    



        This exhibit, entitled "Base Building Construction Agreement," is and shall constitute Exhibit A to the
Lease Agreement, dated as of January 1, 2001, by and between Landlord and Tenant (the "Lease"). The terms and conditions of this  Exhibit A
are hereby incorporated into and are made a part of the Lease. 


        Subject
to the terms and conditions set forth herein and in the Lease, Landlord shall cause construction of the Building in accordance with the procedures set forth below: 


A.    Definitions  



	1.
	"Base Building Improvements" shall mean a three (3) story building, containing approximately 60,000 square feet, all exterior
surfaces, utilities, landscaping and paved parking, all in substantial compliance with those items listed on the 951 Gateway Preliminary Specifications as "Base Building" and located substantially in
accordance with the Site Plan; provided, however, that the term "Base Building Improvements" shall not include any Tenant Requested Base Building
Improvements.



	2.
	"Base Building Plans and Specifications" is defined in Section B.1 below.



	3.
	"Building Work Cost" is defined in Section B.3 below.



	4.
	"Contractor" shall mean a licensed general contractor selected by Landlord and approved by Tenant, which approval shall not be
unreasonably withheld, conditioned or delayed.



	5.
	"Construction Warranties" is defined in Section D.2 below.



	6.
	"Landlord's Architect" shall mean Dowler Gruman Architects or another architect selected by Landlord in Landlord's reasonable
discretion.



	7.
	"Landlord's Contract" shall mean the construction contract entered into by and between Landlord and the Contractor for the construction
of the Base Building Improvements and any Tenant Requested Base Building Improvements.



	8.
	"Original Base Building Plans and Specifications" shall mean the plans and specifications for the two (2) story building,
comprising approximately 50,000 square feet, together with all exterior surfaces, utilities, landscaping and paved parking associated therewith, which was to have been constructed by Landlord pursuant
to the Original 951 Lease, which plans and specifications were titled "Preliminary Construction Documents dated August 24, 2000," and were prepared by Dowler Gruman Architects.



	9.
	"951 Gateway Preliminary Specifications" shall mean those preliminary specifications for construction of the Base Building Improvements
categorized as "Base Building" and more particularly described on the attached Exhibit A-1.



	10.
	"Site Plan" shall mean the site plan set forth on the attached  Exhibit A-2 establishing the approximate location of the Building.



	11.
	"Tenant Requested Base Building Improvements" shall mean those improvements requested by Tenant in accordance with this  Exhibit A that are to be incorporated
into the Base Building Plans and Specifications. 






        Capitalized
terms not otherwise defined in this Exhibit A shall have the meanings ascribed to them in the Lease. 


A-1







 

B.    Schedule  



	1.
	Plans and Specifications. Landlord's Architect has previously prepared the Original Base Building Plans and Specifications. At Tenant's
request, Landlord has obtained the governmental approvals, permits and variances required for the construction of the Base Building Improvements contemplated under this Lease (the
"Expansion Approvals"). At Tenant's sole cost and expense, Landlord's Architect shall modify and amend the Original Base Building Plans and
Specifications, on or before Friday, February 23, 2001, to incorporate any changes necessary to accommodate construction of all of the Base Building Improvements substantially in accordance
with the 951 Gateway Preliminary Specifications (the "Base Building Plans and Specifications"). Tenant shall have the right to approve the Base Building
Plans and Specifications only to the extent such plans and specifications reflect any changes to the Original Base Building Plans and Specifications which are material deviations from the 951 Gateway
Preliminary Specifications; provided, however, that such approval shall not be unreasonably withheld, conditioned or delayed; and provided, further, that if Tenant fails to respond within ten
(10) days following Landlord's request for approval, Tenant shall be conclusively deemed to have given its approval to the matter submitted by Landlord. Notwithstanding the foregoing, the Base
Building Plans and Specifications are, from time to time, subject to change in Landlord's discretion, upon written consent from Tenant, which consent shall not be unreasonably withheld, conditioned or
delayed; and provided, further, that if Tenant fails to respond within five (5) business days following Landlord's request for consent, Tenant shall be conclusively deemed to have given its
consent to any such change. Landlord may without the written consent of the Tenant change the Base Building Plans and Specifications as may be required by any governmental agency or as necessary to
comply with any governmental requirements or to address structural or unanticipated field conditions or which, in the reasonable discretion of Landlord, will not have a material effect on Tenant's use
of the Premises or a material effect on the aesthetic appearance or impression relating to the Base Building Improvements.



	2.
	Tenant Requested Base Building Improvements. On or before Friday, February 23, 2001, Tenant shall deliver to Landlord's Architect
detailed specifications for any Tenant Requested Base Building Improvements. Landlord shall have ten (10) days from its receipt of such specifications to approve or disapprove the Tenant
Requested Base Building Improvements. Landlord's approval may be given or withheld in Landlord's reasonable discretion, to ensure, among other things, that the Tenant Requested Base Building
Improvements are compatible with all other construction and all Systems within the Building. If Landlord disapproves the Tenant Requested Base Building Improvements, then within five
(5) business days thereafter, Landlord shall meet with the Tenant's Architect (as defined in Exhibit B) and Tenant to discuss, or shall
submit to Tenant's Architect and Tenant in writing, the reasons for Landlord's disapproval. Within five (5) business days following such meeting or submission, Tenant shall cause Tenant's
Architect to revise the same and to submit new specifications for the Tenant Requested Base Building Improvements to Landlord. The procedure set forth in this paragraph will be repeated as set forth
above until Landlord has approved the Tenant Requested Base Building Improvements.



	3.
	Estimate of Building Work Costs. Following the approval by Landlord of the Tenant Requested Base Building Improvements, Landlord shall
furnish Tenant with an estimate of the cost of the Tenant Requested Base Building Improvements (the "Building Work Cost").



	4.
	Tenant's Review of Building Work Cost. The Building Work Cost shall be subject to Tenant's approval, which approval shall not be
unreasonably withheld, conditioned or delayed; and provided, further, that if Tenant fails to respond within five (5) business days following Landlord's request for consent, Tenant shall be
conclusively deemed to have given its approval 



A-2







 


to
the Building Work Cost. If Tenant timely disapproves the Building Work Cost, then within five (5) business days thereafter, Tenant shall meet with Landlord, Contractor, Landlord's Architect
and Tenant's Architect to discuss value engineering changes to the Tenant Requested Base Building Improvements. Within five (5) business days following such meeting, Tenant shall cause Tenant's
Architect to revise the Tenant Requested Base Building Improvements and to submit revised specifications for approval by Landlord in accordance with the procedure set forth above and for a new
Building Work Cost to be prepared by Landlord. The procedure set forth in this paragraph will be repeated until Tenant has approved the Building Work Cost. 



	5.
	Revision of Plans & Specifications. Following Landlord's approval of the Tenant Requested Base Building Improvements and Tenant's
approval of the Building Work Cost, Landlord shall cause Landlord's Architect to revise the Base Building Plans and Specifications to incorporate the Tenant Requested Base Building Improvements. 






C.    Construction  


        The Base Building Improvements shall be constructed, at Landlord's sole cost and expense, by Contractor in accordance with the Base Building Plans and
Specifications, as the same may be amended or modified from time to time by Landlord. 



D.    General  



	1.
	Landlord's Covenant. Subject to the terms and conditions of the Lease and the conditions precedent set forth in Section D.1
above, Landlord covenants that the Base Building Improvements shall be free from material latent defects in design, materials and workmanship. Any claims by Tenant under this Section D.1 shall
be made in writing not later than one (1) year after the Commencement Date. In the event Tenant fails to deliver a written claim to Landlord on or before the applicable date set forth above,
then Landlord shall be conclusively deemed to have satisfied its obligations under this paragraph. The covenants contained in this paragraph are subject to Paragraph 39 of the Lease and are
made specifically and exclusively for the benefit of the original Tenant and any assignee or sublessee under a Permitted Transfer pursuant to Paragraph 23.4 of the Lease.



	2.
	Construction Warranties. Landlord shall obtain from Contractor, and shall request Contractor to obtain from all subcontractors and
material suppliers, warranties (collectively, "Construction Warranties") for all components of the Base Building Improvements for which warranties are
customarily provided in the construction industry and Landlord shall enforce the Construction Warranties as reasonably requested by Tenant.



	3.
	Special Provisions regarding Construction of Bridge. At the request of Tenant submitted to Landlord in accordance with
Section B.2 above, Landlord shall consent to the construction of a pedestrian bridge (the "Bridge") connecting the Building to the 901 Gateway
Premises in a location approved by Landlord in writing, subject, however, to the issuance by the City of all required permits and approvals for the construction of the Bridge and compliance by Tenant
with all of the terms and provisions of said Section B.2, including, without limitation, the delivery to and approval by Landlord of detailed plans and specifications for the Bridge and all
required alterations to the facades of the Building and the 901 Gateway Premises. 






INITIALS: 


TENANT:
             


LANDLORD:
             


A-3








  



 
 

EXHIBIT A-1
  
    951 GATEWAY PRELIMINARY SPECIFICATIONS    
    



        A "cold shell" standard shell for each building shall be constructed per all governmental codes by Landlord for Tenant, including, but not limited to, the
following: 


Structure/Envelope  



	•
	Concrete
foundation to be reinforced grade beams with spread footings or other system as specified by geotechnical and engineering consultants.



	•
	Ground
floor to be concrete slab, minimum thickness 5", level to FF-20, FL-15, on grade or as required by geotechnical and engineering consultants
with a minimum of 4" drain rock, 2" sand cushion and a 10 mil vapor barrier, but in no event a mar slab.



	•
	Second
and third floors to have vented metal decking with reinforced concrete topping slab which meets fire inspection code and flat to FF-20.



	•
	Building
structural framing to consist of reinforced steel "braced frame" with beams and columns constructed using rolled shapes. Cross bracing at exterior.



	•
	Non-bearing
exterior curtain wall consisting of EIFS, with exterior containing a minimum average of 40% glass with ribbon windows of high performance glass
(minimum shading coefficient of .67).



	•
	Floor
system designed with live load capacity of 120 psf.



	•
	Roof
live load to be 50 psf in all bays.



	•
	Floor
to floor heights to be 17'-0".



	•
	Roof
drains and drain lines with connection to site storm drain system.



	•
	Paved
surface parking and structured parking adjacent to the Premises as required to provide tenant with the parking designated in the Lease.



	•
	Roof
screens up to 11'-0" in height above the roof as required by the City.



	•
	Roofing
membrane to be a four-ply asphalt built-up over rigid insulation over metal deck roof construction.



	•
	Fire
proofing of building structure, if required, to building code.



	•
	Fire
safing between floors to maintain code required separations.



	•
	Perimeter
and roof base building insulation per Title 24 requirements. 




Utilities  



	•
	2,000
amp 277/480 volt, 3-phase electric service and transformer with underground electrical to switchgear and meter.



	•
	"House
power" panels and transformer for site lights and irrigation.



	•
	One
gas service to exterior meter.



	•
	Four
(4), 4" telephone and data conduits. Stubbed to building.



	•
	Site
storm drain system. 



A-1-1







 



	•
	Domestic
water service with meters, backflow preventers and check assembly located per California Water Service requirements.



	•
	Sanitary
sewer to and including main line under ground floor slab.



	•
	Complete
light hazard automatic fire sprinkler system to meet NFPA standards (excluding drops to suspended ceilings). 




Miscellaneous  



	•
	Exterior
doors prepared with hardware and rough-in to provide for electronic security. Such security to be provided and installed by Tenant.



	•
	All
utility connection(s) and development fees for base building systems.



	•
	Landscaping,
hardscapes and automatic irrigation systems, including control systems.



	•
	One
(1) monument sign at each main entrance along Gateway Boulevard identifying The Gateway North Campus and the building address.



	•
	Site
lighting a minimum of one (1) foot candle per square foot, including control system.



	•
	Two
(2) sets of interior exit stairs per building and two corresponding exits; one set of exit stairs shall be extended to the roof for roof access. 



A-1-2












  



 
 

EXHIBIT A2
  
    SITE PLAN    
    


A-2-1








  



 
 

EXHIBIT B    
    
    PREMISES CONSTRUCTION AGREEMENT    
    



        This exhibit, entitled "Premises Construction Agreement," is and shall constitute Exhibit B to the Lease
Agreement, dated as of January 1, 2001, by and between Landlord and Tenant (the "Lease"). The terms and conditions of this  Exhibit B are
hereby incorporated into and are made a part of the Lease. 


        Subject
to the terms and conditions set forth herein and in the Lease, Landlord shall allow the construction or installation of the improvements in the interior of the Premises in
accordance with the procedures set forth below: 


A.    Definitions  



	1.
	"Approved Plans" is defined in Section B.5 below.



	2.
	"Contractor" shall mean the general contractor retained by Landlord pursuant to  Exhibit A to the Lease.



	3.
	"Estimated Work Cost" is defined in Section B.3 below.



	4.
	"Excess Tenant Improvements Costs" is defined in Section B.6 below.



	5.
	"Final Cost Quotation" is defined in Section B.6 below and shall include all costs associated with the Tenant Improvements,
including, without limitation, costs of all tenant improvement work; architectural and engineering fees; governmental agency fees for permits, licenses and inspections; construction fees, including,
without limitation, general contractors' overhead and supervision fees; and such other costs as may be incurred by Landlord in connection with such construction.



	6.
	"Preliminary Plans" is defined in Section B.1 below.



	7.
	"Tenant Improvement Allowance" shall mean the amount set forth in the Basic Lease Information as adjusted pursuant to the provisions
thereof, which amount shall, except as otherwise provided in this Exhibit B, be paid by Landlord toward the cost of completion of the Tenant
Improvements (collectively, the "Tenant Improvement Cost"). The Tenant Improvement Allowance shall be subject to adjustment upon the final determination
of the Premises' square footage by Landlord's Architect. Notwithstanding the foregoing, (i) not less than an amount equal to Fifteen and 57/100ths Dollars ($15.57) per square foot
of the Premises (the "Warm Shell Allowance") shall be expended on the improvements generally described on  Exhibit B-1 hereto, and (ii) the
Tenant Improvement Allowance and the Deferred Allowance may not be used to pay the costs of
Tenant Improvements that constitute furniture, equipment or trade fixtures or result in changes to the Base Building Improvements. If the Tenant Improvement Cost exceeds the Tenant Improvement
Allowance, the difference shall be paid by Tenant in accordance with this Exhibit B. If the total cost of constructing and installing the
improvements described on Exhibit B-1 is less than the Warm Shell Allowance, then the Tenant Improvement Allowance shall be reduced
by the difference and the difference shall not be disbursed to Tenant.



	8.
	"Tenant's Architect" shall mean Dowler Gruman Architects or a replacement licensed architect selected by Tenant and approved by
Landlord.



	9.
	"Tenant's Contract" shall mean the construction contract entered into by and between Tenant and the Contractor for the construction of
the Tenant Improvements. 



B-1







 



	10.
	"Tenant Improvements" shall mean all improvements made to the Premises pursuant to the Approved Plans, specifically excluding, however,
any Tenant Requested Base Building Improvements (as defined in Exhibit A to the Lease). Without limiting the generality of the foregoing, the
Tenant Improvements shall include and Tenant shall be responsible for the construction and installation of the improvements described on  Exhibit B-1.



	11.
	"Warm Shell Allowance" is defined within the definition of Tenant Improvement Allowance in Section A.7 above. 




        Capitalized
terms not otherwise defined in this Exhibit B shall have the meanings ascribed to them in the Lease. 


B.    Schedule  



	1.
	Tenant
shall cause Tenant's Architect to furnish to Landlord preliminary space plans and specifications (the "Preliminary Plans") on or
before February 15, 2001. The failure of Tenant's Architect to furnish Preliminary Plans to Landlord by February 15, 2001 shall constitute a Tenant Delay for all purposes of this Lease
and shall not lead to a postponement of or adjustment to the Commencement Date. Tenant shall be responsible for all costs associated with the Preliminary Plans (collectively, the
"Preliminary Design Costs"), including any revisions required by Section B.2 hereunder.



	2.
	Landlord
shall have ten (10) days from its receipt of the Preliminary Plans to approve or disapprove the same. Landlord's approval of the Preliminary Plans shall not be
unreasonably withheld, conditioned or delayed. If Landlord disapproves the Preliminary Plans, then within five (5) business days thereafter, Landlord shall meet with Tenant's Architect and
Tenant to discuss, or shall submit to Tenant's Architect and Tenant in writing, the reasons for Landlord's disapproval. Within five (5) business days following such meeting or submission,
Tenant shall cause the Tenant's Architect to revise the same and to submit new Preliminary Plans to Landlord. The same procedure set forth in this paragraph will be repeated as set forth above until
Landlord has approved the Preliminary Plans.



	3.
	Promptly
after approval of the Preliminary Plans, Tenant shall cause Contractor to furnish Landlord with an estimate of the cost of the Tenant Improvements as shown on the Preliminary
Plans (the "Estimated Work Cost"). The Estimated Work Cost shall separately itemize all costs to complete the improvements described on  Exhibit B-1 hereto.



	4.
	Following
Contractor's calculation of the Estimated Work Cost, Tenant shall cause Tenant's Architect to prepare detailed construction drawings and specifications (the
"Working Drawings") for the Tenant Improvements based strictly upon the Preliminary Plans, except as otherwise agreed in writing by Landlord and Tenant.
Tenant shall be responsible for all costs associated with the Working Drawings. The Working Drawings shall be completed no later than April 15, 2001. The foregoing, any delay in the completion
of the Working Drawings beyond April 15, 2001 shall constitute a Tenant Delay for all purposes of this Lease and shall not lead to a postponement of or adjustment to the Commencement Date.



	5.
	Landlord
shall have ten (10) days from its receipt of the Working Drawings to approve or disapprove the same. Landlord's approval of the Working Drawings shall not be
unreasonably withheld, conditioned or delayed. If Landlord disapproves the Working Drawings, then within five (5) business days thereafter, Landlord shall meet with Tenant's Architect and
Tenant to discuss, or shall submit to the Tenant's Architect and Tenant in writing, the reasons for Landlord's disapproval. Within five (5) business days following such meeting or submission,
Tenant shall cause Tenant's Architect to revise the same and to submit new Working Drawings to Landlord, and the same procedure will be repeated as set forth above until Landlord has 



B-2







 


approved
the Working Drawings (the "Approved Plans"). Upon approval of the Working Drawings, Landlord shall deliver to Tenant a list of Tenant
Improvements to be removed by Tenant, at Tenant's cost and expense in accordance with Paragraph 11.2 of the Lease, upon expiration of the Term or earlier termination of the Lease.
Notwithstanding the foregoing, during the preparation of the Working Drawings, Landlord shall, upon Tenant's request, advise Tenant of items that will be required to be removed pursuant to the
previous sentence. 



	6.
	Within
ten (10) business days after Landlord's approval of the Approved Plans, Tenant shall cause Contractor to furnish to Landlord a cost estimate for the Tenant Improvements
based upon the Approved Plans (the "Final Cost Quotation"). The Final Cost Quotation shall separately itemize all costs to complete the improvements
described on Exhibit B-1 hereto. If the Final Cost Quotation is greater than the Tenant Improvement Allowance, Tenant shall be
responsible for the difference between the Tenant Improvement Allowance and the Final Cost Quotation (the "Excess Tenant Improvements Cost"). If the
Tenant Improvement Allowance exceeds the Final Cost Quotation, then the Excess Tenant Improvements Cost shall be zero.



	7.
	Landlord
and Tenant shall make progress payments on a pro rata basis (in the proportion that the Tenant Improvement Allowance paid by Landlord and the Excess Tenant Improvements Cost
paid by Tenant, if any, bear to the Final Cost Quotation) from time to time as the Tenant Improvements are constructed in the Premises. Tenant shall pay its pro rata share of any progress payments
directly to Contractor or subcontractors, as appropriate, and Landlord shall pay its pro rata share of any progress payments directly to Tenant's Contractor or subcontractors, as appropriate, subject
to a reasonable retention as determined by Landlord. Landlord shall be entitled to suspend or terminate construction of the Tenant Improvements and to declare Tenant in default in accordance with the
terms of the Lease if payment by Tenant of Tenant's pro rata share of any progress payment has not been received by Contractor when due, as required hereunder. Moreover, Landlord shall not be required
to pay its pro rata share of any progress payment until such time as Landlord receives from Tenant a draw request in a form approved by Landlord, which draw request shall be executed by Tenant,
Tenant's Architect and Tenant's Contractor, together with a conditional lien waiver duly executed by Tenant's Contractor as to the progress payment then being requested by Tenant hereunder and an
unconditional lien waiver for the immediately preceding progress payment made by Landlord. All lien waivers shall comply with California law regarding materialmen and mechanic's liens.



	8.
	In
the event that the Tenant Improvement Allowance exceeds the Final Cost Quotation, then promptly following the substantial completion of the Tenant Improvements, the payment in full
of all costs of designing and constructing the Tenant Improvements, and the receipt by Landlord of unconditional lien waivers from Tenant's Contractor, subcontractors and material suppliers for all
amounts due in connection with the Tenant Improvements, Landlord shall disburse the remaining Tenant Improvement Allowance to Tenant in a single lump-sum disbursement. 




C.    Tenant Improvement Construction  



	1.
	All
Tenant Improvements to be constructed or installed in the Premises shall be performed by Contractor in accordance with the Approved Plans, subject to any changes agreed to by
Landlord and Tenant in writing. Landlord shall have no obligation to Tenant for defects in design, workmanship or materials in connection with the Tenant Improvements. Any changes to the Approved
Plans shall require the written approval of Landlord and Tenant, which approval shall not be unreasonably withheld, conditioned or delayed. All such changes must be evidenced by a written change order
executed by Landlord and Tenant or their respective 



B-3







 


representatives
describing the change required in the Approved Plans, and the cost of such changes shall be paid in accordance with the terms of this  Exhibit B. 



	2.
	Tenant
shall cause Contractor to construct the Tenant Improvements in a manner designed to avoid interference with the construction of the Base Building Improvements. Landlord and
Tenant shall each use good faith efforts to reasonably resolve any issues or conflicts that may arise during the course of constructing the Tenant Improvements and the Base Building Improvements.
Entry by Contractor in accordance with this Exhibit B shall not constitute Tenant's occupancy of the Premises under Paragraph 3 of the
Lease; however, Tenant shall comply with all terms and conditions of the Lease (excluding only, prior to the Commencement Date, the obligation to pay Rent) during Contractor's occupancy of and work
within the Premises. Tenant shall be responsible for maintaining harmonious labor relations with all contractors and service providers servicing the Premises.



	3.
	In
addition to and without limitation on the requirements set forth in the Lease, Tenant shall ensure that Contractor and all subcontractor(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). 




D.    Deferred Allowance  


        In addition to the Tenant Improvement Allowance, Landlord agrees to provide Tenant up to Nine Hundred Thousand Dollars ($900,000.00) (viz., $15.00 per square
foot) to be applied toward completion of the Tenant Improvements (the "Deferred Allowance") after the Tenant Improvement Allowance has been disbursed.
The Deferred Allowance shall be subject to adjustment upon the final determination of the Premises square footage by Landlord's Architect. The Deferred Allowance shall be disbursed to Tenant, if at
all, in a single lump-sum disbursement, shall be available to reimburse Tenant for costs actually incurred in connection with the design and construction of the Tenant Improvements (except
that no portion of the Deferred Allowance may be used to pay the costs of Tenant Improvements that constitute furniture, equipment or trade fixtures or result in changes to the Base Building
Improvements), shall be disbursed by Landlord upon the submission of draw requests and other documentation similar in form and content to that required in connection with the disbursement of the
Tenant Improvement Allowance, and shall be subject to a reasonable retention as determined by Landlord. Tenant shall provide the aforesaid draw request and associated documentation to Landlord not
less than ninety (90) days' prior to the date of the disbursement of the Deferred Allowance. The Deferred Allowance shall be repayable by Tenant to Landlord in substantially equal
self-amortizing monthly installments over the remaining initial Term of the Lease (from and after the date of disbursement of the Deferred Allowance), together with interest on the balance
outstanding from time to time from the date of disbursement at the following rates: interest shall accrue on the initial Four Hundred Fifty Thousand Dollars ($450,000.00) disbursed by Landlord at the
per annum rate of 14% and on the second Four Hundred Fifty Thousand Dollars ($450,000.00) disbursed by Landlord at the per annum rate of 15%. Such installments shall be payable on the first day of
each month concurrently with the payment of Monthly Base Rent, and shall be deemed a part of the "Rent" hereunder for all purposes of this Lease. Concurrently with the disbursement of the Deferred
Allowance, Landlord and Tenant shall execute a Deferred Allowance Amortization Memorandum in 


B-4







 



the
form of Exhibit I hereto. Notwithstanding anything herein to the contrary, in the event the Lease shall terminate for any reason prior to the
scheduled expiration thereof, the Deferred Allowance and all accrued and unpaid interest thereon shall immediately become due and payable in full. 


E.    General  



	1.
	All
drawings, space plans, plans and specifications for any improvements or installations in the Premises are expressly subject to Landlord's prior written approval, which approval
shall not be unreasonably withheld, conditioned or delayed. Any approval by Landlord of any drawings, plans or specifications prepared on behalf of Tenant including, without limitation, any
Preliminary Plans, Working Drawings or Approved Plans, or any revisions thereto, shall not in any way bind Landlord, create any responsibility or liability on the part of the Landlord for the
completeness of the same, their design sufficiency or compliance with applicable statutes, ordinances or regulations or constitute a representation or warranty by Landlord as to the adequacy or
sufficiency of such drawings, plans or specifications, or the improvements to which they relate, but such approval shall merely evidence the consent of Landlord to such drawings, plans or
specifications.



	2.
	The
Tenant Improvement Allowance (including, without limitation, the Warm Shell Allowance) and Deferred Allowance shall be used by Tenant to construct Tenant Improvements in the entire
Premises and may not be used to improve only a portion or portions of the Premises. Tenant shall be deemed to have satisfied its obligations under this Section E.2 if Tenant constructs or
installs, as appropriate, within the entire Premises, at a minimum, acoustical ceilings, HVAC, floor coverings, light fixtures and walls with a paint finish, all in accordance with applicable Laws and
to a condition which allows for full legal occupancy of the Building, as evidenced by the receipt of a certificate of occupancy from the City. Notwithstanding the foregoing, Tenant shall only be
required to improve the warehouse facilities, storerooms, electrical rooms and data rooms located within the Premises to the same condition to which such facilities and rooms were improved within the
901 Gateway Premises following the completion of construction of Tenant Improvements (as defined in the 901 Gateway Lease) in the 901 Gateway Premises.



	3.
	Any
failure by Tenant to pay any amounts due hereunder shall have the same effect under the Lease as a failure to pay Rent and any failure by Tenant to perform any of its other
obligations hereunder shall be subject to Paragraph 24 of the Lease.



	4.
	Tenant
shall provide Landlord with as-built plans and specifications of the Tenant Improvements within forty-five (45) days after the Commencement Date. 




INITIALS: 


TENANT:
/s/ A. GREG STURMER 


LANDLORD:
/s/ JAMES BUIE, JR. 


B-5








  



 
 

EXHIBIT B-1    
    
    DESCRIPTION OF "WARM SHELL" IMPROVEMENTS    
    



	•
	Elevator(s)
per code



	•
	Stairs
in excess of two (2) exit stairs provided as part of the 951 Gateway Preliminary Specifications



	•
	Restrooms
per code



	•
	HVAC
for standard office use (laboratory upgrades will not be funded-out of the Warm Shell Allowance)



	•
	Standard
office lobby



	•
	Electrical
for standard office use (laboratory upgrades will not be funded out of the Warm Shell Allowance)



	•
	Rooftop
mechanical platform



	•
	Roof
Screens 



B-1-1












  



 
 

EXHIBIT C    
    
    ADDITIONAL OPERATIONAL GUIDELINES    
    



        As a component of the Tenant Improvements and any Alterations made by Tenant to the Premises, Tenant shall install fume hoods, as well as a rooftop venting and
exhaust system designed to increase the velocity of exhaust such that any odors shall be discharged high into the atmosphere in order to minimize the risk of odors detectable at ground level. In
addition, Tenant shall install and utilize such additional venting, exhaust and quenching systems, including, without limitation, base quenching, distillation units, acid quenching, and mechanical
exhaust/filtration systems, as appropriate to reduce the risk of emanation of such odors. 


C-1








  



 
 

EXHIBIT D    
    
    RULES AND REGULATIONS    
    



        This exhibit, entitled "Rules and Regulations," is and shall constitute Exhibit D to the Lease Agreement,
dated as of the Lease Date, by and between Landlord and Tenant for the Premises. The terms and conditions of this Exhibit D are hereby
incorporated into and are made a part of the Lease. Capitalized terms used, but not otherwise defined, in this Exhibit D have the meanings
ascribed to such terms in the Lease. 



	1.
	Tenant
shall not use any method of heating or air conditioning other than that approved by Landlord in writing without the prior written consent of Landlord, which consent shall not to
be unreasonably withheld, conditioned or delayed.



	2.
	All
window coverings installed by Tenant and visible from the outside of the Building require the prior written approval of Landlord.



	3.
	Tenant
shall not use, keep or permit to be used or kept any foul or noxious gas or substance or any flammable or combustible materials on or around the Project or the Adjacent
Properties, except to the extent that Tenant is permitted to use the same in the Premises under the terms of Paragraph 32 of the Lease.



	4.
	Tenant
shall not alter any lock or install any new locks or bolts on any door at the Premises without the prior written consent of Landlord, which consent shall not be unreasonably
withheld, conditioned or delayed.



	5.
	Tenant
shall not make any duplicate keys without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed.



	6.
	Tenant
shall park motor vehicles in parking areas designated by Landlord, including areas for loading and unloading. During those periods of loading and unloading, Tenant shall not
unreasonably interfere with traffic flow around the Building or the Project and loading and unloading areas of other tenants.



	7.
	Tenant
shall not disturb, solicit or canvas any tenant or other occupant of the Building or Project and shall cooperate to prevent same.



	8.
	No
person shall go on the roof without Landlord's permission except as required to repair and maintain the same as required under the Lease.



	9.
	Business
machines and mechanical equipment belonging to Tenant which cause noise or vibration that may be transmitted to the structure of the Building, to such a degree as to be
objectionable to Landlord or other tenants, shall be placed and maintained by Tenant, at Tenant's expense, on vibration isolators or in noise-dampening housing or other devices sufficient to eliminate
noise or vibration.



	10.
	All
goods, including material used to store goods, delivered to the Premises of Tenant shall be immediately moved into the Premises and shall not be left in parking or receiving areas
overnight. During the period of construction of the Tenant Improvements and any Alterations, all construction materials shall be stored in a manner and a location mutually acceptable to Landlord and
Tenant.



	11.
	Tenant
is responsible for the storage and removal of all trash and refuse. All such trash and refuse shall be contained in suitable receptacles stored behind screened enclosures at
locations approved by Landlord. 



D-1







 



	12.
	Tenant
shall not store or permit the storage or placement of goods or merchandise in or around the Common Areas surrounding the Premises. No displays or sales or merchandise shall be
allowed in the Parking Areas or other Common Areas.



	13.
	Tenant
shall not permit any animals, including, but not limited to, any household pets, to be brought or kept in or about the Premises, the Building, the Project or any of the Common
Areas which would violate applicable Laws or constitute a nuisance to the Premises, the Building or the Project. Tenant shall prior to the Commencement Date and thereafter from time to time upon the
request of Landlord provide to Landlord a written plan for the handling and disposal of all animals used by Tenant in the conduct of its business, which plan shall be subject to the written approval
of Landlord. 




INITIALS: 


TENANT:
             


LANDLORD:
             


D-2








  



 
 

EXHIBIT E    
    
    HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE    
    



        Your cooperation in this matter is appreciated. Initially, the information provided by you in this Hazardous Materials Disclosure Certificate is necessary for the
Landlord to evaluate your proposed uses of the premises (the "Premises") and to determine whether to enter into a lease agreement with you as tenant. If
a lease agreement is signed by you and the Landlord (the "Lease Agreement"), on an annual basis in accordance with the provisions of Paragraph 32
of the Lease Agreement, you are to provide an update to the information initially provided by you in this certificate. Any questions regarding this certificate should be directed to, and when
completed, the certificate should be delivered to: 



	Landlord:	 	HMS Gateway Office L.P.

c/o Hines

651 Gateway Boulevard, Suite 1140

South San Francisco, California 94080

Phone: (650) 794-1111





	
 Name of (Prospective) Tenant: Advanced Medicine, Inc.
	

Mailing Address:	

 	

 
	


	


	

Contact Person, Title and Telephone Number(s):	

 
	


	

Contact Person for Hazardous Waste Materials Management and Manifests and Telephone Number(s):
	


	


	

Address of (Prospective) Premises:	

 
	


	

Length of (Prospective) initial Term:	

 
	







	

1.	
 	

GENERAL INFORMATION:	

 
	

 	
 	

 	

Describe the proposed operations to take place in, on, or about the Premises, including, without limitation, principal products processed, manufactured or assembled, and services and activities to be provided or otherwise conducted. Existing tenants
should describe any proposed changes to on-going operations.
	

 	
 	

 	


	

 	
 	

 	


	

2.	
 	

USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS	

 
	

 	
 	

2.1	

Will any Hazardous Materials (as hereinafter defined) be used, generated, treated, stored or disposed of in, on or about the Premises? Existing tenants should describe any Hazardous Materials which continue to be used, generated, treated, stored or
disposed of in, on or about the Premises.
	

 	
 	

 	

Wastes	

 	

Yes o	

No o
	

 	
 	

 	

Chemical Products	

 	

Yes o	

No o
	

 	
 	

 	

Other	

 	

Yes o	

No o
	 	 	 	 	 	 	 





E-1







 

	

 	
 	

 	

If Yes is marked, please explain:	

 
	

 	
 	

 	


	

 	
 	

 	


	

 	
 	

2.2	

If Yes is marked in Section 2.1, attach a list of any Hazardous Materials to be used, generated, treated, stored or disposed of in, on or about the Premises, including the applicable hazard class and an estimate of the quantities of such
Hazardous Materials to be present on or about the Premises at any given time; estimated annual throughput; the proposed location(s) and method of storage (excluding nominal amounts of ordinary household cleaners and janitorial supplies which are not
regulated by any Environmental Laws, as hereinafter defined); and the proposed location(s) and method(s) of treatment or disposal for each Hazardous Material, including the estimated frequency, and the proposed contractors or subcontractors. Existing
tenants should attach a list setting forth the information requested above and such list should include actual data from on-going operations and the identification of any variations in such information from the prior year's certificate.
	

3.	
 	

STORAGE TANKS AND SUMPS	

 
	

 	
 	

3.1	

Is any above or below ground storage or treatment of gasoline, diesel, petroleum, or other Hazardous Materials in tanks or sumps proposed in, on or about the Premises? Existing tenants should describe any such actual or proposed
activities.
	

 	
 	

 	

Yes o	

No o	

 	

 
	

 	
 	

 	

If yes, please explain:	

 	

 
	

 	
 	

 	


	

 	
 	

 	


	

4.	
 	

WASTE MANAGEMENT	

 
	

 	
 	

4.1	

Has your company been issued an EPA Hazardous Waste Generator I.D. Number? Existing tenants should describe any additional identification numbers issued since the previous certificate.
	

 	
 	

 	

Yes o	

No o	

 	

 
	

 	
 	

4.2	

Has your company filed a biennial or quarterly reports as a hazardous waste generator? Existing tenants should describe any new reports filed.
	

 	
 	

 	

Yes o	

No o	

 	

 
	

 	
 	

 	

If yes, attach a copy of the most recent report filed.	

 	

 
	

 	
 	

 	


	

 	
 	

 	


	

5.	
 	

WASTEWATER TREATMENT AND DISCHARGE	

 
	

 	
 	

5.1	

Will your company discharge wastewater or other wastes to:
	

 	
 	

 	

o storm drain?	

o sewer?	

 
	

 	
 	

 	

o surface water?	

o no wastewater or other wastes

    discharged.	

 
	

 	
 	

 	

Existing tenants should indicate any actual discharges. If so, describe the nature of any proposed or actual discharge(s).
	

 	
 	

 	


	

 	
 	

 	





E-2







 

	

 	
 	

5.2	

Will any such wastewater or waste be treated before discharge?
	

 	
 	

 	

Yes o	

No o	

 	

 
	

 	
 	

 	

If yes, describe the type of treatment proposed to be conducted. Existing tenants should describe the actual treatment conducted.
	

 	
 	

 	


	

 	
 	

 	


	

6.	
 	

AIR DISCHARGES	

 
	

 	
 	

6.1	

Do you plan for any air filtration systems or stacks to be used in your company's operations in, on or about the Premises that will discharge into the air; and will such air emissions be monitored? Existing tenants should indicate whether or not
there are any such air filtration systems or stacks in use in, on or about the Premises which discharge into the air and whether such air emissions are being monitored.
	

 	
 	

 	

Yes o	

No o	

 	

 
	

 	
 	

 	

If yes, please describe:	

 	

 
	

 	
 	

 	


	

 	
 	

 	


	

 	
 	

6.2	

Do you propose to operate any of the following types of equipment, or any other equipment requiring an air emissions permit? Existing tenants should specify any such equipment being operated in, on or about the Premises.
	

 	
 	

 	

o Spray booth(s)	

o Incinerator(s)	

 
	

 	
 	

 	

o Dip tank(s)	

o Other (Please describe)	

 
	

 	
 	

 	

o Drying oven(s)	

o No Equipment Requiring

    Air Permits	

 
	

 	
 	

 	

If yes, please describe:	

 	

 
	

 	
 	

 	


	

 	
 	

 	


	

 	
 	

6.3	

Please describe (and submit copies of with this Hazardous Materials Disclosure Certificate) any reports you have filed in the past [thirty-six] months with any governmental or quasi-governmental agencies or authorities related to air discharges or
clean air requirements and any such reports which have been issued during such period by any such agencies or authorities with respect to you or your business operations.
	

7.	
 	

HAZARDOUS MATERIALS DISCLOSURES	

 
	

 	
 	

7.1	

Has your company prepared or will it be required to prepare a Hazardous Materials management plan ("Management Plan") or Hazardous Materials Business Plan and Inventory ("Business
Plan") pursuant to Fire Department or other governmental or regulatory agencies' requirements? Existing tenants should indicate whether or not a Management Plan is required and has been prepared.
	

 	
 	

 	

Yes o	

No o	

 	

 
	

 	
 	

 	

If yes, attach a copy of the Management Plan or Business Plan. Existing tenants should attach a copy of any required updates to the Management Plan or Business Plan.
	 	 	 	 	 	 	 





E-3







 

	

 	
 	

7.2	

Are any of the Hazardous Materials, and in particular chemicals, proposed to be used in your operations in, on or about the Premises listed or regulated under Proposition 65? Existing tenants should indicate whether or not there are any new Hazardous
Materials being so used which are listed or regulated under Proposition 65.
	

 	
 	

 	

Yes o	

No o	

 	

 
	

 	
 	

 	

If yes, please explain:
	

 	
 	

 	


	

 	
 	

 	


	

8.	
 	

ENFORCEMENT ACTIONS AND COMPLAINTS	

 
	

 	
 	

8.1	

With respect to Hazardous Materials or Environmental Laws, has your company ever been subject to any agency enforcement actions, administrative orders, or consent decrees or has your company received requests for information, notice or demand letters,
 or any other inquiries regarding its operations? Existing tenants should indicate whether or not any such actions, orders or decrees have been, or are in the process of being, undertaken or if any such requests have been received.
	

 	
 	

 	

Yes o	

No o	

 	

 
	

 	
 	

 	

If yes, describe the actions, orders or decrees and any continuing compliance obligations imposed as a result of these actions, orders or decrees and also describe any requests, notices or demands, and attach a copy of all such documents. Existing
tenants should describe and attach a copy of any new actions, orders, decrees, requests, notices or demands not already delivered to Landlord pursuant to the provisions of Paragraph 32 of the Lease Agreement.
	

 	
 	

 	


	

 	
 	

 	


	

 	
 	

 	


	

 	
 	

8.2	

Have there ever been, or are there now pending, any lawsuits against your company regarding any environmental or health and safety concerns?
	

 	
 	

 	

Yes o	

No o	

 	

 
	

 	
 	

 	

If yes, describe any such lawsuits and attach copies of the complaint(s), cross-complaint(s), pleadings and other documents related thereto as requested by Landlord. Existing tenants should describe and attach a copy of any new complaint(s),
cross-complaint(s), pleadings and other related documents not already delivered to Landlord pursuant to the provisions of Paragraph 32 of the Lease Agreement.
	

 	
 	

 	


	

 	
 	

 	


	

 	
 	

 	


	

 	
 	

8.3	

Have there been any problems or complaints from adjacent tenants, owners or other neighbors at your company's current facility with regard to environmental or health and safety concerns? Existing tenants should indicate whether or not there have been
any such problems or complaints from adjacent tenants, owners or other neighbors at, about or near the Premises and the current status of any such problems or complaints.
	

 	
 	

 	

Yes o	

No o	

 	

 
	

 	
 	

 	

If yes, please describe. Existing tenants should describe any such problems or complaints not already disclosed to Landlord under the provisions of the signed Lease Agreement and the current status of any such problems or complaints.
	

 	
 	

 	


	

 	
 	

 	


	

 	
 	

 	





E-4







 

	

9.	
 	

PERMITS AND LICENSES	

 
	

 	
 	

9.1	

Attach copies of all permits and licenses issued to your company with respect to its proposed operations in, on or about the Premises, including, without limitation, any Hazardous Materials permits, wastewater discharge permits, air emissions permits,
 and use permits or approvals. Existing tenants should attach copies of any new permits and licenses as well as any renewals of permits or licenses previously issued.





        As
used herein, "Hazardous Materials" shall mean and include any substance that is or contains (a) any
"hazardous substance" as now or hereafter defined in § 101(14) of the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended ("CERCLA") (42 U.S.C. § 9601 et seq.) or any regulations promulgated
under CERCLA; (b) 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;
(c) 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; (d) petroleum, petroleum by-products, gasoline, diesel fuel, or other petroleum
hydrocarbons; (e) asbestos and asbestos-containing material, in any form, whether friable or non-friable; (f) polychlorinated biphenyls; (g) lead and
lead-containing materials; or (h) 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 property or poses or threatens to pose a
hazard to the health or safety of persons on the Premises or any adjacent 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; and "Environmental Laws" shall
mean and include (a) CERCLA, RCRA and TSCA; and (b) any other federal, state or local laws, ordinances, statutes, codes, rules, regulations, orders or decrees now or hereinafter in
effect relating to (i) pollution, (ii) the protection or regulation of human health, natural resources or the environment, (iii) the treatment, storage or disposal of Hazardous
Materials, or (iv) the emission, discharge, release or threatened release of Hazardous Materials into the environment. 


        The
undersigned hereby acknowledges and agrees that this Hazardous Materials Disclosure Certificate is being delivered to Landlord in connection with the evaluation of a Lease Agreement
and, if such Lease Agreement is executed, will be attached thereto as an exhibit. The undersigned further acknowledges and agrees that if such Lease Agreement is executed, this Hazardous Materials
Disclosure Certificate will be updated from time to time in accordance with Paragraph 32 of the Lease Agreement. The undersigned further acknowledges and agrees that the Landlord and its
partners, lenders and representatives may, and will, rely upon the statements, representations, warranties, and certifications made herein and the truthfulness thereof in entering into the Lease
Agreement and the continuance thereof throughout the term, and any renewals thereof, of the Lease Agreement. I [print name]
                        , acting with full authority to bind
the (proposed) Tenant and on behalf of the 


E-5







 



(proposed)
Tenant, certify, represent and warrant that the information contained in this certificate is true and correct. 



	(PROSPECTIVE) TENANT:
	

ADVANCED MEDICINE, INC.,

a Delaware corporation	
 	

 
	

By:	
 	

 	
 	

 
	 	 	
	 	 
	

Title:	
 	

 	
 	

 
	 	 	
	 	 
	

Date:	
 	

 	
 	

 
	 	 	
	 	 





	

INITIALS:	

 	
 	

 
	

TENANT:	

 	
 	

 
	 	/s/  A. GREG STURMER      
	 	 
	

LANDLORD:	

 	
 	

 
	 	/s/  JAMES BUIE, JR.      
	 	 




E-6








  



 
 

EXHIBIT F    
    
    TENANT'S PROPERTY    
    


        Laboratory related furniture and equipment including: 




benches
and tables

casework

biosafety, laminar flow, and fume hoods

cages/fencing

DI water system

vacuum pumps

compressed air

nitrogen manifold 





        Office
related furniture and equipment including: 




open
office partitions

telephone and network equipment

reception desk

lobby furniture

lobby display cases

appliances

interior signage 




F-1












  



 
 

EXHIBIT G    




	RECORDING REQUESTED BY AND	 	 
	WHEN RECORDED RETURN TO:	 	 
	
	 	 
	
	 	 
	
	 	 





Attention: 




        (Space above this line for Recorder's use) 


 
 

MEMORANDUM OF LEASE    
    


        THIS MEMORANDUM OF LEASE is executed as of January 1, 2001, by and between HMS GATEWAY OFFICE, L.P., a Delaware limited partnership
("Landlord"), and ADVANCED MEDICINE, INC., a Delaware corporation ("Tenant"). Landlord has
previously leased to Tenant a portion of that certain real property described on Exhibit A attached hereto and incorporated herein by reference,
consisting of the building commonly known as 951 Gateway Boulevard located in South San Francisco, California, commencing on January 1, 2001 and terminating on March 31, 2012 on the
terms and conditions set forth in that certain Lease between Landlord and Tenant dated as of January 1, 2001 (the "Off Record Lease"). Landlord
has also granted to Tenant options to renew the term of the Lease for two (2) additional periods of five (5) years each in accordance with the terms and conditions of the Off Record
Lease. 


G-1







 

        IN
WITNESS WHEREOF, the undersigned have executed this Memorandum of Lease so that third parties might have notice of the lease by Landlord and Tenant herein. 



	 	 	LANDLORD:	 	HMS GATEWAY OFFICE, L.P.,

a Delaware limited partnership
	

 	
 	

 	
 	

By: Hines Gateway Office, L.P.,

Administrative Partner
	

 	
 	

 	
 	

By: Hines Interests Limited Partnership,

General Partner
	

 	
 	

 	
 	

By: Hines Holdings, Inc.,

General Partner
	

 	
 	

 	
 	

By:	


	

 	
 	

 	
 	

Name:	


	

 	
 	

 	
 	

Its:	


	

 	
 	

TENANT:	
 	

ADVANCED MEDICINE, INC.,

a Delaware corporation
	

 	
 	

 	
 	

By:	


	

 	
 	

 	
 	

Name:	


	

 	
 	

 	
 	

Its:	







INITIALS:



TENANT:
/s/ A. GREG STURMER 


LANDLORD:
/s/ JAMES BUIE, JR. 


G-2








  



 
 

EXHIBIT H    
    
    DEFERRED ALLOWANCE AMORTIZATION MEMORANDUM    
    



	 	 	LANDLORD:	 	ARE-901/951 GATEWAY BOULEVARD, LLC, SUCCESSOR IN INTEREST TO HMS GATEWAY OFFICE, L.P.
	

 	
 	

TENANT:	
 	

THERAVANCE, INC., (FORMERLY ADVANCED MEDICINE, INC.)
	

 	
 	

LEASE DATE:	
 	

January 1, 2001
	

 	
 	

PREMISES:	
 	

Located at 951 Gateway Boulevard, South San Francisco, California





        Tenant
hereby acknowledges that Landlord has provided a Deferred Allowance to Tenant in the amount of eight hundred ninety seven thousand two hundred forty Dollars ($897,240) pursuant to
Paragraph D of Exhibit B to the Lease. Subject to the terms of the Lease and said  Exhibit B, the Deferred Allowance shall be repayable by
Tenant, together with interest on the principal balance outstanding from time to time at
the rates set forth. 


        Four
hundred forty eight thousand six hundred twenty Dollars ($448,620) of the Deferred Allowance shall bear interest at the rate of fourteen percent (14%) per annum; and 



        Four
hundred forty eight thousand six hundred twenty Dollars ($448,620) of the Deferred Allowance shall bear interest at the rate of fifteen percent (15%) per annum. 


        The
Deferred Allowance, together with interest at the rates set above, shall be payable in monthly installments of fourteen thousand three hundred sixty six and 73/100 Dollars
($14,366.73) each. Said installments shall be payable on the first day of each month during the initial Term of the Lease (commencing with the first day of the first month following the disbursement
of the Deferred Allowance) concurrently with the payment of Base Rent. 



	 	 	TENANT:	THERAVANCE, INC.,

(FORMERLY ADVANCED MEDICINE, INC.) a Delaware corporation
	

 	
 	

 	

By:	

/s/  A. GREG STURMER      

	

 	
 	

 	

Name:	

A. Greg Sturmer

	

 	
 	

 	

Title:	

Vice President, Finance






Approved
and Agreed: 


Landlord: 


ARE-901/951
Gateway Boulevard, LLC,

successor in interest to HMS Gateway Office, L.P.

a Delaware limited partnership 


H-1







 

By:
ARE 901/951 Gateway Boulevard, LLC, 



	 	 	By:	SEE SCHEDULE I

	

 	
 	

Name:	

 
	 	 	 	

	

 	
 	

Title:	

 
	 	 	 	





H-2









 
 

SCHEDULE I    
    



	

 	
 	

ARE-901/951 GATEWAY BOULEVARD, LLC, a Delaware limited liability company
	

 	
 	

By:	
 	

ALEXANDRIA REAL ESTATE EQUITIES, L.P., a Delaware limited partnership, managing member
	

 	
 	

 	
 	

By:	

ARE-QRS CORP.,

a Maryland corporation,

general partner





	

 	
 	

 	
 	

 	
 	

By:	

/s/  JOEL S. MARCUS      

	

 	
 	

 	
 	

 	
 	

Name:	

Joel S. Marcus

	

 	
 	

 	
 	

 	
 	

Title:	

CEO












 
 

EXHIBIT J    
    
    TENANT ESTOPPEL CERTIFICATE
  951 GATEWAY BOULEVARD    
    


	From:
	Theravance, Inc.
(Formerly Advanced Medicine, Inc.)

901 Gateway Boulevard

South San Francisco, California 94080

("Tenant")



	To:
	ARE-901/951
Gateway Boulevard LLC

c/o Alexandria Real Estate Equities, Inc.

135 N. Los Robles Ave., Suite 250

Pasadena, California 91101

("Purchaser") 



HMS
Gateway Office, L.P.

Hines Gateway

651 Gateway Boulevard, Suite 1140

South San Francisco, California 94080

("Landlord") 




        Lease:
Amended and Restated Lease Agreement dated January 1, 2001 between HMS Gateway Office, L.P., a Delaware limited partnership, and Advanced Medicine, Inc., a Delaware
corporation, covering the Premises (as defined below), as modified, altered or amended (as further described in Paragraph I below) (the "Lease"). 


        Premises:
59,816 rentable square feet (as determined by Landlord's architect upon the commencement of the term, as provided in the Lease) (the "Premises"), located in the building to be
known as 951 Gateway having an address of 951 Gateway Boulevard, South San Francisco, California 94080. 


        Tenant
hereby certifies to Landlord and Purchaser as follows: 



        1.     Attached
hereto as Annex 1 is a true, correct, and complete copy of the Lease, including amendments, modifications, supplements, guarantees, and restatements thereof.
Tenant is the current Tenant under the Lease. The Lease is in full force and effect and is the complete and only lease, agreement or understanding between Landlord and Tenant affecting the Premises
and any rights to parking. The Lease has not been modified, altered or amended, except by the documents listed on Annex I attached hereto. Pursuant to the Lease, Tenant has the right to use 160
non-exclusive and undesignated parking spaces located within the project of which the Premises are part (the "Project"). Tenant acknowledges that Landlord may fulfill its obligations
regarding parking under the Lease through the exercise of Landlord's rights under that certain Declaration of Reciprocal Easements made by HMS Gateway Office, L.P. and recorded on June 26, 2000
as Document No. 2000-077496. 


        2.     The
term of the Lease has commenced and expires on March 31, 2012 subject to the following options to extend: Two (2) options of five (5) years each.
Tenant has accepted and is presently occupying the Premises. 


        3.     Except
as otherwise set forth in Paragraph 51 of the Lease, Tenant has no option or right of first refusal, right of first offer, or other right to purchase the
Premises and has no right, title, or interest in the Premises other than as the tenant under the Lease. Based on Landlord's representation to Tenant that, on or about December 5, 2001, Landlord
and Purchaser entered into a letter of intent for the sale of the Project to Purchaser, Tenant's right of first offer to purchase the Premises pursuant to Paragraph 51 of the Lease has
automatically terminated, is no longer of any force or effect, and will not be reinstated unless the sale of the Project to Purchaser contemplated in the letter of intent fails to close. Upon
completion of the sale of the Project to Purchaser, (i) neither Purchaser nor any successor landlord under the Lease shall have any obligations under Paragraph 51 of the Lease or shall
ever be 











required
to provide Tenant with an "Offer Notice" (as defined in Paragraph 51.1 of the Lease), and (ii) Purchaser and each successor landlord under the Lease shall have the right to sell
any part of the Project at any time to any "Person" (as defined in Paragraph 51.4 of the Lease) on terms acceptable to Purchaser or any such successor landlord, in Purchaser's or such successor
landlord's sole and absolute discretion. 


        4.     The
base rent under the Lease for the current lease year is $162,731.18 per month. Tenant is responsible to pay, as additional rent, for its pro rata share (100%) of
operating expenses for the building in excess of base operating expenses of $0. Tenant has fully paid all base rent, additional rent and other sums due and payable under the Lease on or before the
date of this Certificate and Tenant has not paid any rent more than one month in advance. Tenant currently is not entitled to any abatement, refund, rebate, concession, forgiveness of rent or other
charges, or free or partial rent. Tenant is not in default under any of the terms, conditions or covenants of the Lease to be performed or complied with by Tenant, and no event has occurred and no
circumstance exists which, with the passage of time or the giving of notice by Landlord, or both, would constitute such a default. 


        5.     As
of the date of this Certificate, Landlord is not in default under any of the terms, conditions or covenants of the Lease to be performed or complied with by Landlord,
and no event has occurred and no circumstance exists which, with the passage of time or the giving of notice by Tenant, or both, would constitute such a default. 


        6.     As
of the date of this Certificate, Tenant has no defenses, offsets or credits against the payment or rent and other sums due or to become due under the Lease or against
the performance of any other of Tenant's obligations under the Lease. 


        7.     Tenant
has paid to Landlord a security deposit in the amount of $1,312,500 in the form of a letter of credit. 



        8.     Tenant
agrees that, from and after the date hereof, Tenant will not pay any rent under the Lease more than thirty (30) days in advance of its due date. 


        9.     As
of the date of this Certificate, all insurance, if any, required to be maintained by Tenant under the Lease currently is in effect. 


        10.   As
of the date of this Certificate, Tenant has not sublet any portion of the Premises or assigned any rights under the Lease. The address for notices to be sent to
Tenant is as set forth in the Lease. 


        11.   Tenant
understands that this Certificate is required in connection with Purchaser's acquisition of the Property, and Tenant agrees that Purchaser and its assigns
(including any parties providing financing for the Property) will, and will be entitled to, rely on the truth of this Certificate. 


        12.   The
party executing this document on behalf of Tenant represents that he/she has been authorized to do so on behalf of Tenant. 



        EXECUTED
on this 19 day of April, 2002. 



        "TENANT" 



        By:
/s/ A. GREG STURMER 

















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Exhibit 10.8


TABLE OF CONTENTS


AMENDED AND RESTATED LEASE AGREEMENT BASIC LEASE INFORMATION



AMENDED AND RESTATED LEASE AGREEMENT

OPERATIVE PROVISIONS


EXHIBIT A BASE BUILDING CONSTRUCTION AGREEMENT


EXHIBIT A-1 951 GATEWAY PRELIMINARY SPECIFICATIONS


EXHIBIT A2 SITE PLAN


EXHIBIT B PREMISES CONSTRUCTION AGREEMENT


EXHIBIT B-1 DESCRIPTION OF "WARM SHELL" IMPROVEMENTS


EXHIBIT C ADDITIONAL OPERATIONAL GUIDELINES


EXHIBIT D RULES AND REGULATIONS


EXHIBIT E HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE


EXHIBIT F TENANT'S PROPERTY


EXHIBIT G

MEMORANDUM OF LEASE


EXHIBIT H DEFERRED ALLOWANCE AMORTIZATION MEMORANDUM



SCHEDULE I


EXHIBIT J TENANT ESTOPPEL CERTIFICATE 951 GATEWAY BOULEVARD