Document:

newcardio_10q-ex1019.htm

    Exhibit
10.19

    NewCardio,
Inc.

    EMPLOYMENT
AGREEMENT

     

    THIS
EMPLOYMENT AGREEMENT (the “Agreement”)
is made and entered into as of March 1, 2008 (the “Effective
Date”) by and between NewCardio, Inc., a Delaware corporation (the “Company”),
and Richard Brounstein (the “Executive”).

     

    BACKGROUND

     

    A.  The
Company desires to retain the services of the Executive as the Chief Financial
Officer and Executive Vice President of the Company from the Effective
Date.  The Company also desires to provide employment security to the
Executive, thereby inducing the Executive to continue employment with the
Company and enhancing the Executive’s ability to perform
effectively.

     

    B.  The
Executive is willing to be employed by the Company on the terms and subject to
the conditions set forth in this Agreement.

     

    THE
PARTIES AGREE AS FOLLOWS:

     

    1.  Title, Duties and
Responsibilities.

     

    1.1  Title.  The
Executive will be employed by the Company as its Chief Financial Officer and
Executive Vice President, at the pleasure of the Board of Directors of the
Company (the “Board”).  Executive
shall report to the Chief Executive Officer.

     

    1.2  Duties.  The
Executive will devote all of the Executive’s business time, energy, and skill to
the affairs of the Company; provided, however, that
reasonable time for the activities set forth on Exhibit A and such
other activities which have been approved in advance by the Board will be
permitted, in any case so long as such activities do not materially interfere
with the Executive’s performance of services under this Agreement.

     

    1.3  Performance of
Duties.  The Executive will discharge the duties described
herein and duties as set forth by the Board from time to time, in a diligent and
professional manner.  The Executive will report to the Board, and will
further comply with the Company’s business policies, rules and regulations, as
adopted from time to time by the Board.

     

    2.  Terms of
Employment.

     

    2.1  Definitions.  For
purposes of this Agreement, the following terms will have the following
meanings:

     

    (a)  “Accrued
Compensation” means any accrued Total Cash Compensation, any benefits
under any plan of the Company in which the Executive is a participant to the
full extent of the Executive’s rights under such plans, any accrued vacation
pay, and any appropriate business expenses incurred by the Executive in
connection with the performance of the Executive’s duties hereunder, all to the
extent unpaid on the date of termination.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)  “Base
Salary” will have the meaning set forth in Section 3.1
hereof.

     

    (c)  “Change of
Control” means the occurrence of any one of the following: (i) any
“person”, as such term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”) (other than the Company, a subsidiary, an affiliate, or a Company
employee benefit plan, including any trustee of such plan acting as trustee) is
or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of Company representing 50% or more
of the combined voting power of the Company’s then outstanding securities; or
(ii) a sale of all or substantially all of the assets of the Company; or (iii)
any merger, reorganization or other transaction of the Company whether or not
another entity is the survivor, pursuant to which holders of all the shares of
capital stock of the Company outstanding prior to the transaction hold, as a
group, less than 50% of the shares of capital stock of the Company outstanding
after the transaction; provided, however, that neither (A) a merger effected
exclusively for the purpose of changing the domicile of the Corporation in which
the holders of all the shares of capital stock of the Company immediately prior
to the merger hold the voting power of the surviving entity following the merger
in the same relative amounts with substantially the same rights, preferences and
privileges, nor (B) a transaction the primary purpose of which is to raise
capital for the Company, will constitute a Change of Control.

     

    (d)  “Death
Termination” means termination of the Executive’s employment due to the
death of the Executive.

     

    (e)  “Disability
Termination” means termination of the Executive’s employment by the
Company due to the Executive’s incapacitation due to disability.  The
Executive will be deemed to be incapacitated due to disability if at the end of
any month the Executive is unable to perform substantially all of the
Executive’s duties under this Agreement in the normal and regular manner due to
illness, injury or mental or physical incapacity, and has been unable so to
perform for either (i) three consecutive full calendar months then ending, or
(ii) 90 or more of the normal working days during the 12 consecutive full
calendar months then ending.  Nothing in this paragraph will alter the
Company’s obligations under applicable law, which may, in certain circumstances,
result in the suspension or alteration of the foregoing time
periods.

     

    (f)  “Termination For
Cause” means termination of the Executive’s employment by the Company due
to (i) the Executive’s dishonesty or fraud, gross negligence in the
performance of the Executive’s duties and responsibilities; (ii) the Executive’s
conviction of a felony involving moral turpitude; (iii) the Executive’s
incurable material breach of the terms of this Agreement or the Confidentiality
Agreement (as defined below); or (iv) the willful and continued refusal by
Executive to substantially perform Executive’s duties or responsibilities for
the Company described herein and as set forth by the Board from time to
time.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (g)  “Termination Other
Than For Cause” means termination of the Executive’s employment by the
Company due to any reason other than as specified in Sections 2.1(d), (e),
or (f) hereof.

     

    (h)  “Total Cash
Compensation” means the Executive’s Base Salary plus any cash bonuses,
commissions or similar payment accrued during the preceding calendar year, and
if there is no complete preceding calendar year, then the preceding twelve (12)
month period, and if there is no complete preceding twelve (12) month period,
then the preceding employment period annualized to a twelve (12) month
period.

     

    (i)  “Voluntary
Termination” means termination of the Executive’s employment by the
voluntary action of the Executive, other than by reason of a Disability
Termination or a Death Termination or as described in 2.1(j).

     

    (j)  “Voluntary
Resignation for Good Reason” means Executive’s voluntary resignation of
Executive’s employment with the Company within thirty (30) days following the
expiration of any Company cure period (discussed below) following the occurrence
of one or more of the following, without Executive’s consent: (i) the
assignment to Executive of any authority, duties, or responsibilities, or the
reduction of Executive’s authority, duties, or responsibilities, either of which
results in a material diminution of Executive’s authority, duties, or
responsibilities with the Company in effect immediately prior to such
assignment, or the removal of Executive from Executive’s authority, duties, or
responsibilities with the Company in effect immediately prior to such removal;
provided, however, that a reduction in duties, position or responsibilities
solely by virtue of the Company being acquired and made part of a larger entity
(as, for example, when the Chief Financial Officer of the Company remains as
such following a Change of Control but is not made the Chief Financial Officer
of the acquiring corporation) shall not constitute a "Voluntary Resignation for
Good Reason" hereunder; (ii) a material reduction of Executive’s Base Salary (in
other words, a reduction of more than ten percent of Executive’s Base Salary in
any one year); (iii) a material change in the geographic location at which
Executive must perform services (in other words, the relocation of Executive to
a facility that is more than fifty (50) miles from Executive’s current
location); and (iv) the failure of the Company to obtain assumption of this
Agreement by any successor.  Executive will not tender Voluntary
Resignation for Good Reason without first providing the Company with written
notice of the acts or omissions constituting the grounds for such Voluntary
Resignation for Good Reason within ninety (90) days of the initial existence of
the grounds such Voluntary Resignation for Good Reason and a reasonable cure
period of not less than thirty (30) days following the date of such
notice.

     

    2.2  Employee at
Will.  The Executive is an “at will” employee of the Company,
and the Executive’s employment may be terminated by the Company at any time by
giving the Executive written notice thereof, subject to the terms and conditions
of this Agreement and the At-Will Employment, Confidential Information,
Invention Assignment and Arbitration Agreement signed by Executive in favor of
the Company on January 22, 2008 and attached as Exhibit B hereto (the
“Confidentiality
Agreement”), the terms of which are herein incorporated by
reference.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    2.3  Termination For
Cause.  Upon a Termination For Cause, the Company will pay the
Executive Accrued Compensation, if any.

     

    2.4  Termination Other
Than For Cause.

     

    (a)  Upon a
Termination Other Than For Cause following December 1, 2008, but prior to
March 1, 2009, and provided Executive executes and delivers to the Company a
release and waiver of claims in the form attached hereto as Exhibit C and such
release and waiver of  claims is not revoked and has become effective
pursuant to its terms, the Company will pay or reimburse, as applicable, the
Executive upon the effectiveness of such release and waiver of claims: (a)
Accrued Compensation, if any, (b) a monthly cash severance payment equal to (x)
Executive’s then Base Salary, divided by (y) twelve (12), for a period of time
equal to the total number of whole months which have then elapsed since the
Effective Date, and (c) Executive’s COBRA-related expenses for such period,
provided that such COBRA-related reimbursement shall cease upon such date that
Executive is afforded health benefits from a subsequent employer.

     

    (b)  Upon a
Termination Other Than For Cause upon or following March 1, 2009, and provided
Executive executes and delivers to the Company a release and waiver of claims in
the form attached hereto as Exhibit C and such
release and waiver of  claims is not revoked and has become effective
pursuant to its terms, the Company will pay or reimburse, as applicable, the
Executive upon the effectiveness of such release and waiver of claims: (a)
Accrued Compensation, if any, (b) a monthly cash severance payment equal to (x)
Executive’s then Base Salary, divided by (y) twelve (12), for the following
twelve (12) month period, and (c) Executive’s COBRA-related expenses for such
period, provided that such COBRA-related reimbursement shall cease upon such
date that Executive is afforded health benefits from a subsequent
employer.

     

    2.5  Voluntary
Resignation For Good Reason.

     

    (a)  Upon a
Voluntary Resignation For Good Reason following December 1, 2008, but prior
to March 1, 2009, and provided Executive executes and delivers to the Company a
release and waiver of claims in the form attached hereto as Exhibit C and such
release and waiver of  claims is not revoked and has become effective
pursuant to its terms, the Company will pay or reimburse, as applicable, the
Executive upon the effectiveness of such release and waiver of claims: (a)
Accrued Compensation, if any, (b) a monthly cash severance payment equal to (x)
Executive’s then Base Salary, divided by (y) twelve (12), for a period of time
equal to the total number of whole months which have then elapsed since the
Effective Date, and (c) Executive’s COBRA-related expenses for such period,
provided that such COBRA-related reimbursement shall cease upon such date that
Executive is afforded health benefits from a subsequent employer.

     

    (b)  Upon a
Voluntary Resignation For Good Reason upon or following March 1, 2009, and
provided Executive executes and delivers to the Company a release and waiver of
claims in the form attached hereto as Exhibit C and such
release and waiver of  claims is not revoked and has become effective
pursuant to its terms, the Company will pay or reimburse, as applicable, the
Executive upon the effectiveness of such release and waiver of claims: (a)
Accrued Compensation, if any, (b) a monthly cash severance payment equal to (x)
Executive’s then Base Salary, divided by (y) twelve (12), for the following
twelve (12) month period, and (c) Executive’s COBRA-related expenses for such
period, provided that such COBRA-related reimbursement shall cease upon such
date that Executive is afforded health benefits from a subsequent
employer.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    2.6  Disability
Termination.  The Company will have the right to effect a
Disability Termination by giving written notice thereof to the
Executive.  Upon a Disability Termination, the Company will pay the
Executive Accrued Compensation, if any.

     

    2.7  Death
Termination.  Upon a Death Termination, the Executive’s
employment will be deemed to have terminated as of the last day of the month
during which her death occurs, and the Company will promptly pay to the
Executive’s estate Accrued Compensation, if any.

     

    2.8  Voluntary
Termination.  In the event the Executive wishes to consummate a
Voluntary Termination, the Company requests that Executive give the Company at
least ninety (90) days advance written notice.  During such period,
the Executive will continue to receive regularly scheduled Base Salary payments
and benefits.  Following the effective date of a Voluntary
Termination, the Company will pay the Executive Accrued Compensation, if
any.

     

    2.9  Timing of
Termination Payments.  Unless expressly provided otherwise, the
foregoing termination payments will be made at the usual and agreed times
provided for in Section 3.1 of this Agreement.

     

    3.  Compensation and
Benefits.

     

    3.1  Base
Salary.  As payment for the services to be rendered by the
Executive as provided in Section 1 and subject to the provisions of Section 2 of
this Agreement, the Company will pay the Executive a “Base
Salary” at the rate of $240,000 per year, payable on the Company’s normal
payroll schedule.  The Executive’s “Base
Salary” may be increased in accordance with the provisions hereof or as
otherwise determined from time to time, but reviewed at least annually, by the
Board or the Compensation Committee of the Board.

     

    3.2  Additional
Benefits.

     

    (a)  Benefit
Plans.  The Executive will be eligible to participate in such
of the Company’s benefit plans as are now generally available or later made
generally available to senior officers of the Company, including, without
limitation, medical, dental, life, and disability insurance plans.

     

    (b)  Expense
Reimbursement.  The Company agrees to reimburse the Executive
for all reasonable, ordinary and necessary travel and entertainment expenses
incurred by the Executive in conjunction with the Executive’s services to the
Company consistent with the Company’s standard reimbursement
policies.  The Company will pay travel costs incurred by the Executive
in conjunction with the Executive’s services to the Company consistent with the
Company’s standard travel policies.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (c)  Vacation.  The
Executive will be entitled to vacation as fitting the position, whereby it is
discretionary and the Executive will provide contact information while away.
Vacation is not specifically accrued. 

     

    3.3  Bonus.  For
fiscal year 2008, the Executive will be entitled to earn a prorated annual bonus
based on Executive’s achievement of certain milestones to be defined by the
Board and discussed with the Executive as soon as practicable following the date
hereof, not exceed twenty-five percent (25%) of Executive’s Base Salary as of
the Effective Date. Bonuses to be paid to Executive in subsequent years shall be
on terms and conditions determined by the Board.

     

    3.4  Option to
Purchase Common Stock.  Promptly following the Effective Date,
the senior management of the Company will recommend that the Board grant the
Executive an option (the “Option”)
to purchase 630,000 shares of the Company’s Common Stock pursuant to the
Company’s 2004 Equity Incentive Plan (the “Plan”) at
an exercise price per share equal to the fair market value of a share of the
Company’s Common Stock as of the date of such grant, as determined by the Board,
and subject to the following vesting schedule: (i) 30,000 of the shares shall be
fully vested as of the Effective Date, and (ii) with respect to the remaining
600,000 shares, such shares shall vest monthly over 48 months in equal monthly
amounts subject to Executive’s Continuous Service (as defined in the Plan)
through each such date.  Notwithstanding the above, upon the closing a
Change of Control and subject to Executive’s Continuous Service (as defined in
the Plan) as of such date, the Option will vest immediately with respect to an
additional six (6) months of vesting of any then unvested or unreleased
shares.  In addition, notwithstanding anything to the contrary set
forth in the Plan, the 30,000 shares which are fully vested as of the Effective
Date shall be exercisable until the first to occur of (i) the five (5) year
anniversary of the date of Executive’s termination, (ii) a Change of Control, or
(iii) ten (10) years from the date of grant.

     

    4.  Miscellaneous.

     

    4.1  Waiver.  The
waiver of the breach of any provision of this Agreement will not operate or be
construed as a waiver of any subsequent breach of the same or other provision
hereof.

     

    4.2  Notices.  All
notices and other communications under this Agreement will be in writing and
will be given by personal or courier delivery, facsimile or first class mail,
certified or registered with return receipt requested, and will be deemed to
have been duly given upon receipt if personally delivered or delivered by
courier, on the date of transmission if transmitted by facsimile, or three
business days after mailing if mailed, to the addresses of the Company and the
Executive contained in the records of the Company at the time of such
notice.  Any party may change such party’s address for notices by
notice duly given pursuant to this Section 4.2.

     

    4.3  Headings.  The
section headings used in this Agreement are intended for convenience of
reference and will not by themselves determine the construction or
interpretation of any provision of this Agreement.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    4.4  Governing
Law.  This Agreement will be governed by and construed in
accordance with the laws of the State of California, excluding those laws that
direct the application of the laws of another jurisdiction.

     

    4.5  Survival of
Obligations.  This Agreement will be binding upon and inure to
the benefit of the executors, administrators, heirs, successors, and assigns of
the parties; provided, however, that except as herein expressly provided, this
Agreement will not be assignable either by the Company (except to an affiliate
or successor of the Company) or by the Executive without the prior written
consent of the other party.

     

    4.6  Counterparts and
Facsimile Signatures.  This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.  This Agreement
may be executed by facsimile signature (including signatures in Adobe PDF or
similar format).

     

    4.7  Withholding.  All
sums payable to the Executive hereunder will be reduced by all federal, state,
local, and other withholdings and similar taxes and payments required by
applicable law.

     

    4.8  Enforcement.  If
any portion of this Agreement is determined to be invalid or unenforceable, such
portion will be adjusted, rather than voided, to achieve the intent of the
parties to the extent possible, and the remainder will be enforced to the
maximum extent possible.

     

    4.9  Entire Agreement;
Modifications.  Except as otherwise provided herein or in the
exhibits hereto, this Agreement and all exhibits hereto represent the entire
understanding among the parties with respect to the subject matter of this
Agreement, and supersedes any and all prior and contemporaneous understandings,
agreements, plans, and negotiations, whether written or oral, with respect to
the subject matter hereof, including, without limitation, any understandings,
agreements, or obligations respecting any past or future compensation, bonuses,
reimbursements, or other payments to the Executive from the
Company.  All modifications to the Agreement must be in writing and
signed by each of the parties hereto.  The Company and Executive
acknowledge that upon the execution of this Agreement, the offer letter dated
January 22, 2008 between the Company and Executive is hereby terminated and of
no further force or effect, and no further compensation is owing to Executive
thereunder as of the Effective Date, including without limitation the stock
option grant to purchase 90,000 shares of Common Stock pursuant to the
Plan.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    4.10  Section
409A.

     

    (a)           Notwithstanding
anything to the contrary in this Agreement, if Executive is a “specified
employee” within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) and
the final regulations and any guidance promulgated thereunder (“Section
409A”) at the time of Executive’s termination, and the severance payable
to Executive, if any, pursuant to this Agreement, when considered together with
any other severance payments or separation benefits which may be considered
deferred compensation under Section 409A (together, the “Deferred
Compensation Separation Benefits”) will not and could not under any
circumstances, regardless of when such termination occurs, be paid in full by
March 15 of the year following Executive’s termination, then only that portion
of the Deferred Compensation Separation Benefits which do not exceed the
Section 409A Limit (as defined below) may be made within the first six (6)
months following Executive’s termination of employment in accordance with the
payment schedule applicable to each payment or benefit. For these purposes,
each severance payment is hereby designated as a separate payment and will not
collectively be treated as a single payment.  Any portion of the
Deferred Compensation Separation Benefits in excess of the Section 409A Limit
shall accrue and, to the extent such portion of the Deferred Compensation
Separation Benefits would otherwise have been payable within the first six (6)
months following Executive’s termination of employment, will become payable on
the first payroll date that occurs on or after the date six (6) months and
one (1) day following the date of Executive’s termination of
employment.  All subsequent Deferred Compensation Separation Benefits,
if any, will be payable in accordance with the payment schedule applicable to
each payment or benefit.

     

    (b)           The
foregoing provision is intended to comply with the requirements of Section 409A
so that none of the severance payments and benefits to be provided hereunder
will be subject to the additional tax imposed under Section 409A, and any
ambiguities herein will be interpreted to so comply.  The Company and
Executive agree to work together in good faith to consider amendments to this
Agreement and to take such reasonable actions which are necessary, appropriate
or desirable to avoid imposition of any additional tax or income recognition
prior to actual payment to Executive under Section 409A.

     

    (c)           For
purposes of this Agreement, “Section 409A
Limit” means the lesser of two (2) times: (i) Executive’s annualized
compensation based upon the annual rate of pay paid to Executive during the
Company’s taxable year preceding the Company’s taxable year of Executive’s
termination of employment as determined under Treasury Regulation
1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with
respect thereto; or (ii) the maximum amount that may be taken into account
under a qualified plan pursuant to Section 401(a)(17) of the Code for the year
in which Executive’s employment is terminated.

     

    

     

    [Remainder
of Page Intentionally Left Blank]

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    IN
WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as
of the Effective Date.

     

     

    
      	 	
              NewCardio,
      Inc.

              

              By:  
      /s/ Brainislav Vajdic

               

              Name:
      Brainislav Vajdic

               

              Title: 
      President and Chief Executive Officer

              

              

              /s/
      Richard
      Brounstein                                                                
      

              Richard
      Brounstein

               

              Address:  
      ____________________________

               

              ____________________________

              ____________________________

               

              Telephone:
      ____________________________

               

              Facsimile:
      _____________________________

               

              Email:
      ________________________________

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

                          

    EXHIBIT
A

    

    OTHER
ACTIVITIES

    

    
      	
              1..

            	
              Member
      of the Board of Directors of The CFO
Network.

            

    

    

    
      	
              2.

            	
              Member
      of the Board of Directors of Contego Healthcare,
  Inc..

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
EXHIBIT
B

    

    AT-WILL EMPLOYMENT, CONFIDENTIAL
INFORMATION, INVENTION ASSIGNMENT AND ARBITRATION AGREEMENT

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
C

    

    RELEASE
AND WAIVER OF CLAIMS

    

    In
consideration of the payments and other benefits set forth in the Employment
Agreement dated March 1, 2008, to which this form is attached (the “Employment
Agreement”), I, Richard Brounstein, hereby furnish NewCardio, Inc. (the
“Company”)
with the following release and waiver (“Release and
Waiver”).

    

    In
exchange for the consideration provided to me by the Employment Agreement that I
am not otherwise entitled to receive, I hereby generally and completely release
the Company and its directors, officers, employees, stockholders, partners,
agents, attorneys, predecessors, successors, parent and subsidiary entities,
insurers, affiliates, and assigns from any and all claims, liabilities and
obligations, both known and unknown, that arise out of or are in any way related
to events, acts, conduct, or omissions occurring prior to my signing this
Release and Waiver.  This general release includes, but is not limited
to: (1) all claims arising out of or in any way related to my employment with
the Company or the termination of that employment; (2) all claims related to my
compensation or benefits from the Company, including, but not limited to,
salary, bonuses, commissions, vacation pay, expense reimbursements, severance
pay, fringe benefits, stock, stock options, or any other ownership interests in
the Company; (3) all claims for breach of contract, wrongful termination,
and breach of the implied covenant of good faith and fair dealing; (4) all
tort claims, including, but not limited to, claims for fraud, defamation,
emotional distress, and discharge in violation of public policy; and (5) all
federal, state, and local statutory claims, including, but not limited to,
claims for discrimination, harassment, retaliation, attorneys’ fees, or other
claims arising under the federal Civil Rights Act of 1964 (as amended), the
federal Americans with Disabilities Act of 1990, the federal Age Discrimination
in Employment Act of 1967 (as amended) (“ADEA”),
and the California Fair Employment and Housing Act (as amended).

    

    I also
acknowledge that I have read and understand Section 1542 of the California Civil
Code which reads as follows:  “A general release does not extend to
claims which the creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have materially
affected his settlement with the debtor.” I hereby expressly waive
and relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to any claims I may have against the
Company.

     

    I
acknowledge that, among other rights, I am waiving and releasing any rights I
may have under ADEA, that this Release and Waiver is knowing and voluntary, and
that the consideration given for this Release and Waiver is in addition to
anything of value to which I was already entitled as an executive of the
Company.  I further acknowledge that I have been advised, as required
by the Older Workers Benefit Protection Act, that:  (a) the release
and waiver granted herein does not relate to claims under the ADEA which may
arise after this Release and Waiver is executed; (b) I should consult with an
attorney prior to executing this Release and Waiver; (c) if I am over the age of
forty (40) on the date I am signing this Release and Waiver, I have 21 days in
which to consider this Release and Waiver (although I may choose voluntarily to
execute this Release and Waiver earlier); (d) if I am over the age of forty (40)
on the date I am signing this Release and Waiver, I have seven days following
the execution of this Release and Waiver to revoke my consent to this Release
and Waiver; and (e) if I am over the age of forty (40) on the date I am signing
this Release and Waiver, this Release and Waiver shall not be effective until
the eighth day after I execute this Release and Waiver and the revocation period
has expired; otherwise it shall be effective upon the date of my signature
below.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    I acknowledge my continuing obligations
under the At-Will Employment, Confidential Information, Invention Assignment and
Arbitration Agreement a copy of which is attached hereto (the “Confidentiality
Agreement”).  Pursuant to the Confidentiality Agreement, I
understand that among other things, I must not use or disclose any confidential
or proprietary information of the Company and I must immediately return all
Company property and documents (including all embodiments of proprietary
information) and all copies thereof in my possession or control.  I
understand and agree that my right to the severance pay I am receiving is in
exchange for my agreement to the terms of this Release and Waiver and is
contingent upon my continued compliance with my Confidentiality
Agreement.

     

    This Release and Waiver, including the
Confidentiality Agreement, constitutes the complete, final and exclusive
embodiment of the entire agreement between the Company and me with regard to the
subject matter hereof.  I am not relying on any promise or
representation by the Company that is not expressly stated
herein.  This Release and Waiver may only be modified by a writing
signed by both me and a duly authorized officer of the Company.

    

    
    

     

    
      	Date:
      __________________	
              By:                                    
      

              Richard
      Brounstein

            

    

     

     

    2newcardio_10q-ex1020.htm

    Exhibit
10.20

      

      

      

      MISSION
CITY CENTER

      

      

      STANDARD
OFFICE LEASE

      2350
Mission College Boulevard, Suite 1175

      Santa
Clara, California 95054

      

      

      

      Between

      

      

      2350
MISSION INVESTORS, LLC,

      a
Delaware limited liability company

      Lessor

      

      

      

      And

      

      

      NEWCARDIO,
INC.,

      a
Delaware corporation

      

      Lessee

      

      

      

      Dated:  February 6,
2008

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      LEASE
SUMMARY

      2350
Mission College Boulevard, Suite 1175

      Santa
Clara, California 95054

      

      
        	
                LEASE
      DATE:

              	
                February 6,
      2008

              
	
                LESSOR:

              	
                2350
      MISSION INVESTORS, LLC,

                a
      Delaware limited liability company

              
	
                LESSOR'S
      ADDRESS FOR NOTICES:

              	
                2350
      Mission Investors, LLC

                c/o
      Woodmont Real Estate Services

                1050
      Ralston Avenue

                Belmont,
      California 94002

              
	
                LESSEE:

              	
                NEWCARDIO,
      INC., a Delaware corporation

              
	
                LESSEE'S
      ADDRESS FOR NOTICES:

              	
                Before Term
      Commencement Date:

                NewCardio,
      Inc.

                2033
      Gateway Plaza, Suite 500

                San
      Jose, California 95110

                 

                After Term
      Commencement Date:

                NewCardio,
      Inc.

                2350
      Mission College Boulevard, Suite 1175

                Santa
      Clara, California 95054

                 

                With
      a copy to :

                 

                Hopkins
      & Carley

                70
      S. First Street

                San
      Jose, California 95113

                Attention:  Julie
      Frambach

              
	
                BUILDING:

              	
                2350
      Mission College Boulevard

                Santa
      Clara, California 95054

              
	
                RENTABLE
      AREA OF THE BUILDING:

              	
                 

                Approximately
      235,883 square feet

              
	
                PREMISES:

              	
                Suite 1175

              
	
                RENTABLE
      AREA OF THE PREMISES:

              	
                 

                Approximately 1,980
      square feet

              
	
                TERM:

              	
                Thirty-Eight (38)
      months

              
	
                ESTIMATED
      TERM COMMENCEMENT DATE:

              	
                 

                March 1,
      2008

              
	
                ESTIMATED
      TERM EXPIRATION DATE:

              	
                 

                April 30,
      2011

              
	
                BASE
      RENT:

              
	
                Period:

              	
                Monthly
      Base Rent

              	
                Annual
      Base Rent

              
	
                March 1,
      2008 through April 30, 2008

              	
                NONE

              	
                NONE

              
	
                May 1,
      2008 through April 30, 2009

              	
                $5,940.00

              	
                $71,280.00

              
	
                May 1,
      2009 through April 30, 2010

              	
                $6,118.20

              	
                $73,418.40

              
	
                May 1,
      2010 through April 30, 2011

              	
                $6,301.75

              	
                $75,621.00

              
	
                If
      the Term Commencement Date (as defined in Section 2.01) is a date
      other than March 1, 2008, the foregoing schedule of Base Rent shall
      be adjusted to reflect the actual Term Commencement Date with Base Rent
      abated for the first two (2) months

              
	
                BASE
      YEAR:

              	
                January
      1, 2008 through December 31, 2008

              
	
                LESSEE'S
      PERCENTAGE SHARE:

              	
                Eighty-Four
      One Hundredths percent (0.84%)

              
	
                PERMITTED
      USE:

              	
                General
      office use including medical device company offices

              
	
                SECURITY
      DEPOSIT:

              	
                Twelve
      Thousand Six Hundred Dollars ($12,600.00)

              
	
                PREPAID
      RENT:

              	
                Five
      Thousand Nine Hundred Forty Dollars ($5,940.00), to be applied toward
      the Base Rent due for April 2008

              
	
                LESSEE
      PERMITTED PARKING:

              	
                Five (5)
      unassigned, non-exclusive parking spaces

              
	
                GUARANTOR:

              	
                NONE

              
	
                BROKERS:

              	
                NAI/BT
      Commercial representing Lessor

                Wayne
      Mascia Associates representing
Lessee

              

      

      

      The
foregoing Lease Summary is incorporated into and form a part of the
Lease.  Each reference in the Lease to any of the Lease Summary
provisions shall mean the respective information set out above and shall be
construed to incorporate all of the terms provided under the particular Lease
section pertaining to such information.  Each such reference shall
incorporate the applicable Lease Summary provisions.  In the event of
any conflict between any of the Lease Summary provisions and the provisions of
the Lease, the provisions of the Lease shall control.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      TABLE
OF CONTENTS

      2350
Mission College Boulevard, Suite 1175

      Santa
Clara, California 95054

      

       

      
        	Lease
    Summary	 	
                PAGE

              
	Article 1	PREMISES	4
	Article 2	TERM	
                4

              
	Article 3	RENT	
                5

              
	Article 4	OPERATING
      EXPENSES	

                5

              
	Article 5	TAXES	

                7

              
	Article 6	SECURITY
      DEPOSIT	

                8

              
	Article 7 	USE	

                8

              
	Article 8	SERVICES AND
      UTILITIES	

                9

              
	Article 9	ALTERATIONS	

                10

              
	Article 10	REPAIRS	

                11

              
	Article 11	ASSIGNMENT AND
      SUBLETTING	

                12

              
	Article 12	INSURANCE AND WAIVER
      OF RIGHT OF SUBROGATION	

                14

              
	Article 13	WAIVER OF LIABILITY
      AND INDEMNITY	

                15

              
	Article 14	DAMAGE OR
      DESTRUCTION	

                15

              
	Article 15	EMINENT
    DOMAIN	

                16

              
	Article 16	RULES AND
      REGULATIONS	

                17

              
	Article 17	ENTRY BY
      LESSOR	

                17

              
	Article 18	ESTOPPEL
      CERTIFICATE	

                18

              
	Article 19	SUBORDINATION	

                18

              
	Article 20	FINANCIAL
      INFORMATION	

                18

              
	Article 21	HAZARDOUS
      MATERIALS	

                19

              
	Article 22	DEFAULT	

                20

              
	Article 23	LESSOR’S RIGHT TO
      CURE DEFAULTS	

                22

              
	Article 24	ATTORNEYS’
      FEES	

                22

              
	Article 25	SURRENDER OF
      PREMISES	

                22

              
	Article
      26 	HOLDING
    OVER	

                22

              
	Article 27	WAIVER	

                23

              
	Article 28	SALE BY
    LESSOR	

                23

              
	Article 29	NO MERGER	

                23

              
	Article 30	NOTICES	

                23

              
	Article 31	RELOCATION OF
      PREMISES	

                23

              
	Article 32	SUCCESSORS	

                23

              
	Article 33	LIMITATION OF
      LIABILITY	

                24

              
	Article 34	GUARANTY OF
      LEASE	

                24

              
	Article 35	BROKERS	

                24

              
	Article 36	MISCELLANEOUS	

                24

              
	 	 	 
	EXHIBIT A	FLOOR PLAN	
                A-1

              
	EXHIBIT B	RULES AND
      REGULATIONS	
                B-1

              
	EXHIBIT C	WORK
LETTER	
                C-1

              
	EXHIBIT
C-1	DIAGRAM SHOWING THE
      LESSEE IMPROVEMENTS	
                C-2

              

      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      STANDARD
OFFICE LEASE

      2350
Mission College Boulevard, Suite 1175

      Santa
Clara, California 95054

      

      This
Standard Office Lease (this "Lease") is made and entered
into by and between the Lessor ("Lessor") and the Lessee
("Lessee") set forth in
the Lease Summary and is effective as of the Lease Date (the "Lease Date") set out in the
Lease Summary.

      

      ARTICLE
1 - PREMISES

      

      Section 1.01.  Premises.  Lessor
leases to Lessee, and Lessee hereby hires and leases from Lessor, for the term
and subject to the agreements, conditions and provisions set forth in the Lease
Summary and in this Lease, to each and all of which Lessor and Lessee mutually
agree, those certain premises described in the Lease Summary and generally shown
on Exhibit A (the
"Premises"), which
Premises are located in the office building described in the Lease Summary (the
"Building").  Lessor
and Lessee agree that for the purposes of this Lease the Rentable Area of the
Premises and the Rentable Area of the Building shall be the respective numbers
of square feet set forth in the Lease Summary.  The real property upon
which the Building and Common Areas (as defined in Section 1.03) are
located, and the improvements from time to time located on such real property,
are referred to in this Lease as the "Project".

      

      Section 1.02.  Condition of the
Premises.  Except as set forth in this Lease, neither Lessor
nor any representative or agent of Lessor has made any representation or
warranty to Lessee respecting the condition of the Premises or the suitability
of the Premises for any purpose or use.  Lessee agrees that Lessee is
leasing the Premises in their AS-IS condition without any improvements or
alterations by Lessor, unless Lessor has expressly agreed to make any
improvements or alterations in a work letter attached to this Lease as Exhibit C.  If
Lessor has agreed to make any such improvements or alterations, then the
Premises shall include the Lessor Improvements (as defined in Exhibit C) to be
constructed by Lessor within the interior of the Premises pursuant to Exhibit C.  Lessor
and Lessee shall be bound by the terms and conditions of Exhibit C.  Except
for the Lessor Improvements to be constructed by Lessor pursuant to Exhibit C, the
execution of this Lease by Lessee constitutes conclusive evidence that Lessee
has inspected the Premises and found them to be good condition and
repair.

      

      Section 1.03.  Common
Areas.  During the Term (as defined in Article 2), Lessee
and Lessee's employees and guests shall have the non-exclusive right to use, in
common with Lessor other permitted users those areas located within the Project
from time to time designated and made available by Lessor for the common use of
Lessor and the lessees, occupants and invitees of the Building, which areas may
include the areas on individual floors in the Building devoted to corridors,
elevators, foyers, lobbies, restrooms, stairways and other similar facilities,
and the driveways and parking areas of the Project ("Common
Areas").  Such use shall be subject to the Rules and
Regulations (as defined in Section 16.01).  Lessor has the right,
in its sole discretion, from time to time, to:  (a) make changes
to the Common Areas, the Building and/or the Project, including, without
limitation, changes in the location, size, shape and number of entrances,
corridors, elevators, foyers, lobbies, restrooms, stairways and other similar
facilities on individual floors in the Building, and driveways, entrances,
parking spaces, parking areas, direction of driveways, landscaped areas and
walkways; (b) close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;
(c) add additional buildings to the Project and improvements to the Common
Areas or remove existing improvements from the Common Areas; (d) use the
Common Areas while engaged in making additional improvements, repairs or
alterations to the Building and/or the Project; and (e) do and perform any
other acts, alter or expand or make any other changes in, to or with respect to
the Common Areas, the Building and/or the Project as Lessor may, in its sole
discretion, deem to be appropriate.  Lessee shall have the
non-exclusive right in common with other permitted users to use not more than
the number of parking spaces set forth in the Lease Summary located in the
parking areas of the Common Area for the parking of the passenger automobiles of
the employees and invitees of Lessee, subject to compliance with the Rules and
Regulations (as defined in Section 16.01).

      

      ARTICLE
2 - TERM

      

      Section 2.01.  Term.  The term of
this Lease (the "Term")
shall commence on the later of (a) the date set out in the Lease Summary as
the "Estimated Term Commencement Date", or (b) the date that substantial
completion of the Lessor Improvements (as defined in Exhibit C) has
been achieved and Lessor has given written notice to Lessee of such substantial
completion (such later date being the "Term Commencement Date") and,
unless sooner terminated as provided in this Lease, shall end on day immediately
preceding the first day of the thirty-eighth (38th) month
following the Term Commencement Date (the "Term Expiration
Date").  As used in this Section 2.01, the term
“substantial completion” shall mean that the Lessor Improvements have been
completed to the extent that the same may be used generally for the purposes
that they are intended and that only minor touch up or incomplete work remains
to be completed.  Notwithstanding the foregoing, if construction of
the Lessor Improvements is delayed by any act, fault or neglect of Lessee, then
the period of any such delay shall be not be taken into account in determining
the Term Commencement Date.  Notwithstanding any provision of this
Lease to the contrary, if Lessor does not tender possession of the Premises to
Lessee on or before the Estimated Term Commencement Date for any reason
whatsoever, Lessor shall not be liable to Lessee for damages or otherwise and
this Lease shall not be void or voidable, but Lessee shall not be liable for
payment of any rent until such time as Lessor tenders possession of the Premises
to Lessee.  Any such delay in the tender of possession of the Premises
shall not affect any of the other obligations of Lessee under this Lease, but
shall extend the Initial Term Expiration Date for the same period of
time.  Lessee's entry upon the Premises for the conduct of business
(whether before or after the Term Commencement Date) shall constitute Lessee's
agreement that the Premises are in good order and condition.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      

      ARTICLE
3 - RENT

      

      Section 3.01.  Base Rent.  Lessee
shall pay to Lessor for the right to use and occupy the Premises Annual Base
Rent in the amount set forth in the Lease Summary, payable without notice or
demand in equal monthly installments in advance in the amount set out in the
Lease Summary (the "Monthly
Base Rent") beginning two (2) months after the Term Commencement
Date and continuing on the first day of each calendar month thereafter during
the Term.  Lessee shall pay to Lessor the Monthly Base Rent due for
the first month of the Term for which Monthly Base Rent is due upon execution of
this Lease.

      

      Section 3.02.  Additional
Rent.  Lessee shall pay to Lessor as additional rent ("Additional Rent")
(a) Lessee's Percentage Share of any Increased Operating Expenses as
provided in Section 4.01, (b) Lessee's Percentage Share of Increased
Taxes as provided in Section 5.01, and (c) all other costs, expenses
and charges that are referred to in this Lease as "Additional
Rent".  As used in this Lease, the term "Rent" shall mean Base Rent,
Additional Rent and all other sums and amounts payable by Lessee under this
Lease.  This Lease is intended to be a triple-net
lease.  The provisions of this Section 3.02, and the provisions
of Sections 4.01 and 5.01, providing for the payment of Additional Rent are
intended to pass on to Lessee Lessee’s Percentage Share of all costs and
expenses relating to Lessor’s ownership and operation of the Premises, the
Building and/or the Project.

      

      Section 3.03.  Partial Months.  If
the Term Commencement Date is a day other than the first day of a calendar month
or if the Term expires or is terminated on a day other than the last day of a
calendar month, then the Monthly Base Rent and Additional Rent for the first
and/or last fractional month of the Term shall be prorated based upon the number
of days in the first and/or last fractional month that are included within the
Term.

      

      Section 3.04.  Interest.  Every
installment of Base Rent, and every other payment of Rent due under this Lease,
which is not received by Lessor within five (5) days after the same shall
have become due shall bear interest at the annual rate equal of ten
percent (10%), or at the highest rate legally permitted, whichever is less
(the "Applicable Interest
Rate"), from the date that the same became due and payable until the same
is received by Lessor, whether or not demand for payment is made by
Lessor.

      

      Section 3.05  Late Charge.  Lessee
acknowledges that late payment by Lessee to Lessor of any installment of Base
Rent or other payment of Rent will cause Lessor to incur costs not contemplated
by this Lease, the exact amount of such costs being extremely difficult and
impractical to determine.  Such costs include, without limitation,
processing and accounting charges, and late charges that may be imposed on
Lessor by the terms of any indebtedness secured by an encumbrance covering the
Project.  Therefore, if any installment of Base Rent or other payment
of Rent is not received by Lessor when due, Lessee shall pay to Lessor on demand
an additional sum equal to six percent (6%) of the overdue amount as a late
charge.  The parties agree that this late charge represents a fair and
reasonable estimate of the costs that Lessor will incur by reason of such late
payment by Lessee.  Acceptance of any late charge shall not constitute
a waiver of the failure of Lessee to pay the unpaid amount or prevent Lessor
from exercising any of the other rights and remedies available to Lessor by
reason of such failure of Lessee.

      

      Section 3.06   Payment.  All
payments required to be made by Lessee under this Lease shall be made in lawful
money of the United States without any set off, deduction or counterclaim
whatsoever and shall be made payable and delivered to Lessor at the address of
Lessor set forth in the Lease Summary or such other place as Lessor may
designate in writing.

      

      ARTICLE
4 - OPERATING EXPENSES

      

      Section 4.01.  Increased Operating
Expenses.  The term "Base Year" means that
twelve (12) month period set forth in the Lease Summary.  In
addition to the payment of Base Rent, during each calendar year of the Term
following the Base Year Lessee shall pay to Lessor as Additional Rent Lessee's
Percentage Share (as set forth in the Lease Summary) ("Lessee's Percentage Share") of
any increase in Operating Expenses (as defined in Section 4.02) paid or
incurred by Lessor during such calendar year ("Increased Operating Expenses")
which are in excess of the Operating Expenses paid or incurred by Lessor for the
Base Year.  Lessor may, at or after the start of any calendar year
subsequent to the Base Year, notify Lessee of the amount which Lessor estimates
will be Lessee's Percentage Share of the Increased Operating Expenses for such
calendar year, and Lessee shall pay to Lessor monthly in advance, at the time
and place that Monthly Base Rent is payable under this Lease,
one-twelfth (1/12) of such estimate.  Lessor may, from time to
time, revise Lessor's estimate of Increased Operating Expenses by written notice
to Lessee and Lessee shall pay Lessee’s Percentage Share based upon such revised
estimate.  An annual Statement ("Statement") of the actual
Increased Operating Expenses incurred or paid by Lessor for each calendar year
subsequent to the Base Year shall be given to Lessee within one hundred
twenty (120) days after the end of each calendar year, or as soon
thereafter as practical.  If Lessee's Percentage Share of Increased
Operating Expenses as shown on such Statement is greater or less than the total
estimated amounts actually paid by Lessee with respect to the calendar year
covered by such Statement, then within thirty (30) days after receipt of
the Statement, Lessee shall pay in cash any sums owed to Lessor or, if
applicable, Lessee shall receive a credit against Lessee’s Percentage Share of
Increase Operating Expenses next accruing for any sum overpaid by
Lessee.  Following expiration of the calendar year in which the Term
expires or during which this Lease is terminated, Lessor shall give a final
Statement to Lessee for such calendar year.  If Lessee's Percentage
Share of any Increased Operating Expenses as shown on the final Statement is
greater or less than the total amount of Increased Operating Expenses actually
paid by Lessee with respect to the calendar year covered by the final Statement,
then within thirty (30) days after the delivery of the Statement to Lessee
the appropriate party shall pay to the other party any sums owed.  The
obligations of Lessor and Lessee under this Section 4.01 shall survive the
expiration or sooner termination of this Lease.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      
Section 4.02.  Operating
Expenses.  The term "Operating Expenses" as used in
this Lease shall include all costs, charges and expenses incurred in the course
of ownership, management, operation, maintenance, repair, restoration and
replacement of the Building, the Common Areas and/or the Project, including,
without limitation:

      

      (a)    Wages,
salaries, compensation and benefits for all persons engaged in the management,
operation, maintenance, repair, restoration and replacement of the Building,
Common Areas and/or the Project including, but not limited to, employer’s Social
Security taxes, unemployment taxes, insurance premiums, and any other taxes
which may be levied on such wages, salaries, compensation and
benefits.

      

      (b)    The cost of
service, maintenance and inspection contracts, including, but not limited to,
contracts for landscaping, janitorial, window cleaning, rubbish removal,
exterminating, elevator, plumbing, electrical, mechanical, HVAC and life safety
equipment and systems.

      

      (c)    The cost of
purchasing or renting equipment, supplies, tools, materials and
uniforms.

          

      (d)    Premiums and
other charges for the insurance policies to be maintained by Lessor under this
Lease and for such other insurance policies as Lessor shall elect to maintain
with respect to the Project, and insurance deductibles and the amount of
self-insured or retained coverage.

      

      (e)    Costs of
electricity, water, gas, sewer and other utility services provided to the
Building and/or the Common Areas that are not billed directly to lessees,
including, but not limited to, surcharges, assessments or impositions levied,
assessed or imposed upon the Premises, the Building or the Project or any part
thereof, or upon the use and occupancy of the Premises, the Building or the
Project, as a result of any rationing of utility services or restriction on the
use or quality of utility services supplied to the Premises, the Building and/or
the Project.

      

      (f)    Sales, use
and excise taxes on goods and services purchased by Lessor.

      

      (g)   License, permit and
inspection fees.

          

      (h)   Attorneys',
accountants' and consultants' fees.

      

      (i)    Fees for
management services, whether provided by an independent management company,
Lessor, or an affiliate of Lessor.

      

      (j)    The cost of
any capital improvements, equipment or devices installed or paid for by Lessor
in order (i) to conform with any laws, rules, regulations or requirements
of any governmental or quasi-governmental authority having jurisdiction or of
any board of fire underwriters or similar insurance body, (ii) to replace
existing systems, or (iii) to effect a labor saving, energy saving or other
economy, which cost shall be amortized over the useful life of such capital
improvement, equipment or device as determined by Lessor, together with interest
on the unamortized balance at an annual rate equal to Applicable Interest Rate,
or such higher rate as may have been paid by Lessor on borrowed
funds.

      

      (k)    The cost of
the replacement of Common Area furnishings, fixtures, decorations and equipment
including, but not limited to, window coverings, carpeting and wall
coverings.  The cost of such items having a useful life of
five (5) years or less shall be treated as an expense changed in the
calendar year incurred.  The cost of such items having a useful life
in excess of five (5) years shall be amortized over the useful life of such
items as determined by Lessor, together with interest on the unamortized balance
at an annual rate equal to the Applicable Interest Rate, or such higher rate as
may have been paid by Lessor on borrowed funds.

      

      (l)    Depreciation
or amortization of the costs of materials, tools, supplies and equipment
purchased by Lessor to enable Lessor to supply services which Lessor might
otherwise contract for with a third party.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      (m)    Taxes (as
defined in Section 5.02).

      

      The term
“Operating Expenses” shall not include
(i) any expense paid by any lessee of the Building directly to third
parties; (ii) any expense for which Lessor is otherwise reimbursed by any
third party, by any other lessee of the Building or by insurance proceeds;
(iii)rent paid to any ground lessor; (iv) the cost of constructing lessee
improvements for any other lessee of the Project; (v) legal fees,
advertising costs, brokerage commissions and other costs incurred by Lessor in
connection with the leasing of space to individual lessees of the Project;
(vi) Lessor’s general overhead expenses not related to the ownership and
management of the Project; and (vii) legal fees, accountings’ fees and
other expenses incurred in connection with disputes with other lessees of the
Project.

      

      Section 4.03.    Statement Binding and Audit
Rights.  Each Statement shall be conclusive and binding upon
Lessee unless within ninety (90) days after receipt of the Statement Lessee
shall notify Lessor in writing that Lessee disputes the correctness of such
Statement, specifying the particular respects in which the Statement is claimed
to be incorrect.  Following Lessor’s receipt of Lessee's notice
disputing any Statement, Lessor and Lessee shall meet and attempt in good faith
to resolve the matters in dispute.  If the matters in dispute are not
resolved by Lessor and Lessee within thirty (30) days following Lessor's
receipt of Lessee's dispute notice, Lessee may, by written notice given to
Lessor within fifteen (15) days following the elapse of the foregoing
thirty (30) day period, request an independent audit of the books and
records of Lessor relating to the matters in dispute.  The independent
audit of the books and records shall be conducted by a Certified Public
Accountant not then employed by either Lessor or Lessee who is to be compensated
on an hourly basis and is otherwise acceptable to both Lessor and Lessee ("CPA").  If, within
thirty (30) days after Lessor's receipt of Lessee's notice requesting an
audit, Lessor and Lessee are unable to agree on the CPA to conduct such audit,
then Lessor may designate an accounting firm not then employed by Lessor or
Lessee to conduct such audit.  The audit shall be limited to the
matters in dispute for the subject calendar year as contained in Lessee’s
initial written dispute notice.  The audit shall be completed within
sixty (60) days following the date of identification of the CPA to conduct
such audit.  If the audit discloses that the matters in dispute were
incorrectly billed to Lessee, the appropriate party shall pay to the other party
the deficiency or overpayment, as applicable.  Lessee shall pay all
costs and expenses of the CPA in connection with the audit.  Lessee
shall keep any information gained from such audit confidential and shall not
disclose any information to any other person or entity.  The exercise
by Lessee of such audit rights shall not relieve Lessee of its obligation to
timely pay all sums due under the Statement that are not in
dispute.

      

      ARTICLE
5 - TAXES

      

      Section 5.01.    Increased Taxes.  In
addition to the payment of Base Rent, during each calendar year of the Term
following the Base Year, Lessee shall pay to Lessor as Additional Rent Lessee's
Percentage Share of any increase in Taxes (as defined in Section 5.02) paid
or incurred by Lessor during each such calendar year over the Taxes paid or
incurred by Lessor for the Base Year (“Increased
Taxes”).  Lessee shall pay Lessee's Percentage Share of any
Increased Taxes in the manner provided in Section 4.01.

      

      Section 5.02.    Taxes.  The term
"Taxes" as used in this
Lease shall include all taxes, assessments, charges and surcharges (including
costs and expenses of contesting the amount or validity thereof by appropriate
administrative or legal proceedings) levied or assessed upon or with respect to
the Building and/or the Project, or the interest of Lessor in the Building
and/or Project, and any personal property of Lessor used in connection with the
Building and/or Project, including, without limitation, all so-called ad valorem real property
taxes and general and special assessments; charges, fees, levies or assessments
for transit, housing, police, fire or other services or purported benefits to
the Project; service payments in lieu of taxes; and any tax, fee or charge on
the act of entering into this Lease or any other lease of space in the Building,
on the use or occupancy of the Building and/or the Project or any part thereof,
or on the rent payable under any lease of the Building or in connection with the
business of renting space in the Building, which may now or hereafter be levied
or assessed against Lessor by the United States of America, the State of
California, or any governmental or quasi-governmental entity holding the power
of taxation, and any other tax, fee. levy or other charge, however described,
that may be levied or assessed as a substitute for, or as an addition to (in
whole or in part), any other item included as Taxes, whether or not now
customary or in the contemplation of Lessor and Lessee on the date of this
Lease.  "Taxes" shall also include legal and consultants' fees, costs
and disbursements incurred in connection with proceedings to contest, determine
or reduce taxes, Lessor specifically reserving the right, but not the
obligation, to contest by appropriate legal proceedings the amount or validity
of any Taxes.  "Taxes" shall not include the net income, estate,
succession, inheritance, transfer or franchise taxes of
Lessor.  Lessee acknowledges, that the Lessor named in this Lease is a
tax exempt entity and that in lieu of customary ad valorem real property
taxes, the taxing authority will issue a possessory interest tax based upon the
value of the rights conferred upon Lessee under this Lease, and that such
possessory interest tax is included in the definition of “Taxes”.

      

      Section 5.03.    Additional
Taxes.  In addition to the payment of Base Rent and other
charges to be paid by Lessee under this Lease, during the Term Lessee shall pay
directly to the taxing authority any and all taxes, charges, surcharges, fees,
levies and assessments, whether or not now customary or with the contemplation
of Lessor and Lessee on the date of this Lease:  (a) upon,
measured by or reasonably attributable to the cost or value of Lessee's
equipment, furniture, fixtures and other personal property located in the
Premises, or the cost or value of any leasehold improvements in or Alterations
(as defined in Section 9.01) to the Premises, regardless of whether title
to such improvements or Alterations shall be in Lessee or Lessor; (b) upon
or measured by any Rent payable under this Lease, including, without limitation,
any gross receipts tax or excise tax levied by the city and/or county in which
the Building is located, the State of California, the United States of America
or any other governmental entity; (c) upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Lessee of the Premises or any portion thereof; or (d) upon
this transaction or any document to which Lessee is a party creating or
transferring any interest or estate in the Premises (collectively, "Additional
Taxes").  If any Additional Taxes are included in Lessor's tax
bills, Lessee shall pay the amount of the Additional
Taxes to Lessor upon demand.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      

      ARTICLE
6 - SECURITY DEPOSIT

      

      Section 6.01.    Security
Deposit.  Lessee has paid to Lessor the sum contained in the
Lease Summary as the Security Deposit (the "Security Deposit"), which
shall be held by Lessor as security for the timely and faithful performance by
Lessee of all of the provisions of this Lease to be performed or observed by
Lessee.  Upon the occurrence of an Event of Default (as defined in
Section 22.01), Lessor may use, apply or retain all or any portion of the
Security Deposit for the payment of any Rent in default, or for the payment of
any other sum incurred by Lessor by reason of such Event of Default, or to
compensate Lessor for any loss or damage which Lessor may suffer by reason of
such Event of Default.  If Lessor so uses or applies all or any
portion of the Security Deposit, Lessee shall, within ten (10) days after
written demand by Lessor, deposit cash with Lessor in an amount sufficient to
restore the Security Deposit to its full original amount and Lessee's failure to
do so shall constitute an Event of Default under this Lease.  Lessor
shall not be required to keep the Security Deposit separate from its general
accounts.  No interest shall accrue on or be payable to Lessee with
respect to the Security Deposit.  If Lessee timely performs all of
Lessee's obligations under this Lease, the Security Deposit, or so much thereof
as has not been applied by Lessor as provided in this Lease, shall be returned
to Lessee (or, at Lessor's option, to the last assignee, if any, of Lessee's
interest under this Lease) at the expiration of the Term, and after Lessee has
vacated the Premises and surrendered the Premises in the condition required
under this Lease.  No trust relationship is created herein between
Lessor and Lessee with respect to the Security Deposit.

      

      Section 6.02.    Waiver.  Lessee
waives the provisions of California Civil Code Section 1950.7, excepting
only subdivision (b), and any other present or future law, statute or
ordinance regarding security deposits held under commercial leases, and agrees
that the provisions of this Article 6 shall solely govern the rights and
obligations of Lessor and Lessee regarding the Security Deposit.

      

      ARTICLE
7 - USE

      

      Section 7.01.    General.  The
Premises shall be used only for the purposes contained in the Lease Summary (the
"Permitted Use"), and
for no other purpose or use.  Use of the Premises shall be subject to
the Rules and Regulations (as defined in Section 16.01).  The
term “Permitted Use” shall not include (i) offices of any agency or bureau
of the United States or any state or political subdivision thereof, (ii) offices
or agencies of any foreign government or political subdivision thereof, (iii)
offices of any health care professionals or service organization, except for
administrative offices where no diagnostic, treatment or laboratory services are
performed, (iv) schools or other training facilities that are not ancillary
to executive, professional or corporate administrative office use,
(v) retail or restaurant uses, (vi) broadcast studios or other
broadcast production facilities, such as radio and/or television stations,
(vii) product display or demonstration facilities, (viii) offices at
which deposits or bills are regularly paid in person by customers,
(ix) personnel agencies, except offices of executive search firms;
(x) offices or facilities that are open to the public before or after
Ordinary Business Hours (as defined in Section 8.01 below);
(xi) residential property sales or brokerage offices; (xii) any
examination or testing of humans or animals, or laboratory functions; and
(xiii) any use that involves the presence on the Premises of any biologic
material or biologic waste.

      

      Section 7.02.    No Nuisance or
Waste.  Lessee shall not do or permit anything to be done in or
about the Premises, the Building or the Project which will in any way obstruct
or interfere with the rights of Lessor or other lessees or occupants, or injure
or annoy any of them.  Lessee shall not use or allow the Premises to
be used for any improper, immoral or objectionable purpose, nor shall Lessee
cause, maintain or permit any nuisance in, on, or about the Premises, the
Building or the Project.  Lessee shall not commit or allow the
commission of any waste in, on, or about the Premises, the Building or the
Project.

      

      Section 7.03.    Compliance with
Laws.  Lessee shall not use the Premises or permit anything to
be done in or about the Premises, the Building or the Project which will in any
way conflict with any law, statute, ordinance, rule, regulation, requirement,
directive, order, permit or approval of any governmental authority or
quasi-governmental authority now in force or which may hereafter be enacted or
promulgated (collectively, "Laws").  Lessee
shall not do or permit anything to be done in or about the Premises or bring or
keep anything therein which will in any way cause a cancellation or an increase
in the rate of any insurance on the Building or the Project maintained by
Lessor.  Lessee shall, at its sole cost and expense, promptly comply
with all Laws relating to or affecting the condition, use, or occupancy of the
Premises, excluding structural changes not related to or affected by Lessee's
use or manner of use of the Premises or alterations or improvements made to the
Premises by or at the request of Lessee.  The judgment of any court of
competent jurisdiction or the admission by Lessee in any action against Lessee,
whether Lessor be a party to any such action or not, that Lessee has so violated
any Laws shall be conclusive of such violation as between Lessor and Lessee for
purposes of this Lease.  Lessee shall promptly comply with the
requirements of any board of fire underwriters or other similar body now or
hereafter constituted relating to or affecting the condition, use, or occupancy
of the Premises or the Building.

      

      Section 7.04.    No Rights
Granted.  No rights to any view, light or air over any
property, whether belonging to Lessor or any other person, are granted to Lessee
by this Lease.  Any diminution or shutting off of light, air or view
by any structure which is now or may hereafter be erected on the Project or on
lands adjacent to the Project shall in no way affect this Lease or impose any
liability on Lessor.  Noise, dust or vibration or other incidents to
new construction of improvements on the Project or on lands adjacent to the
Project, whether or not owned by Lessor, shall in no way affect this Lease or
impose any liability on Lessor.   If Lessor makes changes,
alterations or additions to any portion of the Building other than the Premises,
or to the Common Areas or the Project, Lessor shall not be subject to any
liability.  No such changes or additions shall entitle Lessee to
damages or other compensation, relieve Lessee of any obligation under this Lease
or constitute or be construed as a constructive or other eviction of Lessee or a
breach of Lessor's covenant of quiet enjoyment.  In the exercise of
the foregoing rights, Lessor shall use commercially reasonable efforts not to
unreasonably interfere with access to the Premises or Lessee’s use of the
Premises as permitted in this Lease.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      
Section 7.05.    No Interference with Communications
Installations and Equipment.  Lessee shall not use, or permit
any employee, contractor or agent of Lessee to use, in or about the Premises,
the Building or the Project any equipment (including, but not limited to,
communications equipment or devices) that interferes with the communications
installations, equipment or devices of any other lessee or licensee of the
Building.  All equipment or devices installed or used by Lessee in or
about the Premises, the Building or the Project shall be maintained and used in
compliance with the rules, regulations, requirements, guidelines and licensing
conditions of all federal , state, regional or local governmental authorities or
quasi-governmental authorities, including, but not limited to, the Federal
Communications Commission, and within the technical parameters specified by the
manufacturer or suppler of such equipment or devices.  If any
equipment or device installed or used by Lessee or any employee, contractor or
agent of Lessee interferes directly or indirectly with the use or enjoyment of
the Project by Lessor, or any other lessee or licensee, then Lessee shall
eliminate such interference within twenty-four (24) hours after written
notice from Lessor.  If such interference is not eliminated within
such twenty-four (24) hour period, then Lessee shall cease the use of such
equipment or devices (except for intermittent testing) until the interference
has been eliminated to the satisfaction of Lessor.

      

      ARTICLE
8 - SERVICES AND UTILITIES

      

      Section 8.01.    General.  Subject to
the provisions of Section 8.03 and so long as no Event of Default exists
under this Lease, Lessor shall:

      

      (a)    Operate or
cause the operation in season of the heating, ventilating and
air conditioning ("HVAC") system serving the
Premises during the hours of 7:00 a.m. until 6:00 p.m. Monday through Friday,
except holidays observed by the federal and/or State of California government
("Ordinary Business
Hours"), at such temperatures and in such amounts as Lessor determines
are reasonably required for the comfortable occupancy of the Premises or as may
be permitted or controlled by applicable Laws or the directives of utility
suppliers.  If Lessee requires heat or air-conditioning on days or
during hours other than Ordinary Business Hours, Lessee must make advance
arrangements with Lessor for the provision of the same and shall pay Lessor, as
additional Rent, the hourly rate established by Lessor for such service and a
monthly accounting fee for any month during which additional heat or air
conditioning is requested..  At least 48 hours' prior notice must be
given to Lessor in order to schedule additional heat or air conditioning
service.  Lessee shall be responsible, and shall pay Lessor for, any
additional costs (including, without limitation, the costs of installation of
additional HVAC equipment) due to the arrangement of partitioning in the
Premises, changes or alterations to the Premises made by Lessee or at the
request of Lessee, the use in the Premises of equipment or machinery consuming
more than 500 watts at rated capacity, occupancy of the Premises exceeding
one person per one hundred and twenty-five (125) square feet of rentable
area, the failure of Lessee to keep all HVAC system outlets within the Premises
free of obstruction, or the failure of Lessee to observe the Rules and
Regulations for the use and operation of the HVAC system.

      

      (b)    Make
customary arrangements with public utilities and/or public agencies to furnish
electric current to the Building.  Electric current will be available
to the Premises in amounts sufficient for normal lighting by overhead
fluorescent fixtures and for normal use of office computers and other office
machines of similar low electrical consumption not exceeding an average of
3 watts per square foot of the Premises or such lesser amount as may be
available.  Lessee shall not install in the Premises any electronic
data processing equipment, independent air conditioning units, special
communications equipment, special lighting or any other item of electrical
equipment which consumes more than 500 watts at rated capacity or requires
a voltage other than 120 volts, single phase (collectively "High Consumption Equipment")
without Lessor's prior written consent.  Lessor shall have no
obligation to install dedicated circuits or other special circuitry or wiring
serving the Premises.  Lessee shall advise Lessor prior to execution
of this Lease and within five (5) days after written request from Lessor of
the nature and quantity of all lights, equipment and machines using electricity
in the Premises and shall permit Lessor or its authorized agents to make
periodic inspections of all lights, equipment and machines using electricity
located within the Premises.  If Lessor determines that Lessee is
using electric current in excess of 3 watts per square foot of rentable
area per month or such lesser amount as may be available based on the safe and
lawful capacity of the existing electrical circuits and facilities serving the
Premises, Lessor shall have the right to install an electric current meter in
the Premises to measure the amount of electric current consumed on the
Premises.  Lessee shall pay to Lessor, as Additional Rent, the cost of
installation, maintenance and repair of such meter (including, but not limited
to, special conduits, wiring and panels) and the cost of excess electric current
consumed on the Premises as measured by such meter.

      

      (c)    Provide water
for drinking, lavatory and toilet purposes at those points of supply provided
for nonexclusive general use of all lessees of the Building.

      

      (d)    Operate,
maintain, clean, light, heat, ventilate and air condition the Building
interior Common Areas and provide elevator service in the Building during
Ordinary Business Hours.

              

      (e)    Operate,
maintain and clean the Common Areas outside of the Building.

      

      (f)    Provide
routine janitorial service to the Premises and the Common Areas on each weekday,
exclusive of Saturdays, Sundays and holidays, subject to access being granted to
the person or persons employed or retained by Lessor to perform such
work.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      

      Section 8.02.    Supplementary
Services.  Lessee shall pay to Lessor as Additional Rent, at
the charges established by Lessor from time to time, all charges for
supplementary or additional services provided by Lessor or its agents to Lessee
at the request of Lessee or any of the employees of Lessee, which charges shall
be payable by Lessee upon demand by Lessor.  Lessor may rely upon any
written or oral request by any employee of Lessee, unless Lessee shall notify
Lessor of, or Lessor shall request, the names of individuals authorized to make
such requests.  Such supplementary services shall include, without
limitation, maintenance, repair, janitorial, cleaning and other services
provided during hours other than Ordinary Business Hours and/or in amounts not
considered by Lessor as standard.

      

      Section 8.03.    Interruption of Access, Use or
Services.  Lessor shall not be liable for any failure to
provide access to the Premises, to assure the beneficial use of the Premises or
to furnish any services or utilities when such failure is caused by natural
occurrences; riots, civil disturbances, insurrection, war or public enemy;
accidents or breakage; strikes, lockouts or other labor disputes or
disturbances; the making of repairs, alterations or improvements to the
Premises, the Building or the Project; the inability to obtain an adequate and
uninterrupted supply of fuel, gas, steam, water, electricity, labor or other
supplies; Laws; utility supplier rules, regulations or controls, whether
voluntary or mandatory; limitation, curtailment, rationing or restriction on the
use of water, electricity, gas or any other form of energy or any other service
or utility; or any other event or condition beyond the reasonable control of
Lessor.  No such failure shall entitle Lessee to damages or other
compensation, relieve Lessee of any obligation under this Lease or constitute or
be construed as a constructive or other eviction of Lessee or a breach of
Lessor's covenant of quiet enjoyment.

      

      Section 8.04.    Compliance With Utility Controls or
Guidelines.  If any governmental entity promulgates or revises
any Laws, or if any governmental entity or utility supplier imposes mandatory or
voluntary controls or guidelines on Lessor, the Building or the Project relating
to the use, consumption or conservation of electricity, water, gas, steam,
light, or energy, or the provision of any utility or service provided to the
Building or the Project, Lessor may, in its sole discretion, comply with such
mandatory or voluntary controls or guidelines and/or make changes, alterations,
additions or improvements to the Premises, the Building or the Project in order
to comply with the same. Neither such compliance nor the making of such changes,
alterations, additions or improvements shall entitle Lessee to damages or other
compensation, relieve Lessee of any obligation under this Lease or constitute or
be construed as a constructive or other eviction of Lessee or a breach of
Lessor's covenant of quiet enjoyment.

      

      Section 8.05.    No Obligation to Provide Security
Services.  Lessee acknowledges and agrees that, while Lessor,
in its sole and absolute discretion, may engage security personnel or a security
service to patrol the Building or the Project, Lessor is not providing any
security services for the benefit of Lessee or Lessee's employees, agents,
contractors or invitees.  Lessor shall not be liable to Lessee or to
any of Lessee's employees, agents, contractors or invitees for, and Lessee
waives any claim against Lessor with respect to, any loss by theft or any other
personal or property damage or loss suffered or incurred by Lessee or any of
Lessee's employees, agents, contractors or invitees in connection with any
unauthorized entry into the Premises or any criminal activity occurring in, on
or about the Premises, the Building or the Project.

      

      Section 8.06.    Force
Majeure.  Notwithstanding any provision of this Lease to the
contrary, any prevention, delay or stoppage due to strikes, lockouts, labor
disputes, acts of God, inability to obtain services, labor, or materials or
reasonable substitutes, governmental actions, civil commotions, fire or other
casualty, and other causes beyond the reasonable control of the Lessor (each a
“Force Majeure Delay”),
shall excuse the performance by Lessor of the obligations of Lessor under this
Article 8 for a period equal to any such Force Majeure Delay.

       

      ARTICLE
9 - ALTERATIONS

      

      Section 9.01.    General.  Lessee
shall neither make nor cause to be made any alterations, additions or
improvements (each an "Alteration") in, on or to any
portion of the Building or the Common Areas outside of the interior of the
Premises.  Lessee shall neither make nor cause to be made any
Alteration in, on or to the Premises or any part of the Premises without the
prior written consent of Lessor, which consent will not be unreasonably withheld
with respect to any proposed Alteration that: (a) complies with all Laws;
(b) is in the opinion of Lessor compatible with the Building and its
structural, roofing, mechanical, plumbing, electrical, HVAC systems; and
(c) will not interfere with the use and occupancy of any other portion of
the Building by any other lessee or its invitees.  When applying for
any such consent, Lessee shall furnish complete plans and specifications for the
desired Alteration, unless such requirement is waived by
Lessor.  Lessee shall, concurrently with the submittal of its request
for consent, pay to Lessor a review fee in an amount equal to the greater of ten
percent (10%) of the cost of the Alteration or $500 in order to compensate
Lessor for the cost of review of Lessee's request and the plans and
specifications and for additional administrative costs for monitoring the
construction of the Alteration; provided, however, no review fee shall be
payable by Lessee with respect to the Lessee Improvements described in Exhibit
 C.  All Alterations shall, at Lessor's election, be
constructed by Lessor's contractor or by a licensed and bondable contractor
selected by Lessee and approved by Lessor.  Subsequent to obtaining
Lessor's consent and prior to commencement of construction of any Alteration,
Lessee shall, at Lessee's expense, obtain and deliver to Lessor a copy of the
building permit, a copy of the executed construction contract (if applicable),
any completion, performance and/or payment bonds required by Lessor and
certificates of insurance for Lessee's contractor evidencing the insurance
coverages required by Lessor.  Any Alteration undertaken by Lessee
shall be completed in accordance with the plans and specifications approved by
Lessor, shall be carried out in a good, workmanlike and prompt manner, shall
comply with all Laws and shall be subject to monitoring by Lessor or its
employees, agents or contractors.  Lessee shall not use any portion of
the Common Areas in connection with the making of any Alteration without
Lessor's prior written consent.  If Lessor elects to have any
Alteration constructed by Lessor's contractor, then in addition to the review
fee, Lessee shall pay to Lessor in advance any and all costs for such
construction (including, without limitation, the costs of design, labor,
materials, equipment, insurance, bonds, permits, inspections and governmental
fees) within ten (10) days after demand.  If Lessor determines,
in the exercise of Lessor's reasonable discretion, that any changes, additions
and/or improvements to other portions of the Building should be made as the
result of any Alteration in order to comply with any Laws, then Lessee shall
reimburse Lessor upon demand for all costs and expenses incurred by Lessor in
making such changes, additions and/or improvements.  Any Alteration
made by Lessee shall remain on and be surrendered with the Premises upon the
expiration or sooner termination of this Lease, except Lessee shall, upon demand
by Lessor and at Lessee's sole cost and expense, remove prior to the expiration
or termination of this Lease all or any portion of any Alterations which are
designated by Lessor to be removed, and Lessee shall, at Lessee's sole cost and
expense, repair and restore the Premises to their original
condition.  Lessor's review and/or approval of any plans and
specifications and/or Lessor’s monitoring of the construction of any Alteration
shall be for Lessor's purposes only and shall not constitute any warranty or
covenant by Lessor of the adequacy of the plans and specifications or
construction of the Alteration.  Lessee shall be solely responsibility
to ensure that any plans and specifications and the construction of any
Alteration meet the requirements of this Section 9.01.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      

      Section 9.02.    Notice.  Lessee
shall give Lessor at least fifteen (15) days prior written notice of the
commencement of any work of construction, alteration, maintenance, repair or
replacement by or on behalf of Lessee.  Lessor shall have the right at
all times to post and keep posted on the Premises any notice permitted or
required by any Law, or which Lessor may deem proper, for the protection of
Lessor, the Building or the Project and any other persons from liability
resulting from such work.

      

      Section 9.03.    Labor Relations.  No
contractor, mechanic or laborer employed by Lessee (directly or indirectly)
shall materially interfere or cause any material conflict with other
contractors, mechanics, or laborers engaged in the construction, maintenance or
operation of the Project by Lessor or others or interfere with harmonious labor
relations in existence at the Project.  In the event of any such
interference or conflict, all work by Lessee shall be halted immediately upon
demand by Lessor until such time as such work can proceed without any such
interference or conflict.

      

      Section 9.04.    Liens.  Lessee shall
keep the Premises, the Building and the Project free from any liens arising out
of any work performed, materials or services furnished or obligations incurred
by Lessee.  In the event any such lien is imposed or recorded, Lessee
shall cause the same to be released of record by payment or recording of a lien
release bond as provided by Law within ten (10) days after such imposition
or recording.  If Lessee shall fail to cause any such lien to be
released within such ten (10) day period, then Lessor shall have, in
addition to all other rights and remedies provided in this Lease and at law, the
right, but not the obligation, to cause any such lien to be released by such
means as Lessor shall deem proper, including payment of the claim giving rise to
such lien.  All sums paid by Lessor pursuant to this
Section 9.04, and all expenses incurred by Lessor in connection therewith,
shall be payable to Lessor by Lessee as Additional Rent on demand with interest
at the Applicable Interest Rate.

      

      Section 9.05.    Indemnity.  Lessee
shall indemnify, protect, defend and hold Lessor and the Project harmless from
and against any and all claims, damages, losses, actions, causes of action,
judgments, settlements, costs and expenses (including, but not limited to,
attorneys' fees, costs and disbursements and court costs) arising out of,
connected with or in any way related to claims for work or labor performed, or
materials or supplies furnished, to or at the request of Lessee (or alleged to
have been performed or furnished to or at the request of Lessee) or in
connection with performance of any work done for the account of Lessee (or
alleged to have been done for the account of Lessee), whether or not Lessee
obtained Lessor's consent to have such work done, labor performed, or materials
or supplies furnished.  The indemnity set forth in this
Section 9.05 shall not apply to the Lessor Improvements to be performed by
Lessor pursuant to Exhibit C.

      

      ARTICLE
10 - REPAIRS

      

      Section 10.01.    Repairs by
Lessee.  Lessee shall keep the Premises and every part of the
Premises in good, safe and secure condition and shall make promptly all repairs
and replacements as and when Lessor deems necessary in order to preserve the
Premises in good working order and condition, including but not limited to,
repairs and replacements of windows, glass, doors, walls and wall finishes and
floor coverings, excepting ordinary and reasonable wear and tear and damage by
casualty or condemnation that results in a termination of this
Lease.  Lessee shall reimburse Lessor, upon demand, for the cost of
any and all damage, repairs and replacements necessitated or occasioned by the
acts, omissions, negligence or willful misconduct of Lessee, or any of Lessee's
employees, agents, contractors or invitees, or necessitated or occasioned by the
use or occupancy or manner of use or occupancy of the Premises by Lessee or any
person claiming through or under Lessee.   Lessor shall not be
liable for any injury to or interference with Lessee's business arising from any
repairs, maintenance, alteration or improvement in or to any portion of the
Premises, the Building or the Project or to any of the fixtures, appurtenances
or equipment serving the Premises, the Building or the Project.

      

      Section 10.02.    Lessor Not
Liable.  In no event shall Lessor be liable to Lessee for any
damage to the Premises or for any loss, damage or injury to any property in, on
or about the Premises occasioned by bursting, rupture, leakage or overflow of
any plumbing or other pipes or lines (including, without limitation, water,
steam, sewer and/or refrigerant lines), sprinklers, tanks, drains, drinking
fountains or washstands, the penetration of rain or storm water, or other
similar cause in, above, upon or about the Premises, the Building or the
Project.

      

      Section 10.03.    Repairs by
Lessor.  Subject to Lessee’s obligation under Section 4.01
to pay Lessee’s Percentage Share of Increased Operating Expenses and subject to
any Force Majeure Delay, Lessor agrees to maintain the Building and the Common
Areas in good condition and repair.  Lessor’s obligation under this
Section 10.03 is subject to the condition precedent that Lessor shall have
received written notice of the need for such repairs and maintenance and has
been afforded a reasonable time after receipt of such notice to perform such
repairs and maintenance.  Notwithstanding anything in this
Section 10.03 to the contrary, in the event of any damage to the Building
and/or Common Areas necessitated or occasioned by the acts, omissions,
negligence or willful misconduct of Lessee, or any of Lessee's employees,
agents, contractors or invitees, or any person claiming through or under Lessee,
Lessor shall have the right, at Lessor’s option, to either repair the same, or
to require Lessee to repair the same, to the condition existing prior to the
occurrence of such damage; provided, however, that in the event Lessor elects to
perform such repair work, Lessee shall, upon demand, pay Lessor in advance for
the cost of such repairs plus with an administrative fee of fifteen
percent (15%) of the cost of such repairs.  Lessee shall promptly
report in writing to Lessor any condition known to Lessee that Lessor is
required to repair, and failure to so report such condition shall make Lessee
responsible to Lessor for any liability incurred by Lessor by reason of such
condition.

      

      Section 10.04.    Waiver.  To the
fullest extent permitted by Law, Lessee hereby waives all rights to make any
repair at Lessor's expense under any present or future Laws, including, but not
limited to, the provisions of Sections 1932(1), 1941 and 1942 of the
California Civil Code.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      ARTICLE
11 - ASSIGNMENT AND SUBLETTING

      

      Section 11.01.    General.  Lessee
shall not, without the prior written consent of
Lessor:  (a) assign, or otherwise transfer this Lease, the term
or estate granted under this Lease, or any interest under this Lease;
(b) permit the Premises or any part of the Premises to be used or occupied
by anyone other than Lessee and the employees of Lessee (whether as
concessionaire, franchisee, licensee, permittee or otherwise); or
(c) sublet or offer for subletting the Premises or any part of the
Premises.  Lessor shall not withhold its consent to a proposed
assignment or sublease so long as (i) the proposed assignee or sublessee
will use the Premises for the Permitted Use; (ii) the proposed assignee or
sublessee is of sound financial condition, as reasonably determined by Lessor;
(iii) the use of the Premises by the proposed assignee or sublessee does
not involve the storage, use, treatment or disposal of any Hazardous Materials
(as defined in Section 21.01(a)); (iv) the use of the Premises by the
proposed assignee or sublessee will not create a violation of any covenant or
agreement binding upon Lessor; (v) the use of the Premises by the proposed
assignee or sublessee will not permit any other lessee of the Project to
terminate its lease; (vi) the proposed assignee or sublessee does not then
lease or occupy any other space in the Project; (vii) the use of the
Premises by the proposed assignee or sublessee will not, in the reasonable
opinion of Lessor, overburden the Premises, the Building or the Common Areas or
increase the on-site parking, service or maintenance requirements of the
Project; (viii) the proposed assignee or sublessee is not a foreign
government, or an instrumentality, agency or division of a foreign government or
of the government of the United States of America; (ix) the proposed
assignee or sublessee has a good business reputation or a good reputation as a
lessee, as determined in Lessor’s reasonable discretion; (x) the proposed
assignee or sublessee is not a person or entity with whom Lessor is negotiating
to lease space in the Building; (xi) the assignment or subletting would not
entail alterations to the Premises which would lessen the value of the Premises;
(xii) no Event of Default exists at the time of such Transfer Notice, and
Lessor has not given Lessee three (3) or more notices of events or
conditions that would constitute an Event of Default preceding the date of the
Transfer Notice even if no Event of Default were noticed and declared by Lessor;
and (xiii) the proposed subletting would not result in more than
one (1) sublease of any portion of the Premises being in effect at any one
time during the Term.  Any assignment, transfer or sublease without
Lessor's consent shall be voidable and, at Lessor's election, shall constitute
an Event of Default by Lessee under this Lease.  Any dissolution,
merger, consolidation or other reorganization of Lessee, or the sale or other
transfer of a controlling percentage of the capital stock or ownership interests
of Lessee, or the sale of fifty percent (50%) or more of the value of the
assets of Lessee, shall be deemed an assignment of this Lease by
Lessee.  The phrase "controlling percentage" shall
mean the ownership of, and the right to vote, stock or ownership interests
possessing fifty percent (50%) or more of the total combined voting power
of all classes of Lessee's issued capital stock or ownership
interests.  The preceding two sentences shall not apply to
corporations, the stock of which is traded through a nationally recognized
securities exchange or through the over the counter market.  No
assignee or sublessee shall have a right further to assign or sublet, except
with the consent of Lessor as required in this Article 11.

      

      Failure
by Lessor to approve a proposed assignee or sublessee shall not be grounds for
any claim by Lessee against Lessor.  The consent of Lessor to any
assignment or subletting shall be in the form and substance required by Lessor
and may require execution by Lessee and the assignee or sublessee.

      

      Section 11.02.    Notice and
Procedure.  If at any time or from time to time during the
Term, Lessee desires to assign or sublet all or any part of the Premises, then
at least thirty (30) days, but not more than one hundred twenty (120)
days, prior to the date when Lessee desires the assignment or subletting to be
effective (the "Transfer
Date"), Lessee shall give Lessor a written notice (the "Transfer Notice") which shall
contain: (a) the name, address and business of the proposed assignee or
sublessee; (b) information (including financial statements, references and
business plan) concerning the business and character of the proposed assignee or
sublessee; (c) a detailed description of the space proposed to be assigned
or sublet (the "Transfer
Space"); (d) any rights of the proposed assignee or sublessee to use
Lessee's furniture, fixtures, equipment or other personal property; (e) the
Transfer Date; (f) the rent and/or other consideration for, and all other
material terms and conditions of, the proposed assignment or subletting;
(g) a true and complete copy of all documents and agreements relating to
the proposed assignment or subletting; and (h) such other information as
Lessor may reasonably request in order for Lessor to evaluate the assignment or
subletting and the assignee or sublessee, all in such detail as Lessor may
reasonably require.  If Lessor requests additional detail or
additional information, the Transfer Notice shall not be deemed to have been
received until Lessor receives such additional detail and
information.  Lessor shall have the option, exercisable by giving
notice to Lessee at any time within thirty (30) days after Lessor's receipt
of the Transfer Notice and supporting information:  (A) to
terminate this Lease as to the Transfer Space as of the Transfer Date, in which
event Lessee shall be relieved for all further obligations as to the Transfer
Space following such termination; or (B) to disapprove the assignment or
subletting, or the proposed assignee or sublessee, on any reasonable grounds; or
(C) to approve the proposed assignment or subletting, and the proposed
assignee or sublessee.  If Lessor exercises its option to terminate
this Lease as to the Transfer Space, Lessor shall have the right to lease the
Transfer Space to any person or entity including, but not limited to the
proposed assignee or sublessee.  No failure of Lessor to exercise any
option with respect to the Transfer Space shall be deemed to be Lessor's consent
to the assignment or subletting of all or any portion of the Transfer
Space.  If Lessor consents to such proposed assignment or subletting,
Lessee shall be free to assign or sublet the space to the assignee or sublessee
identified in the Transfer Notice subject to the following
conditions:  (a) the assignment or sublease shall be on the same
terms contained in the Transfer Notice given to Lessor; (b) no assignment
or sublease shall be valid and no assignee or sublessee shall take possession of
the Transfer Space until an executed original of the assignment or sublease has
been delivered to Lessor; (c) the Lessee, assignee or sublessee and Lessor
have entered into a consent to assignment or sublease in a form and substance
prepared by and acceptable to Lessor; (d) the assignee or sublessee shall
not have the right to further assign or sublet without obtaining the prior
written consent of Lessor and complying with the provisions of this
Article 11; and (e) the Lessee, assignee or sublessee shall not amend,
alter, surrender or terminate the assignment or sublease without the prior
written consent of Lessor.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      
If Lessee
assigns this Lease, or sublets all or a portion of the Premises, or requests the
consent of Lessor to any assignment or subletting, or if Lessee takes any action
that is subject to the provisions of this Article 11, then Lessee shall
pay, as Additional Rent under this Lease, Lessor's reasonable attorney's fees
and costs incurred in connection with such assignment, sublease or action,
whether or not Lessor consents to the assignment, subletting or
action.

      

      Section 11.03.    Bonus Rent.  All
rent, payments and other consideration received by Lessee (or benefiting Lessee)
as a result of such assignment or subletting (less the amortized amount of any
reasonable leasing commissions and legal fees and costs paid by Lessee with
respect to the assignment or subletting, which commissions, fees and costs shall
be amortized on a monthly basis without interest over the term of such
assignment or sublease), whether denominated rent or otherwise, which exceed, in
the aggregate, the total of the Base Rent and Lessee’s Percentage Share of
Increased Operating Expenses which Lessee is obligated to pay Lessor under this
Lease (prorated as to any sublease to reflect obligations allocable to that
portion of the Premises that is subject to such sublease) shall be payable to
Lessor as Additional Rent under this Lease as and when received by Lessee (or
received by others for the benefit of Lessee), without affecting or reducing any
other obligation of Lessee under this Lease.  Any non-monetary
consideration received by or benefiting Lessee shall be converted to its
monetary equivalent.  During the term of each assignment or
subletting, Lessee shall deliver to Lessor within fifteen (15) days after
the end of each calendar month a statement specifying with respect to the
preceding calendar month (i) each assignment or sublease in effect during
the preceding calendar month, identifying the assignee or sublessee, the date of
the assignment or sublease document, the number of square feet of the rentable
area demised and the term; (ii) the amount of commissions, fees and costs
paid by Lessee with respect to the assignment or subletting; (iii) the
amount of all rent, payments and other consideration received or benefiting
Lessee during the preceding calendar month; and (iv) a computation in
reasonable detail showing the amount (if any) paid or to be paid to Lessor
pursuant to this Section 11.03 with respect to such assignment or
subletting for the preceding calendar month.

      

      Section 11.04.    Continuing Liability of
Lessee.  Regardless of Lessor's consent, no assignment or
subletting shall release Lessee's obligation or alter the primary liability of
Lessee to pay the Rent and to perform all other obligations to be performed by
Lessee under this Lease.  The acceptance of rent by Lessor from any
person other than Lessee shall not be deemed to be a waiver by Lessor of any
provision of this Article 11.  Consent to one assignment or
subletting shall not be deemed consent to any further assignment or
subletting.  If any assignee of Lessee or any successor of Lessee
commits any Event of Default, Lessor may proceed directly against Lessee without
the necessity of proceeding against such assignee or
successor.  Lessor may consent to subsequent assignments of this
Lease, sublettings of the Premises or amendments or modifications to this Lease
with the current assignee of Lessee, without notifying or obtaining the consent
of Lessee, any successor to Lessee, and such action shall not relieve Lessee or
any successor to Lessee of its or their liability under this Lease.

      

      Section 11.05.    Bankruptcy.   If
a petition is filed by or against Lessee for relief under Title 11 of the
United States Code, as the same may be amended (the "Bankruptcy Code"), and Lessee
(including Lessee's successor in bankruptcy, whether a trustee or Lessee as
debtor in possession) assumes and proposes pursuant to the provisions of the
Bankruptcy Code to assign, or proposes to assume and assign, this Lease to any
person or entity who has made or accepted a bona fide offer of assignment of
this Lease on terms acceptable to Lessee, then notice of the proposed assignment
setting forth (a) the name and address of the proposed assignee;
(b) all of the terms and conditions of the offer and proposed assignment;
and (c) the adequate assurance to be furnished by the proposed assignee of
its future performance under this Lease, shall be given to Lessor by Lessee no
later than thirty (30) days after Lessee has made or received such offer,
but in no event later than ten (10) days prior to the date on which Lessee
applies to a court of competent jurisdiction for authority and approval to enter
into the proposed assignment.  Lessor shall have the prior right and
option, to be exercised by notice to Lessee given at any time prior to the date
on which the court order authorizing such assignment becomes final and
non-appealable, to receive an assignment of this Lease upon the same terms and
conditions, and for the same consideration, if any, as the proposed assignee,
less any brokerage commissions which may otherwise be payable out of the
consideration to be paid by the proposed assignee for the assignment of this
Lease.  If this Lease is assigned pursuant to the provisions of the
Bankruptcy Code, Lessor:  (i) may require from the assignee a
deposit cash or other security for the performance of its obligations under the
Lease in an amount substantially the same as would have been required by Lessor
upon the initial leasing to a lessee similar to the assignee; and
(ii) shall receive, as Additional Rent, the sums and economic consideration
payable to Lessor pursuant to Section 11.03.  Any person or
entity to which this Lease is assigned pursuant to the provisions of the
Bankruptcy Code shall be deemed, without further act or documentation, to have
assumed all of the obligations of Lessee arising under this Lease on and after
the date of such assignment.  Any such assignee shall, upon demand,
execute and deliver to Lessor an instrument confirming such
assumption.  No provision of this Lease shall be deemed a waiver of
the rights or remedies of Lessor under the Bankruptcy Code to (A) oppose
any assignment and/or assumption of this Lease; (B) require the timely
performance of the obligations of Lessee under this Lease; or (C) regain
possession of the Premises if this Lease has been neither assumed nor rejected
within sixty (60) days after the date of the order for relief or within
such additional time as a court of competent jurisdiction may have
fixed.  Notwithstanding anything in this Lease to the contrary, all
amounts payable by Lessee to or on behalf of Lessor under this Lease, whether or
not expressly denominated as Rent, shall constitute rent for the purposes of
Section 502(b)(6) of the Bankruptcy Code.

      

      Section 11.06.    No Mortgage, Pledge or
Encumbrance.  Lessee shall not mortgage, pledge, encumber or
otherwise create any lien upon the leasehold estate created by this Lease, any
of the interest of Lessee under this Lease, or any interest in or right
appurtenant to the Premises.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      

      ARTICLE
12 - INSURANCE AND WAIVER OF RIGHT OF SUBROGATION

      

      Section 12.01.    Lessee's
Insurance.  Lessee shall, at the cost and expense of Lessee,
maintain the following insurance coverages throughout the Term:

      

      (a)    Commercial
general liability insurance, including contractual liability coverage, with a
minimum combined single limit of coverage of not less than Two Million
Dollars ($2,000,000.00) per occurrence for bodily injury and property
damage, insuring against all liability of Lessee and its employees, agents,
contractors and invitees arising out of or in connection with the use or
occupancy of the Premises by Lessee or this Lease.  Such insurance
shall name Lessor and Lessor’s management agent for the Project (“Lessor’s Manager”), as
additional insureds, shall specifically include contractual liability coverage
for the liability assumed by Lessee under this Lease (including the indemnity
obligations of Lessee contained in Section 13.02), and shall provide that
such insurance is primary insurance and not excess over or contributory with any
other insurance in force for or on behalf of Lessor.  The insurance
policy shall not eliminate cross-liability and shall contain a severability of
interests clause.  Not more frequently than once each year, if, in the
opinion of any Mortgagee (as defined in Section 19.02) or of any insurance
consultant of Lessor, the amount of general liability insurance coverage at that
time is not adequate, Lessee shall increase the insurance coverage as required
by any Mortgagee or Lessor's insurance consultant.

      

      (b)    Standard fire
and extended coverage insurance (in so-called “all-risk” or “special” form),
with theft, vandalism, sprinkler leakage and malicious mischief endorsements, on
all personal property, Lessee improvements (whether constructed by Lessor or
Lessee), and Alterations, in, on, or about the Premises, covering the full
replacement cost of such items without any deduction for
depreciation.  The "full replacement cost" of the items to be insured
under this Section 12.01(b) shall be determined by the company issuing the
insurance policy at the time the policy is initially obtained and upon each
renewal of such policy.  No such insurance policy shall contain a
deductible greater than Two Thousand Five Hundred Dollars ($2,500.00)
without the prior written approval of Lessor.  During the Term, the
proceeds from any such insurance policy shall be used solely for the repair or
replacement of the items so insured.  Lessor shall have no interest in
the insurance upon Lessee’s personal property and will sign any documents
reasonably necessary in connection with the settlement of any claim or loss by
Lessee.

      

      (c)    Workers'
compensation insurance in an amount, and with a scope of coverage, as required
by Law.

      

      (d)    Employer's
liability insurance with a minimum combined single limit of coverage of not less
than One Million Dollars ($1,000,000.00) per occurrence.

      

      (e)    Such
additional forms of insurance or increased levels of coverage as Lessor may
reasonably require, or as any Mortgagee may require, from time to
time.

      

      Section 12.02.    Insurance
Criteria.  All the insurance required to be maintained by
Lessee under this Lease shall: (a) be issued by insurance companies
authorized to do business and issue insurance in California holding a rating of
at least an A/X in the most recent edition of Best's Insurance
Reports; (b) be issued as primary policies; and (c) contain an
endorsement requiring not less than thirty (30) days’ written notice from
the insurance company to both parties and to any Mortgagee before cancellation
or change in the coverage, scope, or amount of the policy.

      

      Section 12.03.    Evidence of
Coverage.  Prior to the Term Commencement Date, and thereafter
not less than thirty (30) days prior to expiration of each insurance
policy, Lessee shall deliver to Lessor certificates of insurance (or if
requested by Lessor or any Mortgagee, a copy of each insurance policy), together
with evidence of the payment of premiums for a period of not less than
one (1) year, for each of the insurance coverages to be maintained by
Lessee under this Lease.

      

      Section 12.04.    Waiver of the Right of
Subrogation.  Lessor and Lessee hereby each waives any and all
claims against the other and the agents of the other for any loss or damage
to any of their respective property located on or about the Premises or the
Project that is caused by or results from perils covered by the property
insurance carried by the respective parties or required to be carried under the
provisions 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 to an insurance company or any other person of any claim by way of
subrogation, Lessor and Lessee each shall give its insurance companies written
notice of the terms of these waivers and shall have its insurance policies
endorsed to waive the insurance company's right of subrogation and to prevent
the invalidation of any insurance policy or coverage because of these
waivers.  Nothing in this Paragraph 12.04 shall relieve a party
of liability to the other for failure to carry insurance required by this
Lease.

      

      Section 12.05.    No Limit on
Liability.  The requirements for Lessee's insurance contained
in this Article 12 are minimum requirements and Lessee shall be solely
responsible for determining the scope and amount of insurance coverage to be
maintained by Lessee.  The scope and amount of insurance coverage
required in this Article 12 shall not limit the liability of Lessee under
this Lease.

      

      Section 12.06.    Lessor May Obtain
Insurance.  If Lessee shall fail to deliver to Lessor evidence
of coverage at the time and in the manner required in Section 12.03, Lessor
may, but shall not be obligated to, obtain such insurance in the name of Lessee
and at the cost of Lessee, and Lessee shall pay to Lessor upon demand as
Additional Rent all costs, expenses, disbursements and premiums incurred by
Lessor in obtaining such insurance, together with interest at the Applicable
Interest Rate.  The rights of Lessor under this Section 12.06
shall be in addition to any other rights or remedies available to Lessor by
reason of the failure of Lessee to deliver evidence of the insurance coverages
as required in Section 12.03.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      

      Section 12.07.    Lessor’s
Insurance.  Lessor shall maintain the following insurance
coverages throughout the Term:

      

      (a)    Commercial
general liability insurance, including contractual liability coverage, insuring
Lessor (and such persons and entities as are designated by Lessor from time to
time) against liability for personal injury, bodily injury, death and damage to
property occurring or resulting from an occurrence in, on or about the Project,
with combined single limit coverage in an amount Lessor from time to time
determines is reasonably necessary for its protection or as required by any
Mortgagee.

      

      (b)    Standard fire
and extended coverage insurance (in so-called “all-risk” or “special” form),
with theft, vandalism, sprinkler leakage and malicious mischief endorsements, on
the Building, but excluding personal property, Lessee improvements (whether
constructed by Lessor or Lessee), and Alterations, in, on, or about the
Premises, in an amount Lessor from time to time determines is reasonably
necessary for its protection or as required by any Mortgagee.

      

      (c)    Such other
forms of insurance including, but not limited to, rent loss insurance and
earthquake insurance, as Lessor from time to time determines are reasonably
necessary for its protection or which are required by any
Mortgagee.

      

      All
insurance proceeds payable under the insurance maintained by Lessor under this
Section 12.07 shall be payable solely to Lessor, and Lessee shall have no
interest in such proceeds and will sign any documents reasonably necessary in
connection with the settlement of any claim or loss by Lessor.  All
premiums and costs for the insurance maintained by Lessor under this
Section 12.07 shall be included as an Operating Expense pursuant to
Section 4.02.

      

      ARTICLE
13 - WAIVER OF LIABILITY AND INDEMNITY

      

      Section 13.01.    Waiver of
Liability.  Lessor shall not be liable or responsible in any
way for, and Lessee hereby waives all claims against Lessor with respect to,
connected with or arising out of, (a) the injury or death of any person in,
on or about the Project from any cause whatsoever; (b) the loss, damage or
injury to any property belonging to Lessee or to any of Lessee's employees,
agents, contractors or invitees in, on or about the Project; and (c) any
damage to, loss of or interference with the business or activities of Lessee in,
on or about the Premises, unless such injury or damage is caused by the sole
active negligence or willful misconduct of Lessor, or Lessor's employees, agents
or contractors.  Without limiting the generality of the foregoing,
Lessor shall not be liable for any damage or loss of any nature whatsoever to
persons or property caused by (i) explosion, fire, theft or breakage;
(ii) the operation or failure of any sprinkler, drainage or plumbing
system; (iii) interruption or curtailment of any utility or service;
(iv) steam, gas, water, rain or other substances leaking, issuing or
flowing into any part of the Premises, the Building or the Project;
(v) natural occurrence; (vi) acts of any public enemy, terrorist or
criminal; (vii) riot, strike, lockout or labor dispute;
(viii) insurrection or war; (ix) court order or order of any
government body or authority; (x) repair, maintenance or alteration of any
part of the Premises, the Building or the Project; or (xi) anything done or
omitted to be done by any lessee, occupant or person in, on or about the
Building or the Project.  In addition, Lessor shall not be liable for
any loss or damage for which Lessee is required to insure under
Section 12.01, or for any loss or damage resulting from any construction,
Alterations or repair by Lessee.

      

      Section 13.02.    Indemnity.  Lessee
shall hold Lessor and Lessor’s property manager harmless, and shall defend,
protect and indemnify Lessor and Lessor’s management agent for the Project, from
and against any and all losses, damages, claims, demands, liabilities, actions,
causes of action, judgments, settlements, costs and expenses (including, but not
limited to, reasonable attorneys' fees, costs and disbursements and court costs)
arising from, related to or connected with:  (a) the use of the
Premises, the Building or the Project by Lessee or Lessee’s employees, agents,
contractors or invitees; (b) from any activity done, permitted or suffered
by Lessee or Lessee’s employees, agents, contractors or invitees in, on or about
the Premises, the Building or the Project; (c) any act, omission, neglect,
fault or willful misconduct of Lessee or of any of Lessee’s employees, agents,
contractors or invitees; (d) any Event of Default; and (e) any suit,
action or proceeding brought on account of any matter described in
items (a), (b), (c) or (d) of this Section 13.02 ("Claim").  If any
action or proceeding is brought against Lessor and/or Lessor’s Manager by reason
of any Claim, then upon notice from Lessor and/or Lessor’s Manager, Lessee shall
defend the same at Lessee’s expense by counsel reasonably satisfactory to Lessor
and/or Lessor’s Manager.  The provisions of this Section 13.02
shall survive the expiration of the Term or sooner termination of this Lease
with respect to any event, condition or Claim occurring prior to, or the onset
of which occurred prior to, such expiration or termination.

      

      ARTICLE
14 - DAMAGE OR DESTRUCTION

      

      Section 14.01.    Termination of
Lease.  In the event of a fire or other casualty to the
Premises or the Building occurring during the Term, the following provisions
shall apply:

      

      (a)    If (i) the
damage or destruction is limited solely to the Premises; (ii) the Premises
can be made tenantable with all damage repaired within six (6) months from
the date of the occurrence of the damage or destruction; and (iii) Lessor
receives insurance proceeds from the hazard insurance maintained by Lessor with
respect to the Building in the full amount of the cost of the required repairs
and restoration, then Lessor shall repair and restore the Premises as provided
in Section 14.02.

      

      (b)    If
(i) portions of the Building outside the boundaries of the Premises are
damaged or destroyed whether or not the Premises are also damaged or destroyed;
(ii) the Building can be made tenantable with all damage repaired within
six (6) months from the date of occurrence of the damage or destruction;
(iii) Lessor receives insurance proceeds from the hazard insurance
maintained by Lessor with respect to the Building in the full amount of the cost
of the required repairs and restoration; and (iv) Lessor determines, in the
sole discretion of Lessor, that it is economically prudent to repair and restore
the Building, then Lessor shall repair and restore the Building as provided in
Section 14.02.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      
(c)    If the damage
or destruction is not covered by the provisions of Section 14.01(a) or
Section 14.01(b), Lessor shall notify Lessee within ninety (90) days
after the date of the occurrence of the damage or destruction that Lessor elects
either to (i) rebuild and restore the Premises and/or Building or
(ii) to terminate this Lease.

      

      (d)    Notwithstanding any
of the provisions of this Section 14.01 to the contrary, Lessor shall have
no obligation to rebuild the Premises or the Building in the event of damage or
destruction to the Premises or the Building occurring during the last
twelve (12) months of the Term (disregarding any unexercised options to
extend the Term).

      

      (e)    Lessee shall
give Lessor prompt written notice of the occurrence of any damage or destruction
of the Premises.

      

      Section 14.02.    Repair and
Restoration.  If this Lease is not terminated as provided in
Section 14.01, then Lessor shall repair or restore the Premises and/or
Building to substantially their condition existing prior to the occurrence of
the damage or destruction, except for Alterations, additions or improvements
made to the Premises by Lessee.  Lessee shall promptly repair and
restore, at Lessee’s expense, all Alterations, additions or improvements made to
the Premises by Lessee and repair, restore or replace the furniture, fixtures,
equipment and personal property of Lessee.  The proceeds from any
insurance paid by reason of damage to or destruction of the Premises or Building
or any part thereof, insured by Lessor, shall, subject to the rights of any
Mortgagee (as defined in Section 19.02) belong to and be paid to Lessor and
Lessee shall have not interest in such insurance or insurance
proceeds.  If this Lease is terminated pursuant to the provisions of
Section 14.01, Lessee shall pay to Lessor that portion of the proceeds of
the insurance to be maintained by Lessee pursuant to Section 12.01(b) which
is allocable to Lessee improvements (whether constructed by Lessor or Lessee)
and Alterations, in, on, or about the Premises.

      

      Section 14.03.    Abatement of Base
Rent.  During any period when Lessee's use of the Premises is
materially impaired by any damage or destruction of the Premises or the
Building, Base Rent shall abate to the extent that Lessee's use of the Premises
is prevented by such damage or destruction, as reasonably determined by Lessor,
until such time as the Premises are made tenantable, but only to the extent of
any rent loss insurance proceeds (if any) received by Lessor with respect to the
loss of use of the Premises.

      

      Section 14.04.    Waiver.  Lessee
waives all of the rights Lessee may now or hereafter hold under any existing or
future law, statute, or ordinance which would permit Lessee to terminate this
Lease in the event of the damage or destruction of the Premises or the Building,
including, but not limited to, the provisions of California Civil Code
Sections 1932(2) and 1933(4).

      

      ARTICLE
15 - EMINENT DOMAIN

      

      Section 15.01.    Termination of
Lease.  In the event all or any part of the Premises, the
Building or the Project shall be taken by any public or quasi-public authority
for a period in excess of twelve (12) months as a result of the exercise of
the power of eminent domain, or is sold under the threat of such taking (a
"taking"), then the
following provisions shall apply:

      

      (a)    If all of the
Premises are subject to a taking, then this Lease shall automatically terminate
effective as the date possession is taken or granted to the condemning
authority.

      

      (b)    If
twenty-five percent (25%) or more of the Premises, the Building or the
Project is subject to a taking, Lessor may, at its option by written notice
given to Lessee within ninety (90) days after the nature and extent of the
taking has been finally determined, terminate this Lease as of the effective
date of the taking.

      

      (c)    If
(i) twenty-five percent (25%) or more of the Premises is subject to a
taking and (ii) the portion of the Premises remaining after such taking and
any repairs by Lessor would be untenantable for the conduct of Lessee’s business
operations as reasonably determined by Lessor, then Lessor may, at its option by
written notice given to Lessee within ninety (90) days after the nature and
extent of the taking has been finally determined, terminate this Lease as of the
effective date of the taking.

      

      (d)    If this Lease
is not terminated as provided in Section 15.01(a) through
Section 15.01(c), then this Lease shall automatically terminate as of the
date possession is taken or granted to the condemning authority only as to the
portions of the Premises, the Building or the Project that are the subject of
the taking, and this Lease shall continue as to the portions of the Premises,
the Building or the Project that are not the subject of the taking.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      
Section 15.02.    Repair and
Restoration.  If this Lease is not terminated as provided in
Section 15.01(a) through Section 15.01(c), then Lessor shall, to the
extent of any award received by Lessor as the result of the taking, repair and
restore the remaining portion of the Premises, the Building and the Project as a
complete architectural unit substantially the same as existed prior to such
taking, allowing for the effects of such taking, except for Alterations,
additions or improvements made to the Premises by Lessee.  Lessee
shall promptly repair and restore, at Lessee’s expense, all Alterations,
additions and improvements made to the Premises by Lessee and repair, restore or
replace the furniture, fixtures, equipment and personal property of
Lessee.

      

      Section 15.03.    Adjustment of Base
Rent.  If this Lease is not terminated as provided in
Section 15.01(a) through 15.01(c), then the Base Rent shall be adjusted to
based upon the proportion that the floor area of the Premises existing prior to
the taking bears to the floor area of the Premises following the taking
(adjusted for any increase thereto resulting from reconstruction), as reasonably
determined by Lessor, and Lessee's Percentage Share shall be recalculated by
Lessor.  Except as expressly provided in the immediately preceding
sentence, Lessee shall have no claim against Lessor for, and hereby releases
Lessor and Lessor’s employees, agents, contractors and invitees from,
responsibility for, and waives its entire claim of recovery for, any cost,
expense or loss suffered or incurred by Lessee as a result of any taking or the
repair or restoration of the Premises, the Building or the Project following any
taking, including, without limitation, any cost, expense or loss resulting from
any loss of use of the whole or any part of the Premises, the Building, the
Project and/or any inconvenience or annoyance occasioned by such taking, repair
or restoration.

      

      Section 15.04.    Condemnation
Award.  In the event of any taking, Lessor shall be entitled to
any and all compensation, damages, income, rent and awards which may be paid or
made by the condemning authority in connection such taking, and Lessee shall
have no claim against Lessor or the condemning authority for the value of any
unexpired term of this Lease, the leasehold estate of Lessee or any interest of
Lessee in or to the Premises.  Notwithstanding the foregoing, Lessee
may seek a separate award from the condemning authority for loss of business,
moving costs or loss of goodwill, provided that any such award shall not reduce
the amount to which Lessor is otherwise entitled.

      

      Section 15.05.    Temporary
Taking.  If all or any portion of the Premises shall be subject
to governmental occupancy or use for a period of twelve (12) months or
less, then this Lease shall continue in force and effect, and Lessee shall be
entitled to receive and retain any compensation, damages, income, rent and
awards made by the condemning authority in connection such occupancy or
use.  All of the obligations of Lessee under this Lease shall continue
during the period of such governmental occupancy and use.  If the
period of such governmental occupancy or use is extended for a period in excess
of twelve (12) months, then the provisions of Section 15.01 shall
apply to such occupancy or use.

      

      Section 15.06.    Waiver.  Lessor and
Lessee each waives all rights it may now or hereafter hold under any existing or
future law, statute, or ordinance which would permit Lessor or Lessee to
terminate this Lease in the event of a taking of all or any part of the
Premises, the Building or the Project, including, but not limited to, the
provisions of California Code of Civil Procedure
Section 1265.130.

      

      ARTICLE
16 - RULES AND REGULATIONS

      

      Section 16.01.    Rules and
Regulations.  Lessee shall faithfully observe and comply with
the rules and regulations for the Premises, the Building and the Project
promulgated by Lessor from time to time, and with all modifications and
additions to such rules and regulations made by Lessor (collectively, the "Rules and
Regulations").  The current Rules and Regulations are attached
to this Lease as Exhibit B.  Lessor
shall not be responsible to Lessee for the failure of any Lessee, occupant,
invitee or other person to comply with any of the Rules and
Regulations.  In the event of any inconsistencies between the
provisions of the Rules and Regulations and the provisions of this Lease, the
provisions of this Lease shall control.

      

      ARTICLE
17 - ENTRY BY LESSOR

      

      Section 17.01.    Entry by
Lessor.  Lessor may enter the Premises at all reasonable times
upon not less than twenty-four (24) hours’ prior telephone or written
notice (except to provide routine services and in the case of an emergency, in
which cases no prior notice will be required) to: (a) inspect the same;
(b) exhibit the Premises to prospective purchaser or lender or any
Mortgagee (as defined in Section 19.02); (c) determine whether Lessee
is complying with the obligations of Lessee under this Lease; (d) supply
janitorial service and any other service to be provided by Lessor to Lessee
under this Lease, or to any other lessee of the Building, or to any of the
Common Areas; (e) post notices of non-responsibility or other legal
notices; (f) make repairs required under the provisions of this Lease;
(g) make any alteration, addition or repair to the Building or the Project
or to any utility systems or facilities serving the Building or the Project;
(h) during the last six (6) months of the Term, to exhibit the
Premises to prospective tenants; and (i) for any other reasonable business
purpose.  Lessor shall at all times have and retain a key with which
to unlock all of the doors in, on, or about the Premises (excluding Lessee's
vaults, safes and similar areas agreed upon in writing by Lessee and
Lessor).  In the event of an emergency, Lessor shall have the right to
enter the Premises at any time and to use any and all means that Lessor may deem
proper to obtain entry to the Premises.  Lessee hereby waives any
claim for damages for any injury or inconvenience to or interference with
Lessee's business, any loss of occupancy or quiet enjoyment of the Premises, and
any other loss occasioned by such entry, except for actual physical damage to
the property of Lessee resulting from the sole active negligence or willful
misconduct of Lessor or Lessor's employees, agents or contractors.  No
entry onto the Premises by Lessor pursuant to this Section 17.01 shall
under any circumstances constitute or be deemed to constitute a forcible or
unlawful entry into, or a detainer of, the Premises or an eviction, actual or
constructive, of Lessee from the Premises, or any portion of the
Premises.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      
ARTICLE
18 - ESTOPPEL CERTIFICATE

      

      Section 18.01.    Estoppel
Certificate.  At any time and from time to time, upon not less
than ten (10) days’ prior written notice by Lessor, Lessee shall execute,
acknowledge and deliver to Lessor, a certificate in the form and substance
provided by Lessor certifying:  (a) that Lessee has accepted the
Premises (or, if Lessee has not done so, that Lessee has not accepted the
Premises, and specifying the reasons why the Premises has not been accepted);
(b) the commencement and expiration dates of the Term; (c) Lessor is
not in default under this Lease (or if Lessee claims any default by Lessor,
specifying the same); (d) that this Lease is unmodified and in full force
and effect (or, if there have been modifications, stating the date and nature of
each modification); (e) the date to which Base Rent and other sums payable
under this Lease have been paid; (f) that no notice has been received by
Lessee of any Event of Default which has not been cured, except as to any Event
of Default specified in the certificate; (g) the amount of any security
deposit and prepaid Base Rent or other sums prepaid by Lessee; (h) the
capacity of the person executing such certificate, and that such person is duly
authorized to execute such certificate on behalf of Lessee; and (i) such
other matters as may be requested by Lessor.  Any such certificate may
be relied upon by any prospective purchaser, lender or Mortgagee (as defined in
Section 19.02).  If Lessee fails to deliver the executed
certificate within the time period specified in Lessor’s notice (which time
period shall not be less than ten (10) days after receipt of the requested
certificate by Lessee), then Lessee shall be conclusively deemed to have
certified as true and accurate the matters contained in the certificate
delivered by Lessor to Lessee, and such failure shall, at the election of
Lessor, constitute an Event of Default by Lessee under this Lease.

       

      ARTICLE
19 - SUBORDINATION

      

      Section 19.01.    Subordination of this
Lease.  This Lease is and shall remain subject and subordinated
at all times to:  (a) all ground or underlying leases which may
now or hereafter affect the Project or any portion of the Project, and
(b) the lien of all mortgages, deeds of trust and other security devices
now or hereafter encumbering the Project or any portion of the Project, or on or
against the interest or estate of Lessor in or to the Project, or on or against
all such ground or underlying leases, all without the necessity of having any
further instrument executed by Lessee to effectuate such
subordination.  In the event that any superior ground lease or
underlying lease terminates, or any superior mortgage, deed of trust or other
security device is foreclosed, or a conveyance in lieu of foreclosure is
granted, or the Project is sold under the power of sale granted in any such
superior mortgage, deed of trust or other security device, for any reason, then
Lessee shall attorn to and become bound to the successor in interest to Lessor
at the option of such successor in interest.  Notwithstanding the
foregoing, Lessor shall have the right to elect, by written notice to Lessee, to
have this Lease be prior and superior to any such ground or underlying lease,
mortgage or deed of trust or other security device.

      

      Section 19.02.    No Subordination Documents
Required.  The provisions of this Article 19 are
self-operative and shall not require the execution of any further documents by
Lessor or Lessee.  However, at any time and from time to time, upon
not less ten (10) days’ prior written notice by Lessor, Lessee shall
execute and deliver any documents evidencing, confirming or effectuating the
effect of any of the provisions of this Article 19, in the form requested
by Lessor or by the lessor under any ground or underlying lease or the holder or
beneficiary of any mortgage, deed of trust or other security device encumbering
the Project or any portion of the Project ("Mortgagee”).  If
Lessee fails to execute and deliver such documents within the time period
specified in Lessor’s notice (which time period shall not be less than
ten (10) days after receipt of the requested documents by Lessee), then
Lessee shall be conclusively deemed to have certified as true and accurate the
matters set out in the documents delivered by Lessor to Lessee, and such failure
shall, at the election of Lessor, constitute an Event of Default by Lessee under
this Lease.

       

      ARTICLE
20 - FINANCIAL INFORMATION

      

      Section 20.01.    Financial
Information.  At any time and from time to time, upon not less
than ten (10) days’ prior written notice by Lessor, Lessee shall deliver to
Lessor the then current financial statements of Lessee (including interim
periods following the end of the last fiscal year for which annual statements
are available), including a balance sheet and profit and loss statement for the
most recent prior year, all prepared in accordance with generally accepted
accounting principles consistently applied.  If Lessee fails to
deliver such financial statements within the time period specified in Lessor’s
notice (which time period shall not be less than ten (10) days after
receipt of the request by Lessee), then such failure shall, at the election of
Lessor, constitute an Event of Default by Lessee under this
Lease.  Any financial information received by Lessor from Lessee
pursuant to this Section 20.01 that is marked “Confidential” will be
treated by Lessor as confidential and will not be provided to any other person
or entity, except (a) as required by law, (b) pursuant to subpoena or
court order, (c) to the attorneys and accountants of Lessor, or
(d) any prospective purchaser or lender in connection with the proposed
sale or financing of the Project or of any interest in the Project.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      

      ARTICLE
21 - HAZARDOUS MATERIALS

      

      Section 21.01.    Definitions.  As
used in this Lease, the following terms shall have the meanings contained in
this Section 21.01:

      

      (a)    The term
"Hazardous Materials"
shall mean and include any substance, material or waste that is or contains
(i) 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; (ii) 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; (iii) 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; (iv) petroleum, petroleum
by-products, gasoline, diesel fuel, or other petroleum hydrocarbons;
(v) asbestos and asbestos-containing material, in any form, whether friable
or non-friable; (vi) polychlorinated biphenyls; (vii) lead and
lead-containing materials; (viii) methly tertiary-buytl ether; or
(ix) any substance, material or waste (A) the presence of which on or
about the Premises, the Building or the Project (I) requires licensing,
reporting, investigation or remediation under any Environmental Laws (as
hereinafter defined), (II) which, if released, would cause or threaten to
cause a nuisance on the Premises, the Building or the Project or any adjacent
area or property or pose or threaten to pose a hazard to the health or safety of
persons on the Premises, the Building or the Project or any adjacent area or
property, or (III) which, if it emanated or migrated from the Premises, the
Building or the Project could constitute a trespass, or (B) which is now or
is hereafter classified or considered to be harmful, hazardous or toxic under
any Environmental Laws.

      

      (b)    The term
"Environmental Laws"
shall mean and include (i) CERCLA, RCRA and TSCA; (ii) the Hazardous
Waste Control Law (California Health and Safety Code § 25100 et seq., as amended);
(iii) the Carpenter-Presley-Tanner Hazardous Substance Account Act,
(California Health and Safety Code § 25300 et seq., as amended and
revived by subsequent legislation); (iv) the Porter-Cologne Water Quality
Control Act (California Water Code § 13000 et seq., as amended);
(v) the Barry Keene Underground Storage Tank Cleanup Trust Fund Act of 1989
(California Health and Safety Code § 25299.10 et seq., as amended);
(vi) the California Hazardous Substances Act (California Health and Safety
Code §108100, et seq.,
as amended); (vii) the Radiation Control Law (California Health and Safety
Code §114960, et seq.);
(viii) any other federal, state or local law, statute, ordinance, code,
rule, regulation, order or decree now or hereinafter in effect relating to
(A) pollution, (B) the protection or regulation of human health,
natural resources or the environment, (C) the transportation, storage, use,
treatment or disposal of Hazardous Materials, or (D) the emission,
discharge, release or threatened release of Hazardous Materials into the
environment; (ix) all regulations promulgated pursuant to such Environmental
Laws; and (x) all requirements (whether order, directive or otherwise) of
federal, state and local governmental authorities including, but not limited to,
the California Regional Water Control Board, San Francisco Bay Region, and the
State of California Environmental Protection Agency.

      

      (c)    The term
"Permitted Hazardous
Materials" shall mean and include only those Hazardous Materials that are
contained in ordinary office supplies of a type and in quantities typically used
in the ordinary course of business in executive or administrative offices of a
similar size and location to that of the Premises, but only if and to the extent
that such office supplies are transported, stored, used and disposed of in
compliance with the recommendations of the manufacturer and all Environmental
Laws.  Any office supplies that are not transported, stored, used and
disposed of in compliance with the recommendations of the manufacturer and all
Environmental Laws shall constitute “Hazardous Materials” for purposes of this
Article 21.

      

      Section 21.02.    Hazardous Materials
Prohibited.  Lessee shall not cause or permit any Hazardous
Materials to be brought upon, stored, used or disposed in, on or about the
Premises, the Building or the Project by Lessee or the employees, agents,
contractors, invitees or customers of Lessee, except Permitted Hazardous
Materials.  Prior to the Term Commencement Date and thereafter on each
anniversary of the Term Commencement Date, Lessee shall deliver to Lessor a list
of all Permitted Hazardous Materials located at the Premises.

      

      Section 21.03.    Indemnity.  Lessee
agrees to indemnify, defend, protect and hold harmless Lessor from and against
any and all claims, damages, fines, judgments, penalties, costs, losses
(including, without limitation, loss in value of the Premises, the Building or
the Project, damages due to loss or restriction of rentable or useable space,
and any damages due to any adverse impact on marketability of the Premises, the
Building or the Project), settlements, claims, liabilities and expenses
(including, without limitation, attorneys’ fees, consultants’ fees and expert’s
fees) sustained by Lessor during or after the Term and attributable to
(a) any Hazardous Materials brought upon, stored, used or disposed in, on
or about the Premises, the Building or the Project by Lessee or the employees,
agents, contractors, invitees or customers of Lessee, or (b) the breach by
Lessee of any provision of this Article 21.  The provisions of
this Section 21.03 shall survive the expiration of the Term or any sooner
termination of this Lease.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      
ARTICLE
22 - DEFAULT

      

      Section 22.01.    Event of
Default.  In addition to any other event specified in this
Lease as a default by Lessee, the occurrence of any one or more of the following
events (each an "Event of
Default") shall constitute a default by Lessee under this
Lease:

      

      (a)    the vacation
or abandonment of the Premises for a continuous period in excess of
five (5) business days.

      

      (b)    the failure
by Lessee to pay any installment of Base Rent as and when the same becomes due
and payable.

      

      (c)    the failure
by Lessee to pay any other sum as and when the same becomes due and payable if
such failure continues for more than five (5) days after written notice
from Lessor.

      

      (d)    the failure
by Lessee to execute and deliver to Lessor any estoppel certificate,
subordination agreement or financial information within the time periods and in
the manner required by Section 18.01, Section 19.02 and
Section 20.01, respectively.

      

      (e)    the failure
by Lessee to perform or observe any other obligation of Lessee under this Lease,
if such failure continues for more than ten (10) days after written notice
from Lessor; provided, however, if such failure reasonably cannot be cured
within such ten (10) day period, Lessee shall not be in default if Lessee
shall commence to cure such failure within such period ten (10) day period
and thereafter prosecute and complete such cure with due diligence and
dispatch.

      

      (f)    the making by
Lessee of a general assignment for the benefit of its creditors, or the
admission of the inability of Lessee to pay its debts as they become
due.

      

      (g)    the filing of
a petition, case or proceeding in bankruptcy by Lessee, or the adjudication of
Lessee as bankrupt or insolvent.

          

      (h)    the filing of
a petition against Lessee seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, where such petition, case or proceeding is
not dismissed within sixty (60) days after filing or commencement, or the
filing of an answer by Lessee admitting or failing to contest the material
allegations of a petition filed against Lessee in any such
proceeding.

      

      (i)    the seeking
or consenting to or acquiescence in the appointment of any trustee, receiver or
liquidator of Lessee or any material part of the assets or properties of
Lessee.

      

      (j)    the
appointment of any trustee, receiver or liquidator for Lessee or for any
material part of the assets or property of Lessee where such appointment is not
vacated or dissolved within sixty (60) days after the date of the
appointment or the date of any sooner sale or disposition of any of the assets
or properties of Lessee by any such trustee, receiver or
liquidator.

      

      (k)    if this Lease
or any interest or estate of Lessee under this Lease shall be levied upon under
any attachment or execution and such attachment or execution is not vacated
within ten (10) days.

      

      Section 22.02.    Lessor's
Remedies.  If an Event of Default shall occur, Lessor shall
have the following remedies and rights:

      

      (a)    Lessor may
terminate this Lease by written notice to Lessee, and on the date specified in
such notice Lessee's right to possession and this Lease shall
terminate.  Should Lessor terminate this Lease pursuant to the
provisions of this Section 22.02(a), Lessor shall have all the rights and
remedies of a lessor provided by Section 1951.2 of the California Civil
Code or any successor code section.  Upon such termination, in
addition to any other rights and remedies to which Lessor may be entitled under
applicable law, Lessor may recover from Lessee:  (i) the worth at
the time of award of the unpaid Rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid Rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Lessee proves could have been
reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid Rent for the balance of the Term of this Lease after the time
of award exceeds the amount of such rental loss that Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate
Lessor for all the detriment proximately caused by Lessee's failure to perform
its obligations under this Lease or which in the ordinary course of things would
be likely to result therefrom.  The "worth at the time of award" of
the amounts referred to in clauses (i) and (ii) above shall be
computed by allowing interest at the Applicable Interest Rate.  The
"worth at the time of award" of the amount referred to in clause (iii)
above shall be computed by discounting such amount at a rate equal to the
discount rate of the Federal Reserve Board of San Francisco at the time of award
plus one percent (1%).

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      (b)    This Lease
shall continue in effect for so long as Lessor does not terminate this Lease as
provided in Section 22.02(a), and Lessor may enforce all of Lessor's rights
and remedies under this Lease, including without limitation, the right to
recover Rent as it becomes due.  Lessor shall have the remedy
described in Section 1951.4 of the California Civil Code (lessor may
continue lease in effect after lessee's breach and abandonment and recover rent
as it becomes due, if lessee has right to sublet or assign, subject only to
reasonable limitations).  Lessor, without terminating this Lease, may
exercise all of the rights and remedies of a lessor under Section 1951.4 of
the California Civil Code or any successor code section.  Acts of
maintenance, preservation or efforts to relet the Premises or the appointment of
a receiver upon application of Lessor to protect Lessor's interest in and to the
Premises shall not constitute an election by Lessor to terminate Lessee's right
to possession.  Lessor shall not be liable in any way whatsoever for
its failure to relet the Premises following any Event of Default.  No
action by Lessor shall be deemed a termination of this Lease except written
notice by Lessor delivered to Lessee expressly declaring a termination of this
Lease.  If Lessor does not immediately terminate the right of Lessee
to possession of the Premises following the occurrence of an Event of Default,
Lessor may thereafter elect to terminate this Lease.

      

      (c)    Lessor shall
also have the right, with or without terminating this Lease, in compliance with
applicable law, to re-enter the Premises, by force if necessary, 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 Lessee.

      

      (d)    if Lessor
does not elect to terminate this Lease as provided in Section 22.02(a),
Lessor 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 Lessor in its sole discretion may deem
advisable with the right to make alterations and repairs to the Premises in
Lessor’s sole discretion.  In the event that Lessor shall elect to so
relet, then rentals received by Lessor from such reletting shall be applied in
the following order: (i) to reasonable attorneys’ fees, costs and
disbursements incurred by Lessor as a result of any Event of Default and costs
in the event suit is filed by Lessor to enforce such remedies; (ii) to the
payment of any costs of such reletting; (iii) to the payment of the costs
of any alterations and repairs to the Premises; (iv) to the payment of any
amount owed by Lessee other than Base Rent; (v) to the payment of Base
Rent; and (vi) the residue, if any, shall be held by Lessor and applied in
payment of future Rent and other sums payable by Lessee under this Lease as the
same may become due and payable hereunder.   Should that portion
of such rentals received from such reletting during any month that is applied to
the payment of Rent hereunder be less than the Rent payable during the month by
Lessee under this Lease, then Lessee shall pay such deficiency to
Lessor.  Such deficiency (if any) shall be calculated and paid
monthly.  Lessee shall also pay to Lessor as Additional Rent all costs
and expenses incurred by Lessor in such reletting or in making such alterations
and repairs not covered by the rentals received from such
reletting.

      

      (e)    Lessor shall
have such other rights and remedies as now or hereafter may be available to
Lessor at law or in equity by reason of the occurrence of an Event of
Default.

      

      Section 22.03.    Rent
Computation.  For purposes of computing unpaid Rent which would
have accrued and become payable under this Lease following any Event of Default,
unpaid Rent shall consist of the sum of:  (a) the total Base Rent
for the balance of the Term; plus (b) Lessee's Percentage Share of
Increased Operating Expenses for the balance of the Term.  For
purposes of computing Increased Operating Expenses for the calendar year during
which an Event of Default occurs and each subsequent calendar year during the
Term, it shall be assumed that Operating Expenses were equal to the Operating
Expenses for the immediately preceding calendar year increased by the average
increase in the Consumer Price Index for Urban Consumers, All Items, for the San
Francisco-Oakland-San Jose, California Area (1982-84=100), as published by the
United States Department of Labor, Bureau of Labor Statistics for the
three (3) calendar years preceding the calendar year during which the Event
of Default occurred.  If such index is discontinued or revised, then
Increased Operating Expenses shall be determined by reference to the index
designated as the successor or substitute index by the government of the United
States.

      

      Section 22.04.    Remedies Not
Exclusive.  The remedies granted to Lessor in this Lease are
not exclusive and shall be in addition to any and all other remedies now or in
the future available to Lessor at law or in equity.  The remedies of
Lessor shall be cumulative, and the exercise of any one remedy by Lessor shall
not exclude the concurrent or subsequent exercise by Lessor of any other
remedy.

      

      Section 22.05.    Waiver.  Lessee
waives the right of redemption or relief from forfeiture under California Code
of Civil Procedure Sections 1174 and 1179, California Civil Code
Section 3275 or under any
other present or future law or statute, in the event Lessee is evicted or Lessor
takes possession of the Premises by reason of an Event of Default.

      

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      ARTICLE
23 - LESSOR'S RIGHT TO CURE DEFAULTS

      

      Section 23.01.    Right to Cure.  All
obligations to be performed by Lessee under any of the provisions of this Lease
shall be at Lessee's sole cost and expense and without any abatement of or
off-set against Rent.  If Lessee shall fail to pay any sum of money,
other than Base Rent, required to be paid by Lessee under this Lease or shall
fail to cure any Event of Default within three (3) days after notice from
Lessor, then Lessor may, but shall not be obligated, and without waiving or
releasing Lessee from any obligation, make any such payment or perform any such
act on behalf of Lessee.  All sums so paid or incurred by Lessor shall
be deemed Additional Rent and shall be paid to Lessor by Lessee on demand, and
Lessor shall have (in addition to all other rights and remedies of Lessor) the
same rights and remedies in the event of the non-payment of any such sums and
costs by Lessee as in the case of a failure by Lessee in the payment of Base
Rent.

      

      ARTICLE
24 - ATTORNEYS' FEES

      

      Section 24.01.    Attorneys' Fees.  If
Lessor or Lessee fails to perform any of its obligations under this Lease or if
any dispute arises between Lessor and Lessee concerning the meaning or
interpretation of any provision of this Lease, then the party not prevailing in
such dispute shall pay any and all costs and expenses incurred by the prevailing
party on account of such default and/or in enforcing or establishing the rights
of the prevailing party under this Lease, including, without limitation, court
costs and reasonable attorneys’ fees, costs and disbursements.  Any
such attorneys’ fees and other expenses incurred by the prevailing 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.

      

      Section 24.02.    Collection of
Rent.  Without limiting the generality of Section 24.01,
if Lessor utilizes the services of an attorney for the purpose of collecting any
Rent due and unpaid by Lessee or in connection with any failure of Lessee to
perform any obligation of Lessee under this Lease, Lessee shall pay to Lessor,
as Additional Rent, the attorneys’ fees, costs and disbursements incurred by
Lessor for such services, regardless of the fact that no legal action may be
commenced or filed by Lessor.

      

      ARTICLE
25 - SURRENDER OF PREMISES

      

      Section 25.01.    Surrender of
Premises.  At the expiration of the Term or upon sooner
termination of this Lease, Lessee shall peaceably deliver up possession of the
Premises to Lessor, together with all improvements or additions to the Premises,
by whomsoever made, (a) in the same condition as received or first
installed, excepting only ordinary wear and tear and damage by casualty or
condemnation that results in a termination of this Lease; (b) “broom
clean", free of trash, debris and the personal property and trade fixtures
placed on the Premises by Lessee; and (c) free of all Hazardous Materials
and Permitted Hazardous Materials brought upon the Premises by Lessee or
Lessee's employees, agents, contractors or invitees and otherwise in compliance
with all Environmental Laws.  Notwithstanding the foregoing to the
contrary, upon the written request of Lessor (and unless otherwise previously
agreed to in writing by Lessor), Lessee shall, at the cost of Lessee, remove any
or all Alterations, additions or improvements to the Premises installed by
Lessee and shall return the Premises to its condition existing on the Term
Commencement Date, ordinary wear and tear excepted.  Lessee shall
repair any damage to the Premises caused by the removal of Lessee’s personal
property, trade fixtures, Alterations, additions or improvements.  Any
personal property or trade fixtures placed on the Premises by Lessee that are
not so removed may, at the election of Lessor, be deemed abandoned by Lessee and
title to the same shall thereupon pass to Lessor, and the same may be removed
and disposed of by Lessor at the cost of Lessee.  The obligations of
Lessee under this Section 25.01 shall survive the expiration of the Term or
the sooner termination of this Lease.

       

      ARTICLE
26 - HOLDING OVER

      

      Section 26.01.    Holding Over.  If
Lessee shall remain in possession of all or any portion of the Premises after
the expiration of the Term or the sooner termination of this Lease without the
written consent of Lessor (which consent may be granted or withheld at the sole
discretion of Lessor), such holding over shall constitute a tenancy at
sufferance at a Monthly Base Rent equal to one hundred fifty percent (150%)
of the Monthly Base Rent payable for the last month of the Term, plus Additional
Rent, and otherwise on the terms and provisions of this Lease so far as the same
are applicable, and Lessee shall be subject to summary eviction without demand
or notice; provided, however, in no event shall any renewal or expansion option
or other similar right or option set forth in this Lease (if any) be deemed
applicable to any such tenancy at sufferance.  If the Premises are not
surrendered at the expiration of the Term or the sooner termination of this
Lease, in accordance with the provisions of Section 25.01, Lessee shall
indemnify, defend, protect and hold Lessor harmless from and against any and all
loss, liability, cost and expense resulting from any delay by Lessee in so
surrendering the Premises including, without limitation, any loss or liability
resulting from any claim against Lessor made by any succeeding lessee or
prospective lessee founded on or resulting from such delay, and any loss
sustained by Lessor due to the loss of the opportunity to relet the Premises or
any portion of the Premises, together with, in each case, attorneys’ fees, costs
and disbursements.

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      

      ARTICLE
27 - WAIVER

      

      Section 27.01.    Waiver.  The failure
of Lessor to exercise any right or remedy in connection with any breach or
violation of any term, covenant or condition of this Lease shall not be deemed
to be a waiver of any such right or remedy or a waiver of the breach or
violation of such term, covenant or condition or any subsequent breach or
violation of the same or any other term, covenant or condition of this Lease.
The acceptance of any Rent or other sum by Lessor shall not be deemed to be a
waiver of any preceding breach or violation by Lessee of any term, covenant or
condition of this Lease other than the failure of Lessee to pay the particular
Rent or sum so accepted, regardless of Lessor's knowledge of any such preceding
breach or violation at the time of acceptance of such Rent or other
sum.  No delay or omission in the exercise of any right or remedy by
Lessor with respect to any Event of Default by Lessee shall impair such a right
or remedy or be construed as a waiver of any Event of Default.  Any
waiver by Lessor of any Event of Default by Lessee must be in
writing.

      

      ARTICLE
28 - SALE BY LESSOR

      

      Section 28.01.    Sale by Lessor.  In
the event of a sale or conveyance by Lessor of the Project, the same shall
operate to release Lessor from any future liability for the performance of any
of the agreements, obligations, covenants or conditions set forth in this Lease,
and in such event Lessee agrees to look solely to the successor in interest of
Lessor in and to the Project for the performance of this Lease.  This
Lease shall not be affected by any such sale or conveyance by Lessor and Lessee
shall attorn to the purchaser or grantee, such attornment to be effective and
self-operative without the execution of any further instruments on the part of
Lessee.

      

      ARTICLE
29 - NO MERGER

      

      Section 29.01.    No Merger.  The
voluntary or other surrender of this Lease by Lessee, or a cancellation of this
Lease by Lessor and Lessee, shall not work a merger, and shall, at the option of
Lessor, either terminate any or all existing subleases or subtenancies of the
Premises or operate as an assignment to Lessor of any or all of such subleases
or subtenancies of the Premises.

      

      ARTICLE
30 - NOTICES

      

      Section 30.01.    Notices.  All
notices and demands which may or are required to be given by Lessor or Lessee
under this Lease shall be in writing given by personal delivery, delivery by
United States Postal Service mail, certified or registered, postage prepaid, or
overnight delivery by any nationally recognized overnight courier service,
charges prepaid.  Notices shall be addressed as follows:  If
to Lessee, (a) prior to the Term Commencement Date, at Lessee's address set
out in the Lease Summary, and (b) after the Term Commencement Date, at the
Premises; if to Lessor at the address set out in the Lease
Summary.  Lessee hereby appoints as its agent to receive the service
of all notices (including, but not limited to, service of process) the person in
charge of or occupying the Premises at the time, and if no person shall be in
charge of or occupying the Premises, then such service may be made by attaching
the same to the main entrance of the Premises.  Both parties may from
time to time designate a different address for notices by a notice given to the
other party in the manner provided in this Section 30.01.  For
purposes of this Lease, notices shall be deemed given or received on the date of
personal delivery, three (3) business days after the date of deposit with
the United States Postal Service or the next business day following the date of
deposit with a nationally recognized overnight courier service.

      

      ARTICLE
31 - RELOCATION OF PREMISES

      

      Section 31.01.    Relocation of
Premises.  INTENTIONALLY OMITTED.

      

      ARTICLE
32 - SUCCESSORS

      

      Section 32.01.    Successors.  All the
terms, covenants, and conditions of this Lease shall be binding upon and inure
to the benefit of the heirs, executors, administrators, successors, and assigns
of the parties hereto, provided that nothing set forth in this
Section 32.01 shall be deemed to permit any assignment, subletting,
occupancy or use of the Premises in violation of the provisions of
Article 11.

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      ARTICLE
33 - LIMITATION OF LIABILITY

      

      Section 33.01.    Limitation of
Liability.  Lessee agrees that, in the event of any breach or
default by Lessor under this Lease or arising in connection with this Lease or
with operation, management, leasing, repair, renovation, alteration of the
Premises, Building or Project by Lessor or any other matter relating to the
Premises, Building or Project, Lessee’s remedies shall be limited solely and
exclusively to the recovery of damages in an amount which is equal to the equity
interest in the Project of the then current Lessor subject to encumbrance by any
mortgage, deed of trust or other security device, provided that in no event
shall such liability extend to any sales or insurance proceeds or condemnation
awards received by Lessor or by any of Lessor's partners, members, trustees,
beneficiaries, shareholders, officers, directors, employees, agents, investment
advisors, manager or managers, or any successor in interest of any of them
(“Lessor Parties” ) in
connection with the Premises, Building or Project.

      

      Section 33.02.    Waiver.  Neither
Lessor, nor any of the Lessor Parties, shall have any personal liability under
or in connection with this Lease, the Premises, the Building or the Project, and
Lessee hereby expressly waives and releases such personal liability on behalf of
itself, its successors and assigns and all persons claiming by, through or under
Lessee.  The limitations of liability set forth in Section 33.01
and this Section 33.02 shall inure to the benefit of the present and each
future Lessor and their respective Lessor Parties.  Under no
circumstances shall any present or future Lessor or any Lessor Parties have any
liability for the performance of, or failure to perform, any of the obligations
of Lessor under this Lease.  Notwithstanding any contrary provision
set forth in this Lease, neither Lessor nor any of the Lessor Parties shall be
liable under any circumstances for injury or damage to, or interference with the
business or activities of Lessee, including but not limited to, loss of business
or profits, loss of rents or other revenues, loss of business opportunity, loss
of goodwill or loss of use, in each case, however occurring.  The
provisions of this Article 33 shall apply only to the Lessor and the Lessor
Parties, and shall not be for the benefit of any insurer or any other third
party.

      

      ARTICLE
34 - GUARANTY OF LEASE

      

      Section 34.01.    Guaranty of
Lease.  INTENTIONALLY OMITTED.

      

      ARTICLE
35 - BROKERS

      

      Section 35.01.    Brokers. Lessor
and  Lessee each represents and warrants to the other that it has not
dealt or had any contact with any broker, agent or finder in connection with
this Lease or the Premises other than the Broker(s) identified in the Lease
Summary (the "Brokers").  Lessor
shall pay the commission due the Brokers in connection with this Lease pursuant
to separate agreement between Lessor and the Brokers. Lessor and Lessee shall
each indemnify, protect, defend and hold  harmless the other from and
against any and all claims, demands, liabilities, losses, damages, actions,
causes of action, suits, costs, and expenses (including attorneys' fees, costs
and disbursements) arising out of or relating to a breach by it of the foregoing
representation and warranty.

      

      ARTICLE
36 - MISCELLANEOUS

      

      Section 36.01.    Captions.  The
captions and headings of the Articles and Sections in this Lease are provided
for convenience only and shall not in any way limit the provisions of this Lease
or be used in the interpretation of the provisions of this Lease.

      

      Section 36.02.    Time of
Essence.  Time is of the essence of this Lease and of all
provisions of this Lease, except with respect to the delivery of possession of
the Premises and the obligations of Lessor under Section 2.01.

      

      Section 36.03.    Number, Genders and Joint and Several
Liability.   The words "Lessor" and "Lessee", as used
herein, shall include the plural as well as the singular.  Words used
in the any gender include all other genders.  If more than one person
or entity is identified as Lessor or Lessee in this Lease, then the obligations
imposed upon Lessor and Lessee under this Lease are joint and
several.

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

      

      Section 36.04.    Governing Law.  This
Lease shall be construed and enforced in accordance with the laws of the State
of California without regard to any choice of laws provisions or
principles.

      

      Section 36.05.    Entire
Agreement.  This Lease, including any Exhibits and any Addenda
attached to this Lease, contains the entire agreement of Lessor and Lessee with
respect to the Premises and the leasing of the Premises, and no representation,
warranty, inducement, promise or agreement, whether written or oral, preceding
or contemporaneous with the execution of this Lease, which is not set forth in
this Lease shall be of any force and effect to amend, modify or supplement the
provisions of this Lease.  Lessor and Lessee intend and agree that
this Lease constitutes the complete and exclusive statement of the terms of the
leasing of the Premises and that no extrinsic evidence whatsoever may be
introduced in any judicial proceedings, if any, involving this
Lease.

      

      Section 36.06.    Invalidity.  If any
provision of this Lease or the application thereof to any person or circumstance
shall, to any extent, be determined by a court of proper jurisdiction to be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision to persons or circumstances other than those as to which it is
held to be invalid or unenforceable, shall not be affected by such invalidity or
unenforceability, and each provision of this Lease shall be valid and be
enforced to the fullest extent permitted by law.

      

      Section 36.07.    Authority.  Each of
the persons executing this Lease on behalf of Lessee represents and warrants
that (a) Lessee has full right and authority to enter into this Lease; and
(b) the person or persons signing this Lease on behalf of Lessee are authorized
to do so and to bind Lessee to this Lease.  Upon Lessor's request,
Lessee shall provide Lessor with evidence satisfactory to Lessor confirming the
foregoing representations and warranties.

      

      Section 36.08.    No Offer.  The
submission of this Lease to Lessee by Lessor is for examination purposes only,
and does not and shall not interpreted to constitute a reservation of or an
option for Lessee to lease, or otherwise create any interest by Lessee in, the
Premises. Execution of this Lease by Lessee and its return to Lessor shall not
be binding upon Lessor until Lessor has in fact executed and delivered this
Lease to Lessee.  No contractual or other rights shall exist between
Lessor and Lessee with respect to the Premises until both Lessor and Lessee have
executed and delivered this Lease, notwithstanding that rental or other deposits
may have been received by Lessor and notwithstanding that Lessor has delivered
to Lessee an unexecuted copy of this Lease.

      

      Section 36.09.    No Representations or
Warranties.  Neither Lessor nor the agents or attorneys of
Lessor have made any representation or warranty with respect to this Lease, the
Premises, the Building or the Project, except as set forth in this
Lease.

      

      Section 36.10.    Amendments.  This
Lease may not be altered, changed, or amended except by an instrument signed by
Lessor and Lessee.

      

      Section 36.11.    Name of
Building.  In the event Lessor chooses to change the name or
address of the Building and/or the Project, Lessee agrees that such change shall
not affect in any way the obligations of Lessee under this Lease, and that,
except for the name or address change, all of the provisions of this Lease shall
remain in full force and effect.  Lessee agrees further that such name
or address change shall not require a formal amendment to this Lease, but shall
be effective upon written notification from Lessor to Lessee of such
change.

      

      Section 36.12.    No
Recordation.  Neither this Lease, nor any memorandum, affidavit
or other writing with respect to this Lease, shall be recorded by Lessee or by
any one acting through, under or on behalf of Lessee, and any such recording in
violation of this provision shall, at the election of Lessor, constitute and
Event of Default.

      

      Section 36.13.    Right to
Lease.  Lessor reserves the absolute right to effect such other
tenancies in the Building and the Project as Lessor in the exercise of its sole
business judgment shall determine to best promote the interests of
Lessor.  Lessee has not relied on the fact, nor has Lessor
represented, that any specific lessee or type or number of lessees shall occupy
any space in the Building or the Project, or that any specific lessee or type of
lessee shall be excluded from occupying any space in the Building or the
Project.

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

      

      Section 36.14.    Waiver of Jury
Trial.  Lessee hereby waives any right to trial by jury with
respect to any action or proceeding brought by Lessor, Lessee 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 (c) to which Lessor is a
party.  Lessee hereby agrees that this Section 36.14 constitutes
a written consent to waiver of trial by jury pursuant to the provisions of
California Code of Civil Procedure Section 631, and Lessee does hereby
constitute and appoint Lessor its true and lawful attorney-in-fact, which
appointment is coupled with an interest, and Lessee does hereby authorize and
empower Lessor, in the name, place and stead of Lessee, to file this Lease with
the clerk or judge of any court of competent jurisdiction as a statutory written
consent to waiver of trial by jury.

      

      Section 36.15.    Representations by
Lessee.  Lessee represents and warrants to Lessor that each
individual executing this Lease on behalf of Lessee is authorized to do so on
behalf of Lessee and that Lessee is not, and the entities or individuals
constituting Lessee or which may own or control Lessee or which may be owned or
controlled by Lessee are not (i) in violation of any laws relating to
terrorism or money laundering, and/or (ii) among the individuals or
entities identified on any list compiled pursuant to Executive Order 13224
for the purpose of identifying suspected terrorists or on the most current list
published by the U.S. Treasury Department Office of Foreign Assets Control at
its official website, http://www.treas.gov/ofac/tllsdn.pdf
or any replacement website or other replacement official publication of such
list.

      

      Section 36.16.    Quiet
Enjoyment.  Provided Lessee timely pays the Rent as and when
due and timely and fully performs all of the covenants and agreements of Lessee
to be performed under this Lease, then Lessee shall peacefully have, hold and
enjoy the Premises without interference by any person or entity claiming by or
through Lessor.  This covenant shall be binding upon Lessor and its
successors only during its or their respective periods of ownership of the
Building.

      

      IN
WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of the Lease
Date.

      

      
        	
                LESSOR

              	
                LESSEE

              
	 
      	 
      
	
                2350 MISSION INVESTORS,
      LLC,

                a
      Delaware limited liability company

                 

                By: 
      PCCP CS 2350 Mission, LLC,

                a
      Delaware limited liability company

                Its:   Managing
      Member

                 

                By:   PacificCal,
      LLC,

                 a
      Delaware limited liability company

                Its:   Sole
      Member

                 

                By:   PCCP
      CS Holdings, LLC,

                 a
      Delaware limited liability company

                Its:    Manager

                 

                By:  
      /s/ Aaron Glovara

                Name:  
      Aaron A. Glovara

                Its: 
      Vice President

                 

              	
                NEWCARDIO,
      INC.,

                a
      Delaware corporation

                 

                 

                By   /s/ Branislav
      Vajdic                                   
      

                Name  
      Branislav Vajdic

                Title  
      CEO

                 

                 

                By
      ______________________________

                Name
      ____________________________

                Title
      _____________________________

                 

              

      

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      EXHIBIT
A

      

      Floor
Plan of the Premises

      

      

      

      

       

       

      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

      EXHIBIT
B

      

      Rules and
Regulations

      

      1.           The
sidewalks, halls, passages, courts, exits, vestibules, entrances, public areas,
elevators and stairways of the Building shall not be obstructed by Lessee or
used by Lessee for any purpose other than ingress to and egress from the
Premises.  The halls, passages, exits, entrances, elevators and
stairways are not for the general public, and Lessor shall, in all cases, retain
the right to control and prevent access thereto by all persons whose presence in
the judgment of Lessor would be prejudicial to the safety, character, reputation
and interests of the Building and its lessees, provided that nothing herein
contained shall be construed to prevent such access to persons with whom Lessee
normally deals in the ordinary course of its business, unless such persons are
engaged in illegal activities.  If the Premises are situated on the
ground floor with direct access to the street, then Lessee shall, at Lessee's
expense, keep the sidewalks and curbs directly in front of the Premises clean
and free from dirt, refuse or other obstructions.  Lessee shall not
place any parcels or other articles in the halls or in any other part of the
Building outside of the Premises.  Lessee shall not throw or allow to
be thrown any article out of the doors or windows of the Premises.

      

      2.           Neither
Lessee nor any employee, agent, contractor or invitee of Lessee shall go upon
the roof of the Building, except such portions of the roof as may be contiguous
to the Premises and which are designated in writing by Lessor as a roof-deck or
roof-garden area.

      

      3.           No
sign, placard, picture, name, advertisement or notice visible from the exterior
of the Premises shall be inscribed, painted, affixed or otherwise displayed by
Lessee on any part of the Building without the prior written consent of Lessor.
Written material visible from outside the Building will not be
permitted.  Lessor shall, at Lessor’s expense, place Lessee's name on
any lobby and floor directories of the Building and at the entrance to Lessee's
Premises.  Lessee shall not have the right to have additional names
placed on any directory without Lessor's prior written consent.  Any
change to such lobby, directory and entrance signage shall be performed by
Lessor at Lessee’s expense.

      

      4.           The
Premises shall not be used for the storage or merchandise held for sale to the
general public or for lodging.  No cooking shall be done or permitted
by Lessee in the Premises, except the use by Lessee of Underwriter's Laboratory
approved equipment for brewing coffee, tea, hot chocolate and similar beverages
shall be permitted, provided that such use is in accordance with all applicable
federal, state and city laws, codes, ordinances, rules and regulations and is
provided only for the convenience of Lessee and its employees and
invitees.

      

      5.           Lessee
shall not employ any person or persons other than the janitor of Lessor for the
purpose of cleaning the Premises, unless otherwise agreed to by Lessor in
writing.  Except with the written consent of Lessor, no person or
persons other than those approved by Lessor shall be permitted to enter the
Building for the purpose of cleaning the Premises.  Lessee shall not
cause any unnecessary labor by reason of such Lessee's carelessness or
indifference in the preservation of good order and cleanliness.

      

      6.           Lessor
will furnish Lessee with two keys to each door lock in the
Premises.  Lessor may make a reasonable charge for these and any
additional keys.  Lessee shall not have any additional keys
made.  Lessee shall not alter any lock or install a new or additional
lock or bolts on any door of the Premises without the prior written consent of
Lessor.  Lessee shall in each case furnish Lessor with a key for any
such lock.  Lessee, upon the expiration of the Term or sooner
termination of this Lease, shall deliver to Lessor all keys to doors in the
Building that shall have been furnished to Lessee.

      

      7.           The
moving of freight, furniture or bulky material of any description in or out of
the Building must take place during such hours as Lessor may from time to time
reasonably determine including weekends or non-business hours.  The
moving of freight, furniture or bulky material shall be made upon previous
notice to the superintendent or manager of the Building and the persons employed
by Lessee for such work must be reasonably acceptable to
Lessor.  Lessee may, subject to the provisions of the immediately
preceding sentence, move freight, furniture or bulky material into or out of the
Premises on Saturdays between the hours of 8:00 a.m. and 6:00 p.m. provided that
Lessee gives Lessor at least two (2) days' prior written notice of such
proposed activities and pays the additional costs, if any, incurred by Lessor
for elevator operators, security guards and other expenses arising by reason of
such activities by Lessee.  If requested by Lessor, Lessee shall
deposit with Lessor, as security for Lessee's obligation to pay such additional
costs, a cash sum which Lessor reasonably estimates to be the amount of such
additional costs.  Lessor will not be responsible for loss of or
damage to any such property from any cause and all damage done to the Building
by moving or maintaining such property shall be repaired at the expense of the
Lessee.  Lessor shall have the right to prescribe the weight, size and
position of all equipment, materials, furniture or other property brought into
the Building.

      

      8.           Heavy
objects to be located in the Premises shall be placed on wood strips of such
thickness as is necessary to properly distribute the weight, if deemed necessary
by Lessor.  Business machines and other equipment shall be placed and
maintained by Lessee at Lessee's expense in locations sufficient, in Lessor's
reasonable judgment, to absorb and prevent unreasonable vibration and prevent
noise and annoyance.

      

      9.           Lessee
shall not permit or suffer the Premises to be occupied or used in any manner
that is offensive or objectionable to Lessor or any lessee or invitee of the
Building by reason of sounds, odors, vibrations or electromagnetic
interference.

      

      10.           Lessor
shall have the right, exercisable without notice and without liability to
Lessee, to change the name and street address of the Building.

      

      11.           Lessor
reserves the right to exclude from the Building, between the hours of 6:00 p.m.
and 7:00 a.m., and during all hours on Saturdays, Sundays and legal holidays,
all persons who do not present a pass to the Building signed by
Lessor.  Lessor will furnish passes to persons for whom Lessee
requests the same in writing.  Lessee shall be responsible for all
persons for whom it requests passes and shall be liable to Lessor for all acts
of such persons.  Lessor shall, in no case, be liable for damages for
any error with regard to the admission to or exclusion from the Building of any
person.  In the case of invasion, mob, riot, public excitement or
other circumstances rendering such action advisable in Lessor's reasonable
opinion, Lessor reserves the right to prevent access to the Building or the
Project during the continuance of the same by such action as Lessor may deem
appropriate including closing doors to the Building and closing entrance ways to
the Project.

      

      12.           No
curtains, draperies, blinds, shutters, shades, screens or other coverings,
hangings or decorations shall be attached to, hung or placed in, or used in
connection with any window of the Premises without the prior written consent of
Lessor.  No files, cabinets, boxes, containers or similar items shall
be placed in, against or adjacent to any window of the Premises so as to be
visible from the outside of the Building.

      

      13.           Lessee
shall not obtain for use in the Premises, ice, drinking water, food, beverage,
towel or other similar services, except at such reasonable hours and under such
reasonable regulations as may be determined by Lessor.

       

      
        
          
          

        

        
          B-1

          
            

          

        

        
          
          

        

      

      

      14.           Lessee
shall see that the doors of the Premises are closed and locked and that all
water faucets, water apparatus and lights are shut off before Lessee or Lessee's
employees leave the Premises so as to prevent waste or damage, and Lessee shall
be responsible for all injuries sustained by Lessor or other lessees or
occupants of the Building resulting from Lessee’s failure to do
so.  Lessee shall keep the doors to the Building corridors closed at
all times, except for ingress and egress.

      

      15.           The
restrooms rooms, toilets, urinals, wash bowls and other apparatus shall not be
used for any purpose other than that for which they were installed, and Lessee
shall not throw any foreign substance of any kind whatsoever in the same and the
expense of any breakage, stoppage or damage resulting from the violation of this
rule shall be borne by Lessee.

      

      16.           
Except with the prior written consent of Lessor, Lessee shall not sell, or
permit the sale at retail of newspapers, magazines, periodicals, or any other
goods or merchandise to the general public in or on the
Premises.  Lessee shall not use the Premises for manufacturing of any
kind or any business or activity other than that specifically provided for in
Lessee's lease.

      

      17.           Lessee
shall not install or attach any radio or television antenna, loud speaker, air
conditioning unit, awning or other item or device on the roof or to exterior
surface of the exterior walls of the Building.

      

      18.           Lessee
shall not use or permit the use of any hand trucks except those equipped with
inflatable rubber tires and side guards or such other materials handling
equipment as Lessor may approve.  No other vehicles or conveyances of
any kind shall be brought by Lessee into the Building or kept in or on the
Premises.

      

      19.           Lessee
shall store all its trash and garbage within its Premises.  No
material shall be placed in the trash boxes or receptacles if such material is
of such nature that it may not be disposed of in the ordinary and customary
manner of removing and disposing of trash and garbage in the city where the
Building is located without being in violation of any law or ordinance governing
such disposal.  The transportation of trash, garbage and refuse from
the Premises shall be made only through entry ways and elevators provided for
such purposes and at such times as Lessor shall designate.

      

      20.           Canvassing,
peddling, soliciting and distribution of handbills or any other written
materials in the Building are prohibited and Lessee shall cooperate with Lessor
to prevent the same.

      

      21.           Lessee
and its employees, authorized representatives and invitees shall not
(a) make or permit any noise in the Building that is annoying, unpleasant
or distasteful or interfering in any way with Lessor, other lessees or those
having business with them, (b) bring into or keep within the Premises, the
Building or the Common Areas any bicycle, conveyance or other vehicle, except
such vehicles as are permitted to park in the parking areas in accordance with
these rules and regulations, (c) place or store any item or vehicle in the
Common Areas; or (d) use any of the Common Area for any event, promotion or
gathering, without the prior written consent of Lessor, which consent my be
conditioned, withheld or granted at the sole discretion of Lessor.

      

      22.           Bring
into or keep within the Premises, the Building or Common Areas any animal except
service dogs.

      

      23.           Lessee
shall not drive nails or screws or drill into the partitions, woodwork or walls
of the Premises except to affix standard pictures or other wall hangings on the
interior walls of the Premises so long as they are not visible from the exterior
of the Building.  Lessee shall not mark or in any way deface
partitions, woodwork, walls or doors of the Premises.

      

      24.           Lessor
shall direct electricians as to where and how telephone and communications wires
are to be introduced.  No cutting or boring for wires shall be allowed
without Lessor's consent.  The location of telephones, call boxes and
office equipment affixed to the Premises shall be subject to Lessor's
approval.

      

      25.           Lessee
shall not lay or affix any floor covering in the Premises so that it is
permanently affixed to the floor slab of the Premises, without Lessor's
approval.

      

      26.           The
requirements of Lessee will be attended to only upon application by telephone or
in person at the office of the Building superintendent or
manager.  Employees of Lessor shall not perform any work or do
anything outside of their regular duties unless under special instructions from
Lessor.

      

      27.           Lessee
and its employees, agents, contractors and invitees shall comply with all speed
limit, curb markings and directional and other signage located in or about the
driveways and parking areas.  All parking spaces are unreserved and
unassigned unless otherwise designated.  All parking spaces shall be
used only for parking of vehicles no larger than full size passenger
automobiles, sports utility vehicles, pickup trucks and other non-commercial
vehicles.  Lessee shall not permit or allow any vehicles that belong
to or are controlled by Lessee or Lessee’s employees, agents, contractors.
Invitees, suppliers or shippers to be loaded, unloaded or parked in areas other
than those provided for such activities.  Parking of vehicles is
permitted only during Ordinary Business Hours unless otherwise authorized by
Lessor.  No vehicle services (such as windshield or window
replacement, washing, waxing, detailing, oil changes or other mechanical
servicing) shall be performed in the parking areas.  If Lessee or any
of Lessee’s employees, agents, contractors, invitees, suppliers or shippers
conducts, permits or allows any of the prohibited activities described above,
then Lessor shall have the right, without notice, in addition to such other
rights and remedies that Lessor may have, to remove or tow away the vehicle
involved and charge the costs of removal of the vehicle and any clean-up to
Lessee.

      

      28.           Lessor
may waive any one or more of these rules and regulations for the benefit of any
particular lessee or lessees, but no such waiver by Lessor shall be construed as
a waiver of such rules and regulations in favor of any other lessee or lessees,
nor prevent Lessor from thereafter enforcing any such rules and regulations
against any or all of the lessees of the Building.

      

      29.           These
rules and regulations are in addition to, and shall not be construed to in any
way modify or amend, in whole or in part, the terms, covenants, agreements and
conditions of Lessee’s Lease of Premises.

      

      30.           Lessor
reserves the right to make such other reasonable rules and regulations as, in
its judgment, may from time to time be needed for the safety, care and
cleanliness of the Building or Project, and for the preservation of the order
therein.

      

      31.           Lessor
shall not be responsible to Lessee or to any other person for the non-observance
or violation of these rules and regulations by any other Lessee or other
person.  Lessee shall be deemed to have read these rules and to have
agreed to abide by them as a condition to its occupancy of the
Premises.

      

      32.           The
"Ordinary Business Hours" of the Building shall be 7:00 a.m. to 6:00 p.m. on
business days (exclusive of Saturdays, Sundays.

       

      
        
          
          

        

        
          B-2

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
C

      

      Work
Letter

      

      1.           Lessee
Improvements.  Lessee shall, at Lessee’s cost, perform the
following work in the Premises (collectively, the “Lessee
Improvements”):

       

      (a)           Add
professional sound insulation to the wall between private offices labeled “A”
and “B”, generally as shown on the diagram attached as Exhibit
C-1.

       

      (b)           Remove
walls and door to eliminate one private office, generally as shown on the
diagram attached as Exhibit
C-1.

       

      (c)           Add
walls to create defined entrance area, generally as shown on the diagram
attached as Exhibit
C-1.

       

      (d)           Add
four power 110 volt outlets to center of the floor in conference room labeled as
“X”, generally as shown on the diagram attached as Exhibit
C-1.

      

      2.           Commencement and Completion
of Lessee Improvements.  The Lessee Improvements shall be
commenced upon Lessee obtaining Lessor’s approval to proceed.  The
Lessee Improvements shall be constructed by a licensed general contractor
approved by Lessor (such approval not to be unreasonably withheld or delayed) in
good and workmanlike manner using standard materials and finishes consistent
with those used by Lessor for the Building and Project.  The
construction of the Lessee Improvements shall be performed outside of the
Ordinary Business Hours of the Building (i.e., after 6:00 p.m. and before 7:00
a.m. or on Saturdays or Sundays).  If required by Lessor, the
construction of the Lessee Improvements and the activities of Lessee’s general
contractor shall be supervised by Lessor’s property manager or other designated
supervisor, and Lessee shall reimburse Lessor upon demand for the cost of such
supervision.  The Lessee Improvements shall be completed as soon
commercially reasonable following commencement.

      

      3.           Lessor
Improvements.   Lessor shall, at Lessor's cost, perform
the following work in the Premises (collectively, the "Lessor
Improvements"):

      

      (a)           Paint
the interior walls of the Premises.

       

      (b)           Install
new carpeting in the Premises.

       

      (c)           Repair
torn wallpaper in hallway near entrance to the Premises.

       

      (d)           Place
all Building systems serving the Premises, including the electrical, lighting,
plumbing, utility, fire protection and HVAC systems and all doors in the
Premises, in working order and replace any damaged ceiling tiles.

      

      The
Lessor Improvements shall be performed by Lessor's contractor or maintenance
personnel in good and workmanlike manner using standard materials and finishes
used by Lessor for the Building and Project.  If applicable, Lessee
shall have the right to approve the color of the carpeting and paint from the
colors available for the Building standard carpeting and paint.

      

      4.           Commencement and Completion
of Lessor Improvements.  The Lessor Improvements shall be
commenced by Lessor’s contractor or maintenance personnel upon completion of the
Lessee Improvements and receipt of any required permits and approvals and,
subject to delays beyond the reasonable control of Lessor’s contractor or
maintenance personnel, shall be completed as commercially reasonable following
commencement.

      

      5.           No Change in Lessor
Improvements.  Lessee shall not have the right to request any
change, alteration or addition to the Lessor Improvements.

       

      
        
          
          

        

        
          C-1

          
            

          

        

        
          
          

        

      

      

      EXHIBIT
C-1

      

      Diagram
Showing the Lessee Improvements

      

      

       

      C-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}]]