Exhibit 10.1

BELVEDERE PLACE

 
DATED AS OF JUNE 1, 2012

 
BETWEEN

 
BENTLY HOLDINGS CALIFORNIA LP,

 
AS LANDLORD,

 
AND

 
REDWOOD TRUST, INC.,

 
AS TENANT.

 
 

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BELVEDERE PLACE
 
BASIC LEASE INFORMATION
 
1.
Date:
 
June 1, 2012
       
2.
Landlord:
 
Bently Holdings California LP
       
3.
Tenant:
 
Redwood Trust, Inc.
       
4.
Property:
 
The real property legally described on Exhibit A attached hereto
       
5.
Project:
 
The Property, together with the buildings known as One and Two Belvedere Place
and all other improvements located thereon, commonly known as the Belvedere
Place Office Center containing 103,598 rentable square feet.
       
6.
Building:
 
That certain office building located within the Project located at One Belvedere
Place, Mill Valley, California
       
7.
Premises:
 
Subject to Section 1(b) of the Lease, 27,292 rentable square feet located on the
entire third floor and the designated portion of the second floor of the
Building, as outlined on the floor plan attached hereto as Exhibit B
       
8.
Load Factor:
 
Twenty-three percent (23%) for suite 200 and ten percent (10%) for suite 300
       
9.
Initial Term:
 
Six years
       
10.
Estimated Delivery Date:
 
June 1, 2012
       
11.
Outside Delivery Date:
 
June 1, 2012
       
12.
Commencement Date:
 
June 1, 2012
       
13.
Expiration Date:
 
May 31, 2018
       
14.
Initial Basic Rental Rate:
 
$121,381.17 per month, or $53.37 per square foot.

 

 
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15.
Fair Market Rental Value:
 
The rental rate per rentable square foot per month (taking into account
additional rent and all other monetary payments and considering any base year or
expense stop applicable thereto), including all escalations, for all leases for
comparable, unencumbered space for approximately the same lease term, executed
at the Project and/or any other comparable Class A building in terms of size,
quality, level of services, amenities, age and appearance located within the
Southern Marin County area from the northern border of Corte Madera and Larkspur
south to the Golden Gate Bridge (collectively, “Comparable Buildings”), during
the twelve (12) month period immediately preceding the date upon which the
determination of Fair Market Rental Value is made, and having a commencement
date within six (6) months of the date that the Fair Market Rental Value will
commence under this Lease, and taking into account any free rent, tenant
improvements, tenant improvement allowances, moving allowances and other
concessions granted to tenants under leases of such comparable space in
Comparable Buildings and the value, if any, of the existing tenant improvements
(with such value being judged with respect to the utility of such existing
tenant improvements to the general business office user and not this particular
Tenant), The Fair Market Rental Value shall be determined in accordance with the
terms and provisions of this Lease below.
       
16.
Security Deposit:
 
$364,143.51, in the form of company check, cashier’s check, or direct deposit,
net of existing security deposit, which will become part of the Security Deposit
as further described in Section 5 below
       
17.
Base Year:
 
2012
       
18.
Tenant’s Proportionate Share:
 
The ratio which the rentable area of the Premises bears to the rentable area of
the entire Project, which, subject to Section 1(b) of the Lease, is agreed to be
27.4%.
       
19.
Tenant Improvement Allowance:
 
None
       
20.
Space Plan Deadline:
 
N/A

  
 
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21.
Working Drawing Deadline:
 
N/A
       
22.
Landlord’s Broker:
 
N/A
       
23.
Tenant’s Broker:
 
Aaron Wright and Brad Hedrick of Studley, 150 California Street, 14th Floor, San
Francisco, CA  94111
       
24.
Extension Term:
 
One (1) five-year option.
       
25.
Guarantor:
 
None

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EXHIBITS

Exhibit A
Legal Description of Property

 
Exhibit B
Description of Premises

 
Exhibit C
Notice of Lease Term Dates

 
Exhibit D
Form of Tenant Estoppel Certificate

 
Exhibit E
Rules and Regulations

 
Exhibit F
Second Floor Build-Out/Improvement Plans

 
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BELVEDERE PLACE OFFICE LEASE
 
THIS LEASE is entered into by and between Landlord and Tenant, as specified in
the Basic Lease Information, which is incorporated herein by reference, as of
the date shown in Paragraph 1 of the Basic Lease Information.
 
1.           PREMISES.
 
(a)           Initial Premises.  Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord the Premises (as defined in Paragraph 7 of the Basic
Lease Information) upon and subject to the terms, covenants and conditions
herein set forth. Tenant covenants, as a material part of the consideration for
this Lease, to keep and perform each and all of said terms, covenants and
conditions for which Tenant is responsible and that this Lease is entered into
upon the condition of such performance.
 
(b)           Verification of Usable Square Feet of Premises, Building and
Project.  For the purposes of this Lease, “usable square feet” for the Premises
shall be calculated pursuant to the Standard Method for Measuring Floor Area in
Office Buildings, [ANSI Z65.1 — 1996], and “rentable square feet” shall equal
(i) the usable square feet contained within the Premises multiplied by (ii) the
sum of (x) one (1) plus (y) the Load Factor (as defined in Paragraph 8 of the
Basic Lease Information). The usable square feet and rentable square feet of the
Premises, Building and the Project are subject to verification by Tenant’s
architect within ninety (90) days following the Commencement Date. The usable
square feet and rentable square feet of the Premises are subject to verification
from time to time by Landlord’s planner/designer only in the event of a change
in the boundaries of the Premises and the parties hereby agree that the usable
square footage and rentable square footage of the Premises shall be as specified
in the Basic Lease Information unless and until (i) there is such a change in
the boundaries of the Premises from as shown on Exhibit B attached hereto and/or
(ii) Tenant exercises its right to remeasure as provided
above.   Notwithstanding the foregoing, Landlord shall have the right to verify
the usable and rentable square feet in the Premises after completion of the
Tenant Improvements.  In the event either Landlord or Tenant elects to remeasure
as provided herein, Tenant’s architect may consult with Landlord’s
planner/designer regarding any such verification (if applicable) as it pertains
to the Premises and such verification shall be subject to the approval of
Tenant’s architect (which approval shall not be unreasonably withheld,
conditioned or delayed), and Landlord’s architect may consult with Tenant’s
architect regarding any such verification as it pertains to the Premises and
such verification shall be subject to the approval of Landlord’s architect.  In
the event Landlord’s architect and Tenant’s architect cannot agree on the square
footage of the Premises, Landlord and Tenant shall select a mutually acceptable
independent architect to measure the Premises in accordance with this Section
1(b) and the decision of such architect shall be binding on Landlord and
Tenant.  Landlord and Tenant shall equally share the cost of such independent
architect.  In the event of such a change in the usable and rentable square
footage in the Premises as provided herein, all amounts, percentages and figures
appearing or referred to in this Lease based upon such incorrect amount
(including, without limitation, the amount of rent) shall be modified in
accordance with such determination. If such determination is made, it will be
confirmed in writing by Landlord to Tenant.

 
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2.           TERM.
 
(a)           Initial Term.  Except as otherwise provided herein, the term of
this Lease shall be the Initial Term as set forth in Paragraph 9 of the Basic
Lease Information, commencing on the Commencement Date, and ending as of the
Expiration Date, as set forth in Paragraph 12 and Paragraph 13, respectively, of
the Basic Lease Information. The Initial Term, together with any extension term
as to which a right has been properly exercised, shall be referred to as the
“Term.”  Notwithstanding anything to the contrary set forth in this Lease, in
the event that Landlord has not delivered the Premises to Tenant in the Delivery
Condition by the Outside Delivery Date, as set forth in Paragraph 11 of the
Basic Lease Information, Tenant shall have the right, at Tenant’s sole option,
to elect to terminate this Lease by delivery to Landlord of a notice (the
“Termination Notice”), which termination shall be effective thirty (30) days
after Tenant’s delivery of the Termination Notice to Landlord, unless within
such thirty (30) day period Landlord shall deliver the Premises to Tenant in the
Delivery Condition.  In the event Tenant shall elect to terminate this Lease,
Tenant must deliver to Landlord the Termination Notice prior to the date the
Premises are delivered to Tenant in the Delivery Condition.
 
(b)           Confirmation of Lease Term.  When the Commencement Date and the
Expiration Date have been ascertained, the parties shall promptly complete and
execute a Notice of Lease Term Dates in the form of Exhibit C attached hereto;
provided, however, that the failure of the parties to confirm same shall not
affect the Commencement Date or otherwise invalidate this Lease.
 
(c)           Lease Years.  The term “Lease Year” when used herein shall mean
the twelve months commencing on the Commencement Date and each subsequent period
of twelve months; provided, however, that if the Commencement Date does not
occur on the first day of the calendar month, the first Lease Year shall mean
the twelve months commencing on the first day of the calendar month following
the Commencement Date. As provided above, if the Commencement Date does not
occur on the first day of the calendar month, the first Lease Year shall include
the period, if any, from the Commencement Date to the end of the month in which
the Commencement Date occurs.
 
3.           BASIC RENT.
 
(a)           Basic Rent Payments.  Tenant agrees to pay Landlord each calendar
month, as base monthly rent, the Basic Rent as set forth in Paragraph 14 of the
Basic Lease Information, subject to adjustment pursuant to subsection (b) below.
Each monthly installment of Basic Rent shall be payable in advance on the first
day of each calendar month during the Term. If the Term commences or ends on a
day other than the first day of a calendar month, then the rent for the months
in which this Lease commences or ends shall be prorated (and paid at the
beginning of each such month) in the proportion that the number of days this
Lease is in effect during such month bears to the total number of days in such
month, and such partial month’s installment shall be paid no later than the
commencement of the subject month except for the first month’s rent which shall
be paid no later than the Commencement Date. In addition to the Basic Rent,
Tenant agrees to pay as additional rent the amount of additional rent and rent
adjustments and other charges required by this Lease. All rent shall be paid to
Landlord, without prior demand and without any deduction or offset (except as
otherwise provided in this Lease), in lawful money of the United States of
America, at the address of Landlord designated in Section 31 below or to such
other person or at such other place as Landlord may from time to time designate
in writing. Except as otherwise provided in this Lease, in the event of a
remeasurement or adjustment of the area of the Premises, the Basic Rent shall be
recalculated using the Basic Rental Rate referenced in Paragraph 14 of the Basic
Lease Information.

 
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(b)           Adjustment in Basic Rent.  Basic Rent shall be modified, per
rentable foot, pursuant to the following schedule:
 
June 1, 2012-May 31, 2013:
  $ 53.37            
June 1, 2013-May 31, 2014:
  $ 54.85            
June 1, 2014-May 31, 2015:
  $ 56.38            
June 1, 2015-May 31, 2016:
  $ 53.95            
June 1, 2016-May 31, 2017:
  $ 55.57            
June 1, 2017-May 31, 2018:
  $ 57.23  

 
(c)           Late Charge.  If Tenant fails to pay any installment of Basic
Rent, additional rent or other changes or otherwise fails to make any other
payment for which Tenant is obligated under this Lease within five (5) days
after Tenant’s receipt of notice that Tenant failed to pay same when due, then
Tenant shall pay to Landlord a late charge equal to five percent (5%) of the
amount so payable; provided, however, that if Tenant fails to pay any
installment of Basic Rent or additional rent when due more than three (3) times
in any twelve (12) month period, Landlord shall no longer be required to give
Tenant notice before imposing the late charge and Tenant shall pay to Landlord a
late charge equal to five percent (5%) of the amount due for any amount not paid
within five (5) days after the date due. Tenant acknowledges that late payments
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which costs are extremely difficult and impracticable to calculate.
The parties agree that the late charge described above represents a fair and
reasonable estimate of the extra costs incurred by Landlord as a result of such
late payment. Such late charge shall not be deemed a consent by Landlord to any
late payment, nor a waiver of Landlord’s right to insist upon timely payments at
any time, nor a waiver of any remedies to which Landlord is entitled hereunder.
In addition, all amounts payable by Tenant to Landlord hereunder, exclusive of
the late change described above, if not paid within five (5) days after such
amounts are due, shall bear interest from the due date until paid at the lesser
of (i) the rate of ten percent (10%) per annum or (ii) the maximum rate of
interest permitted to be collected by the Landlord by law (“Interest Rate”).

 
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4.           ADDITIONAL RENT.  In addition to the Basic Rent provided in Section
3 of this Lease, Tenant shall pay Tenant’s Proportionate Share as specified in
Paragraph 18 of the Basic Lease Information, of the increase in Actual Operating
Expenses for each Operating Year over the Base Amount (as such terms are defined
below). Tenant’s Proportionate Share of the Building may change based on
remeasurement or adjustment of the area of the Project or the Premises as
described in Section 1(b). In addition, whenever additional space is added to
the Premises, Tenant’s Proportionate Share of the Project shall increase
accordingly.
 
(a)           Estimated Operating Expenses.  Within ninety (90) days after the
close of each Operating Year during the Term following the Base Year, Landlord
shall furnish Tenant a written statement of the “Estimated Operating Expenses”
for the then current Operating Year, and a corresponding calculation of
additional rent, which shall be one-twelfth (1/12) of Tenant’s Proportionate
Share of the amount, if any, by which the Estimated Operating Expenses exceed
the Base Amount. Such additional amount shall be added to the monthly
installment of Basic Rent payable by Tenant under this Lease for each month
during such Operating Year.
 
(b)           Actual Operating Expenses.  Within ninety (90) days after the
close of each Operating Year (including the Base Year) during the Term, Landlord
shall deliver to Tenant a written statement setting forth the Actual Operating
Expenses during the preceding Operating Year and the amount by which the Actual
Operating Expenses exceed the Base Amount . If such expenses for any Operating
Year exceed the Estimated Operating Expenses paid by Tenant to Landlord pursuant
to Section 4(a), Tenant shall pay the amount of such excess to Landlord as
additional rent within thirty (30) days after receipt by Tenant of such
statement. If such statement shows such expenses to be less than the amount paid
by Tenant to Landlord pursuant to Section 4(a), then the amount of such
overpayment shall be paid by Landlord to Tenant within thirty (30) days
following the date of such statement or, at Landlord’s option, credited by
Landlord to the payment of rent next due. Additionally, promptly following the
reassessment of the value of the Project by any such governmental authority
subsequent to the leasing and occupancy of a substantial portion of the Project,
Landlord shall provide Tenant with a written statement reflecting the adjusted
Actual Operating Expenses for the Base Year. If, as a result of Landlord’s
recalculation of the Actual Operating Expenses for the Base Year Landlord
determines that the amount paid by Tenant pursuant to this Section 4 for any
Operating Year was less than the amount owed by Tenant for such Operating Year,
Tenant shall pay to Landlord the amount of such shortfall within thirty (30)
days after the date of Tenant’s receipt of such statement, and if, as a result
of Landlord’s recalculation of the Actual Operating Expenses for the Base Year
Landlord determines that amounts paid by Tenant pursuant to this Section 4 for
any Operating Year exceeded the amount owed by Tenant for such Operating Year,
then the amount of such overpayment shall be paid by Landlord to Tenant within
thirty (30) days following the date of such statement or, at Landlord’s option,
credited by Landlord to the payment of rent next due. Prior to the date that is
one (1) year after Tenant’s receipt of Landlord’s statement of Actual Operating
Expenses for any Operating Year, Landlord shall provide Tenant with reasonable
access, upon reasonable prior notice amid during normal business hours, to
inspect and photocopy Landlord’s books and records with respect to the Actual
Operating Expenses for such Operating Year (“Tenant’s Audit”), provided: (i)
Tenant is not in default under any of the material provisions of the Lease
(remaining uncured following the expiration of any applicable period for cure
under this Lease), (ii) Tenant shall pay any amounts owing hereunder when due,
(iii) Tenant’s Audit is performed by an employee of Tenant or certified, public
accountant who is not paid on a contingency fee basis, (iv) Tenant and any
Tenant Party (as defined in Section 6(c) hereof) performing Tenant’s Audit
execute a confidentiality agreement in a form reasonably acceptable to Landlord
and Tenant, (v) Tenant’s Audit shall be performed at Tenant’s sole cost and
expense unless otherwise provided herein and (vi) Tenant’s Audit shall be
completed within such sixty (60) days after Landlord gives Tenant access to its
books and records. If, within such sixty (60) day period, Tenant delivers to
Landlord the written results of Tenant’s Audit which states that Actual
Operating Expenses are less than Landlord’s determination of Actual Operating
Expenses (the “Discrepancy”), Landlord shall, promptly after its receipt of the
written results of Tenant’s Audit either (A) reimburse Tenant for the amount of
any overpayment made by Tenant to Landlord pursuant to this Section 4(b) and for
Tenant’s reasonable out-of-pocket costs and expenses incurred in performing the
Tenant’s Audit in the event the Discrepancy is greater than five percent (5%) or
(B) notify Tenant in writing that Landlord disagrees with the result of Tenant’s
Audit, in which event the Landlord and Tenant shall submit their respective
calculations of the Actual Operating Expenses to a neutral certified public
accountant appointed with the consent of both Landlord and Tenant, who shall
review the respective determinations of Actual Operating Expenses, and shall
make a final determination of the Actual Operating Expenses for the year in
question which shall be binding on both Landlord and Tenant, and if such
accountant determines that there is a Discrepancy, Landlord, promptly after its
receipt of such final determination, shall reimburse Tenant for the amount of
any overpayment made by Tenant to Landlord pursuant to this Section 4(b) and for
Tenant’s reasonable out-of-pocket costs and expenses incurred in performing the
Tenant’s Audit in the event the Discrepancy is greater than five percent (5%).

 
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(c)           Determinations.  The determination of Actual Operating Expenses
and Estimated Operating Expenses shall be made by Landlord reasonably and in
good faith. Any payments pursuant to this Section 4 shall be additional rent
payable by Tenant hereunder, and in the event of nonpayment thereof, Landlord
shall have the same rights with respect to such nonpayment as it has with
respect to any other nonpayment of rent hereunder.
 
(d)           End of Term.  If this Lease shall terminate on a day other than
the last day of an Operating Year, the amount of any adjustment between
Estimated Operating Expenses and Actual Operating Expenses with respect to the
Operating Year in which such termination occurs shall be prorated on the basis
which the number of days from the commencement of such Operating Year, to and
including such termination date, bears to three hundred sixty-five (365); and
any amount payable by Landlord to Tenant or Tenant to Landlord with respect to
such adjustment shall be payable within thirty (30) days after delivery of the
statement of Actual Operating Expenses with respect to such Operating Year.
 
(e)           Definitions.  The following terms shall have the respective
meanings hereinafter specified:
 
(1)           “Base Amount” shall mean an amount equal to the Actual Operating
Expenses for the Base Year (as defined in Paragraph 17 of the Basic Lease
Information); provided that, if the Project is not one hundred percent (100%)
occupied (with all tenants paying full rent, as contrasted with free rent, half
rent and the like) during the entire Base Year, then the Actual Operating
Expenses actually incurred for the Base Year shall be annualized to reflect the
Actual Operating Expenses that would have been incurred had the Project been one
hundred percent (100%) occupied (with all tenants paying full rent, as
contrasted with free rent, half rent and the like).

 
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(2)           “Operating Year” shall mean a calendar year commencing January 1
and ending December 31.
 
(3)           “Operating Expenses” shall mean all expenses paid or incurred by
Landlord for maintaining, owning, operating and repairing the Project (as
defined in Paragraph 5 of the Basic Lease Information), including, without
limitation, the Building, and the personal property used in conjunction
therewith, including, but not limited to expenses incurred or paid for: (i)
Property Taxes (as hereinafter defined); (ii) utilities for the Project,
including but not limited to electricity, power, gas, steam, oil or other fuel,
water, sewer, lighting, heating, air conditioning and ventilating; (iii)
permits, licenses and certificates necessary to operate, manage and lease the
Project; (iv) insurance Landlord reasonably deems appropriate to carry or is
required to carry by any mortgagee under any mortgage encumbering the Project or
any portion thereof or interest therein or encumbering any of Landlord’s or the
property manager’s personal property used in the operation of the Project; (v)
supplies, tools, equipment and materials used in the operation, repair and
maintenance of the Project; (vi) accounting, legal, inspection, consulting,
concierge and other services; (vii) equipment rental (or installment equipment
purchase or equipment financing agreements); (viii) management agreements
(including the cost of any management fee actually paid thereunder and the fair
rental value of any office space provided thereunder, up to customary and
reasonable amounts); (ix) wages, salaries and other compensation and benefits
(including the fair value of any parking privileges provided) for all persons
(not higher than Project manager) engaged in the operation, maintenance or
security of the Project, and employer’s Social Security taxes, unemployment
taxes or insurance, and any other taxes which may be levied on such wages,
salaries, compensation and benefits (provided that if an employee spends a
portion of his or her time on projects other than the Project, then the wages,
salaries, compensation and benefits of such employee and taxes thereon pursuant
hereto shall be reasonably and equitably prorated); (x) payments under any
easement, operating agreement, declaration, restrictive covenant, or instrument
pertaining to the sharing of costs in any planned development or similar
arrangement; (xi) operation, repair, and maintenance of all systems and
equipment and components thereof (including replacement of components); (xii)
janitorial service, alarm and security service, window cleaning, trash removal,
elevator maintenance, and cleaning of walks, parking facilities and building
walls (provided that janitorial service to the premises of other Project
occupants shall not be included in Operating Expenses if Tenant separately
provides janitorial service to the Premises at Tenant’s cost); (xiii)
replacement of wall and floor coverings, ceiling tiles and fixtures in lobbies,
corridors, restrooms and other common or public areas or facilities; (xiv)
maintenance and replacement of shrubs, trees, grass, sod and other landscape
items, irrigation systems, drainage facilities, fences, curbs, and walkways;
(xv) maintenance of parking facilities; (xvi) roof repairs and (xvii) capital
expenditures, which capital expenditures shall be amortized for purposes of this
Lease over their respective useful lives (together with interest thereon at the
rate of 10% per annum), made (A) primarily to reduce Operating Expenses, or (B)
to comply with any laws or other governmental requirements (except that
Operating Expenses shall specifically exclude work required to correct any
non-compliance of the Project with applicable laws or requirements existing as
of the Commencement Date where correction of such noncompliance was then legally
required as of the Commencement Date).  Notwithstanding the foregoing, Operating
Expenses shall not include (a) depreciation, interest and amortization on
mortgages or other debt costs or ground lease payments, if any; (b) legal fees
in connection with leasing, tenant disputes or enforcement of leases; (c) real
estate brokers’ leasing commissions; (d) improvements or alterations to tenant
spaces or allowances, inducements or other concessions for any tenant; (e) the
cost of providing any service directly to and paid directly by, any tenant; (f)
costs of any items to the extent Landlord receives reimbursement from insurance
proceeds or from a third party (such proceeds to be deducted from Operating
Expenses in the year in which received); (g) costs incurred by Landlord in
connection with the correction of structural and/or latent defects in the
original construction materials or installations for the Building; (h) costs
incurred by Landlord to lease space to new tenants or to retain existing tenants
including all marketing, advertising and promotional expenditures; (i) costs
arising from the presence of Hazardous Materials on or about the Building, the
Project or the land not placed on or about the Premises, Project, land or the
Building by the Tenant or any Tenant Panty; (j) any amount billed separately to
another tenant, whether or not the tenant actually pays such amount; (k) the
cost of charitable or political contributions; (1) the cost of sculpture,
paintings or other objects of art; (m) expenses incurred by Landlord in respect
of a development or buildings other than the Project; (n) salaries and benefits
of executives and management personnel above the level of the Project manager;
(o) increased costs of performance to the extent resulting from the negligence
or willful misconduct of Landlord or its agents, employees or contractors; (p)
capital expenditures except those capital expenditures made primarily to reduce
Operating Expenses (as to which the amortized cost to be included in Operating
Expenses in any Operating Year shall be limited to the amount of the actual
reduction in Operating Expenses during such Operating Year as a result thereof),
or to comply with any laws or other governmental requirements (provided that
Operating Expenses shall specifically exclude costs of work required to correct
any non-compliance of the Project with applicable laws or requirements existing
as of the Commencement Date where correction of such noncompliance was then
legally required as of the Commencement Date), which capital expenditures
(together with interest thereon at the rate of 10% per annum) shall be amortized
for purposes of this Lease over their respective useful lives; (q) rentals for
items (except when needed in connection with normal repairs and maintenance of
permanent systems) which if purchased, rather than rented, would constitute a
capital expenditure which is specifically excluded in (p) above (excluding,
however, equipment not affixed to the Building or Project which is used in
providing janitorial or similar services); (r) costs incurred by Landlord for
the repair of damage to the Building or Project, to the extent that Landlord is
or should be reimbursed by insurance proceeds, and costs of all capital repairs,
replacements or restorations resulting from a casualty, regardless of whether
such repairs are covered by insurance and costs due to repairs resulting from an
earthquake or flood to the extent such costs exceed $25,000; (s) expenses in
connection with services or other benefits which are not offered to Tenant or
for which Tenant is charged for directly; (t) overhead and profit increment paid
to Landlord or to subsidiaries or affiliates of Landlord for goods and/or
services in or to the Building and Project to the extent the same exceeds the
costs of such goods and/or services rendered by unaffiliated third parties on a
competitive basis; (u) Landlord’s general corporate overhead and general and
administrative expenses; (v) advertising and promotional expenditures, and costs
of signs in or on the Project or the Building identifying the owner of the
Project or Building or other tenants’ signs; (w) costs incurred in connection
with upgrading the Building or Project to comply with life, fire and safety
codes, ordinances, statutes or other laws in effect prior to the Commencement
Date, including, without limitation, the ADA, including penalties or damages
incurred due to such non compliance; (x) tax penalties incurred as a result of
Landlord’s failure to make payments and/or to file any tax or informational
returns when due; (y) costs for which Landlord has been compensated by a
management fee, and any management fees in excess of those management fees which
are normally and customarily charged by landlords of Comparable Buildings; (z)
costs associated with the operation of the business of the partnership or entity
which constitutes Landlord as the same are distinguished from the costs of
operation of the Building and Project, including partnership accounting and
legal matters, costs of defending any lawsuits with or claims by any mortgagee
(except as the actions of Tenant may be in issue), costs of selling,
syndicating, financing, mortgaging or hypothecating any of Landlord’s interest
in the Building or Project, costs of any disputes between Landlord and its
employees (if any) not engaged in Building or Project operation, disputes of
Landlord with Building or Project management, or outside fees paid in connection
with disputes with other tenants; (aa) any increase of, or reassessment in, real
property taxes and assessments in excess of two percent (2%) of the taxes for
the previous year, resulting from either (1) any sale, transfer, or other change
in ownership of the Building or the Project during the Term or from major
alterations, improvements, modifications or renovations to the Building or the
Project; (bb) the cost of any item included in Operating Expenses to the extent
that such cost is attributable solely to the use, management, repair, service,
insurance, condition, operation or maintenance of other office buildings in the
Project; or (cc) reserves for bad debts or for future improvements, repairs,
additions, etc.

 
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(4)           “Estimated Operating Expenses” shall mean Landlord’s estimate of
Operating Expenses for the following Operating Year, adjusted as if one hundred
percent (100%) of the total rentable area of the Property will be occupied for
the entire Operating Year, Base Year or Operating Year, as applicable, with all
tenants paying full rent, as contrasted with free rent, half rent and the like.
 
(5)           “Actual Operating Expenses” shall mean the actual Operating
Expenses for the Base Year or any Operating Year, as applicable, adjusted, (a)
if less than one hundred percent (100%) of the total rentable area of the
Project had been occupied for the entire Base Year or Operating Year, as
applicable, as if one hundred percent (100%) of the total rentable area of the
Project had been occupied for the entire Base Year or Operating Year, with all
tenants paying full rent, as contrasted with free rent, half rent and the like,
and (b) if the Property Taxes component of the Base Year or Operating Year, as
applicable, are based on an assessment of the value of the Project made by a
governmental authority prior to completion of the Project and/or prior to
leasing and occupancy of a substantial portion of the Project, then the Property
Taxes component of the Actual Operating Expenses for such Operating Year or Base
Year, as applicable, shall be adjusted by Landlord, in Landlord’s reasonable
discretion, as if the Project had been fully assessed in such Base Year or
Operating Year with all improvements completed therein.

 
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(6)           “Property Taxes” shall mean all real and personal property taxes
and assessments imposed by any governmental authority or agency on the Project;
any assessments levied in lieu of such taxes; any non-progressive tax on or
measured by gross rents received from the rental of space in the Project; and
any other costs levied or assessed by, or at the direction of, any federal,
state, or local government authority in connection with the use or occupancy of
the Project or the Premises or the parking facilities serving the Project; any
tax on any document to which Tenant is a party creating or transferring an
interest in the Premises, and any expenses, including the reasonable cost of
attorneys or experts, incurred by Landlord in seeking reduction by the taxing
authority of the above-referenced taxes, less any tax refunds obtained as a
result of an application for review thereof; but shall not include any net
income, franchise, estate, excess profits, documentary transfer or inheritance
taxes.
 
5.           SECURITY DEPOSIT
 
Tenant shall remit $364,143.51, equal to three months of initial Basic Rent, as
a security deposit in either cash or a letter of credit.  No interest shall be
paid on said deposit.  At the end of the tenancy, or any holdover thereof, the
deposit shall be returned to Tenant within fourteen days of Tenant’s departure
provided that Landlord may deduct from the deposit any amounts to compensate
Landlord for the Basic Rent, any additional rent, cleaning costs, or costs to
repair damages to the Building or the Premises caused by Tenant or Tenant’s
agents, invitees and/or licensees.  Landlord currently holds a security deposit
in the amount of $141,512.00 under Tenant’s existing lease with
Landlord.  Tenant shall increase the existing security deposit by $222,631.51,
so that the total Security Deposit held by Landlord equals $364,143.51.
 
6.           USES; HAZARDOUS MATERIAL.
 
(a)           Use.  Landlord agrees that the Premises may be used for (i) the
sale and trading of securities (including, without limitation) stocks and
bonds), (ii) providing private banking services, investment banking services,
trust services and other diversified financial services, (iii) the sale of
insurance, (iv) office use, including conference and computer facilities,
employee and visitor cafeteria and dining areas (including related kitchen
facilities) and/or (vi) and other legally permitted use consistent with the
character of the Project and Comparable Buildings.  Tenant, at its sole cost and
expense, shall promptly comply with all local, state and federal laws, statutes,
ordinances and governmental rules, regulations or requirements now in force or
which may hereinafter be in force relating to the use of the Premises,
including, without limitation, the Americans with Disabilities Act, 42 U. S .C.
§ 12101 et seq. and any governmental regulations relating thereto (collectively,
the “ADA”), including any required alterations within the Premises for purposes
of “public accommodations” under such statute. However, notwithstanding anything
to the contrary contained in this Lease, Landlord (and not Tenant), at
Landlord’s cost but as an item of Operating Expenses (subject to the provisions
of Section 4(e) above establishing certain exclusions from Operating Expenses),
shall be required to make any alterations or improvements to the Premises
constituting capital expenditures (including, without limitation, alterations or
improvements to the Premises in order to comply with the ADA constituting
capital expenditures) and to the Building Structure and Building Systems (as
those terms are defined in Section 7(a) below) to the extent such alterations or
improvements are required to cause the Premises to comply with applicable laws,
except that Tenant (and not Landlord), at Tenant’s sole cost, shall be
responsible for performing such alterations or improvements work to the extent
such compliance work is necessitated by the particular use of the Premises by
Tenant, any subtenant of Tenant or any of their respective employees, agents,
contractors, licensees or invitees (collectively, “Tenant Parties”) (as opposed
to mere occupancy for general office use) or by any Alterations to the Premises
under Section 8 below to the extent such Alterations are not normal and
customary business office improvements. Tenant shall not use or permit the
Premises to be used in any manner nor do any act which would increase the
existing rate of insurance on the Project (unless Tenant agrees to pay such
increased cost) or cause the cancellation of any insurance policy covering the
Project, nor shall Tenant permit to be kept, used or sold, in or about the
Premises, any article which may be prohibited by the standard form of fire
insurance policy, unless Tenant obtains an endorsement to the policy allowing
such activity. Tenant shall not during the Term (i) commit or allow to be
committed any waste upon the Premises, or any public or private nuisance in or
around the Project, (ii) allow any sale by auction upon the Premises, (iii)
place any loads upon the floor, walls, or ceiling of the Premises which endanger
the Building, (iv) use any apparatus, machinery or device in or about the
Premises which will cause any substantial noise or vibration or in any manner
damage the Building, (v) place any harmful liquids in the drainage system or in
the soils surrounding the Project, or (vi) disturb or unreasonably interfere
with other tenants of the Project. If any of Tenant’s office machines or
equipment unreasonably disturbs the quiet enjoyment of any other tenant in the
Building, then Tenant shall provide adequate insulation, or take such other
action as may be reasonably necessary to eliminate the disturbance, all at
Tenant’s sole cost and expense.

 
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(b)           Hazardous Material.  As used herein, the term “Hazardous Material”
means any hazardous or toxic substance, material or waste which is or becomes
regulated by, or is dealt with in, any local governmental authority, the State
of California or the United States Government. Accordingly, the term “Hazardous
Material” includes, without limitation, any material or substance which is (i)
defined as a “hazardous waste,” “extremely hazardous waste” or “restricted
hazardous waste” under Sections 25115, 25117 or 25122.7, or listed pursuant to
Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5
(Hazardous Waste Control Law), (ii) defined as a “hazardous substance” under
Section 25316 of the California Health and Safety Code, Division 20, Chapter
6.95 (Hazardous Materials Release Response Plans and Inventory), (iii) defined
as a “hazardous substance” under Section 25281 of the California Health and
Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous
Substances), (iv) petroleum, (v) asbestos, (vi) listed under Article 9 or
defined as hazardous or extremely hazardous pursuant to Article 11 of Title 22
of the California Administrative Code, Division 4, Chapter 20, (vii) designated
as a “hazardous substance” pursuant to Section 311 of the Federal Water
Pollution Control Act (33 U.S.C. § 1317), (viii) defined as a “hazardous waste”
pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act,
42 U.S.C. § 6902 et seq., or (ix) defined as a “hazardous substance” pursuant to
Section 101 of the Compensation and Liability Act, 42 U.S.C. § 9601 et seq.
Tenant shall not (either with or without negligence) cause or permit the escape,
disposal or release of any Hazardous Materials in or on the Premises or the
Project by any Tenant Parties. Tenant shall not allow the storage or use of
Hazardous Materials in any manner not sanctioned by law or by the highest
standards prevailing in the industry for the storage or use of such substances
or materials, nor allow to be brought onto the Building or Project any such
materials or substances, except that Tenant may maintain products in the
Premises which are incidental to the operation of its offices, such as photocopy
supplies, secretarial supplies and limited janitorial supplies which products
contain chemicals which are categorized as Hazardous Materials, provided that
the use of such products in the Premises by Tenant shall be in compliance with
applicable laws and shall be in the manner in which such products are designed
to be used. In addition, Tenant shall execute affidavits, representations and
the like from time to time at Landlord’s request concerning Tenant’s best
knowledge and belief with no independent investigation regarding the presence of
Hazardous Materials on the Premises. The covenants of this Section 6(b) shall
survive the expiration or earlier termination of the Lease.  To the best of
Landlord’s actual knowledge, there are no Hazardous Materials in the Building,
the Project or the Premises as of the date hereof.
 
(c)           Environmental Obligations.  Landlord and Tenant shall notify each
other in writing of (i) any enforcement, clean-up, removal or other governmental
action instituted with regard to Hazardous Materials involving the Project, (ii)
any claim made by any person against either of the parties related to Hazardous
Materials in the Premises or the Project, (iii) any reports made to any
governmental agency arising out of or in connection with Hazardous Materials in
the Premises or the Project including, without limitation, any complaints,
notices or warnings, and (iv) any spill, release, discharge or disposal of
Hazardous Materials in the Premises or the Project that is required to be
reported to any governmental agency or authority under any applicable
governmental law, rule or regulation. Tenant shall indemnify and hold Landlord
and its affiliates harmless with respect to any environmental claims or
liabilities which occur as a result of the breach by Tenant of any of Tenant’s
covenants set forth in Section 6(b) above or this Section 6(c) and from any
escape, seepage, leakage, spillage, discharge, emission, release from, onto or
into the Premises, the Building or the Project of any Hazardous Materials to the
extent caused by Tenant or any of Tenant Parties.  Landlord shall indemnify and
hold Tenant and the Tenant Parties harmless with respect to any environmental
claims or liabilities which occur as a result of the breach by Landlord of any
of Landlord’s covenants, representations or warranties set forth in Section 6(b)
above or this Section 6(c) and from any escape, seepage, leakage, spillage,
discharge, emission, release from, onto or into the Premises, the Building or
the Project of any Hazardous Materials to the extent caused by Landlord or its
employees, agents, contractors, licensees or invitees.

 
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7.           MAINTENANCE AND REPAIRS
 
(a)           Landlord’s Obligations.  Landlord shall maintain and keep in
first-class condition and state of repair (comparable to other Comparable
Buildings) and, subject to Section 6 above, in compliance with applicable laws,
the foundations, exterior walls, structural portions of the roof and other
structural portions of the Building (including the floor/ceiling slabs, curtain
wall, exterior glass and mullions, columns, beams, shafts (including elevator
shafts), stairs, parking facilities, stairwells, escalators, elevator cabs,
plazas, pavement, sidewalks, curbs, entrances, landscaping, art work,
sculptures, restrooms, mechanical, electrical and telephone closets, and all
common and public areas) (collectively, the “Building Structure”), and shall
maintain the electrical, plumbing, heating, ventilating, sprinkler and
life-safety equipment in the Building (collectively, the “Building Systems”);
and except that all damage or injury to the Premises, the Building or the
equipment and improvements therein caused by any act, neglect, misuse or
omission of any duty by Tenant Parties shall be paid by Tenant except to the
extent the cost of same is covered by insurance carried by Landlord hereunder
(or would have been covered had Landlord carried the insurance required
hereunder).  Subject to the provisions of Section 42(i) below, Landlord shall
commence performance of any such required repairs promptly (but in any event
within ten (10) days or sooner if required by reason of an emergency situation,
unsafe condition or threat to person or property) following receipt of written
notice from Tenant of the need for such repairs and shall thereafter diligently
prosecute the work of such repairs to completion. Subject to the following
provisions of this Section 7(a), Tenant hereby waives and releases its right to
make repairs at Landlord’s expense under Sections 1941 and 1942 of the
California Civil Code or under any similar law, statute or ordinance now or
hereafter in effect. Landlord makes no warranty as to the quality, continuity or
availability of the telecommunications services in the Building, and Tenant
hereby waives any claim against Landlord for any actual or consequential damages
(including damages for loss of business) if Tenant’s telecommunications services
in any way are interrupted, damaged or rendered less effective, except to the
extent caused by the negligence or willful misconduct of Landlord, its agents,
contractors or employees. However, if Landlord fails to perform any of
Landlord’s obligations under this Section 7(a) promptly after receipt of written
notice of the need therefore from Tenant, and (1) such failure results in a
situation which materially and adversely affects the operation of Tenant’s
business from the Premises or an material risk of injury to persons or material
property damage, (2) such failure is susceptible of cure by Tenant without work
upon or otherwise affecting the exterior appearance of the Building, or
adversely affecting the structural elements of the Building or the integrated
Building mechanical or utility systems, and (3) within three (3) business days
(or such shorter period as is reasonable under the circumstances if relating to
an emergency situation, unsafe condition or threat to person or property)
following Landlord’s receipt of a second written notice from Tenant of the
existence of such situation stating Tenant’s intent to exercise its rights under
this Section if such situation is not cured, Landlord fails to commence and
thereafter diligently prosecute to completion the cure thereof, then Tenant
shall have the right, but not the obligation, to promptly take such measures as
are necessary to cure such situation (using qualified, licensed contractors
reasonably experienced in performance of comparable work in Comparable
Buildings), and Landlord shall reimburse Tenant for the reasonable costs of
completing such cure, plus interest at the ten percent (10%) per annum (or such
lesser rate as is the then maximum lawful rate of interest) from the date such
costs were incurred by Tenant until such reimbursement by Landlord, within
thirty (30) days following Tenant’s submission to Landlord of reasonable
evidence of the amount of such costs. If within thirty (30) days following
Tenant’s completion of such cure and submission of such evidence of the costs
thereof, Landlord does not either pay to Tenant the amount requested or deliver
written notice (an “Objection Notice”) to Tenant objecting to Tenant’s claim
that Landlord was required to perform such work under this Lease and/or the
amount requested for reimbursement (provided that if Landlord so objects to a
portion of the amount requested for reimbursement, Landlord shall pay to Tenant
the undisputed amount), then, notwithstanding anything to the contrary contained
in this Lease, Tenant may offset the amount so requested, including interest,
for reimbursement from Tenant’s rental obligations next coming due under this
Lease; provided that if Landlord so delivers an Objection Notice, Tenant shall
not be entitled to any such offset (other than as to undisputed amounts if the
Objection Notice objects only to a portion of the amount requested for
reimbursement) and as Tenant’s sole remedy for amounts not so reimbursed or
offset, Tenant may proceed to claim a default by Landlord. Any dispute as to
which Landlord delivers an Objection Notice pursuant hereto shall be resolved by
arbitration in accordance with the provisions of Section 37 below.

 
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(b)           Tenant’s Obligations.  Tenant shall at its expense maintain,
repair and replace all portions of the Premises and the equipment or fixtures
therein, except to the extent specified in Section 7(a), above, at all times in
first-class condition and state of repair, all in accordance with the laws of
the State of California and all health, fire, police and other ordinances,
regulations and directives of governmental agencies having jurisdiction over
such matters. However, notwithstanding anything to the contrary contained in
this Lease, Landlord (and not Tenant), at Landlord’s cost as an item of
Operating Expenses (subject to the provisions of Section 4(e) above establishing
certain exclusions from Operating Expenses), shall be required to make any
alterations, additions or improvements to the Premises constituting capital
expenditures (including, without limitation, alterations, additions or
improvements to the Premises constituting capital expenditures required in order
to comply with the ADA) and to the Building Structure and Building Systems to
the extent such alterations, additions or improvements are required to cause the
Premises to comply with applicable laws, except that Tenant (and not Landlord),
at Tenant’s sole cost, shall be responsible for performing such alterations,
additions or improvements work to the extent such compliance work is
necessitated by the particular use of the Premises by Tenant or any of the
Tenant Parties (as opposed to mere occupancy for general office use) or by any
Alterations to the Premises under Section 8 below to the extent such Alterations
are not normal and customary business office improvements. Tenant shall replace
at Tenant’s sole expense any glass that may be broken in the Premises with glass
of the same size, specifications and quality, with signs thereon, if required.
At the expiration of the Term, Tenant shall surrender the Premises in good and
reasonably clean condition, normal wear and tear and damage by fire, other
casualty or condemnation excepted; provided, however, that Tenant shall have no
obligation to repaint, install new floor coverings or patch wall and floor
penetrations.
 
8.           ALTERATIONS.
 
(a)           Landlord’s Consent.  Tenant shall not make any alterations,
additions or improvements (collectively, “Alterations”) in or to the Premises or
make changes to locks on doors or add, disturb or in any way change any plumbing
or wiring without obtaining the prior written consent of Landlord, which consent
shall not be withheld provided that the Alterations would (i) not adversely
affect the Building Structure or Building Systems, (ii) not affect the exterior
appearance of the Building or (iii) comply with applicable laws (individually
and collectively, a “Design Problem”).  Notwithstanding anything to the contrary
set forth herein, Tenant shall not be required to obtain Landlord’s prior
consent with respect to any strictly cosmetic work performed within the Premises
by Tenant (i.e., paint, carpet and other similar alterations that do not affect
the Building Systems and Building Standard items).
 
(b)           Performance of Work.  All Alterations shall be made at Tenant’s
sole expense and by contractors or mechanics selected by Tenant, subject to
Landlord’s reasonable approval, except that Landlord shall have the right to
require use of Building standard contractors or mechanics for work affecting the
Building Systems or items under warranty (including, but not limited to, the
Building roof). All Alterations shall be made at such times and in such manner
as Landlord may from time to time reasonably designate, and shall become the
property of Landlord without its obligation to pay therefore at the expiration
or earlier termination of this Lease. All work with respect to any Alterations
shall be performed in a good and workmanlike manner, shall be of a quality equal
to or exceeding the then existing construction standards for the Project and
must be of a type, and the floors and ceilings must be finished in a manner,
customary for general office use. Alterations shall be diligently prosecuted to
completion to the end that the Premises shall be at all times a complete unit
except during the period necessarily required for such work. All Alterations
shall be made strictly in accordance with all laws, regulations and ordinances
relating thereto and if interior improvements installed in the Premises shall be
removed, Tenant shall either replace same with interior improvements of the same
or better quality or repair the damage caused by the removal so the Premises is
in good condition. Landlord hereby reserves the right to require any contractor
or mechanic working in the Premises to provide lien waivers and liability
insurance covering the Alterations to the Premises. In addition to the
foregoing, Tenant shall provide Landlord with evidence that Tenant or its
contractor carries “Builder’s All Risk” insurance in an amount reasonably
approved by the Landlord covering the construction of such Alterations, and such
other insurance as the Landlord may reasonably require, it being understood and
agreed that all of such Alterations shall be insured by Tenant pursuant to
Section 14(a) of this Lease immediately upon completion thereof.  Prior to the
performance of any Alterations, Tenant shall allow Landlord to enter the
Premises and post appropriate notices to avoid liability to contractors or
material suppliers for payment for any Alterations. All Alterations shall remain
in and be surrendered with the Premises as a part thereof at the expiration or
earlier termination of this Lease, without disturbance, molestation or injury;
provided, however, that all of Tenant’s personal property, including furniture,
trade fixtures, and equipment, may be removed by Tenant at any time during the
Term. Landlord may not require Tenant to remove any Alterations (including
cabling) or the Tenant Improvements from the Premises upon the expiration or
earlier termination of this Lease.

 
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(c)           Landlord’s Expenses; Administrative Fee.  Tenant shall pay to
Landlord, as additional rent, any out-of-pocket costs incurred by Landlord in
connection with the review and approval of the Alterations and for any
additional Building services provided to Tenant or to the Premises in connection
with any such alterations, additions or improvements which are beyond the normal
services provided to occupants of the Building as part of Operating
Expenses.  Under no circumstances shall Landlord be liable to Tenant for any
damage, loss, cost or expense incurred by Tenant on account of Tenant’s plans
and specifications, Tenant’s contractors or subcontractors, or Tenant’s design
of any work, construction of any work or delay in completion of any work.
 
(d)           Second Floor Build-Out. Tenant shall, at its sole cost, build out
and improve that designated portion of the second floor in the Building in
accordance with a work plan that is submitted by Tenant and agreed to by
Landlord.  Tenant’s proposed plan is attached hereto as Exhibit F and has been
approved by Landlord.  All work contemplated in Exhibit F shall be completed
prior to the Commencement Date, and Landlord agrees to cooperate with Tenant to
accomplish timely fulfillment of this deadline.
 
9.           TENANT’S PROPERTY
 
(a)           Removal Upon Expiration of Lease.  All articles of personal
property and all business and trade fixtures, machinery and equipment, furniture
and movable partitions owned by Tenant or installed by Tenant at its expense in
the Premises shall be and remain the property of Tenant and may be removed by
Tenant at any time during the Term, subject to the other requirements of this
Lease. If Tenant shall fail to remove all of such property from the Premises at
the expiration of the Term or within ten (10) days after any earlier termination
of this Lease for any cause whatsoever, Landlord may, at its option, on five (5)
days’ notice to Tenant, remove the same in any manner that Landlord shall
choose, and store such property without liability to Tenant for loss thereof. In
such event, Tenant agrees to pay Landlord upon demand any and all reasonable
expenses incurred in such removal, including reasonable court costs and
attorneys’ fees and storage charges on such property for any length of time that
the same shall be in Landlord’s possession. Landlord may, at its option, without
notice, sell said property or any of the same, at private sale and without legal
process, for such price as Landlord may obtain and apply the proceeds of such
sale to any amounts due under this Lease from Tenant to Landlord and to the
expense incident to the removal and sale of said property.

 
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(b)           Personal Property Taxes.  Tenant shall be liable for and shall
pay, at least five (5) days before delinquency, all taxes levied against any
personal property or trade fixtures placed by Tenant in or about the Premises.
If any such taxes on Tenant’s personal property or trade fixtures are levied
against Landlord or Landlord’s property or if the assessed value of the Premises
or Landlord’s obligations are increased by a value placed upon such personal
property or trade fixtures of Tenant and if Landlord, after written notice to
Tenant, pays the taxes or obligations based upon Tenant’s personal property or
trade fixtures, which Landlord shall have the right to do regardless of the
validity thereof, but only under proper protest if requested by Tenant, Tenant
shall, within thirty (30) days of Landlord’s demand, repay to Landlord the taxes
or obligations so levied against Landlord, or the portion of such taxes or
obligations resulting from such increase in the assessment.
 
(c)           Existing Furniture in Suite 200.  As referenced herein, Tenant is
a pre-existing tenant of Landlord in portions of the second floor of the
Building (“old space”).  Notwithstanding any provision herein to the contrary,
the parties agree that Tenant will leave substantially all of its furnishings in
the old space, which is being re-let by Landlord once Tenant vacates the old
space.  Tenant may sell the furnishings to Landlord for $1 upon Landlord’s
election to purchase; if Landlord declines to make this purchase election,
Tenant must, at its sole cost, dispose of all furnishings in the old space
within sixty (60) from Landlord’s notice of its intent not to purchase the
furnishings.  Landlord may make its purchase election, or impose the requirement
that Tenant sell the furnishings, at any time after June 1, 2012.  Upon
requiring Tenant to dispose of its furnishings through delivery of written
notice pursuant to the notice requirements contained within this Lease, Tenant
shall thereafter have thirty (30) days to remove the furnishings from the
Building and Property. This is a material lease covenant.
 
10.         ENTRY BY LANDLORD.  After not less than twenty four (24) hours prior
notice (which may be oral or written notice, notwithstanding anything to the
contrary in this Lease governing the manner of delivery of notices, and except
that in the event of an emergency, Landlord may provide shorter notice as may be
required under the circumstances, which may be no prior notice, if applicable
under the circumstances of the applicable emergency situation), Landlord, its
authorized agents, contractors, and representatives shall at any and all times
have the right to enter the Premises to inspect the same, to supply janitorial
service and any other service to be provided by Landlord to Tenant hereunder, to
show the Premises to prospective purchasers or (only during the final six (6)
months of the Term) tenants, to post notices, to alter, improve or repair the
Premises or any other portion of the Building, all without being deemed guilty
of any eviction of Tenant and without abatement of rent (except as otherwise
provided in this Lease). Except in the event of an emergency, Landlord shall
endeavor to coordinate any such entry with Tenant, so as to minimize the extent
of any unreasonable interference with Tenant’s business operations to the extent
practicable under the circumstances. Landlord may, in order to carry out such
purposes, erect scaffolding and other necessary structures where reasonably
required by the character of the work to be performed, provided that the
business of Tenant shall be interfered with as little as is reasonably
practicable. Landlord shall at all times have and retain a key with which to
unlock all doors in the Premises, excluding Tenant’s vaults and safes, Landlord
shall have the right to use any and all means which Landlord may deem proper to
open said doors in an emergency in order to obtain entry to the Premises. Any
entry to the Premises obtained by Landlord pursuant to the terms hereof shall
not be deemed to be a forcible or unlawful entry into the Premises, or an
eviction of Tenant from the Premises or any portion thereof, and Tenant hereby
waives any claim for damages for any injury or inconvenience to or interference
with Tenant’s business, any loss of occupancy or quiet enjoyment of the
Premises, and any other loss in, upon and about the Premises.  Notwithstanding
anything to the contrary set forth above, Tenant may designate certain areas of
the Premises as “Secured Areas” should Tenant require such areas for the purpose
of securing certain valuable property or confidential information.  Landlord may
not enter such Secured Areas except in the case of emergency or in the event of
a Landlord inspection, in which case Landlord shall provide Tenant with five (5)
days’ prior written notice of the specific date and time of such Landlord
inspection.

 
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11.         LIENS.  Tenant shall keep the Premises, the Building and the Project
free from any liens or encumbrances of any kind or nature arising out of any
work performed, materials ordered or obligations incurred by or on behalf of
Tenant.
 
12.         INDEMNIFICATION.
 
(a)           Indemnity by Tenant.  Except to the extent caused by the
negligence or willful misconduct of Landlord or its members, partners, managers,
shareholders, officers, directors, trustees, employees, agents or contractors
(collectively, the “Landlord Parties”) and not covered by the insurance
maintained by Tenant (and which would not have been so covered had Tenant
maintained the insurance required to be maintained by Tenant under this Lease),
Tenant shall indemnify, defend, and hold harmless Landlord, Landlord’s members,
shareholders, partners, trustees and the Landlord’s Parties from and against all
losses, liabilities, damages, costs, expenses and claims arising from or
relating to (a) Tenant’s use of the Premises or the conduct of its business or
any activity, work, or thing done, permitted or suffered by Tenant in or about
the Premises, (b) any act, neglect, fault or omission of any of the Tenant
Parties, and (c) all reasonable costs, attorneys’ fees, expenses and liabilities
incurred in or about such claims or any action or proceeding brought thereon. In
case any action or proceeding shall be brought against any of the Landlord
Parties by reason of any such claim, Tenant upon written notice from Landlord
shall defend the same at Tenant’s expense by counsel reasonably approved in
writing by Landlord. Tenant, as a material part of the consideration to
Landlord, hereby assumes all risk of and waives all claims against the Landlord
Parties with respect to damage to property or injury to persons in, upon or
about the Premises from any cause whatsoever except that which is caused by the
negligence or willful misconduct of Landlord or the Landlord Parties or by the
failure of Landlord to observe any of the terms and conditions of this Lease
where such failure has persisted for an unreasonable period of time after
written notice to Landlord of such failure.

 
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(b)           Indemnity by Landlord.  Except to the extent caused by the
negligence or willful misconduct of Tenant or any of the Tenant Parties or any
of Tenant’s members, partners, managers, shareholders, officers, directors,
trustees or agents (all of the foregoing including Tenant and Tenant Parties are
collectively referred to herein as the “Tenant Indemnitees”) and not covered by
the insurance maintained by Landlord (and which would not have been so covered
had Landlord maintained the insurance required to be maintained by Landlord
under this Lease), Landlord shall indemnify, defend, and hold harmless Tenant
and the Tenant Indemnitees from and against all losses, liabilities, damages,
costs, expenses and claims arising from or relating to (a) any occurrence on the
common areas of the Project, or (b) any claim arising from the negligence or
willful misconduct of Landlord or any of the Landlord Parties and not covered by
the insurance maintained by Tenant (and which would not have been so covered had
Tenant maintained the insurance required to be maintained by Tenant under this
Lease), and (c) all reasonable costs, attorneys’ fees, expenses and liabilities
incurred in or about such claims or any action or proceeding brought thereon. In
case any action or proceeding shall be brought against any of the Tenant
Indemnitees by reason of any such claim, Landlord upon written notice from
Tenant shall defend the same at Landlord’s expense by counsel reasonably
approved in writing by Tenant.
 
13.         DAMAGE TO TENANT’S PROPERTY.  Notwithstanding anything to the
contrary in this Lease, the Landlord Parties shall not be liable for (a) any
damage to any property entrusted to employees of the Project or its property
managers, (b) loss or damage to any property by theft or otherwise, (c) any
injury or damage to persons or property resulting from fire, explosion, falling
plaster, steam, gas, electricity, water or rain which may leak from any part of
the Building or from the pipes, appliances or plumbing work therein or from the
roof, street or sub-surface or from any other place or resulting from dampness
or any other cause whatsoever, or (d) any damage or loss to the business or
occupation of Tenant arising from the acts or neglect of other tenants or
occupants of, or invitees to, the Project, except to the extent that such damage
is due to the negligence or willful misconduct of Landlord or any of the
Landlord Parties or the breach of this Lease by Landlord. Tenant shall give
prompt written notice to Landlord in case of fire or accident in the Premises or
in the Building or of defects therein or in the fixtures or equipment.
 
14.         INSURANCE.
 
(a)           Tenant’s Insurance.  Tenant shall, during the entire Term of this
Lease and any other period of occupancy, at its sole cost and expense, keep in
full force and affect the following insurance:
 
(1)           Standard form property insurance insuring against the perils of
fire, vandalism, malicious mischief, cause of loss-special form (“All-Risk”),
sprinkler leakage and earthquake sprinkler leakage. This insurance policy shall
be upon all trade fixtures and other property owned by Tenant, for which Tenant
is legally liable and/or that was installed by or on behalf of Tenant, and which
is located in the Building, including, without limitation, Alterations,
furniture, fittings, installations, fixtures, Tenant Improvements and any other
personal property, in an amount not less than the full replacement cost thereof.
If there shall be a dispute as to the amount which comprises full replacement
cost, the decision of Landlord or any mortgagees of Landlord shall be
presumptive.
 
(2)           Commercial General Liability Insurance insuring Tenant against any
liability arising out of the lease, use, occupancy, or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be in the
amount of Two Million Dollars ($2,000,000) Combined Single Limit for injury to
or death of one or more persons in an occurrence and Three Million Dollars
($3,000,000) aggregate, and for damage to tangible property (including loss of
use) in an occurrence, with an Additional Insured - Landlord Endorsement. The
policy shall insure the hazards of premises and operations, independent
contractors, contractual liability (covering the indemnity contained in Section
12 hereof) and shall (i) name Landlord as an additional insured, (ii) contain a
cross-liability provision, (iii) contain a provision that “the insurance
provided the landlord hereunder shall be primary and noncontributing with any
other insurance available to the landlord,” and (iv) include fire legal
liability coverage in the amount of One Million Dollars ($1,000,000).

 
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(3)           Workers’ Compensation and Employer’s Liability Insurance (as
required by state law).
 
(4)           If Tenant installs with prior approval of the Landlord, any
boiler, pressure object, machinery, fire suppression system, supplemental air
conditioning or other mechanical equipment within the Premises, Tenant shall
also obtain and maintain at Tenant’s expense, boiler and machinery insurance
covering loss arising from the use of such equipment.
 
 (5)  All motorized vehicles that Tenant parks at the Building, whether in or
outside the parking structure, must be insured at all times.  Tenant hereby
covenants that every vehicle belonging to Tenant or its agents/employees shall
be insured for replacement and casualty in accordance with California law.
 
(6)           Any other form or forms of insurance as Tenant or Landlord or any
mortgagees of Landlord may reasonably require from time to time in form, amounts
and for insurance risks against which a prudent tenant would protect itself and
then being required by other reasonable and prudent landlords of Comparable
Buildings of tenants comparable to Tenant.
 
All such policies shall be written in a form reasonably satisfactory to Landlord
and shall be taken out with insurance companies qualified to issue insurance in
the State of California and holding an A.M. Best’s Rating of “A-” and a
Financial Size Rating of “VII” or better, as set forth in the most current issue
of Best’s Key Rating Guide. Such insurance shall provide that it is primary
insurance, and not contributory with any other insurance in force for or on
behalf of Landlord. Prior to the commencement of the Term, Tenant shall deliver
to Landlord certificates of insurance evidencing the existence of the amounts
and forms of coverage required above and, except for the All-Risk insurance,
naming Landlord and any other person specified by Landlord, as an additional
insured. No such policy shall be cancelable, terminable or reducible in coverage
except after thirty (30) days prior written notice to Landlord. Tenant shall,
within ten (10) days prior to the expiration of such policies, furnish Landlord
with renewals or “binders” thereof, or Landlord may, on five (5) days notice to
Tenant, order such insurance and charge the cost thereof to Tenant as additional
rent, if Tenant fails to so notify Landlord. If Landlord obtains any insurance
that is the responsibility of Tenant under this Section 14, Landlord shall
deliver to Tenant a written statement setting forth the cost of any such
insurance and showing in reasonable detail the manner in which it has been
computed.
 
(b)           Landlord’s Insurance.  Landlord shall, during the entire term of
this Lease, as an item of Operating Expenses, keep in full force and affect the
following insurance:

 
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(1)           All Risk insurance (including a vandalism and malicious mischief
endorsement and sprinkler leakage coverage, and also covering such other risks
as Landlord or Landlord’s lender may require) upon the Project (excluding any
property which Tenant is obligated to insure under Section 14(a) above) in an
amount not less than the full replacement cost thereof (excluding footings,
foundations and excavation), and including commercially reasonable rental loss
coverage for losses covered by such insurance policy. Such insurance policy or
policies shall name Landlord as a named insured. The deductible under the All
Risk policy shall not exceed such commercially reasonable amount as Landlord
reasonably determines to be appropriate given prudent risk management practices
and the practices of comparable landlords of Comparable Buildings.
 
(2)           Commercial general liability insurance coverage, including
personal injury, bodily injury, broad form property damage, automobile, Premises
operations hazard, contractual liability, and products and completed operations
liability, in the amount of One Million Dollars ($1,000,000) Combined Single
Limit for injury to or death of one or more persons in an occurrence and Five
Million Dollars ($5,000,000) aggregate.
 
Landlord may satisfy its insurance obligations under this Lease by blanket,
umbrella and/or, as to liability coverage in excess of One Million Dollars
($1,000,000), excess liability coverage. All such policies shall be taken out
with insurance companies qualified to issue insurance in the State of California
and holding an A.M. Best’s Rating of “A” and a Financial Size Rating of “VIII”
or better, as set forth in the most current issue of Best’s Key Rating
Guide.  Upon request, Landlord shall deliver to Tenant certificates evidencing
Landlord’s maintenance of insurance in compliance with Landlord’s insurance
requirements set forth in this Lease.
 
15.         WAIVER OF SUBROGATION.  Whether any loss or damage to or within the
Project, the Building and/or the Premises is due to the negligence of either of
the parties hereto, their agents or employees, Landlord and Tenant do each
herewith and hereby release and relieve the other from responsibility for, and
waive their entire claim of recovery, for any loss or damage to the real or
personal property of the other located anywhere in the Project and including the
Project itself, arising out of or incident to the occurrence of any of the
perils which are covered by any fire insurance policy covering the Project (or
would have been covered by any fire insurance policy covering the Project had
the applicable party carried the insurance required to be carried hereunder). To
the extent that such risks above are, in fact, covered by insurance, each party
shall cause its insurance carriers to consent to such waiver and to waive all
rights of subrogation against the other party.  Notwithstanding the foregoing,
no such release shall be effective unless the aforesaid insurance policy or
policies shall expressly permit such a release or contain a waiver of the
carrier’s right to be subrogated.
 
16.         CASUALTY.  If the Building and/or the Premises are damaged by fire
or other perils covered by insurance carried by Landlord, Landlord and Tenant
shall have the following rights and obligations:

 
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(a)           Repair and Restoration
 
(1)           If the Building and/or the Premises are damaged or destroyed by
any such peril to the extent that the Building and/or the Premises cannot
reasonably be repaired, reconstructed and restored within one hundred eighty
(180) days from the date of such damage or destruction, Landlord shall, at its
sole option, as soon as reasonably possible thereafter, either (i) commence or
cause the commencement of the repair, reconstruction and restoration of the
Building and/or the Premises to substantially their condition existing
immediately prior to such casualty, and prosecute or cause the same to be
prosecuted diligently to completion, in which event this Lease shall remain in
full force and effect; or (ii) within thirty (30) days after such damage or
destruction, elect not to so repair, reconstruct or restore the Building and/or
the Premises, in which event this Lease shall terminate. In either event,
Landlord shall give Tenant written notice of its intention within said thirty
(30) day period. If Landlord elects not to restore the Building and/or the
Premises, this Lease shall be deemed to have terminated as of the date of such
damage or destruction.
 
(2)           If the Building and/or the Premises are partially damaged or
destroyed by any such peril to the extent that the Building and/or the Premises
reasonably may be repaired, reconstructed or restored within a period of one
hundred eighty (180) days from the date of such damage or destruction, then
Landlord shall commence or cause the commencement of and diligently complete or
cause the completion of the work of repair, reconstruction and restoration of
the Building and/or the Premises to substantially their condition existing
immediately prior to such casualty and this Lease shall continue in full force
and effect.
 
(b)           Uninsured Casualties.  If damage or destruction of the Building
and/or the Premises is due to any cause not covered by collectible insurance
carried by Landlord at the time of such damage or destruction and the costs of
such repair exceed Five Hundred Thousand Dollars ($500,000.00), Landlord may
elect to terminate this Lease, provided that Landlord may only elect to
terminate this Lease if Landlord also terminates the leases of all of Building
tenants. If the repairing or restoring of the damage is delayed or prevented for
longer than two hundred forty (240) days after the occurrence of such damage or
destruction by reason of weather, acts of God, war, governmental restrictions,
inability to procure the necessary labor or materials, or any cause that is
beyond the reasonable control of Landlord, Landlord may elect to be relieved of
its obligation to make such repairs or restoration and terminate this Lease, in
which case Landlord shall provide Tenant with thirty (30) days written notice of
its intent to terminate this Lease. Further, Landlord shall not have any
obligation to repair, reconstruct or restore the Premises and may terminate this
Lease when the damage resulting from any casualty covered under this Section 16
occurs during the last twelve (12) months of the Term and the Premises cannot be
repaired, reconstructed or restored within thirty (30) days after the date of
the casualty.

 
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(c)           Tenant’s Termination Right.  Notwithstanding anything to the
contrary contained in this Lease, in the event of material casualty damage to
the Premises not resulting in termination of this Lease by Landlord, Landlord
shall deliver written notice to Tenant within thirty (30) days following such
casualty damage or occurrence setting forth Landlord’s good faith estimate of
the time required for completion of repair and/or restoration of the Premises,
and if such estimated time exceeds one hundred eighty (180) days from the
occurrence of the casualty, Tenant may elect to terminate this Lease by written
notice to Landlord delivered within twenty (20) days following Tenant’s receipt
of such estimate notice. In addition, in the event such repair and/or
restoration of the Premises is not actually completed within two hundred forty
(240) days from the occurrence of the casualty (or such longer time period as
may have been estimated in such notice to Tenant), Tenant may elect to terminate
this Lease upon thirty (30) days prior written notice to Landlord, provided that
if such repair and/or restoration is completed within such thirty (30) day
period, such election to terminate shall be nullified and this Lease shall
continue in full force and effect.  In addition, and notwithstanding anything to
the contrary contained in this Lease, if the Premises or the Building is wholly
or partially damaged or destroyed within the final twelve (12) months of the
Term of this Lease so that Tenant shall be prevented from using the Premises for
thirty (30) consecutive days due to such damage or destruction, then Tenant may,
at its option, by notice to Landlord within sixty (60) days after the occurrence
of such damage or destruction, elect to terminate this Lease.
 
(d)           Termination of Lease.  Upon any termination of this Lease under
any of the provisions of this Section 16, Landlord and Tenant shall each be
released without further obligation to the other from the date possession of the
Premises is surrendered to Landlord or such other date as is mutually agreed
upon by Landlord and Tenant except for payments or other obligations which have
theretofore accrued and are then unpaid or unperformed.
 
(e)           Rent Abatement.  In the event of repair, reconstruction and
restoration by or through Landlord as herein provided, the rent payable under
this Lease (including Basic Rent and Tenant’s Proportionate Share of Operating
Expenses) shall be abated in the proportion that the rentable area of the
portion of the Premises that Tenant is prevented from using, and does not use,
bears to the total rentable area of the Premises.  However, in the event that
Tenant is prevented from conducting, and does not conduct, its business in any
portion of the Premises and the remaining portion of the Premises is not
sufficient to allow Tenant to effectively conduct its business therein, and if
Tenant does not conduct its business from such remaining portion, then the rent
for the entire Premises shall be abated.  Tenant’s abatement period shall
continue until Tenant has been given sufficient time, and sufficient access to
the Premises, the parking facilities and/or the Building, to rebuild such
portion it is required to rebuild, to install its property, furniture, fixtures,
and equipment to the extent the same shall have been removed and/or damaged as a
result of such damage or destruction.  Tenant shall not be entitled to any
compensation or damages for loss of the use of the whole or any part of the
Premises and/or any inconvenience or annoyance occasioned by such damage,
repair, reconstruction or restoration, nor shall Tenant be entitled to any
insurance proceeds, including those in excess of the amount required by Landlord
for such repair, reconstruction or restoration. Tenant shall not be released
from any of its obligations under this Lease due to damage or destruction of the
Building and/or the Premises except to the extent and upon the conditions
expressly stated in this Section 16.
 
(f)            Extent of Repair Obligation.  If Landlord is obligated to or
elects to repair or restore as herein provided, Landlord shall be obligated to
make repair or restoration only of those portions of the Building and the
Premises which were originally provided at Landlord’s expense, and the repair
and restoration of items not provided at Landlord’s expense shall be the
obligation of Tenant, except that Tenant shall be responsible for the repair of
all Tenant Improvements performed by Tenant under Section 30 below. Tenant shall
be entitled to all insurance proceeds payable to or received by Tenant in
connection with the Tenant Improvements or any other improvements insured by the
Tenant pursuant to Section 14 hereof.

 
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(g)           Waiver.  The provisions of California Civil Code § 1932(2) and §
1933(4), which permit termination of a lease upon destruction of the Premises,
are hereby waived by Tenant; and the provisions of this Section 16 shall govern
in case of such destruction.
 
17.         CONDEMNATION
 
(a)           Complete Taking.  If the whole of the Project, the Building or the
Premises or so much thereof shall be taken by condemnation or in any other
manner for any public or quasi-public use or purpose so that the Premises will
no longer be reasonably suitable for Tenant’s continued occupancy (as reasonably
determined by Tenant), this Lease and the term and estate hereby granted shall
terminate as of the date that possession of the Project, the Building or the
Premises is so taken (herein called “Date of the Taking”), and the Basic Rent
and other sums payable hereunder shall be prorated and adjusted as of such
termination date.
 
(b)           Partial Taking.  If only a part of the Building, the Project or
the Premises shall be so taken and the remaining part thereof after
reconstruction is reasonably suited for Tenant’s continued occupancy (as
reasonably determined by Tenant), this Lease shall be unaffected by such taking,
except that Landlord may, at its option, terminate this Lease by giving Tenant
written notice to that effect within sixty (60) days after the Date of the
Taking provided that in such event, Landlord also terminates the leases of all
other Building tenants. In such event, this Lease shall terminate on the date
that such notice from the Landlord to Tenant shall be given, and the Basic Rent
and other sums payable hereunder shall be prorated and adjusted as of such
termination date. Upon a partial taking after which this Lease continues in
force as to any part of the Premises, the Basic Rent and other sums payable
hereunder shall be adjusted according to the rentable area remaining.
 
(c)           Award.  Landlord shall be entitled to receive the entire award or
payment in connection with any taking without deduction therefrom for any estate
vested in Tenant by this Lease, and Tenant shall receive no part of such award,
including any award for the “leasehold bonus value” of this Lease, provided that
Tenant shall be entitled to make a separate claim for its relocation expenses,
the value of its personal property and fixtures belonging to Tenant actually
taken, the value of the Tenant Improvements and other improvements to the extent
paid for by Tenant and for the interruption of or damage to Tenant’s business
(not attributable to the “leasehold bonus value” of this Lease). Tenant hereby
expressly assigns to Landlord all of its right, title and interest in and to any
award or payment attributable to the “leasehold bonus value” of this Lease.
 
(d)           Waiver.  Except as may be otherwise provided herein, Tenant hereby
waives and releases any right to terminate this Lease under Sections 1265.120
and 1265.130 of the California Code of Civil Procedure or under any similar law,
statute or ordinance now or hereafter in effect relative to eminent domain,
condemnation or takings.
 
18.         ASSIGNMENT OR SUBLETTING.
 
(a)           Landlord’s Consent.  Without the express prior written consent of
Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed, Tenant shall not directly or indirectly, voluntarily or by operation of
law, sell, assign, encumber, pledge, or otherwise transfer or hypothecate all of
its interest in or rights with respect to the Premises (collectively,
“Assignment”), or permit all or any portion of the Premises to be occupied by
anyone other than Tenant or sublet all or any portion of the Premises or
transfer a portion of its interest in or rights with respect to the Premises
(collectively, “Sublease”).

 
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(b)           Notice to Landlord.  If Tenant desires to enter into an Assignment
or a Sublease, Tenant shall give written notice to Landlord of its intention to
do so (the “Transfer Notice”), containing (i) the name of the proposed assignee
or subtenant (collectively, “Transferee”), (ii) the nature of the proposed
Transferee’s business to be carried on in the Premises, (iii) the material terms
of the proposed Assignment or Sublease, including, without limitation, the
commencement and expiration dates thereof and the rent payable thereunder, (iv)
the portion of the Premises proposed to be assigned or subleased (the “Transfer
Space”), (v) and the most recent financial statement or other equivalent
financial information reasonably available to Tenant concerning the proposed
Transferee. Within fifteen (15) days after Landlord’s receipt of the Transfer
Notice, Landlord shall, by written notice to Tenant, elect to (1) consent to the
Sublease or Assignment, or (2) disapprove the Sublease or Assignment; provided,
however, that Landlord agrees not to unreasonably withhold its consent to the
Sublease or Assignment. Landlord’s consent shall not be deemed to have been
unreasonably withheld if the Transferee is a new concern with no previous
business history or if the Transferee intends to use the Premises (x) for
executive suites or any other use inconsistent with Section 6 or the operation
of a first-class office building or (y) in a manner which would increase the use
of, or the possibility of disturbance of, Hazardous Substances on the Property.
Landlord’s failure to make such election within fifteen (15) days after
Landlord’s receipt of the Transfer Notice shall be deemed to be Landlord’s
approval of the proposed Sublease or Assignment.
 
(c)           Permitted Transfers.  If Landlord consents to any Sublease or
Assignment as set forth in Section 18(b):
 
(1)           Tenant may thereafter, within one hundred eighty (180) days after
Landlord’s consent, enter into such Assignment or Sublease, but only with the
party and upon substantially the same terms as set forth in the Transfer Notice,
provided, however, that the financial terms contained in the Assignment or
Sublease shall be no less favorable to Tenant than those set forth in the
Transfer Notice.
 
(2)           In the case of a Sublease, Tenant shall pay to Landlord fifty
percent (50%) of the difference between (x) any and all sums actually received
by Tenant in connection with such Sublease (including key money, bonus money and
any payment in excess of fair market value for (A) services rendered by Tenant
in connection with such Sublease or (B) assets, fixtures, inventory, equipment
or furniture transferred by Tenant in connection with such Sublease, but
expressly excluding any payment up to the fair market value for the items
referenced in the foregoing clauses (A) and/or (B)), minus (y) the sum of the
proportionate amount (on a rentable square footage basis) of rent (including
Basic Rent and Tenant’s Proportionate Share of Operating Expenses) payable by
Tenant under this Lease for the Transfer Space plus any actual and reasonable
out-of-pocket costs incurred by the Tenant in connection with such Sublease
(including brokerage commissions, legal fees, improvement costs for work for the
benefit of the subtenant, improvement allowances or other monetary concessions
or inducements provided to the subtenant, the gross revenue as to the Transfer
Space paid to Landlord by Tenant for all days the Transfer Space was vacated
from the date that Tenant first vacated the Transfer Space until the date the
subtenant was to pay rent, costs of advertising the space for sublease and
unamortized cost of initial and subsequent improvements to the Premises by
Tenant [collectively, the “Transfer Costs”]), which amounts shall not be paid by
Tenant to Landlord until Tenant has recovered its Transfer Costs.  Once Tenant
has recouped its Transfer Costs, Tenant shall pay Landlord its share of the
amounts due hereunder on a monthly basis.
 
 
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(3)           In the case of an Assignment, Tenant shall pay to Landlord fifty
percent (50%) of any transfer or assignment fee, purchase price or other
consideration received by Tenant in connection with the Assignment attributable
to the value of this Lease (but Landlord shall not be entitled to any proceeds
paid for the sale of Tenant’s business which are not related to the value of
this Lease or for the fair market value of any assets, fixtures, inventory,
equipment or furniture transferred by Tenant in connection with such Assignment)
less the Transfer Costs, which amounts shall be paid by Tenant to Landlord as
provided in Section 18(c)(2) above.
 
(4)           Any Sublease or Assignment shall be subject to all of the
provisions of this Lease, and Landlord’s consent to any Sublease or Assignment
shall not be construed as a consent to any terms thereof which conflict with any
of the provisions of this Lease except to the extent that Landlord specifically
agrees in writing to be bound by such conflicting terms.
 
(d)          Continuing Liability. Tenant shall not be relieved of any
obligation to be performed by Tenant under this Lease, including the obligation
to obtain Landlord’s consent to any other Assignment or Sublease, regardless of
whether Landlord consented to any Assignment or Sublease. Any Assignment or
Sublease that fails to comply with this Section 18 shall be void. The acceptance
of Basic Rent or other sums by Landlord from a proposed Transferee shall not
constitute Landlord’s consent to such Assignment or Sublease.
 
(e)           Assumption by Transferee.  Each Transferee under an Assignment
shall assume all obligations of Tenant under this Lease and shall be and remain
liable jointly and severally with Tenant for the payment of Basic Rent,
additional rent and other charges, and for the performance of all other
provisions of this Lease. Each Transferee under a Sublease shall be subject to
this Lease. No Assignment shall be binding on Landlord unless Landlord shall
receive a counterpart of the Assignment and an instrument that contains a
covenant of assumption by the Transferee reasonably satisfactory in substance
and form to Landlord and consistent with the requirements of this Section 18 but
the failure of the Transferee to execute such instrument shall not release the
Transferee from its liability as set forth above. Tenant shall reimburse
Landlord, within thirty (30) days after Tenant’s receipt of an invoice
therefore, for any reasonable costs (not to exceed $1,000) that Landlord may
incur in connection with any proposed Assignment or Sublease, including
Landlord’s reasonable attorneys’ fees and the costs of investigating the
acceptability of any proposed Transferee.
 
(f)           Default; Waiver.  Any Assignment or Sublease in violation of this
Section 18 shall be void.  The acceptance of rent or additional charges by
Landlord from a purported assignee or sublessee shall not constitute a waiver by
Landlord of the provisions of this Section 18.

 
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(g)          Intentionally Omitted.
 
(h)          Use by Affiliates.  Tenant shall have the right, without consent of
Landlord, to assign this Lease or to sublease all or any portion of the
Premises, to (i) any person or entity which, directly or indirectly, controls
Tenant or is controlled by Tenant or is under common control with Tenant, (ii)
any successor to Tenant by merger, consolidation or other operation of law,
(iii) any person or entity to whom all or substantially all of the assets of
Tenant are conveyed or (iv) any person or entity purchasing the business which
the Tenant conducts at the Premises so long as the Premises are used in a manner
consistent with the requirements of this Lease.  The term “control” shall mean
ownership, directly or indirectly, of more than fifty percent (50%) of the
equity and voting interests of Tenant or such entity, as the case may be.
 
(i)           Recognition Agreement.  To the extent that Tenant enters into a
Sublease for all of the Premises, Landlord, if it grants its consent to such
Sublease, shall also simultaneously execute and deliver a recognition agreement
pursuant to which Landlord shall agree that in the event Tenant defaults under
this Lease and this Lease is terminated, the Sublease shall be recognized as a
direct lease between Landlord and the subtenant on the terms and conditions of
the sublease to the extent same are not inconsistent with, or contrary to, the
provisions of this Lease and at a rental rate which is the higher of the rental
rate under this Lease or the rental rate under the sublease.
 
(j)           Occupancy By Others.  Tenant may allow any person or company which
is a client or customer of Tenant or which is providing service to Tenant or one
of Tenant’s clients to occupy certain portions of the Premises without such
occupancy being deemed an assignment or subleasing as long as no new demising
walls are constructed to accomplish such occupancy and as long as such
relationship was not created as a subterfuge to avoid the obligations set forth
in this Section 18.
 
19.        SUBORDINATION AND NON-DISTURBANCE.  Subject to the last sentence of
this Section 19, Tenant agrees that this Lease is and shall be subordinate to
any mortgage, deed of trust, ground lease, underlying lease or other prior lien
(hereinafter “Prior Lien”) that may heretofore or hereafter be placed upon the
Project or the Building, and all renewals, replacements and extensions thereof.
If any Prior Lien holder wishes to have this Lease prior to its Prior Lien, then
and in such event, upon such Prior Lien holder’s notifying Tenant to that
effect, this Lease shall be deemed prior to the Prior Lien. If any ground lease
or underlying lease terminates for any reason or any mortgage or deed of trust
is foreclosed or a conveyance in lieu of foreclosure is made for any reason,
Tenant shall, notwithstanding any subordination, attorn to and become the tenant
of the successor in interest to Landlord, provided that such successor in
interest recognizes the interest of Tenant under this Lease if no default under
this Lease then exists beyond all applicable notice and cure periods. Within
fifteen (15) days of presentation, Tenant shall execute any documents which any
such Prior Lien holder may require to effectuate the provisions of this Section
19. Notwithstanding anything to the contrary contained herein, Tenant’s
obligation to subordinate this Lease to the holder of any Prior Lien hereafter
placed upon the Project or the Building shall be conditioned upon such Prior
Lien holder’s executing and delivering to Tenant an agreement of subordination,
non-disturbance and adornment with Tenant in commercially reasonable form
reasonably designated by such Prior Lien holder and reasonably acceptable to
Tenant in which the Prior Lien holder agrees not to disturb Tenant in its
possession of the Premises.  Landlord represents and warrants to Tenant that as
of the date hereof, the Building and Project are not subject to any ground
lease, mortgage or lien.

 
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20.        ESTOPPEL CERTIFICATE.  Tenant will, upon ten (10) business days prior
request by Landlord, execute, acknowledge and deliver to Landlord a statement in
writing executed by Tenant, substantially in the form of Exhibit D attached
hereto, certifying, among other things, the date of this Lease, that this Lease
is unmodified and in full force and effect (or, if there have been
modifications, that this Lease is in full force and effect as modified, and
setting forth such modifications) and the date to which the Basic Rent and
additional rent and other sums payable hereunder have been paid, and either
stating that to the knowledge of Tenant no default exists hereunder on the part
of Landlord or Tenant or specifying each such default of which Tenant may have
knowledge and such other matters as may be reasonably requested by Landlord. The
parties agree and intend that any such statement by Tenant may be relied upon by
any prospective purchaser or mortgagee of the Building or the Project. Tenant’s
failure to timely deliver such a statement shall be deemed to be an
acknowledgment by Tenant that this Lease is in full force and effect without
modification (except as set forth by Landlord), there are no uncured defaults
under this Lease by Landlord and no more than one monthly installment of Basic
Rent and additional rent and other sums payable hereunder have been paid in
advance.  Landlord will, upon ten (10) business days prior request by Tenant,
execute, acknowledge and deliver to Tenant a statement in writing executed by
Landlord substantially in the form of Exhibit D attached hereto with such
changes as may be required when Tenant is the requesting party.

 
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21.         SERVICES.
 
(a)           Standard Services.  Landlord shall maintain the public and common
areas of the Project and the Building, such as lobbies, stairs, corridors and
restrooms, in first-class condition and state of repair consistent with
Comparable Buildings, except for damage occasioned by the acts or omissions of
the Tenant Parties, which shall be repaired at Tenant’s sole cost and expense
except to the extent the cost of such repair is covered by insurance carried by
Landlord (or would have been covered had Landlord carried the insurance required
to be carried hereunder). Landlord shall be solely responsible for providing
janitorial services to the Premises comparable to janitorial services provided
in Comparable Buildings. Notwithstanding the foregoing, Tenant may elect, from
time to time with respect to any calendar month(s), by delivery of written
notice to Landlord not less than forty-five (45) calendar days prior to the
commencement of such month(s), to be responsible for providing janitorial
services to the Premises, or to a portion thereof as specified in such notice,
which janitorial services shall be consistent with those janitorial services
provided by Landlord to other tenants in the Building, in which event Tenant
shall be responsible to perform such janitorial services in such month(s) and
Tenant shall receive a monthly credit to the Basic Rent due hereunder for such
respective month(s), on a month-by-month basis, in an amount equal to $.07 per
rentable square foot of space for that portion of the Premises as specified in
such notice for which Tenant so elects to provide such janitorial services.
Tenant shall have access to the Premises and Project parking garage at all
times. Landlord shall furnish the Premises with a minimum of seven (7) watts
consumed load per rentable square foot within the Premises of electric power (in
addition to the electrical power required for lighting and base Building HVAC)
for operation of typical general office machines, hot and cold running water to
restrooms, hot and cold water to the kitchen facility within the Premises
(through piping to be installed as a part of the Tenant Improvements) and
elevator service (including the use of one elevator as a freight elevator for
deliveries and construction purposes, but subject to availability based upon
common use of such elevator with other Building occupants) at all times during
the Term. Landlord shall furnish the Premises with heating or normal office air
conditioning comparable to the amounts being provided by comparable landlords of
Comparable Buildings between the hours of 6:00 a.m. and 6:00 p.m., Monday
through Friday, except for New York Stock Exchange-recognized holidays, and
between the hours of 9:00 a.m. and 12:00 p.m. on Saturday. Supplemental air
conditioning units and electricity therefore or special air conditioning
requirements, such as for any computer centers, and after-hours heating and air
conditioning shall be at Tenant’s expense at an hourly rate established by the
Landlord as its Actual Cost (as hereinafter defined).  For purposes hereof,
“Actual Cost” shall mean the actual out-of-pocket incremental extra cost to
Landlord to provide additional services without markup for profit, overhead,
depreciation or administration (to the extent Landlord’s administration costs
are duplicative of amounts being paid by Tenant as part of Operating Expenses).
After hours heating and air conditioning shall be charged by the Landlord to the
Tenant at the rate of $125.00/hour and shall be payable by the Tenant as
Additional Rent within thirty (30) days after receipt of an invoice therefore.
Tenant shall be solely responsible for the repair and maintenance of any
separate heating, ventilating, air conditioning or other equipment installed in
the Premises by the Tenant (with the Landlord’s consent). Landlord shall also
provide lighting replacement for Landlord-furnished lighting, toilet room
supplies, window washing with reasonable frequency as is provided in other
Comparable Buildings and janitorial service to all common areas and garages of
the Property comparable to that provided in Comparable Buildings. Landlord shall
not be liable to Tenant for any loss or damage caused by or resulting from any
variation, interruption or failure of said services due to any cause whatsoever;
and no temporary interruption or failure of such services incident to the making
of repairs, Alterations or improvements due to accident or strike or conditions
or events not under Landlord’s control shall be deemed an eviction of Tenant or
relieve Tenant from any of Tenant’s obligations hereunder unless otherwise
provided in this Lease.
 
(b)           Overstandard Use.  Tenant shall not, without the Landlord’s prior
written consent, use heat-generating machines, machines other than normal office
machines, or equipment or lighting located in the Premises, which may materially
affect the temperature otherwise maintained by the air conditioning system or
increase the water normally furnished for the Premises by Landlord. If such
consent is given, Landlord shall have the right to install supplementary air
conditioning units or other facilities in the Premises, including supplementary
or additional metering devices, and the Actual Cost thereof, including the
Actual Cost of installation, operation and maintenance shall be paid by Tenant
to Landlord within thirty (30) days of billing by Landlord. If Tenant uses water
or electricity in excess of that supplied by Landlord pursuant to subsection (a)
above, Tenant shall pay to Landlord, within thirty (30) days of billing, the
Actual Cost of such excess consumption, the cost of the installation, operation
and maintenance of equipment which is installed in order to supply such excess
consumption; and Landlord may install devices to separately meter any increased
use and in such event Tenant shall pay the increased cost directly to Landlord,
within thirty (30) days of demand, including the Actual Cost of such additional
metering devices (including installment costs).

 
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(c)           Abatement of Rent.  Notwithstanding the foregoing or anything in
this Lease to the contrary, in the event that Tenant is prevented from using,
and does not use, the Premises or any portion thereof, for three (3) consecutive
business days or ten (10) business days in any twelve (12) month period (the
“Eligibility Period”) as a result of (i) any repair, maintenance or alteration
performed by Landlord after the Commencement Date that substantially interferes
with Tenant’s use of the Premises, the parking facility and/or the Building, or
(ii) any failure by Landlord to provide Tenant with services or access to the
Premises, the Parking Facility and/or the Building, then Tenant’s Rent shall be
abated or reduced, as the case may be, after expiration of the Eligibility
Period for such time that Tenant continues to be so prevented from using, and
does not use, the Premises or a portion thereof, in the proportion that the
rentable area of the portion of the Premises that Tenant is prevented from
using, and does not use, bears to the total rentable area of the
Premises.  However, in the event that Tenant is prevented from conducting, and
does not conduct, its business in any portion of the Premises for a period of
time in excess of the Eligibility Period, and the remaining portion of the
Premises is not sufficient to allow Tenant to effectively conduct its business
therein, and if Tenant does not conduct its business from such remaining
portion, then for such time after expiration of the Eligibility Period during
which Tenant is so prevented from effectively conducting its business therein,
the Rent for the entire Premises shall be abated; provided, however, if Tenant
reoccupies and conducts its business from any portion of the Premises during
such period, the Rent allocable to such reoccupied portion, based on the
proportion that the rentable area of such reoccupied portion of the Premises
bears to the total rentable area of the Premises, shall be payable by Tenant
from the date such business operations commence.
 
22.        SIGNS AND ADVERTISING.  Landlord shall provide Tenant, at Landlord’s
sole cost and expense, with Building standard signage (as such standard is
established from time to time by Landlord) on the Building directory in the
lobby of the Building and at the entry to the Premises for Tenant.  In addition,
Tenant shall have the right to install, at Tenant’s sole cost and expense,
signage on or adjacent to the entry to the Premises, in the lobby and corridor
of any floor in which any part of the Premises are located and on the exterior
monument sign for the Building in the top tenant location (“Additional Tenant
Signage”); provided, however, that Tenant must present the desired signage to
Landlord for its review and approval, which shall not be unreasonably
withheld.  Any Additional Tenant Signage shall comply with Landlord’s signage
program for the Building; provided, however, that Tenant shall be permitted to
use its standard font and logo in connection with the Additional Tenant
Signage.  Tenant shall not erect or install or otherwise utilize signs, lights,
symbols, canopies, awnings, window coverings or other advertising or decorative
matter (collectively, “Signs”) on the windows, walls or exterior doors or
otherwise visible from the exterior of the Premises without first (a) submitting
its plans to Landlord and obtaining Landlord’s written approval thereof, which
approval shall not be unreasonably withheld, conditioned or delayed, and (b)
obtaining any required approval of any applicable governmental authority with
jurisdiction at Tenant’s sole cost and expense. All Signs approved by Landlord
shall be professionally designed and constructed in a first-class workmanlike
manner. Subject to Tenant’s right to use its standard font and logo, Landlord
shall have the right to promulgate from time to time additional reasonable and
non-discriminatory rules, regulations and policies relating to the style and
type of said advertising and decorative matter which may be used by any
occupant, including Tenant, in the Building, and may change or amend such rules
and regulations from time to time as in its discretion it deems advisable.
Tenant agrees to abide by such rules, regulations and policies. At the
expiration or earlier termination of this Lease, all such signs, lights,
symbols, canopies, awnings or other advertising or decorative matter attached to
or painted by Tenant upon the Premises, whether on the exterior or interior
thereof, shall be removed by Tenant at its own expense, and Tenant shall repair
any damage or injury to the Premises or the Building, and correct any unsightly
condition, caused by the maintenance and removal thereof.

 
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23.         PARKING.  Subject to the rules and regulations of the Town of Mill
Valley and the County of Marin, Tenant shall have the right to use, without
payment of additional rent for such parking (provided that nothing contained in
this Section 23 shall be deemed to limit Landlord’s right to include costs
relating to the Project parking areas in Operating Expenses to the extent
permitted under the provisions of Section 4 above), four (4) parking spaces for
every 1,000 rentable square feet in the Premises in the parking facilities for
the Project in common with other tenants, guests and invitees of the Project
during the Term of this Lease and otherwise subject to the reasonable rules and
regulations applicable to the parking facilities, including, without limitation,
hours of operation. The Project shall contain approximately four (4) parking
spaces for each 1,000 square feet of usable office space. Access to and from the
parking facilities shall be available twenty-four (24) hours per day, seven (7)
days per week in accordance with the Landlord’s reasonable and nondiscriminatory
rules and regulations established therefore from time to time.  Tenant has no
right to any “reserved” or “designated” parking space(s).
 
24.         RULES AND REGULATIONS.  Tenant agrees to observe and be bound by the
Rules and Regulations applicable to the Project, a copy of which is attached
hereto as Exhibit E. Landlord reserves the right to amend said Rules and
Regulations in a reasonable and nondiscriminatory manner, as Landlord in its
reasonable judgment may from time to time deem to be necessary or desirable for
the safety, care and cleanliness of the Project and the preservation of good
order therein, and Tenant agrees to comply therewith provided that no amendments
to the Rules and Regulations shall interfere with Tenant’s use of the Premises.
Landlord may make concessions requested by a tenant without granting the same
concessions to any other tenant. To the extent the Rules and Regulations
conflict with this Lease, this Lease shall control.
 
25.         TIME.  Time is of the essence of this Lease.
 
26.        QUIET ENJOYMENT.  Landlord covenants to control its activities and
personnel such that if and so long as no Event of Default by Tenant is in
existence under this Lease, Tenant shall hold and enjoy the Premises peaceably
and quietly, subject to the provisions of this Lease.
 
27.         DEFAULTS AND REMEDIES.
 
(a)          Defaults,  The occurrence of any one or more of the following
events shall constitute a default hereunder by Tenant (each an “Event of
Default”):
 
(1)           The failure by Tenant to make any payment of Basic Rent,
additional rent, other charges or any other payment required to be made by
Tenant hereunder, as and when due, where such failure shall continue for a
period of five (5) days after written notice thereof from Landlord to Tenant;
provided, however, that any such notice shall be in lieu of, and not in addition
to, any notice required under California Code of Civil Procedure § 1161
regarding unlawful detainer actions.

 
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(2)           The failure by Tenant to observe or perform any of the express or
implied covenants or provisions of this Lease to be observed or performed by
Tenant, other than as specified in Section 27(a) above, where such failure shall
continue for a period of thirty (30) days after written notice thereof from
Landlord to Tenant. Any such notice shall be in lieu of, and not in addition to,
any notice required under California Code of Civil Procedure § 1161 regarding
unlawful detainer actions. If the nature of Tenant’s default (other than a
default specified in Section 27(a)(1) above) is such that more than thirty (30)
days are reasonably required for its cure, then Tenant shall not be deemed to be
in default if Tenant shall promptly commence such cure within said thirty (30)
day period and thereafter diligently prosecute such cure to completion.
 
(b)          Remedies.  If an Event of Default exists, in addition to any other
remedies available to Landlord at law or in equity, Landlord shall have the
following rights and remedies:
 
(1)         The right to terminate the Lease and pursue its rights and remedies
provided by California Civil Code Section 1951 .2, in which event Landlord may
recover
 
(A)           The worth at the time of award of any unpaid rent which had been
earned at the time of such termination; plus
 
(B)           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 Tenant proves could have been
reasonably avoided; plus
 
(C)           The worth at the time of award of the amount by which the unpaid
rent for the balance of the Term after the time of award exceeds the amount of
such rental loss that Tenant proves could have been reasonably avoided; plus
 
(D)           Any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant’s failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom, specifically including, but not limited to, brokerage
commissions and advertising expenses incurred, expenses of remodeling the
Premises or any portion thereof for a new tenant, whether for the same or a
different use, and any special concessions made to obtain a new tenant; plus
 
(E)           At Landlord’s election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by applicable law so
long as not duplicative of other amounts paid or payable by Tenant.
 
The term “rent” as used hereinabove shall be deemed to be and to mean all sums
of every nature required to be paid by Tenant pursuant to the terms of this
Lease, whether to Landlord or to others. As used herein, the “worth at the time
of award” for (A) and (B) above shall be computed by allowing interest at the
Interest Rate. As used herein, the “worth at the time of award” for (C) above
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).

 
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(2)           The rights and remedies provided by California Civil Code Section
1951.4, that allow Landlord to continue this Lease in effect and to enforce all
of its rights and remedies under this Lease, including the right to recover
Basic Rent, additional rent and other charges as they become due, for so long as
Landlord does not terminate Tenant’s right to possession. Acts of maintenance or
preservation, efforts to relet the Premises or the appointment of a receiver
upon Landlord’s initiative to protect its interest under this Lease shall not
constitute a termination of Tenant’s right to possession;
 
(3)           The right to enter the Premises and remove therefrom all persons
and property, store such property in a public warehouse or elsewhere at the cost
of and for the account of Tenant, and sell such property and apply the proceeds
therefrom pursuant to applicable California law; and
 
(4)           The right to take steps necessary or appropriate to have a
receiver appointed for Tenant in order to take possession of the Premises and
apply any rental collected and exercise all other rights and remedies granted to
Landlord.
 
(c)          Reentry.  If an Event of Default exists, Landlord shall also have
the right, with or without terminating this Lease, to re-enter the Premises and
remove all persons and property from the Premises; such property may be removed
and stored in a public warehouse or elsewhere at the cost of and for the account
of Tenant. No re-entry or taking possession of the Premises by Landlord pursuant
to this Section 27(c) shall be construed as an election to terminate this Lease
unless a written notice of such intention is given to Tenant or unless the
termination thereof is decreed by a court of competent jurisdiction.
 
(d)          Remedies Cumulative; Waiver.  All rights, options and remedies of
Landlord contained in this Lease or provided by law or in equity shall be
construed and held to be cumulative, and no one of them shall be exclusive of
the other. No waiver of any default hereunder shall be implied from any
acceptance by Landlord of any Basic Rent, additional rent or other charges due
hereunder or any omission by Landlord to take any action on account of such
default, and no express waiver shall affect any default other than as specified
in said waiver. The consent or approval of Landlord to or of any act by Tenant
requiring Landlord’s consent or approval shall not be deemed to waive or render
unnecessary Landlord’s consent or approval to or of any subsequent similar acts
by Tenant.
 
28.        TRANSFER OF LANDLORD’S INTEREST. In the event of any transfer or
transfers of Landlord’s interest in the Project or the Building, other than a
transfer for security purposes only, and the assumption in writing by the
transferee of the obligations of Landlord under this Lease accruing with respect
to the period from and after the date of such transfer, Tenant agrees that
Landlord shall be automatically relieved of any and all obligations and
liabilities on the part of Landlord accruing with respect to the period from and
after the date of such transfer and Tenant agrees to attorn to the transferee.
 
29.        RIGHT TO PERFORM.  If Tenant shall fail to pay any sum of money,
other than Basic Rent required to be paid by it hereunder, or shall fail to
perform any other act on its part to be performed hereunder, and such failure
shall continue for thirty (30) days after written notice thereof by Landlord (or
such shorter period as may be reasonably appropriate in an emergency situation
of imminent risk of injury to persons or property damage), Landlord may, but
shall not be obligated so to do, and without waiving or releasing Tenant from
any obligations of Tenant, make any such payment or perform any such other act
on Tenant’s part to be made or performed as provided in this Lease. Tenant shall
reimburse Landlord for all costs incurred in connection with such payment or
performance within thirty (30) days of demand.

 
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30.        RIGHT OF FIRST REFUSAL.  During the initial and option term herein,
Tenant shall have a right of first refusal to lease any available space on the
second floor of the Building which becomes vacant and available (“ROFR
Space”).  This right of first refusal shall be exercised in the following
manner:  Upon recapture by landlord, Landlord may market the vacant and
available space.  Landlord shall notify Tenant, in writing and pursuant to the
provisions herein, of all material terms and conditions of bona fide offers
received during the marketing period (“Marketing Period”).  In the event
Landlord is ready to accept a bona fide proposed offer (“ROFR Offer”) to lease
space all or a portion of the ROFR Space, landlord shall present Tenant with the
terms of the ROFR Offer (“ROFR Notice”).  The terms of the ROFR Notice if
applicable, the lease term in the ROFR Notice shall be revised so that it is
coterminous with Tenant’s remaining Lease Term, and all tenant improvements,
abated rent, and or other lease concessions shall be prorated accordingly to
reflect the term.  Tenant shall have fifteen days from receipt of the ROFR
Notice to exercise its right of first refusal, and must do so in writing
pursuant to Paragraph 31 of this Lease.  Any exercise thereof shall become
binding, and the newly demised space shall be let pursuant to all terms and
conditions of this Lease, provided that the term of the tenancy shall be
coterminous with any term hereunder, and, Additional Rent, and other obligations
of Tenant under this Lease shall be adjusted to include the newly demised space.
The Basic Rent for the newly acquired space shall be in accordance with the
Basic Rent schedule set forth in Paragraph 3(b) above. This right of first
refusal may be exercised multiple times as second floor space becomes vacant and
available.
 
31.        NOTICES.  All notices under this Lease shall be in writing and sent
to the parties at the following addresses or at such other address as any party
hereto may designate to the other by notice delivered as provided herein:
 

 
   To Landlord:
Bently Holdings CA LP

 
240 Stockton Street, Eighth Floor

 
San Francisco, California  94108

 
Telephone No.: (415) 288-0202

 
Facsimile No.: (415) 288-0203

 
 
   To Tenant:
Redwood Trust, Inc.

 
One Belvedere Place. Suite 300

 
Mill Valley, California  94941

Any such notices shall be sent by (i) U.S. certified mail, postage prepaid,
return receipt requested, in which case notice shall be deemed delivered three
business days after timely deposit in the mail, (ii) a nationally recognized
overnight courier, in which case notice shall be deemed delivered one business
day after timely deposit with such courier; (iii) personally delivered, in which
case notice shall be deemed delivered upon receipt or refusal of receipt, or
(iv) electronic communication, whether by telex, telegram or telecopying, in
which case notice shall be deemed delivered on the date of confirmed dispatch
provided such electronic communication is followed up with a notice sent by
mail.

 
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32.        ATTORNEYS’ FEES.  If either party places the enforcement of this
Lease or any part hereof, or the collection of any Basic Rent, additional rent
or other charges due or to become due hereunder, or recovery of the possession
of the Premises, in the hands of an attorney, or files suit or brings an
arbitration upon the same, the non-prevailing (or defaulting) party shall pay
the other party’s reasonable legal and attorneys’ fees, costs and expenses,
including legal and attorneys’ fees, costs and expenses incurred in connection
with any appeals and any bankruptcy or insolvency proceedings involving Tenant
or this Lease. If Landlord is named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant’s occupancy hereunder, Tenant
shall pay to Landlord its reasonable costs and expenses in such suit, including
its reasonable attorneys’ fees. Any such attorneys’ fees and other expenses
incurred by either party in enforcing a judgment in its favor under this Lease
shall be recoverable separately from and in addition to any other amount
included in such judgment, and such attorneys’ fees obligation is intended to be
severable from the other provisions of this Lease and to survive and not be
merged into any such judgment. The terms “attorneys’ fees” and “attorneys’ fees,
costs and expenses” shall mean the fees, costs and expenses of counsel to the
parties hereto, which may include printing, photostating, duplicating and other
expenses, air freight charges, and fees billed for law clerks, paralegals and
other persons not admitted to the bar but performing services under the
supervision of an attorney, and the costs and fees incurred in connection with
the enforcement or collection of any judgment obtained in any such proceeding,
and shall include, specifically, all fees, costs and expenses of-expert
witnesses. For purposes of this Section 32, the term “prevailing party” shall
include a prevailing party as defined in California Code of Civil Procedure
Section 998.
 
33.        HOLDING OVER.  If Tenant holds over after the expiration or earlier
termination of the Term without the express prior written consent of Landlord,
Tenant shall become a tenant from month to month only, at a rental rate equal to
one hundred twenty-five percent (125%) of the Basic Rent, additional rent and
other charges in effect upon the date of such expiration (subject to adjustment
as provided in Section 4 hereof and prorated on a daily basis), and otherwise
subject to the terms, covenants and conditions herein specified, so far as
applicable; provided, however, that such percentage shall increase from one
hundred twenty-five percent (125%) to one hundred fifty percent (150%) following
the first ninety (90) days of any such holding over. Acceptance by Landlord of
rent after such expiration or earlier termination shall not result in a renewal
of this Lease and shall not waive Landlord’s right to bring an unlawful detainer
action against Tenant or otherwise remove Tenant from the Premises. If Tenant
fails to surrender the Premises upon the expiration of this Lease despite demand
to do so by Landlord, Tenant shall indemnify, defend and hold Landlord harmless
from all loss or liability, including without limitation, any claim made by any
succeeding tenant founded on or resulting from such failure to surrender.
 
34.        SURRENDER OF PREMISES.  Subject to Section 18(i), the voluntary or
other surrender of this Lease by Tenant, or a mutual cancellation hereof, shall
not work a merger, and shall, at the option of Landlord, operate as an
assignment to it of any subleases or subtenancies.
 
35.        NON-WAIVER.  Neither the acceptance of rent nor any other act or
omission of Landlord or Tenant at any time or times after the happening of any
event authorizing the cancellation or forfeiture of this Lease shall operate as
a waiver of any past or future violation, breach or failure to keep or perform
any covenant, agreement, term or condition hereof, or deprive the other party of
its rights and remedies under this Lease, or be construed so as to at any future
time stop Landlord or Tenant from promptly exercising any other option, right or
remedy that it may have under any term or provision of this Lease.

 
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36.        MORTGAGEE PROTECTION.  In the event of any default on the part of
Landlord, Tenant will give written notice by registered or certified mail to any
beneficiary of a deed of trust or mortgagee under a mortgage covering the
Project or the Building whose address shall have been furnished to Tenant, and
shall offer such beneficiary or mortgagee a reasonable opportunity to cure the
default (if such beneficiary or mortgagee is acting in good faith to cure the
Landlord’s default (if curable)), including time to obtain possession of the
Project or the Building by power of sale or a judicial foreclosure, if such
should prove necessary to effect a cure.  For purposes hereof, a reasonable
opportunity shall mean thirty (30) days after receipt of Tenant’s notice or such
longer period as may be necessary so long as the cure is commenced within said
thirty (30) day period and is being diligently pursued to completion.
 
37.        EXPEDITED DISPUTE RESOLUTION.  With the exception of the arbitration
provisions which shall specifically apply to the determination of the Fair
Market Rental Value and Landlord’s exercise of unlawful detainer remedies, the
provisions of this Section 37 contain the sole and exclusive method, means and
procedure to resolve any and all disputes or disagreements, including whether
any particular matter constitutes, or with the passage of time would constitute,
an Event of Default.  The parties hereby irrevocably waive any and all rights to
the contrary and shall at all times conduct themselves in strict, full, complete
and timely accordance with the provisions of this Section 37.  Any and all
attempts to circumvent the provisions of this Section 37 shall be absolutely
null and void and of no force or effect whatsoever.  As to any matter submitted
to arbitration to determine whether it would, with the passage of time,
constitute an Event of Default, such passage of time shall not commence to run
until any such affirmative determination, so long as it is simultaneously
determined that the challenge of such matter as a potential Event of Default was
made in good faith, except with respect to the payment of money.  With respect
to the payment of money, such passage of time shall not commence to run only if
the party which is obligated to make the payment does in fact make the payment
to the other party.  Such payment can be made “under protest,” which shall occur
when such payment is accompanied by a good faith notice stating why the party
has elected to make a payment under protest.  Such protest will be deemed waived
unless the subject matter identified in the protest is submitted to arbitration
as set forth in the following:

 
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(a)           Arbitration Panel.  Within ten (10)  days after delivery of
written notice (“Notice of Dispute”) of the existence and nature of any dispute
given by any party to the other party, and unless otherwise provided herein in
any specific instance, the parties shall each:  (i) appoint one (1) lawyer
actively engaged in the licensed and full time practice of law, specializing in
real estate, in the County of Marin for a continuous period immediately
preceding the date of delivery (“Dispute Date”) of the Notice of Dispute of not
less than ten (10) years, but who has at no time ever represented or acted on
behalf of any of the parties, and (ii) deliver written notice of the identity of
such lawyer and a copy of his or her written acceptance of such appointment and
acknowledgment of and agreement to be bound by the time constraints and other
provisions of this Section 37 (“Acceptance”) to the other parties hereto.  The
party who selects the lawyer may not consult with such lawyer, directly or
indirectly, to determine the lawyer’s position on the issue which is the subject
of the dispute.  In the event that any party fails to so act, such arbitrator
shall be appointed pursuant to the same procedure that is followed when
agreement cannot be reached as to the third arbitrator.  Within ten (10) days
after such appointment and notice, such lawyers shall appoint a third lawyer
(together with the first two (2) lawyers, “Arbitration Panel”) of the same
qualification and background and shall deliver written notice of the identity of
such lawyer and a copy of his or her written Acceptance of such appointment to
each of the parties.  In the event that agreement cannot be reached on the
appointment of a third lawyer within such period, such appointment and
notification shall be made as quickly as possible by any court of competent
jurisdiction, by any licensing authority, agency or organization having
jurisdiction over such lawyers, by any professional association of lawyers in
existence for not less than ten (10) years at the time of such dispute or
disagreement and the geographical membership boundaries of which extend to the
County of Marin or by any arbitration association or organization in existence
for not less than ten (10) years at the time of such dispute or disagreement and
the geographical boundaries of which extend to the County of Marin, as
determined by the party giving such Notice of Dispute and simultaneously
confirmed in writing delivered by such party to the other party.  Any such
court, authority, agency, association or organization shall be entitled either
to directly select such third lawyer or to designate in writing, delivered to
each of the parties, an individual who shall do so.  In the event of any
subsequent vacancies or inabilities to perform among the Arbitration Panel, the
lawyer or lawyers involved shall be replaced in accordance with the provisions
of this Section 37 as if such replacement was an initial appointment to be made
under this Section 37 within the time constraints set forth in this Section 37,
measured from the date of notice of such vacancy or inability, to the person or
persons required to make such appointment, with all the attendant consequences
of failure to act timely if such appointed person is a party hereto.
 
(b)           Duty.  Consistent with the provisions of this Section 37, the
members of the Arbitration Panel shall utilize their utmost skill and shall
apply themselves diligently so as to hear and decide, by majority vote, the
outcome and resolution of any dispute or disagreement submitted to the
Arbitration Panel as promptly as possible, but in any event on or before the
expiration of thirty (30) days after the appointment of the members of the
Arbitration Panel.  None of the members of the Arbitration Panel shall have any
liability whatsoever for any acts or omissions performed or omitted in good
faith pursuant to the provisions of this Section 37.
 
(c)           Authority.  The Arbitration Panel shall (i) enforce and interpret
the rights and obligations set forth in the Lease to the extent not prohibited
by law, (ii) fix and establish any and all rules as it shall consider
appropriate in its sole and absolute discretion to govern the proceedings before
it, including any and all rules of discovery, procedure and/or evidence, and
(iii) make and issue any and all orders, final or otherwise, and any and all
awards, as a court of competent jurisdiction sitting at law or in equity could
make and issue, and as it shall consider appropriate in its sole and absolute
discretion, including the awarding of monetary damages (but shall not award
consequential damages to either party and shall not award punitive damages
except in situations involving knowing fraud or egregious conduct condoned by,
or performed by, the person who, in essence, occupies the position which is the
equivalent of the chief executive officer of the party against whom damages are
to be awarded), the awarding of reasonable attorneys’ fees and costs to the
prevailing party as determined by the Arbitration Panel and the issuance of
injunctive relief.  If the party against whom the award is issued complies with
the award, within the time period established by the Arbitration Panel, then no
Event of Default will be deemed to have occurred, unless the Event of Default
pertained to the non payment of money by Tenant or Landlord, and Tenant or
Landlord failed to make such payment under protest.

 
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(d)           Appeal.  The decision of the Arbitration Panel shall be final and
binding, may be confirmed and entered by any court of competent jurisdiction at
the request of any party and may not be appealed to any court of competent
jurisdiction or otherwise except upon a claim of fraud on the part of the
Arbitration Panel, or on the basis of a mistake as to the applicable law.  The
Arbitration Panel shall retain jurisdiction over any dispute until its award has
been implemented, and judgment on any such award may be entered in any court
having appropriate jurisdiction.
 
38.        CHANGES TO THE PROJECT.  Landlord reserves the right at any time to
make changes, alterations, reductions and additions to the Project, including
the construction of other buildings or improvements in the Project, the leasing
of space to restaurant uses, the building of additional stories on any building,
without any liability or responsibility to Tenant. Landlord will not block
ingress and egress to the Premises. No rights to any view or to light or air
over any property, whether belonging to Landlord or any other person, are
granted to Tenant by this Lease. If at any time any windows of the Premises are
temporarily darkened or the light or view therefrom is obstructed by reason of
any repairs, improvements, maintenance or cleaning in or about the Project, the
same shall be without liability to the Landlord and without any reduction or
diminution of Tenant’s obligations under this Lease. Notwithstanding the
foregoing, Landlord agrees that it shall not make or permit any permanent
modification to the Building (as built substantially in accordance with the
Building Plans), on any changes, alterations, reductions and additions to the
Project, which change the nature of the Building to something other than a first
class office building, materially obstructs the natural light to the Premises or
which materially adversely affects (a) use or occupancy of the Premises, (b)
parking serving the Building, or (c) ingress, egress or access to or from the
Building and the Premises.
 
39.        WAIVER OF JURY TRIAL.  EACH PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION TO ENFORCE THE SPECIFIC PERFORMANCE OF THIS LEASE, FOR
DAMAGES FOR THE BREACH HEREOF, OR OTHERWISE FOR ENFORCEMENT OF ANY REMEDY
HEREUNDER. If either party commences litigation against the other for the
specific performance of this Lease, for damages for the breach hereof or
otherwise for enforcement of any remedy hereunder, the prevailing party shall be
entitled to recover from the other party such costs and reasonable attorneys’
fees as may have been incurred, including any and all costs incurred in
enforcing, perfecting and executing such judgment.
 
40.        OPTIONS TO EXTEND THE TERM
 
Tenant shall have one five-year option to extend the term of this Lease.  This
option (“Option”) must be exercised upon delivery to Landlord, no later than 180
days prior to the expiration of the Initial Term, written notice pursuant to
Paragraph 31 of the Lease.  Basic Rent for the Option shall adjust to 100% of
Fair Market Value as defined in the term page of the Lease.  In the event that
Landlord and Tenant are unable to agree upon Fair Market Value, the dispute
resolution procedures set forth in Paragraph 37 of this Lease shall be used to
resolve the matter.  There shall be no increases in Basic Rent during the Option
period. There are no other options to extend the Lease Term beside the Option.
 
(a)           In the event that the parties have not agreed upon the Fair Market
Value prior to the date four (4) months before the commencement of the extension
term, such value shall be determined by binding arbitration in Marin County,
California before a single arbitrator as follows:

 
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(i)            Landlord and Tenant shall have ten (10) days within which to
select one (1) mutually agreeable arbitrator.  If Landlord and Tenant fail to
agree on one (1) arbitrator within the ten (10) day period, either party may
promptly request JAMS to appoint an arbitrator for the matter, and JAMS’
selection shall be binding upon Landlord and Tenant.  JAMS shall appoint as
arbitrator an individual with the following qualifications:  (i) not less than
ten (10) years’ experience in the valuation of commercial rental properties in
Marin County, California; and (ii) has never been a direct or indirect employee
or agent of either Landlord or Tenant
 
(ii)           Landlord and Tenant shall each submit to the arbitrator, in
writing, a good faith determination of the Fair Market Value.
 
(iii)          The arbitrator selected must make a determination of the Fair
Market Value by choosing either the Landlord’s or Tenant’s determination of the
Fair Market Value, and the arbitrator’s choice shall be final and binding upon
the parties.  In determining the Fair Market Value, the arbitrator shall
consider all relevant factors such as market conditions and comparables.  From
the date of appointment, the arbitrator shall have 30 days within which to
render a decision as to the Fair Market Value.  Landlord and Tenant agree to
cooperate with the arbitrator and with each other in this regard.
 
(iv)          Judgment upon the award rendered by the arbitrator shall be
binding upon the parties and may be entered in any court of competent
jurisdiction only if necessary.  Each of the parties shall pay their own counsel
and arbitration fees and costs.
 
41.         GENERAL PROVISIONS
 
(a)          Entire Agreement.  This Lease contains all of the agreements of the
parties, and there are no verbal or other agreements which modify or affect this
Lease. This Lease supersedes any and all prior agreements made or executed by or
on behalf of the parties hereto regarding the Premises.
 
(b)          Terms and Headings.  The words “Landlord” and “Tenant” include the
plural as well as the singular, and words used in any gender include all
genders. The titles to sections of this Lease are not a part of this Lease and
shall have no effect upon the construction or interpretation of any part hereof.
 
(c)          Successors and Assigns.  All of the covenants, agreements, terms
and conditions contained in this Lease shall inure to and be binding upon
Landlord and Tenant and their respective permitted successors in interest and
assigns.
 
(d)          Brokers.  Landlord did not retain a broker.  Studley, Inc. was
retained to exclusively represent Tenant.  Landlord, at its sole cost and
expense, shall pay a commission to Studley, Inc. equal to $2.00 per rentable
square foot of the Premises per year of the  Term only (and not the  Option or
any holdover period/renewal period).  100% of this commission shall be due and
payable upon full execution and delivery of the Lease to Landlord.

 
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(e)          Liability of Landlord. Landlord’s obligations and liability to
Tenant under this Lease shall be limited solely to Landlord’s interest in the
Project, all post-judgment rents, issues and profits arising therefrom and the
proceeds from the sale thereof, and any available insurance proceeds and neither
Landlord nor any of the members in Landlord, nor any officer, director,
shareholder or partner of or in Landlord or any members in Landlord shall have
or incur any personal liability whatsoever with respect to this Lease.
 
(f)          Independent Covenants. Subject to the provisions of Section 7(a)
above, this Lease shall be construed as though the covenants herein between
Landlord and Tenant are independent and not dependent and Tenant agrees that if
Landlord fails to perform its obligations set forth herein, Tenant shall not be
entitled to make any repairs or perform any acts hereunder at Landlord’s expense
or to any setoff of amounts owing hereunder against Landlord except as otherwise
provided in this Lease; provided, however, that the foregoing shall in no way
impair the right of Tenant to commence a separate action against Landlord for
any violation by Landlord of the provisions hereof so long as notice is first
given to Landlord and any holder of a mortgage or deed of trust covering the
Building or the Project or any portion thereof, and an opportunity is granted to
Landlord and such mortgage holder to correct such violations as provided above.
 
(g)          Waiver of Redemption by Tenant.  Tenant herby waives, for Tenant
and for all those claiming under Tenant, any and all rights now or hereafter
existing to redeem by order or judgment of any court or by any legal process or
writ, Tenant’s right of occupancy of the Premises after any termination of this
Lease.
 
(h)          Severability. Any provision of this Lease which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provision hereof, and the remaining provisions hereof shall nevertheless remain
in full force and effect.
 
(i)           Force Majeure. Except as may be otherwise specifically provided
herein, time periods for Landlord’s or Tenant’s performance under any provisions
of this Lease not involving the payment of money shall be extended for periods
of time during which the nonperforming party’s performance is prevented due to
circumstances beyond the party’s control, including, without limitation,
strikes, embargoes, governmental regulations, acts of God, weather, war or other
strife. Tenant hereby waives and releases its right to terminate this Lease
under Section 1932(1) of the California Civil Code or under any similar law,
statute or ordinance now or hereafter in effect.
 
(j)           Prior Leases/Rental Agreements.  The parties acknowledge that
Tenant was/is a tenant of Landlord in the Building pursuant to two rental and
lease agreements.  These rental and lease agreements shall become null and void
as of the Commencement Date.  No party may rely upon these agreements after the
Commencement Date.
 
(k)          Examination of Lease. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or option to lease,
and it is not effective as a lease or otherwise until execution by and delivery
to both Landlord and Tenant.

 
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(l)           No Warranty.  In executing and delivering this Lease, Tenant has
not relied on any representations, including, but not limited to, any
representation as to the amount of any item comprising additional rent or the
amount of the additional rent in the aggregate or that Landlord is furnishing
the same services to other tenants, at all, on the same level or on the same
basis, or any warranty or any statement of Landlord which is not set forth
herein or in one or more of the exhibits attached hereto.
 
(m)         Right to Lease. Landlord reserves the absolute right to effect such
other tenancies in the Project as Landlord in the exercise of its sole business
judgment shall determine to best promote the interests of the Building and the
Belvedere Place office center so long as the Building remains a first-class
office building comparable to Comparable Buildings. Tenant does not rely on the
fact, nor does Landlord represent, that any specific tenant or type or number of
tenants shall, during the Term, occupy any space in the Building or the
Belvedere Place office center.
 
(n)         Transportation Management. Tenant shall exercise commercially
reasonable efforts to comply with all present or future programs intended to
manage parking, transportation or traffic in and around the Project, and in
connection therewith, Tenant shall take reasonable and responsible action for
the transportation planning and management of all employees located at the
Project by working directly with Landlord, any governmental transportation
management organization or any other transportation-related committees or
entities. Such programs may include, without limitation (i) restrictions on the
number of peak-hour vehicle trips generated by Tenant; (ii) increased vehicle
occupancy; (iii) implementation of an in-house ridesharing program and an
employee transportation coordinator; (iv) working with employees and any
Project, Building or area-wide ridesharing program manager; and (v) utilizing
flexible work shifts for employees.
 
(o)         Modification for Lender. If, in connection with Landlord’s obtaining
construction, interim or permanent financing for the Building or Project, the
lender shall request reasonable modifications in this Lease as a condition to
such financing, Tenant will not unreasonably withhold, delay or defer its
consent thereto, provided that such modifications do not increase the
obligations of Tenant hereunder, decrease Tenant’s rights or adversely affect
the leasehold interest hereby created or Tenant’s rights hereunder.
 
(p)         Requirements of Law. Landlord shall comply with all laws, rules and
regulations (including, without limitation, the Americans with Disabilities Act)
applicable to the common areas of the Building, other than such laws, rules and
regulations with which Tenant is obligated to comply under the terms of this
Lease.
 
(q)         Recording. Neither Landlord nor Tenant shall record this Lease nor a
short form memorandum hereof.
 
(r)           Applicable Laws. This Lease shall be governed by and construed
pursuant to the laws of the State of California.
 
(s)          Relationship of Parties. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venture or any
association between Landlord and Tenant, it being expressly understood and
agreed that neither the method of computation of rent nor any act or omission of
the parties hereto shall be deemed to create any relationship between Landlord
and Tenant other than the relationship of landlord and tenant.

 
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(t)          Landlord’s Title. Landlord’s title is and always shall be paramount
to the title of Tenant. Nothing herein contained shall empower Tenant to do any
act which can, shall or may encumber the title of Landlord.
 
(u)          Project or Building Name and Storage. Landlord shall have the right
at any time to change the name of the Building or Project and to install, affix
and maintain any and all signs on the exterior and on the interior of the
Project or Building as Landlord may, in Landlord’s sole discretion, desire.
Tenant shall not use the name of the Project or the Building (including the name
Belvedere Place) or use pictures or illustrations of the Project or the Building
in advertising or other publicity, without the prior written consent of the
Landlord (which consent shall not be unreasonably withheld).
 
(v)          Survival of Obligations. All provisions of this Lease which require
the payment of money or the delivery of property after the termination of this
Lease or require either party to indemnify, defend or hold the other harmless
shall survive the termination of this Lease.
 
(w)         Authority. Each individual executing this Lease represents that it
has all requisite power and authority to execute and deliver this Lease on
behalf of the entity for which it is signing, and by his or her signature, will
bind such party to the terms of this Lease.
 
(x)          Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
 
(y)         Consent/Duty to Act Reasonably.  Any time the consent of Landlord or
Tenant is required, such consent shall not be unreasonably withheld, conditioned
or delayed.  Whenever this Lease grants Landlord or Tenant the right to take
action, exercise discretion, establish rules and regulations or make allocations
or other determinations (other than decisions to exercise expansion,
contraction, cancellation, termination or renewal options), Landlord and Tenant
shall act reasonably and in good faith and take no action which might result in
the frustration of the reasonable expectations of a sophisticated tenant or
landlord concerning the benefits to be enjoyed under this Lease.
 
(z)          Landlord Bankruptcy Proceeding.  In the event that the obligations
of Landlord under this Lease are not performed during the pendency of a
bankruptcy or insolvency proceeding involving the Landlord as the debtor, or
following the rejection of this Lease in accordance with Section 365 of the
United States Bankruptcy Code, then notwithstanding any provision of this Lease
to the contrary, and in addition to any and all other remedies permitted by this
Lease and/or by applicable laws Tenant shall have the right to set off against
Rents next due and owing under this Lease (a) any and all damages caused by such
non-performance of Landlord’s obligations under this Lease by Landlord,
debtor-in-possession, or the bankruptcy trustee, and (b) any and all damages
caused by the non-performance of Landlord’s obligations under this Lease
following any rejection of this Lease in accordance with Section 365 of the
United States Bankruptcy Code.

 
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(aa)       Access.  Tenant shall be granted access to the Building, the Premises
and the parking provided to the Building twenty-four (24) hours per day, seven
(7) days per week, every day of the year.
 
(bb)       Prohibited Persons and Transactions.  Tenant and Landlord (each, a
“Representing Party”) each represents and warrants to the other (i) that neither
the Representing Party nor any person or entity that directly owns a 10% or
greater equity interest in it nor any of its officers, directors or managing
members is a person or entity (each, a “Prohibited Person”) with whom U.S.
persons or entities are restricted from doing business under regulations of the
Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury
(including those named on OFAC’s Specially Designated and Blocked Persons List)
or under any statute, executive order (including Executive Order 13224 (the
“Executive Order”) signed on September 24, 2001 and entitled “Blocking Property
and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism), or other governmental action, (ii) that the Representing
Party’s activities do not violate the International Money Laundering Abatement
and Financial Anti-Terrorism Act of 2001 or the regulations or orders
promulgated thereunder (as amended from time to time, the “Money Laundering
Act”), and (iii) that throughout the Term the Representing Party shall comply
with the Executive Order and with the Money Laundering Act.
 
(cc)       When Payment Is Due.  Whenever in this Lease a payment is required to
be made by one party to the other, but a specific date for payment is not set
forth or a specific number of days within which payment is to be made is not set
forth, or the words “immediately”, “promptly” and/or “on demand”, or the
equivalent, are used to specify when such payment is due, then such payment
shall be due thirty (30) days after the party which is entitled to such payment
sends written notice to the other party demanding payment.
 
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date
first above written.
 
LANDLORD:
BENTLY HOLDINGS CALIFORNIA LP,
 
a California limited partnership
     
By:
/s/ Amber Marie Bently
 
Name:
Amber Marie Bently
 
Its:
President
       
By:
/s/ Chris Bently
 
Name:
Chris Bently
 
Its:
Chief Executive Officer
   
TENANT:
REDWOOD TRUST, INC.
     
By:
/s/ Brett D. Nicholas
 
Name:
Brett F. Nicholas
 
Its:
Executive Vice President &
   
Chief Operating Officer

 
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EXHIBIT A
 
Legal Description of the Property
 
[Intentionally Omitted]

 
A-1

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EXHIBIT B
 
Description of the Premises
 
[Intentionally Omitted]

 
B-1

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EXHIBIT C
 
notice Of Lease Term dates
 
To:
                     

 
 
Re:
Office Lease dated June 1, 2012, between Bently Holdings California LP, a
California limited partnership (“Landlord”), and Redwood trust, Inc. (“Tenant”),
concerning the third floor and designated portions of the second floor at One
Belvedere Place, Mill Valley, California

 
Ladies and Gentlemen:
 
In accordance with the referenced Office Lease (the “Lease”), we wish to advise
you and/or confirm as follows:
 
 
1.
The Term shall commence on or has commenced on June 1, 2012 for a term of six
years ending on May 31, 2018.

 
 
2.
Rent commenced to accrue on June 1, 2012, in the amount of $121,381.17  per
month.

 
Initially capitalized terms used herein without definition shall have the
respective meanings given such terms in the Lease.
 
LANDLORD:
Bently Holdings California LP,   a California limited partnership        
By:
     
Name:
Christopher Bently
   
Title:
CEO
       
By:
     
Name:
Amber Marie Bently
   
Title:
President

 
C-1

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EXHIBIT D
 
Form of Tenant Estoppel Certificate
 
TENANT ESTOPPEL CERTIFICATE
 
To:
                     

Ladies and Gentlemen:

 Redwood Trust, Inc. (“Tenant”) hereby certifies as follows:
 
1.           The undersigned is the Tenant under that certain Office Lease dated
June 1, 2012 (the “Lease”), executed by BENTLY HODLINGS CALIFORNIA LP, a
California limited partnership (“Landlord”), as Landlord, and the undersigned,
as Tenant, covering a portion of the building located at One Belvedere Place,
Mill Valley, California designated as the entire third floor and designated
portions of the second floor (the “Premises”).  Initially capitalized terms used
herein without definition shall have the respective meanings given such terms in
the Lease.
 
2.           The Premises initially consists of approximately 27,292 rentable
square feet of space.  Tenant has paid to Landlord a security deposit of
$364,143.51. The Term of the Lease commenced on June 1, 2012 and the expiration
of the Lease is May 31, 2018.
 
3.           The Lease provides for one five-year option to extend the initial
term of the Lease.
 
4.           To Tenant’s actual knowledge, Landlord is not in any respect in
default in the performance of the terms and provisions of the Lease.  Tenant is
not in any respect in default under the Lease beyond all applicable notice and
cure periods and has not assigned, transferred or hypothecated the Lease or any
interest therein or subleased all or any portion of the Premises.
 
5.           There are no offsets or credits against rentals payable under the
Lease and no free rent periods or rental concessions have been granted to
Tenant.
 
Tenant hereby expressly acknowledges and agrees that _____________________ is
relying upon this Certificate.
 

 
“Tenant”
     
Redwood Trust, Inc.
     
By:
   
Name:

 
D-1

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EXHIBIT E
 
Rules and Regulations
 
1.           Tenant shall have access to the Building and the Premises at all
times during the Term, except to the extent otherwise necessary for emergencies,
maintenance or repairs, which maintenance and repairs shall be accomplished with
as little interference to Tenant as commercially reasonable.  On all hours other
than normal business hours for the Project (as defined in Paragraph 19(iii) of
these Rules and Regulations below), or such other hours as Landlord shall
determine from time to time, access to the Project and/or to the passageways,
entrances, exits, shipping areas, halls, corridors, elevators or stairways and
other areas in the Project may be restricted and access gained by use of a
key/card key to the outside doors of the Project, or pursuant to such security
procedures as Landlord may from time to time impose.  All such areas, and all
roofs, are not for use of the general public, and Landlord shall in all cases
retain the right to control and prevent access thereto by all persons whose
presence in the judgment of Landlord shall be prejudicial to the safety,
character, reputation and interests of the Project and its tenants, provided,
however, that nothing herein contained shall be construed to prevent such access
to persons with whom Tenant deals in the normal course of Tenant’s business
unless such persons are engaged in activities which are illegal or violate these
Rules.  No Tenant Parties shall enter into areas reserved for the exclusive use
of Landlord Parties.  Tenant shall keep doors to corridors and lobbies closed
except when persons are entering or leaving.
 
2.           Tenant shall not paint, display, inscribe, maintain or affix any
sign, placard, picture, advertisement, name, notice, lettering or direction on
any part of the outside or inside of the Project, or on any part of the inside
of the Premises which can be seen from the outside of the Premises, without the
prior consent of Landlord, and then only such name or names or matter and in
such color, size, style, character and material as may be first approved by
Landlord in writing.  Landlord shall prescribe the suite number and
identification sign for the Premises (which shall be prepared and installed by
Landlord at Tenant’s expense).  Landlord reserves the right to remove at
Tenant’s expense all matter not so installed or approved without notice to
Tenant.
 
3.           Tenant shall not in any manner use the name of the Project for any
purpose other than that of the business address of the Tenant, or use any
picture or likeness of the Project, in any letterheads, envelopes, circulars,
notices, advertisements, containers or wrapping material without Landlord’s
express written consent.
 
4.           Tenant shall not place anything or allow anything to be placed in
the Premises near the glass of any door, partition, wall or window which may be
unsightly from outside the Premises, and Tenant shall not place or permit to be
placed any article of any kind on any window ledge or on the exterior
walls.  Blinds, shades, awnings or other forms of inside or outside window
ventilators or similar devices, shall not be placed in or about the outside
windows in the Premises except to the extent, if any, that the character, shape,
color, material and make thereof are first approved by Landlord in writing.

 
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5.           Furniture, freight and other large or heavy articles, and all other
deliveries may be brought into the Project only at times and in the manner
designated by Landlord, and always at Tenant’s sole responsibility and
risk.  Landlord may impose reasonable charges for use of freight elevators after
or before normal business hours.  All damage done to the Project by moving or
maintaining such furniture, freight or articles shall be repaired by Landlord at
Tenant’s expense.  Landlord may inspect items brought into the Project or
Premises with respect to weight or dangerous nature.  Landlord may require that
all furniture, equipment, cartons and similar articles removed from the Premises
or the Project be listed and a removal permit therefor first be obtained from
Landlord.  Tenant shall not take or permit to be taken in or out of other
entrances or elevators of the Project any item normally taken, or which Landlord
otherwise reasonably requires to be taken, in or out through service doors or on
freight elevators.  Tenant shall not allow anything to remain in or obstruct in
any way, any lobby, corridor, sidewalk, passageway, entrance, exit, hall,
stairway, shipping area, or other such area.  Tenant shall move all supplies,
furniture and equipment as soon as received directly to the Premises, and shall
move all such items and waste (other than waste customarily removed by Project
employees) that are at any time being taken from the Premises directly to the
areas designated for disposal.  Any handcarts used at the Project shall have
rubber wheels.
 
6.           Tenant shall not overload any floor or part thereof in the
Premises, or Project, including any public corridors or elevators therein
bringing in or removing any large or heavy articles, and Landlord may direct and
control the location of safes and all other heavy articles and require
supplementary supports at Tenant’s expense of such material and dimensions as
Landlord may deem necessary to properly distribute the weight.
 
7.           Tenant shall not attach or permit to be attached additional locks
or similar devices to any door or window, change existing locks or the mechanism
thereof, or make or permit to be made any keys for any door other than those
provided by Landlord.  If more than two keys for one lock are desired, Landlord
will provide them upon payment therefor by Tenant.  Tenant, upon termination of
its tenancy, shall deliver to Landlord all keys of offices, rooms and toilet
rooms which have been furnished Tenant or which Tenant shall have had made, and
in the event of loss of any keys so furnished shall pay Landlord therefor.
 
8.           If Tenant desires signal, communication, alarm or other utility or
similar service connections installed or changed, Tenant shall not install or
change the same without the prior approval of Landlord, and then only under
Landlord’s direction at Tenant’s expense.  Tenant shall not install in the
Premises any equipment which requires more electric current than Landlord is
required to provide under this Lease, without Landlord’s prior written approval,
and Tenant shall ascertain from Landlord the maximum amount of load or demand
for or use of electrical current which can safely be permitted in the Premises,
taking into account the capacity of electric wiring in the Building and the
Premises and the needs of tenants of the Building, and shall not in any event
connect a greater load than such safe capacity.
 
9.           Tenant shall not obtain for use upon the Premises ice, drinking
water, towel, janitorial and other similar services, except from Persons
approved by Landlord in writing.  Any Person engaged by Tenant to provide
janitor or other services shall be subject to direction by the manager or
security personnel of the Project.
 
10.         The toilet rooms, urinals, washbowls and other such apparatus shall
not be used for any purpose other than that for which they were constructed, and
no foreign substance of any kind whatsoever shall be thrown therein, and the
expense of any breakage, stoppage or damage resulting from the violation of this
Rule shall be borne by Tenant who, or whose employees or invitees, shall have
caused it.  Tenant shall not cause any unnecessary labor by reason of Tenant’s
carelessness or indifference in the preservation of good order and cleanliness
in and around the Project.

 
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11.         The janitorial closets, utility closets, telephone closets, broom
closets, electrical closets, storage closets, and other such closets, rooms and
areas shall be used only for the purposes and in the manner designated by
Landlord, and may not be used by tenants, or their contractors, agents,
employees, or other parties, without Landlord’s prior written consent.
 
12.         Landlord reserves the right to exclude or expel from the Project any
person who, in the judgment of Landlord, is intoxicated or under the influence
of liquor or drugs, or who shall in any manner do any act in violation of any of
these Rules.  Tenant shall not at any time manufacture, sell, use or give away,
any spirituous, fermented, intoxicating or alcoholic liquors on the Premises,
nor permit any of the same to occur (except in connection with occasional social
or business events conducted in the Premises which do not violate any laws nor
bother or annoy any other tenants).  Tenant shall not at any time sell, purchase
or give away food in any form by or to any of the other Tenant Parties or any
other parties on the Premises, nor permit any of the same to occur (other than
in lunchrooms or kitchens for employees).
 
13.         Tenant shall not make any room-to-room canvass to solicit business
or information or to distribute any article or material to or from other tenants
or occupants of the Project and shall not exhibit, sell or offer to sell, use,
rent or exchange any products or services in or from the Premises unless
ordinarily embraced within the Tenant’s use of the Premises specified in the
Lease.
 
14.         Tenant shall not waste electricity, water, heat or air conditioning
or other utilities or services, and agrees to cooperate fully with Landlord to
ensure the most effective and energy-efficient operation of the Project and
shall not allow the adjustment (except by Landlord’s authorized Project
personnel) of any controls.  Tenant shall keep corridor doors closed and shall
not open any windows, except that if the air circulation shall not be in
operation, windows which are openable may be opened with Landlord’s consent.  As
a condition to claiming any deficiency in the air-conditioning or ventilation
services provided by Landlord, Tenant shall close any blinds or drapes in the
Premises to prevent or minimize direct sunlight.
 
15.         Tenant shall conduct no auction, fire or “going out of business”
sale or bankruptcy sale in or from the Premises, and such prohibition shall
apply to Tenant’s creditors.
 
16.         Tenant shall cooperate and comply with any reasonable safety or
security programs, including fire drills and air raid drills, and the
appointment of “fire wardens” developed by Landlord for the Project, or required
by law.  Before leaving the Premises unattended, Tenant shall close and securely
lock all doors or other means of entry to the Premises and shut off all lights
and water faucets in the Premises (except heat to the extent necessary to
prevent the freezing or bursting of pipes).
 
17.         Tenant will comply with all municipal, county, state, federal or
other governmental laws, statutes, codes, regulations and other requirements,
including without limitation, environmental health, safety and police
requirements and regulations respecting the Premises, now or hereinafter in
force, at its sole cost, and will not use the Premises for any immoral purposes.

 
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18.         Tenant shall not (i) carry on any business, activity or service
except those ordinarily embraced within the permitted use of the Premises
specified in the Lease and more particularly, but without limiting the
generality of the foregoing, shall not (ii) install or operate any internal
combustion engine, boiler, machinery, refrigerating, heating or air conditioning
equipment in or about the Premises except as permitted by the Lease, (iii) use
the Premises for housing, lodging or sleeping purposes or for the washing of
clothes, (iv) place any radio or television antennae other than inside of the
Premises except as permitted by the Lease, (v) operate or permit to be operated
any musical or sound producing instrument or device which may be heard outside
the Premises, (vi) use any source of power other than electricity, (vii) operate
any electrical or other device from which may emanate electrical or other waves
which may interfere with or impair radio, television, microwave, or other
broadcasting or reception from or in the Project or elsewhere, (viii) bring or
permit any bicycle or other vehicle, or dog (except in the company of a blind
person or except where specifically permitted) or other animal or bird in the
Project, (ix) make or permit objectionable noise or odor to emanate from the
Premises, (x) do anything in or about the Premises tending to create or maintain
a nuisance or do any act tending to injure the reputation of the Project, (xi) 
throw or permit to be thrown or dropped any article from any window or other
opening in the Building, (xii)  use or permit upon the Premises anything that
will invalidate or increase the rate of insurance on any policies of insurance
now or hereafter carried on the Project or violate the certificates of occupancy
issued for the Premises or the Project, (xiii)  use the Premises for any
purpose, or permit upon the Premises anything, that may be dangerous to persons
or property (including but not limited to flammable oils, fluids, paints,
chemicals, firearms or any explosive articles or materials), (xiv)  do or permit
anything to be done upon the Premises in any way tending to disturb any other
tenant at the Project or the occupants of neighboring property, or (xv)  at any
time go upon the roof of the Building without prior approval from Landlord.
 
19.         The following Rules shall apply regarding the parking area:
 
(i)          Parking shall be available in areas designated generally for tenant
parking. Tenant shall have card-key access to the parking facilities 24 hours a
day, seven day a week.  In all cases, parking for Tenant and the other Tenant
Parties shall be on a “first come, first served,” unassigned basis, with
Landlord and other tenants at the Project, and their employees and visitors, and
other Persons to whom Landlord shall grant the right or who shall otherwise have
the right to use the same, all subject to these Rules, as the same may be
amended or supplemented, and applied on a non-discriminatory
basis.  Notwithstanding the foregoing to the contrary, Landlord reserves the
right to assign specific spaces, and to reserve spaces for visitors, small cars,
handicapped individuals, and other tenants, visitors of tenants or other
Persons, and Tenant Parties shall not park in any such assigned or reserved
spaces.  Landlord may restrict or prohibit full size vans and other large
vehicles.

 
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(ii)         In case of any violation of these provisions, Landlord may refuse
to permit the violator to park, and may remove the vehicle owned or driven by
the violator from the Project without liability whatsoever, at such violator’s
risk and expense.  Landlord reserves the right to temporarily close all or a
portion of the parking areas or facilities in order to make repairs or perform
maintenance services, or to alter, modify, re-stripe or renovate the same, or if
required by casualty, strike, condemnation, act of God, law or governmental
requirement, or any other reason beyond Landlord’s reasonable control.  In the
event access is denied for any reason, any monthly parking charges shall be
abated to the extent access is denied, as Tenant’s sole recourse.  Tenant
acknowledges that such parking areas or facilities may be operated by an
independent contractor not affiliated with Landlord, and Tenant acknowledges
that in such event, Landlord shall have no liability for claims arising through
acts or omissions of such independent contractor.
 
(iii)        Normal business hours for the Project shall be 7 A.M. to 6 P.M.,
Monday through Friday, and 9:00 A.M. to 12:00 P.M. on Saturdays, or such other
hours as may be reasonably established by Landlord or its parking operator from
time to time.  During such normal business hours, cars must be parked entirely
within the stall lines, and only small cars may be parked in areas reserved for
small or compact cars; all directional signs and arrows must be observed; the
speed limit shall be 5 miles per hour; spaces reserved for handicapped parking
must be used only by vehicles properly designated; every parker is required to
park and lock his own car; washing, waxing, cleaning or servicing of any vehicle
is prohibited; parking spaces may be used only for parking automobiles; parking
is prohibited in areas: (a) not striped or designated for parking, (b) aisles,
(c) where “no parking” signs are posted, (d) on ramps, and (e) loading areas and
other specially designated areas.  Delivery trucks and vehicles shall use only
those areas designated therefor.
 
20.         The directory of the Building will be provided for the display of
the name and location of tenants only, and Landlord reserves the right to
exclude any other names therefrom.  Any additional name that Tenant shall desire
to be placed upon the directory must first be approved by Landlord, and if so
approved, a charge will be made therefore.
 
21.         There is no storage of any kind permitted in the parking facilities.
No storage of any kind is permitted in the parking garage.  The garage area
shall be used for the parking of operable motor vehicles and bicycles (in
designated bike areas) only.
 
22.         Landlord may waive any one or more of these Rules for the benefit of
a particular tenant, but no such waiver by Landlord shall be construed as a
waiver of these Rules in favor of any other tenant nor prevent Landlord from
thereafter enforcing any such Rules against any or all of the tenants of the
building.
 
23.         Landlord reserves the right to make such other and reasonable rules
as in its sole and absolute discretion may from time to time be needed for the
safety, care, efficiency, cleanliness, management and operation of the building,
and for the preservation of good order therein; provided, however, that no such
changes shall interfere with Tenant’s permitted use of the Premises.  In the
event of a conflict between these Rules and Regulations and the Lease, the Lease
shall control.

 
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EXHIBIT F

SECOND FLOOR BUILD OUT PLANS

[Intentionally Omitted]

 
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