exv10w6xby



 








Exhibit 10.6(b)




THIRD AMENDMENT




     THIS THIRD AMENDMENT (the “Amendment”) is made and entered into as of November 30, 2005, by
and between CA-EMERYVILLE PROPERTIES LIMITED PARTNERSHIP, a Delaware limited partnership
(“Landlord”) and ZIPREALTY, INC., a Delaware corporation (“Tenant”).



RECITALS





	A.	 	Landlord (as successor in interest to EOP-Emeryville Properties, L.L.C., a Delaware limited
liability company) and Tenant (as successor by merger to zipRealty, Inc., a California
corporation) are parties to that certain lease dated November 28, 2001, which lease has been
previously amended by instruments dated March 22, 2002 and February 15, 2005 (collectively,
the “Lease”). Pursuant to the Lease, Landlord has leased to Tenant space currently containing
approximately 15,825 rentable square feet (the “Original Premises”) described as Suite No.
1555 on the 15th floor of the building commonly known as Emeryville Tower III
located at 2000 Powell Street, Emeryville, California (the “Building”).






	B.	 	Tenant and Landlord agree to relocate Tenant from the Original Premises to 23,803 rentable
square feet of space described as Suite No. 300 on the 3rd floor of the Building as
shown on Exhibit A attached hereto (the “Substitution Space”).






	C.	 	The Lease by its terms shall expire on January 31, 2007 (“Prior Termination Date”), and the
parties desire to extend the Term, all on the following terms and conditions.





     NOW, THEREFORE, in consideration of the above recitals which by this reference are
incorporated herein, the mutual covenants and conditions contained herein and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant
agree as follows:



1.      Substitution.





	 	1.01.	 	Effective as of the Substitution Effective Date (hereinafter defined), the
Substitution Space is substituted for the Premises and, from and after the Substitution
Effective Date, the Premises, as defined in the Lease, shall be deemed to mean the
Substitution Space containing 23,803 rentable square feet and described as Suite No.
300 on the 3rd floor of the Building.






	 	1.02.	 	The Term for the Substitution Space shall commence on the Substitution
Effective Date and, unless sooner terminated pursuant to the terms of the Lease, shall
end on the Extended Termination Date (as hereinafter defined). The Substitution Space
is subject to all the terms and conditions of the Lease except as expressly modified
herein and except that Tenant shall not be entitled to receive any allowances,
abatements or other financial concessions granted with respect to the Original Premises
unless such concessions are expressly provided for herein with respect to the
Substitution Space. Effective as of the Substitution Effective Date, the Lease shall
be terminated with respect to the Original Premises only, and, unless otherwise
specified herein, “Premises” (as such term is used in the Original Lease) shall mean
the Substitution Space. Except as otherwise set forth herein, Tenant shall vacate the
Original Premises as of February 7, 2006 (such date that Tenant is required to vacate
the Original Premises being referred to herein as the “Original Premises Vacation
Date”) and return the same to Landlord in “broom clean” condition and otherwise in
accordance with the terms and conditions of the Lease. Notwithstanding anything to the
contrary contained herein, if the Original Premises Vacation Date is subsequent to the
Substitution Effective Date (such period commencing on the Substitution Effective Date
and ending on the Original Premises Vacation Date is referred to herein as the
“Vacation Period”), then, during the Vacation Period, Tenant shall comply with all
terms and provisions of the Lease with respect to the Original Premises as though the
Original Premises were still deemed part of the Premises hereunder, except that Tenant
shall not be




 









 











obligated to pay Base Rent or Additional Rent with respect to the Original Premises
during the Vacation Period. Following the Vacation Period, Tenant’s obligation for
payment of Base Rent or Additional Rent for the Original Premises shall be determined
in accordance with Section 10 hereof. However, nothing provided in this Paragraph
1.02 shall alter Tenant’s requirement to pay Rent for the Substitution Space as of
the Substitution Effective Date.



2.  Substitution Effective Date.





	 	2.01.	 	The “Substitution Effective Date” shall be January 1, 2006.






	 	2.02.	 	The Substitution Effective Date shall be delayed to the extent that Landlord
fails to deliver possession of the Substitution Space as a result of holding over by
prior occupants or to the extent that Landlord fails to complete its review of the
final plans for the Initial Alterations and the contractors to perform such Initial
Alterations within the time provided for such review in the Work Letter attached hereto
as Exhibit B. Any such delay in the Substitution Effective Date shall not subject
Landlord to any liability for any loss or damage resulting therefrom. If the
Substitution Effective Date is delayed, the Extended Termination Date shall not be
similarly extended.






	3.	 	Extension. The Term of the Lease is extended for a period of sixty (60) months from
the Prior Termination Date and shall expire on January 31, 2012 (“Extended Termination Date”),
unless sooner terminated in accordance with the terms of the Lease or this Amendment. That
portion of the Term commencing the day immediately following the Prior Termination Date
(“Extension Date”) and ending on the Extended Termination Date shall be referred to herein as
the “Extended Term”.






	4.	 	Base Rent. As of the Substitution Effective Date, the schedule of Base Rent payable
with respect to the Premises during the remainder of the current Term and the Extended Term is
the following:





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Months of Term or Period
	 	 	Annual Rate Per Square Foot	 	 	Monthly Base Rent	 
	 	Substitution Effective Date
— 12/31/2006
	 	 	 	$25.32	 	 	 	 	$50,224.33	 	 
	 	1/1/2007 — 12/31/2007
	 	 	 	$26.21	 	 	 	 	$51,989.72	 	 
	 	1/1/2008 — 12/31/2008
	 	 	 	$27.12	 	 	 	 	$53,794.78	 	 
	 	1/1/2009 — 12/31/2009
	 	 	 	$28.07	 	 	 	 	$55,679.18	 	 
	 	1/1/2010 — 12/31/2010
	 	 	 	$29.06	 	 	 	 	$57,642.93	 	 
	 	1/1/2011 — 12/31/2011
	 	 	 	$30.07	 	 	 	 	$59,646.35	 	 
	 	1/1/2012 — 1/31/2012
	 	 	 	$31.12	 	 	 	 	$61,729.11	 	 
	 





     All such Base Rent shall be payable by Tenant in accordance with the terms of the Lease.




	5.	 	Reduction in Letter of Credit. Landlord currently holds the Letter of Credit, as
defined in the Lease, in the amount of $180,000.00. Upon Tenant’s execution hereof, Tenant
shall either deliver to Landlord a




 









 






	 	 	substitute Letter of Credit in the amount of $90,000.00, or an amendment to the existing
Letter of Credit, reducing the amount of such Letter of Credit to $90,000.00. The
substitute Letter of Credit or the amended Letter of Credit, as the case may be, must be in
compliance with the requirements set forth in Section VI of the Lease. If Tenant delivers a
substitute Letter of Credit, Landlord shall promptly return the original Letter of Credit to
Tenant.






	6.	 	Tenant’s Pro Rata Share. For the period commencing with the Substitution Effective
Date and ending on the Extended Termination Date, Tenant’s Pro Rata Share for the Premises is
6.4718%.






	7.	 	Expenses and Taxes. For the period commencing with the Substitution Effective Date
and ending on the Extended Termination Date, Tenant shall pay for Tenant’s Pro Rata Share of
Expenses and Taxes applicable to the Premises in accordance with the terms of the Lease,
provided, however, during such period, the Base Year for the computation of Tenant’s Pro Rata
Share of Expenses and Taxes applicable to the Premises is 2006.





8.      Improvements to Substitution Space.





	 	8.01.	 	Condition of Substitution Space. Tenant has inspected the Substitution Space
and agrees to accept the same “as is” without any agreements, representations,
understandings or obligations on the part of Landlord to perform any alterations,
repairs or improvements, except as may be expressly provided otherwise in this
Amendment, including the Work Letter attached hereto as Exhibit B. Landlord, at its
sole cost and expense (except to the extent properly included in Expenses), shall be
responsible for correcting any violations of Title III of the Americans with
Disabilities Act with respect to the Common Areas of the Building, including any Common
Areas on the 3rd floor of the Building where the Substitution Space is
located. Notwithstanding the foregoing, Landlord shall have the right to contest any
alleged violation in good faith, including, without limitation, the right to apply for
and obtain a waiver or deferment of compliance, the right to assert any and all
defenses allowed by Law and the right to appeal any decisions, judgments or rulings to
the fullest extent permitted by Law. Landlord, after the exhaustion of any and all
rights to appeal or contest, will make all repairs, additions, alterations or
improvements necessary to comply with the terms of any final order or judgment.
Notwithstanding the foregoing, Tenant, not Landlord, shall be responsible for the
correction of any violations that arise out of or in connection with any claims brought
under any provision of the Americans with Disabilities Act other than Title III, the
specific nature of Tenant’s business in the Substitution Space (other than general
office use), the acts or omissions of Tenant, its agents, employees or contractors,
Tenant’s arrangement of any furniture, equipment or other property in the Substitution
Space, any repairs, alterations, additions or improvements performed by or on behalf of
Tenant and any design or configuration of the Substitution Space specifically requested
by Tenant after being informed that such design or configuration may not be in strict
compliance with the ADA.






	 	8.02.	 	Responsibility for Improvements to Substitution Space. Tenant shall perform
improvements to the Substitution Space in accordance with the Work Letter, and Tenant
shall be entitled to an improvement allowance in connection with such work as more
fully described in the Work Letter.






	9.	 	Early Access to Substitution Space. During the Vacation Period, Tenant’s possession
of the Substitution Space shall be subject to the terms and conditions of the Lease and, as of
the Substitution Effective Date, Tenant shall pay Base Rent and Additional Rent applicable to
the Substitution Premises to Landlord. However, except for the cost of services requested by
Tenant (e.g. freight elevator usage), Tenant shall not be required to pay Rent for the
Substitution Space for any days of possession before the Substitution Effective Date during
which Tenant, with the approval of Landlord, is in possession of the Substitution Space for
the sole purpose of performing improvements or installing furniture, equipment or other
personal property.




 









 












	10.	 	Holding Over. If Tenant continues to occupy the Original Premises after the
expiration of the Vacation Period (as defined in Section 1.02 above), occupancy of the
Original Premises after the expiration of the Vacation Period shall be that of a tenancy at
sufferance and in no event for month-to-month or year-to-year, but Tenant shall, throughout
the entire holdover period, be subject to all the terms and provisions of the Lease and shall
pay for its use and occupancy an amount (on a per month basis without reduction for any
partial months during any such holdover) equal to twice the sum of the Base Rent and
Additional Rent due for the period immediately preceding such holding over, provided that in
no event shall Base Rent and Additional Rent during the holdover period be less than the fair
market rental for the Original Premises. No holding over by Tenant in the Original Premises
or payments of money by Tenant to Landlord after the expiration of the Vacation Period shall
be construed to prevent Landlord from recovery of immediate possession of the Original
Premises by summary proceedings or otherwise. In addition to the obligation to pay the amounts
set forth above during any such holdover period, Tenant also shall be liable to Landlord for
all damage, including any consequential damage, which Landlord may suffer by reason of any
holding over by Tenant in the Original Premises, and Tenant shall indemnify Landlord against
any and all claims made by any other tenant or prospective tenant against Landlord for delay
by Landlord in delivering possession of the Original Premises to such other tenant or
prospective tenant. Notwithstanding the foregoing, if Tenant continues to occupy the Original
Premises, but for a period of less than 30 days after the expiration of the Vacation Period,
Tenant shall be charged the holdover rent set forth in this Section 10 on a per diem basis
only.






	11.	 	Other Pertinent Provisions. Landlord and Tenant agree that, effective as of the date
of this Amendment (unless different effective date(s) is/are specifically referenced in this
Section), the Lease shall be amended in the following additional respects:






	 	11.01	 	Parking. As of the Substitution Effective Date, Section 2 of the Parking
Agreement attached to the Lease as Exhibit F is deleted in its entirety and the
following is substituted therefor: “Landlord hereby grants to Tenant and persons
designated by Tenant a license to use seventy-one (71) parking spaces in the parking
facility (“Parking Facility”) located partially beneath the Property. Of these 71
parking spaces, seventy (70) shall be non-reserved and one (1) shall be reserved, which
space is identified as parking space 1A. The term of such license shall commence on
the Substitution Effective Date and shall continue until the earlier to occur of the
Extended Termination Date, the sooner termination of the Lease, or Tenant’s abandonment
of the Premises thereunder. During the term of this license, Tenant shall pay Landlord
the prevailing monthly charges established from time to time for parking in the Parking
Facility, payable in advance, with Tenant’s payment of monthly Base Rent. The initial
charge for such parking spaces is $65.00 per non-reserved parking pass, per month. No
deductions from the monthly charge shall be made for days on which the Parking Facility
is not used by Tenant. Tenant may, from time to time request additional parking
spaces, and if Landlord shall provide the same, such parking spaces shall be provided
and used on a month-to-month basis, and otherwise on the foregoing terms and
provisions, and at such prevailing monthly parking charges as shall be established from
time to time.”






	 	11.02	 	Renewal Option. The parties hereby confirm that Section I (entitled “Renewal
Option”) of Exhibit E to the Lease continues in full force and effect in accordance
with its terms.






	 	11.03	 	Notice Addresses. Section I.M (Basic Lease Information) of the Lease is as of
the Substitution Effective Date deleted in its entirety and the following substituted
therefore:




 









 











     Landlord:



CA-Emeryville Properties Limited Partnership




c/o Equity Office Management, L.L.C.




One Market, Spear Tower




Suite 600




San Francisco, California 94105




Attn: Property Manager




          A copy of any notices to Landlord shall be sent to Equity Office, One Market,
Spear Tower, Suite 600, San Francisco, California 94105, Attn: Managing Counsel — San
Francisco Region.




          Tenant: Notices shall be sent to Tenant at the Premises (i.e., the Substitution
Space as of the Substitution Effective Date).




          A copy of any notice of Tenant default shall be sent to:




          Michael Polentz




          300 Hamilton Avenue, Third Floor




          Palo Alto, California 94301




          If any additional person listed above fails to receive the copy of the notice of
Tenant default, the validity of the notice served on Tenant shall not be affected
thereby.




         11.04      Right of First Offer.




	 	A.	 	Grant of Option; Conditions. Tenant shall have the one
time right of first offer (the “Right of First Offer”) with respect to the
23,803 rentable square feet known as Suite No. 400 on the 4th floor of the
Building shown on the demising plan attached hereto as Exhibit C (the “Offering
Space”). Tenant’s Right of First Offer shall be exercised as follows: The
termination date of the lease between Landlord and the existing tenant in the
Offering Space is November 30, 2008. If Tenant is interested in leasing the
Offering Space, Tenant shall provide Landlord with a written notice of such
interest no earlier than 120 days prior to such termination date and no later
than 90 days prior to such termination date. If Landlord has determined that
the existing tenant in the Offering Space will not extend or renew its lease of
the Offering Space (but prior to leasing such Offering Space to a party other
than the existing tenant), Landlord shall advise Tenant (the “Advice”) of the
terms under which Landlord is prepared to lease the Offering Space to Tenant for
the remainder of the Term, which terms shall reflect the Prevailing Market
(hereinafter defined) rate for such Offering Space as reasonably determined by
Landlord. Tenant may lease such Offering Space in its entirety only, under such
terms, by delivering written notice of exercise to Landlord (the “Notice of
Exercise”) within 5 days after the date of the Advice, except that Tenant shall
have no such Right of First Offer and Landlord need not provide Tenant with an
Advice, if:




 









 












                              1.      Tenant is in default under the Lease beyond any applicable cure
periods at the time that Landlord would otherwise deliver the Advice;
or




                              2.      the Premises, or any portion thereof, is sublet (other than
pursuant to a Permitted Transfer, as defined in Article XII of the
Lease) at the time Landlord would otherwise deliver the Advice; or




                              3.      the Lease has been assigned (other than pursuant to a Permitted
Transfer, as defined in Article XII of the Lease) prior to the date
Landlord would otherwise deliver the Advice; or




                              4.      Tenant is not occupying the Premises on the date Landlord would
otherwise deliver the Advice; or




                              5.      the Offering Space is not intended for the exclusive use of
Tenant during the Term; or




                              6.      the existing tenant in the Offering Space is interested in
extending or renewing its lease for the Offering Space or entering into
a new lease for such Offering Space.



     B.    Terms for Offering Space.




	 	1.	 	The term for the Offering Space shall commence upon
the commencement date stated in the Advice and thereupon such Offering
Space shall be considered a part of the Premises, provided that all of
the terms stated in the Advice shall govern Tenant’s leasing of the
Offering Space and only to the extent that they do not conflict with the
Advice, the terms and conditions of this Lease shall apply to the
Offering Space.






	 	2.	 	Tenant shall pay Base Rent and Additional Rent for
the Offering Space in accordance with the terms and conditions of the
Advice, which terms and conditions shall reflect the Prevailing Market
rate for the Offering Space as determined in Landlord’s reasonable
judgment.






	 	3.	 	The Offering Space (including improvements and
personalty, if any) shall be accepted by Tenant in its condition and
as-built configuration existing on the earlier of the date Tenant takes
possession of the Offering Space or as of the date the term for such
Offering Space commences, unless the Advice specifies any work to be
performed by Landlord in the Offering Space, in which case Landlord shall
perform such work in the Offering Space. If Landlord is delayed
delivering possession of the Offering Space due to the holdover or
unlawful possession of such space by any party, Landlord shall use
reasonable efforts to obtain possession of the space, and the
commencement of the term for the Offering Space shall be postponed until
the date Landlord delivers possession of the Offering Space to Tenant
free from occupancy by any party.





     C.     Termination of Right of First Offer. The rights of Tenant hereunder with respect to the
Offering Space shall terminate on the earlier to occur of: (i) January 31, 2010; (ii) Tenant’s
failure to exercise its Right of First Offer within the 5 day period provided in Section A above;
and (iii) the date Landlord would have provided Tenant an Advice if Tenant had not been in
violation of one or more of the conditions set forth in Section A above. In addition, if Landlord
provides Tenant with an Advice for any portion of the Offering Space that contains expansion rights
(whether such rights are described as an expansion option, right of first refusal, right of first
offer or otherwise) with respect to any other portion of the Offering Space (such other portion of
the Offering Space subject to such expansion



 









 



rights is referred to herein as the “Encumbered Offering Space”) and Tenant does not exercise
its Right of First Offer to lease the Offering Space described in the Advice, Tenant’s Right of
First Offer with respect to the Encumbered Offering Space shall be subject and subordinate to all
such expansion rights contained in the Advice.




     D.      Offering Amendment. If Tenant exercises its Right of First Offer, Landlord shall prepare
an amendment (the “Offering Amendment”) adding the Offering Space to the Premises on the terms set
forth in the Advice and reflecting the changes in the Base Rent, Rentable Square Footage of the
Premises, Tenant’s Pro Rata Share and other appropriate terms. A copy of the Offering Amendment
shall be sent to Tenant within a reasonable time after Landlord’s receipt of the Notice of Exercise
executed by Tenant, and Tenant shall execute and return the Offering Amendment to Landlord within
15 days thereafter, but an otherwise valid exercise of the Right of First Offer shall be fully
effective whether or not the Offering Amendment is executed.



     E.      Definition of Prevailing Market. For purposes of this Right of First Offer provision,
"Prevailing Market” shall mean the annual rental rate per square foot for space comparable to the
Offering Space in the Building and office buildings comparable to the Building in the Emeryville,
California area under leases and renewal and expansion amendments being entered into at or about
the time that Prevailing Market is being determined, giving appropriate consideration to tenant
concessions, brokerage commissions, tenant improvement allowances, existing improvements in the
space in question, and the method of allocating operating expenses and taxes. Notwithstanding the
foregoing, space leased under any of the following circumstances shall not be considered to be
comparable for purposes hereof: (i) the lease term is for less than the lease term of the Offering
Space, (ii) the space is encumbered by the option rights of another tenant, or (iii) the space has
a lack of windows and/or an awkward or unusual shape or configuration. The foregoing is not
intended to be an exclusive list of space that will not be considered to be comparable.



     F.      Subordination. Notwithstanding anything herein to the contrary, Tenant’s Right of First
Offer is subject and subordinate to the expansion rights (whether such rights are designated as a
right of first offer, right of first refusal, expansion option or otherwise) of any tenant of the
Building existing on the date hereof.



12.      Miscellaneous.





	 	12.01.	 	This Amendment and the attached exhibits, which are hereby incorporated into and made
a part of this Amendment, set forth the entire agreement between the parties with
respect to the matters set forth herein. There have been no additional oral or written
representations or agreements. Under no circumstances shall Tenant be entitled to any
Rent abatement, improvement allowance, leasehold improvements, or other work to the
Substitution Space, or any similar economic incentives that may have been provided
Tenant in connection with entering into the Lease, unless specifically set forth in
this Amendment or in the Work Letter. Tenant agrees that neither Tenant nor its agents
or any other parties acting on behalf of Tenant shall disclose any matters set forth in
this Amendment or disseminate or distribute any information concerning the terms,
details or conditions hereof to any person, firm or entity without obtaining the
express written consent of Landlord. Landlord understands and acknowledges that Tenant
is a publicly traded company and as such has disclosure and reporting requirements that
may require disclosure of this Amendment. Landlord hereby consents to disclosure of
this Amendment or of the Lease as may be required under applicable Law. Landlord
further consents to Tenant’s disclosure of this Amendment or the Lease to Tenant’s
attorneys, accountants, auditors and, on a “need to know” basis, investors.






	 	12.02.	 	Except as herein modified or amended, the provisions, conditions and terms of the
Lease shall remain unchanged and in full force and effect.






	 	12.03.	 	In the case of any inconsistency between the provisions of the Lease and this
Amendment, the provisions of this Amendment shall govern and control.




 









 











	 	12.04.	 	Submission of this Amendment by Landlord is not an offer to enter into this Amendment
but rather is a solicitation for such an offer by Tenant. Landlord shall not be bound
by this Amendment until Landlord has executed and delivered the same to Tenant.






	 	12.05.	 	The capitalized terms used in this Amendment shall have the same definitions as set
forth in the Lease to the extent that such capitalized terms are defined therein and
not redefined in this Amendment.






	 	12.06.	 	Tenant hereby represents to Landlord that Tenant has dealt with no broker other than
Aegis Realty Partners in connection with this Amendment. Tenant agrees to indemnify
and hold Landlord and the Landlord Related Parties harmless from all claims of any
other brokers claiming to have represented Tenant in connection with this Amendment.
Landlord hereby represents to Tenant that Landlord has dealt with no broker in
connection with this Amendment. Landlord agrees to indemnify and hold Tenant and the
Tenant Related Parties harmless from all claims of any brokers claiming to have
represented Landlord in connection with this Amendment.






	 	12.07.	 	Each signatory of this Amendment represents hereby that he or she has the authority
to execute and deliver the same on behalf of the party hereto for which such signatory
is acting.





[SIGNATURES ARE ON FOLLOWING PAGE]




 









 








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




LANDLORD:




CA-EMERYVILLE PROPERTIES LIMITED PARTNERSHIP,
 a Delaware limited partnership





	 	 	By: EOM GP, L.L.C., a Delaware limited liability company, its general partner






	 	 	 	By: Equity Office Management, L.L.C., a Delaware limited liability
company,
its non-member manager






	 	 	 	By: /s/ Mark Geisreiter
	 
	 	 	 	Name: Mark Geisreiter
	 
	 	 	 	Title: Senior Vice President





TENANT:




ZIPREALTY, INC., a Delaware corporation




     By: /s/ Gary M. Beasley



     Name: Gary M. Beasley



     Title: EVP & CFO



     By:                                                                      



     Name:                                                                 



     Title:                                                                   



 









 





EXHIBIT A




OUTLINE AND LOCATION OF SUBSTITUTION SPACE




     This Exhibit is attached to and made a part of the Amendment by and between CA-EMERYVILLE
PARTNERS LIMITED PARTNERSHIP, a Delaware limited partnership (“Landlord”) and ZIPREALTY, INC., a
Delaware corporation (“Tenant”) for space in the Building located at 2000 Powell Street,
Emeryville, California, commonly known as Emeryville Tower III.



 









 





EXHIBIT B




WORK LETTER




     This Exhibit is attached to and made a part of the Amendment by and between CA-EMERYVILLE
PARTNERS LIMITED PARTNERSHIP, a Delaware limited partnership (“Landlord”) and ZIPREALTY, INC., a
Delaware corporation (“Tenant”) for space in the Building located at 2000 Powell Street,
Emeryville, California, commonly known as Emeryville Tower III.



     As used in this Work Letter, the “Premises” shall be deemed to mean the Substitution Space, as
defined in the Amendment to which this Work Letter is attached.



     I.     Alterations and Allowance.




	A.	 	Tenant, following the delivery of the Premises by Landlord and the full and
final execution and delivery of the Amendment to which this Exhibit is attached, the
amended or substitute Letter of Credit, and all prepaid rental required under such
agreement, if any, shall have the right to perform alterations and improvements in the
Premises (the “Initial Alterations”). Notwithstanding the foregoing, Tenant and its
contractors shall not have the right to perform Initial Alterations in the Premises
unless and until Tenant has complied with all of the terms and conditions of Section IX
of the Lease, including, without limitation, approval by Landlord of the final plans
for the Initial Alterations and the contractors to be retained by Tenant to perform
such Initial Alterations. Upon receipt by Landlord of all documentation required by
Landlord to complete its review of the final plans for the Initial Alterations and the
contractors to be retained, Landlord shall have 10 Business Days to complete such
review and inform Tenant as to the results of the review. Tenant shall be responsible
for all elements of the design of Tenant’s plans (including, without limitation,
compliance with Law, functionality of design, the structural integrity of the design,
the configuration of the Premises and the placement of Tenant’s furniture, appliances
and equipment), and Landlord’s approval of Tenant’s plans shall in no event relieve
Tenant of the responsibility for such design. Landlord’s approval of the contractors
to perform the Initial Alterations shall not be unreasonably withheld or delayed. The
parties agree that Landlord’s approval of the general contractor to perform the Initial
Alterations shall not be considered to be unreasonably withheld if any such general
contractor (i) does not have trade references reasonably acceptable to Landlord, (ii)
does not maintain insurance as required pursuant to the terms of this Lease, (iii) does
not have the ability to be bonded for the work in an amount of no less than 150% of the
total estimated cost of the Initial Alterations, (iv) does not provide current
financial statements reasonably acceptable to Landlord, or (v) is not licensed as a
contractor in the state/municipality in which the Premises is located. Tenant
acknowledges the foregoing is not intended to be an exclusive list of the reasons why
Landlord may reasonably withhold its consent to a general contractor.






	B.	 	Provided Tenant is not in default, Landlord agrees to contribute the sum of
$523,666.00 ($22.00 per rentable square foot of the Substitution Space) (the
“Allowance”) toward the cost of performing the Initial Alterations in preparation of
Tenant’s occupancy of the Premises, of which a maximum of $47,606.00 ($2.00 per
rentable square foot of the Substitution Space) may be used for code compliance
upgrades and alterations required to be performed within the Premises by the City of
Emeryville or any of its agencies with jurisdiction over required code upgrades. The
Allowance may only be used for the cost of preparing design and construction documents
and mechanical and electrical plans for the Initial Alterations and for hard costs in
connection with the Initial Alterations. The Allowance, less a 10% retainage (which
retainage shall be payable as part of the final draw), shall be paid to Tenant or, at
Landlord’s option, to the order of the general contractor that performs the Initial
Alterations, in periodic disbursements within 30 days after receipt of the following
documentation: (i) an application for payment and sworn statement of




 









 












	 	 	contractor substantially in the form of AIA Document G-702 covering all work for
which disbursement is to be made to a date specified therein; (ii) a certification
from an AIA architect substantially in the form of the Architect’s Certificate for
Payment which is located on AIA Document G702, Application and Certificate of
Payment; (iii) Contractor’s, subcontractor’s and material supplier’s waivers of liens
which shall cover all Initial Alterations for which disbursement is being requested
and all other statements and forms required for compliance with the mechanics’ lien
laws of the state in which the Premises is located, together with all such invoices,
contracts, or other supporting data as Landlord or Landlord’s Mortgagee may
reasonably require; (iv) a cost breakdown for each trade or subcontractor performing
the Initial Alterations; (v) plans and specifications for the Initial Alterations,
together with a certificate from an AIA architect that such plans and specifications
comply in all material respects with applicable Law; (vi) copies of all construction
contracts for the Initial Alterations, together with copies of all change orders, if
any; and (vii) a request to disburse from Tenant containing an approval by Tenant of
the work done and a good faith estimate of the cost to complete the Initial
Alterations. Upon completion of the Initial Alterations, and prior to final
disbursement of the Allowance, Tenant shall furnish Landlord with: (1) general
contractor and architect’s completion affidavits, (2) full and final waivers of lien,
(3) receipted bills covering all labor and materials expended and used, (4) as-built
plans of the Initial Alterations, and (5) the certification of Tenant and its
architect that the Initial Alterations have been installed in a good and workmanlike
manner in accordance with the approved plans, and in accordance with applicable laws,
codes and ordinances. In no event shall Landlord be required to disburse the
Allowance more than one time per month. If the Initial Alterations exceed the
Allowance, Tenant shall be entitled to the Allowance in accordance with the terms
hereof, but each individual disbursement of the Allowance shall be disbursed in the
proportion that the Allowance bears to the total cost for the Initial Alterations,
less the 10% retainage referenced above. Notwithstanding anything herein to the
contrary, Landlord shall not be obligated to disburse any portion of the Allowance
during the continuance of an uncured default under the Lease, and Landlord’s
obligation to disburse shall only resume when and if such default is cured.






	C.	 	In no event shall the Allowance be used for the purchase of equipment,
furniture or other items of personal property of Tenant. If Tenant does not submit a
request for payment of the entire Allowance to Landlord in accordance with the
provisions contained in this Exhibit by April 30, 2006, any unused amount shall accrue
to the sole benefit of Landlord, it being understood that Tenant shall not be entitled
to any credit, abatement or other concession in connection therewith. Tenant shall be
responsible for all applicable state sales or use taxes, if any, payable in connection
with the Initial Alterations and/or Allowance.






	D.	 	Subject to the terms of this Amendment, Tenant agrees to accept the Premises in
its “as-is” condition and configuration, it being agreed that Landlord shall not be
required to perform any work or, except as provided above with respect to the
Allowance, incur any costs in connection with the construction or demolition of any
improvements in the Premises.






	E.	 	This Exhibit shall not be deemed applicable to any additional space added to
the Premises at any time or from time to time, whether by any options under the Lease
or otherwise, or to any portion of the original Premises or any additions to the
Premises in the event of a renewal or extension of the original Term of the Lease,
whether by any options under the Lease or otherwise, unless expressly so provided in
the Lease or any amendment or supplement to the Lease.






	F.	 	Within ten (10) days after the date upon which Landlord has reported to the
Tenant the results of its review of the final plans and of the contractors to perform
the Initial Improvements, as provided for in Section 1.A above, Landlord shall inform
Tenant in writing of its determination as to whether the Initial Alterations or any
portion thereof constitute Required Removables in accordance with Section VIII of the
Lease. If Landlord fails to provide such written




 









 











determination on or before such date, none of the elements of the Initial Alterations
shall be deemed to be Required Removables pursuant to the terms of Section VIII of
the Lease.



 









 





EXHIBIT C




OFFERING SPACE