Fourth Lease Amendment between Arthur Segal Trust and Phase Three, Inc. for 2701 & 2705 McMillan Road

Summary

This amendment updates the lease between Arthur Segal Trust and Phase Three, Inc. for the properties at 2701 and 2705 McMillan Road. The lease term is extended to May 31, 2007, with options for two additional three-year renewals. Rent is set at $22,000 per month, increasing annually by at least 3% and no more than 6%, based on the Consumer Price Index. The tenant is responsible for all periodic payments and receives a $10,000 rent credit for improvements. Parking is included, and any subtenant rents from UPS go to Phase Three, Inc.

EX-10.39 7 b42939aiex10-39.txt FOURTH LEASE AGREEMENT Exhibit 10.39 FOURTH LEASE AMENDMENT The Lease dated September 27th, 1992 between the ARTHUR SEGAL TRUST and PHASE THREE, INC. for the premises at 2701 MCMILLAN ROAD is hereby modified as follows: SECTION 1.04, PROPERTY: The property now includes the entire property at 2701 and 2705 McMillan Road, containing two buildings of approximately 24,300 sq. ft. SECTION 1.05, TERM: The term of the lease is hereby extended for the period October 1, 2001 through May 31, 2007. SECTION 1.11, VEHICLE PARKING: All parking contained in the subject premises shall be included with the leased premises. SECTION 1.12 (A), RENT & OTHER Base rent shall be $22,000/mo. Rent shall increase each CHARGES year thereafter based upon the increase in the Consumer Price Index. In no event will the annual increase be less than 3% or more than 6%. SECTION 1.12 (B), OTHER Tenant shall be responsible for 100% of all other PERIODIC PAYMENTS: periodic payments required in the Lease. SECTION 4.05: Provision providing that Tenant employees may not use the parking lot without permission of the UPS is hereby deleted. OPTIONS TO RENEW: Tenant shall have two 3-year options to renew its Lease at a rate to be negotiated. Renewal terms shall commence June 1, 2007 and June 1, 2010. Tenant must advise Landlord of its intention to exercise its option to renew not later than December 1, 2006 for the first option, and December 1, 2009 for the second renewal period. Rental rate shall be negotiated between the parties to reflect the then prevailing market rate. In the event the parties are unable to negotiate an agreed rental rate by February 1, 2007 for the first renewal period, and February 1, 2010 for the second renewal period, the MAI appraisal firm of Schenberger, Taylor, McCormick & Jecker, or its successor firm, shall be retained by both parties to set the rental rate. In the event

Schenberger, Taylor, McCormick & Jecker or its successor firm no longer exists, the appraiser shall be an MAI appraiser appointed by the presiding judge of San Luis Obispo County, and the appraiser's primary place of business shall be in San Luis Obispo, California. The cost of the appraisal shall be paid equally by both parties, and the rate set by the appraiser shall be binding on both parties. Thereafter, for the remainder of the term, the rent shall be adjusted annually per the Consumer Price Index as provided earlier in this memorandum. IMPROVEMENT CONCESSION: Tenant shall be entitled to deduct $10,000 from its rental obligation for the month of October, 2001, as a credit for necessary cosmetic modifications to the premises. EXISTING TENANT: In the event that United Parcel Service remains a tenant after September 30th, 2000 it shall be deemed a subtenant of Phase Three, Inc. and Phase Three, Inc. shall be entitled to any rents received from United Parcel Service.

All other terms and conditions of the original Lease shall remain the same. PHASE THREE, INC. By: /s/ Samuel A. Gradess DATE: 5/23/01 ---------------------------- ---------------------- ARTHUR SEGAL TRUST By: /s/ [Signature unreadable] DATE: 6/6/01 ---------------------------------- -------------------