MOUNTAIN VIEW CITY CENTER
 
NET OFFICE LEASE
 
by and between
 
EAGLE SQUARE PARTNERS,
 
a California limited partnership,
 
as Lessor
 
and
 
SOURCEFORCE, INC.,
 
a Delaware corporation,
 
as Lessee
 

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TABLE OF CONTENTS
 
 
     
Page
             
1.
   
SUMMARY OF LEASE PROVISIONS
   
1
 
2.
   
PREMISES DEMISED
   
2
 
3.
   
TERM
   
2
 
4.
   
POSSESSION
   
4
 
5.
   
RENT
   
4
 
6.
   
SECURITY DEPOSIT
   
4
 
7.
   
PROJECT TAXES AND OPERATING EXPENSE ADJUSTMENTS
   
5
 
8.
   
USE
   
10
 
9.
   
COMPLIANCE WITH LAWS
   
11
 
10.
   
ALTERATIONS AND ADDITIONS
   
12
 
11.
   
REPAIRS
   
13
 
12.
   
LIENS
   
14
 
13.
   
ASSIGNMENT AND SUBLETTING
   
14
 
14.
   
HOLD HARMLESS
   
16
 
15.
   
SUBROGATION
   
17
 
16.
   
LESSEE’S INSURANCE
   
17
 
17.
   
SERVICES AND UTILITIES
   
18
 
18.
   
RULES AND REGULATIONS
   
18
 
19.
   
HOLDING OVER
   
19
 
20.
   
ENTRY BY LESSOR
   
19
 
21.
   
RECONSTRUCTION
   
19
 
22.
   
DEFAULT
   
20
 
23.
   
REMEDIES UPON DEFAULT
   
21
 
24.
   
EMINENT DOMAIN
   
22
 
25.
   
OFFSET STATEMENT; MODIFICATIONS FOR LENDER
   
22
 
26.
   
PARKING
   
23
 
27.
   
AUTHORITY
   
23
 
28.
   
SURRENDER OF PREMISES
   
23
 
29.
   
LESSOR DEFAULT AND MORTGAGEE PROTECTION
   
24
 
30.
   
RIGHTS RESERVED BY LESSOR
   
24
 
31.
   
EXHIBITS
   
24
 
32.
   
WAIVER
   
24
 
33.
   
NOTICES
   
24
 
34.
   
JOINT OBLIGATIONS
   
25
 
35.
   
MARGINAL HEADINGS
   
25
 
36.
   
TIME
   
25
 
37.
   
SUCCESSORS AND ASSIGNS
   
25
 
38.
   
RECORDATION
   
25
 
39.
   
QUIET POSSESSION
   
25
 
40.
   
LATE CHARGES; ADDITIONAL RENT AND INTEREST
   
25
 
41.
   
PRIOR AGREEMENTS
   
25
 
42.
   
INABILITY TO PERFORM
   
25
 
43.
   
ATTORNEYS’ FEES
   
25
 
44.
   
SALE OF PREMISES BY LESSOR
   
26
 
45.
   
SUBORDINATION/ATTORNMENT
   
26
 
46.
   
NAME
   
26
 

 
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47.
   
SEVERABILITY
   
26
 
48.
   
CUMULATIVE REMEDIES
   
26
 
49.
   
CHOICE OF LAW
   
26
 
50.
   
SIGNS
   
26
 
51.
   
GENDER AND NUMBER
   
26
 
52.
   
CONSENTS
   
26
 
53.
   
BROKERS
   
27
 
54.
   
SUBSURFACE AND AIRSPACE
   
27
 
55.
   
COMMON AREA
   
27
 
56.
   
LABOR DISPUTES
   
27
 
57.
   
CONDITIONS
   
27
 
58.
   
LESSEE’S FINANCIAL STATEMENTS
   
27
 
59.
   
LESSOR NOT A TRUSTEE
   
28
 
60.
   
MERGER
   
28
 
61.
   
NO PARTNERSHIP OR JOINT VENTURE
   
28
 
62.
   
LESSOR’S RIGHT TO PERFORM LESSEE’S COVENANTS
   
28
 
63.
   
PLANS.
   
28
 
64.
   
RELOCATION
   
28
 
65.
   
WAIVER OF JURY
   
28
 
66.
   
FURNITURE
   
28
 
67.
   
JOINT PARTICIPATION
   
28
 
68.
   
NON DISCLOSURE
   
28
 
69.
   
COUNTERPARTS
   
29
 

 
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MOUNTAIN VIEW CITY CENTER
 
NET OFFICE LEASE
 
For and in consideration of rentals, covenants, and conditions hereinafter set
forth, Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
herein described Premises for the term, at the rental rate specified herein and
subject to and upon all of the terms, covenants and agreements set forth in this
lease (“Lease”):
 
1.  SUMMARY OF LEASE PROVISIONS.
 

a.  
Lessee: SOURCEFORGE, INC., a Delaware corporation (“Lessee”).

 

b.  
Lessor: EAGLE SQUARE PARTNERS, a California limited partnership (“Lessor”).

 

c.  
Date of Lease (for reference purposes only): July 14, 2007.

 

d.  
Premises: That certain office space commonly known as 650 Castro Street, Suite
450, Mountain View, California, and shown cross-hatched on the reduced floor
plan attached hereto as Exhibit “A,” consisting of approximately fourteen
thousand five hundred eighty-three (14,583) square feet of Rentable Area (“the
Premises”). (ARTICLE 2)

 

e.  
Term: Sixty (60) months. (ARTICLE 3)

 

f.  
Commencement Date: October 1, 2007, subject to Article 4.a. below. (ARTICLE 3)

 

g.  
Lease Termination: The last day of the sixtieth (60th) full calendar month
following the Commencement Date (“Expiration Date”), unless sooner terminated
pursuant to the terms of this Lease. (ARTICLE 3)

 

h.  
Base Rent: Monthly Base Rent shall be in the amounts set forth in the below rent
schedule:

 
Months of Term
Monthly Base Rent  01 Free Rent Period 02-12 $46,665.60 per month, triple net
13-24 $48,065.57 per month, triple net 25-36 $49,507.54 per month, triple net
37-48  $50,992.76 per month, triple net 49-60 $52,522.54 per month, triple net
(ARTICLE 5)    

 

i.  
Security Deposit: Sixty-seven thousand five hundred forty-three and 03/100ths
dollars ($67,543.03) (ARTICLE 6)

 

j.  
Lessee’s Percentage Share: Fifteen and 32/100ths percent (15.32%). (ARTICLE 7)

 

k.  
Parking: Nonexclusive right to use no more than three (3) parking spaces within
the underground parking structure serving the Project per each one thousand
(1,000) square feet of Rentable Area in the Premises. (ARTICLE 26)

 

l.  
Addresses for Notices:

 
Lessor:                 c/o Prometheus Real Estate Group, Inc.
1900 South Norfolk Street, Suite 150
San Mateo, California 94403
Attn: Executive Vice President 
Telephone No.: (650) 931-3400
Fax No.: (650) 931-3600
 
with a concurrent copy to:
 
c/o Prometheus Real Estate Group, Inc.
1900 South Norfolk Street, Suite 150
San Mateo, California 94403
Attn: Chief Financial Officer  
Telephone No.: (650) 931-3400
Fax No.: (650) 931-3600
 
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and with a concurrent copy to the
Project Management Office at:

20400 Stevens Creek Boulevard,
Suite 130
Cupertino, California 95014
Attn: Senior Portfolio Manager
Telephone No.: (408) 873-1021
Fax No.: (408) 873-0122

Lessee:                 Prior to the Commencement Date:
SourceForge, Inc.
46939 Bayside Parkway
Fremont, CA 94538
Attn: General Counsel
Telephone No.: (415) 687-7095
Fax No.: (510) 680-7155

Following the Commencement Date:
SourceForge, Inc.
650 Castro Street, Suite 450
Mountain View, CA
Attn: General Counsel
Telephone No.: ______________________  
Fax No.: ____________________________

and with a concurrent copy to:

Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attn: Marc Gottschalk, Esq.
Telephone No.: (650) 354-4250
Fax No.: (650)493-6811

 
m.  Brokers: CPS Corfac International and NAI BT Commercial representing Lessee,
and NAI BT Commercial representing Lessor. (ARTICLE 53)
 
n.  Summary Provisions in General. Parenthetical references in this Article 1 to
other articles in this Lease are for convenience of reference, and designate
some of the other Lease articles where applicable provisions are set forth. All
of the terms and conditions of each such referenced article shall be construed
to be incorporated within and made a part of each of the above referred to
Summary of Lease Provisions. If any conflict exists between any Summary of Lease
Provisions as set forth above and the balance of the Lease, then the latter
shall control.
 
2.  PREMISES DEMISED Lessor does hereby lease to Lessee and Lessee hereby leases
from Lessor the Premises described in Article 1.d., subject, nevertheless, to
all of the terms and conditions of this Lease. Notwithstanding anything to the
contrary contained in this Lease, the Premises shall be deemed for all purposes
of this Lease to contain the amount of Rentable Area specified in Article 1.d.
above, notwithstanding any deviation in actual Rentable Area of the Premises
from such amount and the Lessee’s Percentage Share shall be deemed accurate as
of the Commencement Date regardless of any Building measurement to the contrary.
The Premises is approximately as shown as cross-hatched on the floor plan(s)
attached hereto as Exhibit “A.” As used in this Lease, the term “Building” shall
mean the building at the address listed in Article 1.d. above in which the
Premises is located. The Building is situated upon the parcel(s) of land shown
on Exhibit “B” attached hereto (collectively, the “Parcel”). The Building and
the “Exterior Common Area” (as defined in Article 55 below) and all other
improvements as now or hereafter located on the Parcel, if any, are herein
sometimes referred to collectively as the “Project.”
 
3.  TERM.
 
a.  The term of this Lease shall be for the period designated in Article 1.e.,
commencing on the Commencement Date and ending on the Expiration Date set forth
in Article 1.g., unless sooner terminated pursuant to this Lease (“Term”). The
expiration or sooner termination of the Lease is hereinafter referred to as
“Lease Termination.”
 
b.  Option to Extend. Lessee shall have the option to extend the Initial Term of
this Lease for one (1) period of five (5) years, commencing immediately
following the expiration of the Initial Term (such period is referred to herein
as the “Extended Term”, “Initial Term” and “Extended Term” are collectively
referred to as “Term”), on all provisions contained in this Lease (except for
Base Rent and such other terms and conditions as are specifically or by their
operation limited to the Initial Term only and except that Lessee shall have no
further right or option to extend the term upon the expiration of the Extended
Term), by giving notice of exercise of the option (the “Option Notice”) to
Lessor at any time during the fifty-fourth (54th) month of the Initial Term.
 
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Lessor’s ability to plan for the orderly transaction of its rental business, to
accommodate the needs of other existing and potential tenants, and to enjoy the
benefits of increasing rentals at such times as Lessor is able to do so in its
sole and absolute discretion, are fundamental elements of Lessor’s willingness
to provide Lessee with the option to extend contained herein. Accordingly,
Lessee hereby acknowledges that strict compliance with the notification
provisions contained herein, and Lessee’s strict compliance with the time period
for such notification contained herein, are material elements of the bargained
for exchange between Lessor and Lessee and are material elements of Lessee’s
consideration paid to Lessor in exchange for the grant of the option. Therefore,
Lessee’s failure to adhere strictly and completely to the provisions and time
frame contained in this provision shall render the option automatically null,
void and of no further force or effect, without notice, acknowledgement, or any
action of any nature or sort, required of Lessor. Lessee acknowledges that no
other act or notice, other than the express written notice set forth
hereinabove, shall act to put Lessor on notice of Lessee’s intent to extend, and
Lessee hereby waives any claims to the contrary, notwithstanding any other
actions of Lessee during the Initial Term of this Lease or any statements,
written or oral, of Lessee to Lessor to the contrary during the Initial Term of
this Lease. Notwithstanding the foregoing, if Lessee is in default (after the
expiration of any applicable period for cure pursuant to Article 22 below) on
the date of giving the Option Notice, the Option Notice shall be totally
ineffective, or if Lessee is in default (after the expiration of any applicable
period for cure pursuant to Article 22 below) on the date the Extended Term is
to commence, in addition to any and all other remedies available to Lessor under
this Lease, at Lessor’s election, the exercise of the option shall be deemed
null and void, the Extended Term shall not commence, and this Lease shall expire
at the end of the Initial Term.
 
The option to extend granted pursuant hereto is personal to original Lessee
signatory to this Lease and cannot be assigned, transferred or conveyed to, or
exercised for the benefit of, any other person or entity (voluntarily,
involuntarily, by operation of law or otherwise) including, without limitation,
to any assignee or subtenant permitted under Article 13, except in the event of
a “Permitted Transfer” (as defined in Article 13). All of Lessee’s rights under
this Article 3.b. shall terminate upon the expiration of the Initial Term or
sooner termination of this Lease.
 
The parties shall have thirty (30) days after Lessor receives the Option Notice
in which to agree upon the adjustment of Base Rent as of the commencement of the
Extended Term. The Base Rent shall be adjusted as of the commencement of the
Extended Term to be an amount equal to one hundred percent (100%) of the then
current “Fair Market Rental Value” (defined below) of the Premises at the time
of commencement of the Extended Term. The term “Fair Market Rental Value” of the
Premises as used in this Lease shall mean the then prevailing fair market rent
for the Premises as of the commencement of the applicable Extended Term. In
determining such rate, the parties may consider first class, “Class A” office
space comparable in size and quality to the Premises, if any, located in the
vicinity of the Project in the Mountain View office market, and located in the
Building and other buildings comparable in size and quality to the Building in
which the Premises is located, including, without limitation, and taking into
consideration all other factors normally considered when determining fair market
rental value (including, without limitation, the duration of the Extended Term
and such rental increases as may be appropriate during such period); provided
however, such determination of fair market rental value shall not consider the
value of any improvements to the Premises installed at Tenant’s sole cost and
expense (in excess of improvements funded by the Lessee Improvements Allowance).
 
Upon determination of the Fair Market Rental Value for the Premises, the parties
shall immediately execute an amendment to this Lease stating the adjustment of
the Base Rent as of the commencement of the Extended Term. In the event Lessee
has retained the services of a real estate broker to represent Lessee during the
negotiations in connection with the Extended Term, it is expressly understood
that Lessor shall have no obligation for the payment of all or any part of a
real estate commission or other brokerage fee to Lessee’s real estate broker in
connection with the Extended Term. Lessee shall be solely responsible for
payment of fees for services rendered to Lessee by such broker in connection
with the Extended Term.
 
If the parties are unable to agree, in their sole and absolute discretion, on
the Fair Market Rental Value for the Premises within such thirty (30) day
period, then the Fair Market Rental Value as of the commencement of the Extended
Term shall be determined as follows:
 
(i) Following the expiration of such thirty (30) day period, Lessor and Lessee
shall meet and endeavor in good faith to agree upon a licensed commercial real
estate agent with at least seven (7) years full-time experience as a real estate
agent active in leasing of commercial office buildings in the area of the
Premises to appraise and set the Fair Market Rental Value as of the commencement
of the Extended Term. If Lessor and Lessee fail to reach agreement upon such
agent within fifteen (15) days following the expiration of such thirty (30) day
period, then, within fifteen (15) days thereafter, each party, at its own cost
and by giving notice to the other party, shall appoint a licensed commercial
real estate agent with at least seven (7) years full-time experience as a real
estate agent active in leasing of commercial office buildings in the area of the
Premises to appraise and set the Fair Market Rental Value as of the commencement
of the Extended Term. If a party does not appoint an agent within fifteen (15)
days after the other party has given notice of the name of its agent, the single
agent appointed shall be the sole agent and shall set the Fair Market Rental
Value as of the commencement of the Extended Term. If there are two (2) agents
appointed by the parties as stated above, the agents shall meet within ten (10)
days after the second agent has been appointed and attempt to set Fair Market
Rental Value as of the commencement of the Extended Term. If the two (2) agents
are unable to agree on such Fair Market Rental Value within fifteen (15) days
after the second agent has been appointed, they shall, within fifteen (15) days
after the last day the two (2) agents were to have set such Fair Market Rental
Value, attempt to select a third agent who shall be a licensed commercial real
estate agent meeting the qualifications stated above. If the two (2) agents are
unable to agree on the third agent within such fifteen (15) day period, either
Lessor or Lessee may request the President of the local chapter of the Society
of Industrial and Office Realtors (SIOR) or a then equivalent organization if
SIOR is not then in existence to select a third agent meeting the qualifications
stated in this subsection. Each of the parties shall bear one-half (1/2) of the
cost of appointing the third agent and of paying the third agent’s fee. No agent
shall be employed by, or otherwise be engaged in business with or affiliated
with, Lessor or Lessee, except as an independent contractor.
 
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(ii) Within fifteen (15) days after the selection of the third agent, a majority
of the agents shall set the Fair Market Rental Value as of the commencement of
the Extended Term. If a majority of the agents are unable to set such Fair
Market Rental Value within the stipulated period of time, each agent shall make
a separate determination of such Fair Market Rental Value and the three (3)
appraisals shall be added together and the total shall be divided by three (3).
The resulting quotient shall be the Fair Market Rental Value for the Premises as
of the commencement of the Extended Term. If, however, the low appraisal and/or
high appraisal is/are more than twenty percent (20%) lower and/or higher than
the middle appraisal, such low appraisal and/or such high appraisal shall be
disregarded. If only one (1) appraisal is disregarded, the remaining two (2)
appraisals shall be added together and their total divided by two (2), and the
resulting quotient shall be Fair Market Rental Value as of the commencement of
the Extended Term. If both the low appraisal and the high appraisal are
disregarded as stated in this subsection, the middle appraisal shall be the Fair
Market Rental Value as of the commencement of the Extended Term.
 
(iii) Each agent shall hear, receive and consider such information as Lessor and
Lessee each care to present regarding the determination of Fair Market Rental
Value as of the commencement of the Extended Term and each agent shall have
access to the information used by each other agent. Upon determination of the
Fair Market Rental Value as of the commencement of the Extended Term, the agents
shall immediately notify the parties hereto in writing of such determination by
certified mail, return receipt requested.
 
4.  POSSESSION. Construction of Improvements/Delay in Possession. Lessor and
Lessee agree to the provisions set forth in the work letter attached hereto as
Exhibit “C” (“Work Letter”). Lessor agrees to construct within the Premises the
improvements described in the Work Letter (“Lessee Improvements”), upon and
subject to the provisions thereof. If Lessor, for any reason whatsoever, cannot
deliver possession of the Premises to Lessee at the date specified in Article
1.f. above, this Lease shall not be void or voidable, nor shall Lessor be liable
to Lessee for any loss or damage resulting therefrom; except, however, that in
such event the “Commencement Date” for all purposes of this Lease shall be
adjusted to be the date when Lessor delivers possession or such earlier date
upon which such delivery of possession would have occurred but for delay in
delivery of possession of the Premises caused and/or contributed to by Lessee
and/or Lessee’s agents, officers, employees, representatives, contractors,
servants, invitees and/or guests (collectively “Lessee’s Agents” and such delay
referred to herein as “Lessee’s Delay”), and the “Expiration Date” for all
purposes of this Lease shall be the date which is the period of the Term
specified in Article 1.e. following such Commencement Date. Lessor shall be
deemed to have delivered possession to Lessee on the earlier of (i) the date
that Lessor delivers legal possession of the Premises to Lessee with the Lessee
Improvements substantially completed and available for occupancy by Lessee,
subject only to punch list items which do not materially interfere with Lessee’s
occupancy or use of the Premises for its intended use, or (ii) the date on which
the Lessee Improvements would have been substantially completed but for delays
caused by Lessee’s Delay, including without limitation, change orders requested
by Lessee or required because of any errors or omissions in plans submitted by
Lessee, or (iii) the date upon which Lessee actually occupies and commences its
business operation from the Premises. Notwithstanding anything to the contrary
contained herein, in the event the Commencement Date has not occurred by
December 1, 2007, as may be extended one (1) day for each day of Lessee’s Delay
(the “Lessee Commencement Termination Trigger Date”), Lessee shall have the
right to terminate this Lease by written notice delivered to Lessor no later
than ten (10) days following the Lessee Commencement Termination Trigger Date.
 
a.  Early Possession. Provided that such early occupancy does not delay,
materially impair or otherwise materially interfere with Lessor’s performance of
the Lessee Improvements, Lessee shall be permitted to occupy the Premises prior
to the Commencement Date for purposes of installing Lessee’s telephones,
cabling, furnishings and other personal property items, subject to all the
provisions of this Lease (including any indemnity provisions); provided,
however, that during such period of early possession, Lessee shall not be liable
for payment of Base Rent or Lessee’s Percentage Share of Building Expenses
during such period of occupancy prior to the Commencement Date. Said early
possession shall not trigger the Commencement Date nor advance the Expiration
Date.
 
5.  RENT. Lessee agrees to pay to Lessor as rental for the Premises, without
offset, deduction, prior notice or demand, the monthly Base Rent designated in
Article 1.h. Base Rent shall be payable monthly in advance on or before the
first day of each calendar month during the Term, except that Lessor shall abate
the Base Rent payment that would otherwise be due and payable by Lessee for the
first (1st) month of the Term. The payment of Base Rent for the second (2nd)
full calendar month of the Term shall be paid upon the execution of this Lease,
and if the Commencement Date is other than the first day of a calendar month,
Base Rent for the partial calendar month after the first (1st) month of the Term
but prior to the commencement of the second (2nd) full calendar month of the
Term shall be prorated and paid upon the Commencement Date. Base Rent for any
period during the Term which is for less than one (1) month shall be prorated
based upon the number of days in the applicable calendar month. Base Rent and
all other amounts owing to Lessor pursuant to this shall be paid to Lessor in
lawful money of the United States of America which shall be legal tender at the
time of payment, at the office of the Project, or to such other person or at
such other place as Lessor may from time to time designate in writing.
 
6.  SECURITY DEPOSIT. Upon Lessee’s execution of this Lease, Lessee shall
deposit with Lessor the sum set forth in Article 1.i. as the security deposit
(“Security Deposit”). Lessee hereby grants to Lessor a security interest in the
Security Deposit in accordance with applicable provisions of the California
Commercial Code. The Security Deposit shall be held by Lessor as security for
the faithful performance by Lessee of all the terms, covenants and conditions of
this Lease to be kept and performed by Lessee during the Term. If Lessee
defaults with respect to any provision of this Lease, including, but not limited
to the provisions relating to the payment of Rentals or relating to the
condition of the Premises at Lease Termination, Lessor may (but shall not be
required to) use, apply or retain all or any part of the Security Deposit for
the payment of any Rental or any other sum in default, or for the payment of any
amount which Lessor shall become obligated to spend by reason of Lessee’s
default, or to compensate Lessor for any other loss or damage which Lessor may
suffer by reason of Lessee’s default. If any portion of the Security Deposit is
so used or applied, Lessee shall within five (5) business days after written
demand therefor, deposit cash with Lessor in an amount sufficient to restore the
Security Deposit to its original amount and Lessee’s failure to do so shall be a
material breach of this Lease. Lessor shall not be required to keep the Security
Deposit separate from its general funds, and Lessee shall not be entitled to
interest on the Security Deposit. Lessor is not a trustee of the Security
Deposit and may use it in ordinary business, transfer it or assign it, or use it
in any combination of such ways. The remaining portion of the Security Deposit
shall be returned to Lessee (or, at Lessor’s option, to the last assignee of
Lessee’s interest hereunder) within two (2) weeks after Lease Termination and
vacation of the Premises by Lessee or its last assignee; provided, however if
any portion of the Security Deposit is to be applied to repair damages to the
Premises caused by Lessee or Lessee’s Agents or to clean the Premises, or has
previously been applied to cure any Lessee default under this Lease, then the
balance of the Security Deposit shall be returned to Lessee (or, at Lessor’s
option to the last assignee of Lessee’s interests hereunder) no later than
thirty (30) days from the date Lessor receives possession of the Premises.
Lessee waives any rights it may have under Section 1950.7 of the California
Civil Code with respect to the Security Deposit. Lessee shall not transfer or
encumber the Security Deposit nor shall Lessor be bound by Lessee’s attempt to
do so. If Lessor’s interest in this Lease is terminated, Lessor may transfer the
Security Deposit to Lessor’s successor in interest, and upon such transfer,
Lessor shall be released from any liability to Lessee with respect to the
Security Deposit and Lessee shall look only to the transferee for any return of
the Security Deposit to which Lessee may be entitled.
 
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7.  PROJECT TAXES AND OPERATING EXPENSE ADJUSTMENTS.
 
a.  Intentionally Omitted.
 
b.  Building Taxes and Building Operating Expenses. The parties hereby
acknowledge that certain “Building Expenses” (as hereinafter defined) relate
only to certain elements of the Building, and that other Building Expenses
relate to the entire Building. Accordingly, Lessor shall have the right to
reasonably establish cost pools for the components of Building Expenses relating
only to certain elements of the Building, and for Building Expenses relating to
the entire Building, and to reasonably in good faith allocate Building Expenses
among such cost pools. Without limiting the generality of the foregoing, Lessor
has established such cost pools to allocate Building Expenses between the office
use portions of the Building (the “Office Cost Pool”) and the
retail/service/commercial uses of the Building (the “Retail Cost Pool”). Lessee
shall pay to Lessor, as additional rent and without deduction or offset, from
and after the Commencement Date, Lessee’s percentage share set forth in Article
1.j. (“Lessee’s Percentage Share”) of the amount of annual “Building Taxes” and
“Building Operating Expenses” (as such terms are defined below) allocated to the
Office Cost Pool. Building Taxes and Building Operating Expenses are
collectively referred to herein as “Building Expenses.” Lessee’s Percentage
Share of Building Expenses allocated to the Office Cost Pool shall be determined
by dividing the Rentable Area of the Premises by the total Rentable Area in the
Building devoted to office use. Lessee’s Percentage Share shall be subject to an
equitable adjustment upon a condemnation, sale by Lessor of part of the
Building, reconstruction after damage or destruction or expansion or reduction
of the areas within the Building devoted to office use. Lessee’s Percentage
Share of Building Expenses allocated to the Office Cost Pool shall be payable
during the Term in equal monthly installments on the first day of each month in
advance, without deduction, offset or prior demand.
 
At any time during the Term, Lessor may give Lessee notice of Lessor’s estimate
of the Building Expenses allocated to the Office Cost Pool for the current
calendar year. An amount equal to one twelfth (1/12) of Lessee’s Percentage
Share of the estimated Building Expenses allocated to the Office Cost Pool shall
be payable monthly by Lessee as aforesaid, commencing on the first day of the
calendar month following thirty (30) days written notice and continuing until
receipt of any notice of adjustment from Lessor given pursuant to this
paragraph. Until notice of the estimated Building Expenses allocated to the
Office Cost Pool for a subsequent calendar year is delivered to Lessee, Lessee
shall continue to pay its Percentage Share of Building Expenses allocated to the
Office Cost Pool on the basis of the prior year’s estimate. Lessor may at any
time during the Term adjust estimates of the Building Expenses allocated to the
Office Cost Pool to reflect current expenditures and following Lessor’s written
notice to Lessee of such revised estimate, subsequent payments by Lessee shall
be based upon such revised estimate.
 
If the Commencement Date is on a date other than the first day of a calendar
year, the amount of the Building Expenses allocated to the Office Cost Pool
payable by Lessee in such calendar year shall be prorated based upon a fraction,
the numerator of which is the number of days from the Commencement Date to the
end of the calendar year in which the Commencement Date falls, and the
denominator of which is three hundred sixty (360).
 
Within one hundred twenty (120) days after the end of each calendar year during
the Term or as soon thereafter as practicable, Lessor will furnish to Lessee a
statement (“Lessor’s Statement”) setting forth in reasonable detail the actual
Building Expenses allocated to the Office Cost Pool paid or incurred by Lessor
during the preceding year, and thereupon within thirty (30) days an adjustment
will be made by Lessee’s payment to Lessor or credit to Lessee by Lessor against
the Building Expenses allocated to the Office Cost Pool next becoming due from
Lessee (or if at the end of the Term shall be credited by payment directly to
Lessee), as the case may require, to the end that Lessor shall receive the
entire amount of Lessee’s Percentage Share of Building Expenses allocated to the
Office Cost Pool for such calendar year and no more. If, based on Lessor’s
Statement a payment from Lessee is required, Lessee shall not have the right to
withhold or defer such payment pending a review of Lessor’s books and records
pursuant to the following paragraph or the resolution of any dispute relating to
Building Expenses allocated to the Office Cost Pool. If the Expiration Date is
on a day other than the last day of a calendar year, the amount of Building
Expenses allocated to the Office Cost Pool payable by Lessee for the calendar
year in which Lease Termination falls shall be prorated based on the number of
days in the calendar year. The termination of this Lease shall not affect the
obligations of Lessor and Lessee pursuant to this Article 7.
 
Within sixty (60) days after Lessee receives a statement of actual Building
Expenses allocated to the Office Cost Pool paid or incurred for a calendar year,
Lessee shall have the right, upon written demand and reasonable notice, to
inspect Lessor’s books and records relating to such Building Expenses allocated
to the Office Cost Pool for the calendar year covered by Lessor’s Statement for
the purpose of verifying the amount set forth in such statement. Such inspection
shall be made during Lessor’s normal business hours, at the place where such
books and records are customarily maintained by Lessor. In no event may any such
inspection be performed by a person or entity being compensated on a contingency
fee basis or based upon a share of any refund obtained by Lessee. Information
obtained by such inspection shall be kept in the strictest confidence by Lessee.
Unless Lessee asserts in writing a specific error within one hundred and twenty
(120) days following Lessee’s receipt of Lessor’s Statement, the amounts set
forth in Lessor’s Statement shall be conclusively deemed correct and binding on
Lessee. Lessor shall refund to Lessee any overpayment of Building Expenses
allocated to the Office Cost Pool which is determined to have been made by
Lessee. In addition, if it is determined that Lessor has overstated the Building
Expenses allocated to the Office Cost Pool for a particular calendar year by
more than five percent (5%) and such overstatement results in Lessor owing a
reimbursement to Lessee of more than Five Thousand Dollars ($5,000.00), then
Lessor shall also reimburse Lessee’s reasonable third-party out of pocket
expenses incurred in conducting such inspection), within thirty (30) days
following Lessee’s submission to Lessor of reasonable evidence supporting such
third-party expenses.
 
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(i)  Operating Expenses. As used in this Lease, “Building Operating Expenses”
means all of the Building Service Expenses and an allocable portion of the
Project Expenses as follows:
 
(A)  Building Service Expenses. Building Operating Expenses shall include all
costs of operation, maintenance, repair (which for purposes of this Lease shall
be deemed to include, without limitation, replacement as and when deemed
appropriate by Lessor) and management of the Building and Building Common Area
(defined in Article 55), hereinafter collectively referred to as “Building
Service Expenses,” as determined by Lessor’s commercially reasonable real estate
accounting practices, consistently applied. Building Service Expenses as used
herein shall include, but not be limited to, all sums expended in connection
with all general maintenance, repairs, painting, cleaning, sweeping and
janitorial services; maintenance and repair of signs, indoor plants, and
atriums; trash removal; sewage; electricity, gas, water and any other utilities
(including any temporary or permanent utility surcharge or other exaction
whether now or hereafter imposed); maintenance and repair of any fire protection
systems, elevator systems, lighting systems, storm drainage systems, heating,
ventilation and air conditioning systems and other utility and/or mechanical
systems; any governmental imposition or surcharge imposed upon Lessor with
respect to the Building or assessed against the Building; all costs and expenses
pertaining to a security alarm system or other security services or measures for
the Building, if Lessor deems necessary in Lessor’s sole business judgment;
materials; supplies; tools; depreciation on maintenance and operating machinery
and equipment (if owned) and rental paid for such machinery and equipment (if
rented); service agreements on equipment; maintenance, and repair of the roof
(including repair of leaks and resurfacing) and the exterior surfaces of all
improvements (including painting); routine maintenance and repair of structural
parts (including repair of leaks and resurfacing) and the exterior surfaces of
all improvements (including painting); maintenance and repair of structural
parts (including foundation, floor slabs and load bearing walls); window
cleaning; elevator or escalator services; materials handling; fees for licenses
and permits relating to the Building; the cost of complying with rules,
regulations and orders of governmental authorities to the extent provided in
this Lease; certain accounting and legal fees; the cost of contesting the
validity or applicability of any governmental enactment which may affect
Building Service Expenses; personnel to implement such services (including,
without limitation, if Lessor deems necessary, the cost of security guards,
maintenance personnel, engineers and valet attendants); public liability,
environmental impairment, property damage and fire and extended coverage
insurance on the Building (in such amounts and providing such coverage as
determined in Lessor’s sole discretion and which may include, without
limitation, liability, all risk property, lessor’s risk liability, war risk,
vandalism, malicious mischief, boiler and machinery, rental income, earthquake,
flood and worker’s compensation insurance); compensation and fringe benefits
payable to all persons employed by Lessor in connection with the operation,
maintenance, repair and management of the Building; and a management fee not to
exceed five percent (5%) of gross receipts from the Building (including, without
limitation, all rentals and parking receipts from Building tenants and/or
visitors). Lessor may cause any or all of said services to be provided by an
independent contractor or contractors, or they may be rendered by Lessor. It is
the intent of the parties hereto that except as otherwise set forth in this
Lease, Building Service Expenses shall include every cost paid or incurred by
Lessor in connection with the operation, maintenance, repair and management of
the Building, and the specific examples of Building Service Expenses stated in
this Article 7 are in no way intended to, and shall not, limit the costs
comprising Building Service Expenses, nor shall such examples be deemed to
obligate Lessor to incur such costs or to provide such services or to take such
actions, except as may be expressly required of Lessor in other portions of this
Lease, or except as Lessor, in its sole discretion, may elect. The maintenance
of the Building shall be reasonably determined by Lessor so as to maintain the
same in good condition and repair, reasonable wear and tear excepted (subject to
the express provisions of this Lease governing maintenance, repair, replacement,
casualty and condemnation), and all costs incurred by Lessor in good faith shall
be deemed conclusively binding on Lessee. If less than one hundred percent
(100%) of the Rentable Area of the Building is occupied during any calendar
year, then in calculating Building Service Expenses for such year, the
components of Building Service Expenses which vary based upon occupancy level
shall be adjusted to equal Lessor’s reasonable estimate of the amount of such
Building Service Expenses had one hundred percent (100%) of the total Rentable
Area of the Building been occupied during such year. In addition, if Landlord is
not furnishing any particular work or service (the cost of which, if performed
by Landlord, would be included in Building Service Expenses) to a tenant who has
undertaken to perform such work or service in lieu of the performance thereof by
Landlord, Building Service Expenses shall be deemed to be increased by an amount
equal to the additional Building Service Expenses which would reasonably have
been incurred during such period by Landlord if it had at its own expense
furnished such work or service to such tenant.
 
However, notwithstanding the foregoing or anything to the contrary contained in
this Lease, in no event shall Building Service Expenses include: (1) costs,
including permit, license and inspection costs, incurred with respect to the
installation of tenant improvements to other tenant’s leased premises within the
Building or incurred in renovating or otherwise improving, decorating, painting
or redecorating vacant leasable space within the Building, (2) costs in order to
market space to potential tenants, leasing commissions, and attorneys’ fees in
connection with the negotiation and preparation of letters, deal memos, letters
of intent, leases, subleases and/or assignments or other costs in connection
with lease, sublease and/or assignment negotiations with present or prospective
tenants or other occupants of the Building, (3) reserves (except that nothing
contained herein shall be deemed to prevent Lessor’s collection of anticipated
Building Service Expenses for the current year), (4) ground lease rental on any
underlying ground lease or interest, principal, points and/or fees on debts or
amortization on any mortgage or mortgages or any other debt instrument
encumbering the Building, (5) to the extent any employee of Lessor spends only a
portion of his or her time working with respect to the Building (as opposed to
full time work with respect to the Building), a prorated amount of such
employee’s wages, salaries and compensation based upon the portion of time spent
by such employee with respect to the projects other than the Building, (6)
increased costs of performance or other costs or damages directly resulting from
the negligence or willful misconduct of Lessor or Lessor’s agents, employees or
contractors, (7) costs (including attorney’s fees and costs) incurred due to
violation by Lessor or any other tenant in the Building of the terms and
conditions of any lease for space within the Building or arising out of any
other dispute between Lessor and any other tenant, (8) the cost of any service
provided to Lessee or other occupants of the Building or other cost includable
in Building Service Expenses pursuant hereto for which Lessor is, or is entitled
to be, separately reimbursed by insurance, third parties or otherwise (other
than reimbursement by lessees as a part of their respective payments of Building
Service Expenses), (9) charitable or political contributions, (10) interest,
penalties or other costs arising out of Lessor’s failure to make timely payment
of its obligations, (11) overhead and profit paid to Lessor or to subsidiaries
or affiliates of Lessor for goods and/or services in the Building to the extent
the same exceeds the costs of such goods and/or services rendered by qualified,
unaffiliated third parties on a competitive basis, (12) costs to remediate
Hazardous Materials located upon, within or beneath the Building prior to the
Commencement Date, (13) costs (other than ordinary maintenance) for sculpture,
paintings and other objects of art, (14) costs associated with the operation of
the business of the partnership or entity which constitutes Lessor as the same
are distinguished from the costs of the operation of the Project, including
partnership accounting and legal matters, costs of defending any lawsuits with
any mortgagee, costs of selling, syndicating, financing, mortgaging or
hypothecating any of Lessor’s interest in the Project, costs of any disputes
between Lessor and its employees (if any) not engaged in the operation of the
Project, disputes of Lessor with Project management, or outside fees paid in
connection with disputes with other Project lessees or occupants, (15) leasing
commissions and other similar costs associated with marketing the Building, (16)
costs incurred for restoration following condemnation to the extent reimbursed
by insurance proceeds (provided that insurance deductibles and uninsured
casualty damage up to $50,000 per occurrence (or such higher amount, not to
exceed $100,000, as may be then commercially reasonable as an insurance
deductible for comparable buildings in the Mountain View/Palo Alto area) shall
be included in Building Service Expenses), (17) costs associated with
alterations, improvements, repairs or replacements (including those resulting
from any legal requirement that Lessor is permitted to charge to Lessee
hereunder) that can be amortized in accordance with GAAP except to the extent
amortized over the useful life of the item in question (reasonably determined in
accordance with GAAP) at an interest rate that Lessor pays to finance such items
or would be required to pay to an institutional lender if such financing were
obtained, and (18) costs associated with any retail concession located at the
Building; provided however, in no event shall this exclusion impact Lessor’s
right to create cost pools as described in Section 7.b. There shall be no
duplication of items included in Building Service Expenses and Project Expenses.
 
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(B)  Project Expenses. Building Operating Expenses shall include the Building’s
equitable share of all direct costs of operation, maintenance, repair and
management of the Project (as opposed to expenses relating solely to the
Building or any other particular building within the Project) and/or the
Exterior Common Area, determined by Lessor’s commercially reasonable real estate
accounting practices, consistently applied (collectively, “Project Expenses”).
Such costs shall be allocated by Lessor between the Building containing the
Premises and the other buildings containing Rentable Area located within the
Project from time to time, if any, in such manner as Lessor reasonably
determines in good faith. If at any time the Building is the only building
within the Project containing Rentable Area, then the Building’s share of
Project Expenses shall equal one hundred percent (100%). Project Expenses as
used herein shall include, but not be limited to, all sums expended in
connection with all general maintenance, repairs, resurfacing, painting,
restriping, cleaning, sweeping, and janitorial services; maintenance and repair
of sidewalks, curbs, signs and other Exterior Common Areas; maintenance and
repair of sprinkler systems, planting, and landscaping; trash removal; sewage;
electricity, gas, water and any other utilities (including any temporary or
permanent utility surcharge or other exaction whether now or hereafter imposed);
maintenance and repair of directional signs and other markers and bumpers;
maintenance and repair of any fire protection systems, elevator systems,
lighting systems, storm drainage systems and other utility systems; any
governmental imposition or surcharge imposed upon Lessor or assessed against the
Exterior Common Area or the Project; materials; supplies, tools; depreciation on
maintenance and operating machinery and equipment (if owned) and rental paid for
such machinery and equipment (if rented); service agreements on equipment;
maintenance and repair of parking areas and parking structures, if any; routine
maintenance and repair of structural parts (including foundation and floor
slabs); elevator services, if applicable; material handling; fees for licenses
and permits relating to the Exterior Common Area; the cost of complying with
rules, regulation and orders of governmental authorities to the extent provided
in this Lease; accounting and legal fees; the cost of contesting the validity or
applicability of any governmental enactment which may affect Project Expenses;
personnel to implement such services, including if Lessor deems necessary, the
cost of security guards and valet attendants; all annual assessments and special
assessments levied or charged against the Project and/or Lessor pertaining to
the Project by any owner’s association to which the Project is subject and/or
otherwise under any matters of record to which the Project is subject; public
liability, environmental impairments, property damage and fire and extended
coverage insurance on Exterior Common Area (in such amounts and providing such
coverage as determined in Lessor’s sole discretion and which may include,
without limitation, liability, all risk property, lessor’s risk liability, war
risk, vandalism, malicious mischief, sprinkler leakage, boiler and machinery,
parking income, earthquake, flood and worker’s compensation insurance);
compensation and fringe benefits payable to all persons employed by Lessor in
connection with the operation, maintenance, repair and management of the
Exterior Common Area; and a management fee not to exceed five percent (5%) of
gross receipts from the Project (exclusive of amounts collected from tenants of
any building within the Project under their respective leases). Lessor may cause
any or all of said services to be provided by an independent contractor or
contractors, or they may be rendered by Lessor. It is the intent of the parties
hereto that Project Expenses shall include every cost paid or incurred by Lessor
in connection with the operation, maintenance, repair and management of the
Exterior Common Area, and the specific examples of Project Expenses stated in
this Article 7 are in no way intended to, and shall not limit the costs
comprising Project Expenses, nor shall such examples be deemed to obligate
Lessor to incur such costs or to provide such services or to take such actions
except as Lessor may be expressly required in other portions of this Lease, or
except as Lessor, in its sole discretion, may elect. The maintenance of the
Exterior Common Areas shall be reasonably determined by Lessor so as to maintain
the same in good condition and repair, reasonable wear and tear excepted
(subject to the express provisions of this Lease governing maintenance, repair,
replacement, casualty and condemnation) and all costs incurred by Lessor in good
faith shall be deemed conclusively binding on Lessee. If less than one hundred
percent (100%) of the Rentable Area of the Project is occupied during any
calendar year, then in calculating Project Expenses for such year, the
components of Project Expenses which vary based upon occupancy level shall be
adjusted to equal Lessor’s reasonable estimate of the amount of such Project
Expenses had one hundred percent (100%) of the total Rentable Area of the
Project been occupied during such year. In addition, if Lessor is not furnishing
any particular work or service (the cost of which, if performed by Lessor, would
be included in Project Expenses) to a tenant who has undertaken to perform such
work or service in lieu of the performance thereof by Lessor, then for purposes
of determining the fraction which is Lessee’s Percentage Share of Project
Expenses for such item(s) of work and/or service, the rentable square footage of
the premises of such tenant(s) shall be excluded from the denominator.
 
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However, notwithstanding the foregoing or anything to the contrary contained in
this Lease, in no event shall Project Expenses include (1) costs, including
permit, license and inspection costs, incurred with respect to the installation
of tenant improvements to other tenant’s leased premises within the Building or
incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant leasable space within the Building, (2) costs in order to
market space to potential tenants, leasing commissions, and attorneys’ fees in
connection with the negotiation and preparation of letters, deal memos, letters
of intent, leases, subleases and/or assignments or other costs in connection
with lease, sublease and/or assignment negotiations with present or prospective
tenants or other occupants of the Building, (3) reserves (except that nothing
contained herein shall be deemed to prevent Lessor’s collection of anticipated
Building Service Expenses for the current year), (4) ground lease rental on any
underlying ground lease or interest, principal, points and/or fees on debts or
amortization on any mortgage or mortgages or any other debt instrument
encumbering the Building, (5) to the extent any employee of Lessor spends only a
portion of his or her time working with respect to the Building (as opposed to
full time work with respect to the Building), a prorated amount of such
employee’s wages, salaries and compensation based upon the portion of time spent
by such employee with respect to the projects other than the Building, (6)
increased costs of performance or other costs or damages directly resulting from
the negligence or willful misconduct of Lessor or Lessor’s agents, employees or
contractors, (7) costs (including attorney’s fees and costs) incurred due to
violation by Lessor or any other tenant in the Building of the terms and
conditions of any lease for space within the Building or arising out of any
other dispute between Lessor and any other tenant, (8) the cost of any service
provided to Lessee or other occupants of the Building or other cost includable
in Building Service Expenses pursuant hereto for which Lessor is, or is entitled
to be, separately reimbursed by insurance, third parties or otherwise (other
than reimbursement by lessees as a part of their respective payments of Building
Service Expenses), (9) charitable or political contributions, (10) interest,
penalties or other costs arising out of Lessor’s failure to make timely payment
of its obligations, (11) overhead and profit paid to Lessor or to subsidiaries
or affiliates of Lessor for goods and/or services in the Building to the extent
the same exceeds the costs of such goods and/or services rendered by qualified,
unaffiliated third parties on a competitive basis, (12) costs to remediate
Hazardous Materials located upon, within or beneath the Building prior to the
Commencement Date, (13) costs (other than ordinary maintenance) for sculpture,
paintings and other objects of art, (14) costs associated with the operation of
the business of the partnership or entity which constitutes Lessor as the same
are distinguished from the costs of the operation of the Project, including
partnership accounting and legal matters, costs of defending any lawsuits with
any mortgagee, costs of selling, syndicating, financing, mortgaging or
hypothecating any of Lessor’s interest in the Project, costs of any disputes
between Lessor and its employees (if any) not engaged in the operation of the
Project, disputes of Lessor with Project management, or outside fees paid in
connection with disputes with other Project lessees or occupants, (15) leasing
commissions and other similar costs associated with marketing the Building, (16)
costs incurred for restoration following condemnation to the extent reimbursed
by insurance proceeds (provided that insurance deductibles and uninsured
casualty damage up to $50,000 per occurrence (or such higher amount, not to
exceed $100,000, as may be then commercially reasonable as an insurance
deductible for comparable buildings in the Mountain View/Palo Alto area) shall
be included in Building Service Expenses), (17) costs associated with
alterations, improvements, repairs or replacements (including those resulting
from any legal requirement that Lessor is permitted to charge to Lessee
hereunder) that can be amortized in accordance with GAAP except to the extent
amortized over the useful life of the item in question (reasonably determined in
accordance with GAAP) at an interest rate that Lessor pays to finance such items
or would be required to pay to an institutional lender if such financing were
obtained, and (18) costs associated with any retail concession located at the
Building; provided however, in no event shall this exclusion impact Lessor’s
right to create cost pools as described in Section 7.b. There shall be no
duplication of items included in Project Expenses and Building Service Expenses.
 
(ii)  Project Taxes. “Building Taxes” as used in this Lease, shall mean those
items of “Project Taxes” (as hereinafter defined) which relate solely to the
Building, plus an equitable share of Project Taxes which relate to the land
underlying the Project, to the Exterior Common Areas and/or to the Project as a
whole (as opposed to Project Taxes relating solely to the Building or any other
particular building within the Project), which equitable share shall be
allocated by Lessor between the Building and the other buildings located within
the Project from time to time, in such manner as Lessor reasonably determines in
good faith. The term “Project Taxes” as used in this Lease shall collectively
mean (to the extent any of the following are not paid by Lessee pursuant to
Article 7.c. below) all: real estate taxes and general or assessments
(including, but not limited to, assessments for public improvements or
benefits); personal property taxes; taxes based on vehicles utilizing parking
areas on the Parcel; taxes computed or based on rental income (including without
limitation any municipal business tax but excluding federal, state and municipal
net income taxes); Environmental Surcharges; excise taxes; gross receipts taxes;
sales and/or use taxes; employee taxes; water and sewer taxes, levies,
assessments and other charges in the nature of taxes or assessments (including,
but not limited to, assessments for public improvements or benefit); and all
other governmental, quasi-governmental or special district impositions of any
kind and nature whatsoever, regardless of whether now customary or within the
contemplation of the parties hereto and regardless of whether resulting from
increased rate and/or valuation, or whether extraordinary or ordinary, general
or special, unforeseen or foreseen, or similar or dissimilar to any of the
foregoing which during the Lease Term are laid, levied, assessed or imposed upon
Lessor and/or become a lien upon or chargeable against the Project or the
Premises, Building, Common Area and/or Parcel under or by virtue of any present
or future laws, statutes, ordinances, regulations, or other requirements of any
governmental authority or quasi-governmental authority or special district
having the direct or indirect power to tax or levy assessments whatsoever. The
term “Environmental Surcharges” shall include any and all expenses, taxes,
charges or penalties imposed by the Federal Department of Energy, Federal
Environmental Protection Agency, the Federal Clean Air Act, or any regulations
promulgated thereunder, or imposed by any other local, state or federal
governmental agency or entity now or hereafter vested with the power to impose
taxes, assessments or other types of surcharges as a means of controlling or
abating environmental pollution or the use of energy in regard to the use,
operation or occupancy of the Project including the Premises, Building, Common
Area and/or Parcel. The term “Project Taxes” shall include (to the extent the
same are not paid by Lessee pursuant to Article 7.c. below), without limitation:
the cost to Lessor of contesting the amount or validity or applicability of any
Project Taxes described above; and all taxes, assessments, levies, fees,
impositions or charges levied, imposed, assessed, measured, or based in any
manner whatsoever upon or with respect to the use, possession, occupancy,
leasing, operation or management of the Project (including, without limitation,
the Premises, Building, Common Area and/or Parcel) or in lieu of or equivalent
to any Project Taxes set forth in this Article 7.b.(ii). Notwithstanding the
foregoing, or anything to the contrary contained in this Lease, in no event
shall Building Taxes or Project Taxes include (nor shall Building Service
Expenses or Project Expenses include): Taxes, assessments, all other
governmental levies, and any increases in the foregoing occasioned by or
relating to (i) land and improvements not reserved for Lessee's exclusive or
nonexclusive use, (ii) a voluntary or involuntary change of ownership or other
conveyance of the real property of which the Premises is a part (a) to any
person or entity affiliated with or related to Lessor or the partners,
shareholders, officers or directors of Lessor or (b) in connection with estate
planning or (c) which is not otherwise a bona fide, arm's length sale to an
unrelated third party, (iii) assessments and other fees for improvements and
services which do not benefit the Premises or the Building, (iv) construction of
improvements exclusively for other occupants of the Project, (v) estate,
inheritance and income taxes, or (vi) assessments, except to the extent such
assessments are paid by Lessor over the longest possible term without incurring
a penalty.
 
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If at any time during the Term, Project Taxes are under-assessed by the taxing
authorities so that they are not computed on a fully-completed and occupied
basis in accordance with the then applicable taxing authority of the
governmental entities having jurisdiction, Lessor shall have the right, but not
the obligation, to adjust Project Taxes to reflect the amount that Project Taxes
would be if the Project were assessed on a fully-completed and occupied basis,
as determined in Lessor’s reasonable discretion, and such adjusted amount shall
be allocated to the Project in accordance with the terms of this Lease.
 
c.  Other Taxes. Lessee shall pay the following:
 
(i)  Lessee shall pay (or reimburse Lessor as additional rent if Lessor is
assessed), before delinquency, any and all taxes levied or assessed, and which
become payable for or in connection with any period during the Term, upon all of
the following (collectively, “Leasehold Improvements and Personal Property”):
Lessee’s Leasehold Improvements, equipment, furniture, furnishings, fixtures,
merchandise, inventory, machinery, appliances and other personal property
located in the Premises; except only that which has been paid for by Lessor and
is the standard of the Building. Lessee hereby acknowledges receipt of a copy of
a schedule setting forth the improvements comprising the standard of the
Building. If any or all of the Leasehold Improvements and Personal Property are
assessed and taxed with the Project, Lessee shall pay to Lessor such taxes
within ten (10) days after delivery to Lessee by Lessor of a statement in
writing setting forth the amount applicable to the Leasehold Improvements and
Personal Property. If the Leasehold Improvements and Personal Property are not
separately assessed on the tax statement or bill, Lessor’s reasonable good faith
determination of the amount of such taxes applicable to the Leasehold
Improvements and Personal Property shall be a conclusive determination of
Lessee’s obligation to pay such amount as so determined by Lessor.
 
(ii)  Lessee shall pay (or reimburse Lessor if Lessor is assessed, as additional
rent), prior to delinquency or within thirty (30) days after receipt of a
statement thereof, any and all other taxes, levies, assessments, or surcharges
payable by Lessor or Lessee and relating to this Lease, the Premises or Lessee’s
activities in the Premises (other than Lessor’s net income, succession,
transfer, gift, franchise, estate, or inheritance taxes), whether or not now
customary or within the contemplation of the parties hereto, now in force or
which may hereafter become effective, including but not limited to taxes: (1)
upon, allocable to, or measured by the area of the Premises or on the Rentals
payable hereunder, including without limitation any gross income, gross
receipts, excise, or other tax levied by the state, any political subdivision
thereof, city or federal government with respect to the receipt of such Rentals;
(2) upon or with respect to the use, possession, occupancy, leasing, operation
and management of the Premises or any portion thereof; (3) upon this transaction
or any document to which Lessee is a party creating or transferring an interest
or an estate in the Premises; or (4) imposed as a means of controlling or
abating environmental pollution or the use of energy, including, without
limitation, any parking taxes, levies or charges or vehicular regulations
imposed by any governmental agency. Lessee shall also pay, prior to delinquency,
all privilege, sales, excise, use, business, occupation, or other taxes,
assessments, license fees, or charges levied, assessed, or imposed upon Lessee’s
business operations conducted at the Premises.
 
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(iii)  Any payments made by Lessee directly to the applicable taxing authority
pursuant to this subsection 7.c. shall be made prior to the applicable
delinquency date for such payment, and Lessee shall deliver evidence of such
payment to Lessor within fifteen (15) days thereafter.
 
8.  USE.
 
a.  In no event shall Lessee use or permit any of their employees, agents,
representatives, contractors and/or invitees (“Lessee’s Agents”) the use of the
Premises for any purpose other than general office use and other lawful uses
incidental thereto consistent with operation primarily for general office use
(including at Lessee’s option occasional reconfiguration of servers used by
Lessee and shipping). Lessor and Lessee hereby acknowledge and agree that the
foregoing use restriction is an absolute prohibition against a change in use of
the Premises as contemplated under California Civil Code Section 1997.230.
Lessee shall not do or permit Lessee’s Agents to do anything in or about the
Premises nor bring or keep anything therein which will in any way increase the
existing rate of or affect any fire or other insurance upon the Building or the
Project or any of its contents, or cause cancellation of any insurance policy
covering the Building or the Project or any part thereof or any of its contents.
Lessee shall not, without prior consent of Lessor, bring into the Building or
the Premises or use or incorporate in the Premises any apparatus, equipment or
supplies that may cause substantial noise, odor, or vibration or overload the
Premises or the Building or any of its utility or elevator systems or jeopardize
the structural integrity of the Building or any part thereof. Lessee and
Lessee’s Agents shall not use, store, or dispose of any “Hazardous Materials”
(defined below) on any portion of the Project, except, however, that nothing
contained in this Lease shall be deemed to prohibit Lessee’s use of customary
general office and janitorial supplies typically used in an office area in the
ordinary course of business, such as copier toner, liquid paper, glue and ink,
for use in the manner for which they were designed, in such amounts and in a
manner as is normal for first-class general office use but containing substances
technically constituting Hazardous Materials under this Lease (collectively,
“Standard Office Hazardous Materials”). Without limiting the generality of the
foregoing, Lessee shall not (either with or without negligence) cause, or permit
Lessee’s Agents to cause, the escape, disposal or release of any Hazardous
Materials in, on or below the Premises or any other portion of the Project. If
any lender or governmental agency shall ever reasonably require testing to
ascertain whether or not there has been any release or other use of Hazardous
Materials at the Premises by Lessee or Lessee’s Agents during the Term of this
Lease, and it is determined that there has been a release or other use of
Hazardous Materials at the Premises by Lessee or Lessee’s Agents during the Term
of this Lease (other than use of Standard Office Hazardous Materials as provided
for herein), then the reasonable costs thereof shall be reimbursed by Lessee to
Lessor upon demand as additional rent. In addition, Lessee shall execute such
affidavits, representations and certifications as may be reasonably required by
Lessor from time to time concerning Lessee’s best knowledge and belief regarding
the presence of Hazardous Materials at the Premises. Lessee shall indemnify,
defend with counsel reasonably acceptable to Lessor, and hold Lessor and
Lessor’s employees, agents, partners, officers, directors and shareholders
harmless from and against any and all claims, actions, suits, proceedings,
orders, judgment, losses, costs, damages, liabilities, penalties, or expenses
(including, without limitation, attorneys’ fees) arising in connection with the
breach of the obligations described in any of the previous four sentences and
the obligations of Lessee pursuant hereto and under the previous four sentences
shall survive the Lease Termination. As used in this paragraph, “Hazardous
Materials” means any chemical, substance or material which has been determined
or is hereafter determined by any federal, state, or local governmental
authority to be capable of posing risk of injury to health or safety, including,
without limitation, petroleum, asbestos, polychlorinated biphenyls, radioactive
materials, radon gas, and/or biologically and/or chemically active materials.
Without limiting the generality of the foregoing, the definition of “Hazardous
Materials” shall include those definitions found in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§
9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §§
6901 et seq., the Hazardous Materials Transportation Authorization Act, 49
U.S.C. §§ 5101 et seq., the National Environmental Policy Act, 42 U.S.C. §§ 4321
et seq., the Clean Water Act, 33 U.S.C. §§ 1251 et seq., the Clean Air Act, 42
U.S.C. §§ 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et
seq., the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq., the Occupational
Safety and Health Act, 29 U.S.C. §§ 651 et seq., Division 20 of the California
Health and Safety Code commencing at Section 24000, Division 7 of the California
Water Code commencing at Section 13000, each as amended from time to time, and
all similar federal, state and local statutes and ordinances and all rules,
regulations or policies promulgated thereunder. Lessee shall not do or permit
Lessee’s Agents to do anything in or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Building or the Project or injure or annoy them or use or allow the Premises to
be used for any improper, immoral, unlawful or objectionable purpose, nor shall
Lessee cause, maintain or permit any nuisance in, on or about the Premises.
Lessee shall not commit or suffer to be committed any waste in or upon the
Premises.
 
Lessor represents and warrants to Lessee that Lessor has no actual knowledge
(without duty of investigation or imputation of knowledge) of any Hazardous
Materials existing in or about the Premises or other portions of the Project at
levels which pose a material health risk or are reasonably likely to have a
material and adverse affect upon the operation of Lessee’s business from the
Premises (including, without limitation, access to and/or use of the Premises
and parking areas serving the Project). Lessor shall promptly notify Lessee of
any Hazardous Materials actually known by Lessor (without duty of investigation
or imputation of knowledge) to exist in or about the Premises or other portions
of the Project at levels which otherwise pose a material risk of having a
material and adverse affect upon the operation of Lessee’s business from the
Premises (including, without limitation, access to and/or use of the Premises
and parking areas serving the Project). Notwithstanding anything to the contrary
contained herein, Lessee shall not be responsible (either directly or as an item
of Building Service Expenses or as an item of Project Expenses) for costs
related to the testing, remediation and/or presence of Hazardous Materials on or
about the Premises or Project except to the extent caused to be present thereon
or thereabout by Lessee or Lessee’s Agents.
 
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b.  Effect of Use Restriction. Lessor and Lessee hereby acknowledge and agree
that the use restriction set forth in subsection 8.a. above shall be deemed
reasonable in all respects and under all circumstances. Lessor and Lessee
further acknowledge and agree that, notwithstanding any provision of this Lease
to the contrary, (i) in the event Lessee requests Lessor’s consent to a proposed
assignment of this Lease or subletting of the Premises, Lessor shall be deemed
reasonable in withholding its consent to such assignment or subletting if the
proposed assignee or subtenant desires to use the Premises for any purpose other
than as expressly provided in subsection 8.a. above, and (ii) in the event of a
default by Lessee under the Lease, the enforcement of the use restriction set
forth in subsection 8.a. above shall be deemed reasonable for purposes of
computing the rental loss that could be or could have been reasonably avoided by
Lessor pursuant to California Civil Code Section 1951.2 and in connection with
the exercise of Lessor’s remedies under California Civil Code Section 1951.4.
 
Notwithstanding the preceding to the contrary, if Lessor withholds its consent
to an assignment of the Lease or subletting of the Premises based upon the
desire of the proposed assignee or subtenant to use the Premises for any purpose
other than as expressly provided in subsection 8.a. above, or if Lessee is in
default under this Lease, then, prior to commencing or pursuing any claim or
defense against Lessor based upon the unreasonableness of the use restriction
set forth in subsection 8.a. above, Lessee shall provide Lessor with written
notice (by certified mail, postage prepaid and return receipt requested) setting
forth Lessee’s objections to the enforcement of the use restriction in such
instance, the basis upon which Lessee intends to demonstrate that the
enforcement of such use restriction would be unreasonable in such instance, and
the use(s) which Lessee believes Lessor should allow Lessee or its proposed
assignee or subtenant, as the case may be, to make of the Premises. Within
thirty (30) days of Lessor’s receipt of Lessee’s written notice of objection,
Lessor shall provide Lessee with written notice of Lessor’s election to either
(A) enforce the use restriction set forth in subsection 8.a. above, or (B)
permit a change in the use of the Premises, provided that such proposed use
shall in no event (1) require the use, storage or disposal of Hazardous
Materials on or about the Premises or the Project, (2) increase or affect any
fire or other insurance covering the Building or the Project, (3) interfere with
the rights of other tenants of the Building or Project, including, without
limitation, any exclusive use rights of such tenants, (4) be in violation of
applicable federal, state or local laws, rules, regulations, codes or
ordinances, or (5) require Lessor to construct or install, or to provide any
allowance for the construction or installation of, any tenant improvements in
the Premises. Notwithstanding the preceding to the contrary, in no event shall
Lessor have any obligation to allow a change in the use of the premises, it
being expressly understood by the parties that the use restriction set forth in
subsection 8.a. above is an absolute prohibition against a change in use of the
Premises. In the event Lessor fails to provide Lessee with written notice of its
election to either enforce the use restriction or allow a change in use of the
Premises within said thirty (30) day period, Lessor shall be deemed to have
elected to enforce the use restriction. In the event Lessor elects or is deemed
to have elected to enforce the use restriction as provided hereinabove, Lessee
shall have the right to pursue such valid claims or defenses against Lessor as
may be permitted under California Civil Code section 1997.040 and which Lessee
is able to prove.
 
9.  COMPLIANCE WITH LAWS. Lessee shall not use the Premises or permit anything
to be done in or about the Premises by Lessee’s Agents which will in any way
knowingly conflict with or violate any law, statute, ordinance, order or
governmental rule or regulation or requirement of duly constituted public
authorities or quasi-public authorities now in force or which may hereafter be
enacted or promulgated. Lessee shall, at its sole cost and expense, promptly
comply with all laws, statutes, ordinances, orders and governmental or
quasi-governmental rules, regulations or requirements now in force or which may
hereafter be in force and with all recorded documents which relate to or affect
the condition, particular use or occupancy of the Premises, and with the
requirements of any board of fire insurance underwriters or other similar bodies
now or hereafter constituted, relating to, or affecting the condition, use or
occupancy of the Premises, excluding capital improvements or other alterations
not related to or affected by Lessee’s improvements or particular use of the
Premises; provided however, Lessee’s responsibility shall not extend to the cost
of compliance for any condition of the Premises that existed prior to the
Commencement Date. The judgment of any court of competent jurisdiction or the
admission of Lessee in any action against Lessee, whether Lessor be a party
thereto or not, that Lessee has violated any law, statute, ordinance, or
governmental or quasi-governmental rule, regulation or requirement, shall be
conclusive of that fact as between the Lessor and Lessee. Lessee shall obtain,
prior to taking possession of the Premises, all permits, licenses, or other
authorizations for the lawful operation of its business at the Premises. Lessee
shall indemnify, defend with counsel acceptable to Lessor and hold Lessor and
Lessor’s employees, agents, partners, officers, directors and shareholders
harmless from and against any claim, action, suit, proceeding, order, judgment,
liability, penalty or expense (including, without limitation, attorneys’ fees)
arising out of the failure of Lessee to comply with any applicable law, statute,
ordinance, order, rule, regulation, requirement or recorded document, with which
Lessee is obligated under the terms of this Lease to comply. Lessee acknowledges
that Lessee has independently investigated and is satisfied that the Premises
are suitable for Lessee’s intended use.
 
Lessor and Lessee acknowledge that, in accordance with the provisions of the
Americans with Disabilities Act of 1990 (the “ADA”), responsibility for
compliance with the terms and conditions of Title III of the ADA may be
allocated as between Lessor and Lessee. In this regard and notwithstanding
anything to the contrary contained in the Lease, Lessor and Lessee agree that
the responsibility for compliance with the ADA (including, without limitation,
the removal of architectural and communications barriers and the provision of
auxiliary aids and services to the extent required) shall be allocated as
follows: (i) Lessee shall be responsible for compliance with the provisions of
Title I of the ADA, and of Title II and Title III of the ADA as Titles II and
III relate to any construction, renovations, alterations and repairs made within
the Premises if such construction, renovations, alterations and repairs are made
by Lessee, at its expense without the assistance of Lessor; (ii) Lessor shall be
responsible for compliance with the provisions of Title II and III of the ADA
for all construction, renovations, alterations and repairs which Lessor is
required, under this Lease, to make within the Premises, whether (pursuant to
the relevant provisions of the Lease) at Lessor’s or Lessee’s expense and the
Lessee Improvement Allowance (as defined in Exhibit “C”) will not be used by
Lessor to bring the Premises into compliance; and (iii) Lessor shall be
responsible for compliance with the provisions of Title III of the ADA for all
exterior and interior areas of the Building not included within the Premises
except to the extent such compliance is necessitated as a result of Lessee’s
particular use of, or alterations to, the Premises. Lessor agrees to indemnify,
defend and hold Lessee harmless from and against any claims, damages, costs and
liabilities arising out of Lessor’s failure, or alleged failure, as the case may
be, to comply with the ADA, to the extent such compliance has been allocated to
Lessor herein, which indemnification obligation shall survive the expiration or
termination of this Lease if the Lease has not been terminated by reason of a
default by Lessee. Lessee agrees to indemnify, defend and hold Lessor harmless
from and against any claims, damages, costs and liabilities arising out of
Lessee’s failure, or alleged failure, as the case may be, to comply with the ADA
to the extent such compliance has been allocated to Lessee herein, which
indemnification obligation shall survive the expiration or termination of this
Lease. Lessor and Lessee each agree that the allocation of responsibility for
ADA compliance shall not require Lessor or Lessee to supervise, monitor or
otherwise review the compliance activities of the other with respect to its
assumed responsibilities for ADA compliance as set forth in this Article 9.
Lessor shall, in complying with the ADA (to the extent such compliance has been
allocated to Lessor herein), be entitled to rely upon representations made to,
or information given to Lessor by Lessee in regard to Lessee’s use of the
Premises, Lessee’s employees, and other matters pertinent to compliance with the
ADA. The indemnity of Lessee set forth above shall apply as to any liability
arising against Lessor by reason of any misrepresentations or misinformation
given by Lessee to Lessor. The allocation of responsibility for ADA compliance
between Lessor and Lessee, and the obligations of Lessor and Lessee established
by such allocations, shall supersede any other provisions of the Lease that may
contradict or otherwise differ from the requirements of this Article 9.
 
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10.  ALTERATIONS AND ADDITIONS.
 
a.  Lessee’s Alterations. Lessee shall not make or suffer to be made any
alterations, additions, changes or improvements (collectively, “Alterations”) to
or of the Premises, or any part thereof without Lessor’s prior written consent,
which consent shall not, except as otherwise expressly provided in the Lease, be
unreasonably withheld; except, however, that without Lessor’s consent but upon
at least ten (10) business days prior written notice to Lessor, Lessee may make
interior, non-structural Alterations costing less than Ten Thousand Dollars
($10,000.00) in any one instance and not (1) requiring the demolition of any
material improvements existing as of the Commencement Date, or (2) materially
affecting the mechanical or utility systems serving the Premises or the exterior
appearance of the Building. Lessor may impose, as a condition to the aforesaid
consent, such requirements as Lessor may deem reasonably appropriate in its
reasonable discretion, including without limitation: the manner in which the
work is done; a right of approval of the contractor by whom the work is to be
performed; the times during which such work is to be accomplished; the
requirement that Lessee post a lien and completion bond (or its equivalent) in
an amount equal to one and one-half times any and all estimated Alterations
costs and otherwise in form reasonably satisfactory to Lessor to insure Lessor
against any liability for mechanics’ and materialmen’s liens and to insure
completion of the work; the requirement that Lessee reimburse Lessor, as
additional rent, for Lessor’s actual and reasonable costs incurred in reviewing
any proposed Alterations, whether or not Lessor’s consent is granted; and the
requirement that at Lease Termination, either (i) Lessee, at its expense, will
remove any and all such Alterations designated for removal by Lessor at the time
Lessor approves such Alteration, and Lessee shall, at its cost, promptly repair
all damages to the Project caused by such removal, or (ii) the Alterations made
by Lessee shall remain with the Premises, be a part of the realty, and belong to
Lessor. If Lessor consents to any Alterations to the Premises by Lessee, the
same shall be made by Lessee at Lessee’s sole cost and expense in accordance
with plans and specifications approved by Lessor. Any such Alterations made by
Lessee shall be performed in accordance with all applicable laws, ordinances and
codes and in a first class workmanlike manner, and shall not weaken or impair
the structural strength or lessen the value of the Building, shall not
invalidate, diminish, or adversely affect any warranty applicable to the
Building or any other improvements located within the Project, including any
equipment therein, and shall be performed in a manner causing Lessor and
Lessor’s agents and other tenants of the Building the least interference and
inconvenience practicable under the circumstances. In making any such
Alterations, Lessee shall, at Lessee’s sole cost and expense:
 
(i)  File for and secure any necessary permits or approvals from all
governmental departments or authorities having jurisdiction, and any utility
company having an interest therein,
 
(ii)  Notify Lessor in writing at least fifteen (15) days prior to the
commencement of work on any Alteration, so that Lessor can post and record
appropriate notices of non-responsibility, and
 
(iii)  Provide Lessor with copies of all drawings and specifications prior to
commencement of construction of any Alterations, and provide Lessor with “as
built” plans and specifications (on CAD diskette if available) following
completion of such Alterations.
 
In no event shall Lessee make or suffer to be made any Alteration to the
mechanical or utility systems of the Building, to the Common Area or the
structural portions of the Building or any part thereof without Lessor’s prior
written consent, which consent may be withheld in Lessor’s sole discretion.
 
b.  Removal. Upon Lease Termination, Lessee shall, upon written demand by Lessor
at Lessee’s sole cost and expense, forthwith and with all due diligence remove
any Alterations made by Lessee, designated by Lessor to be removed at the time
Lessor approved such Alteration and Lessee shall, forthwith and with all due
diligence at its sole cost and expense, repair any damage to the Project caused
by such removal. Lessee shall also, upon Lease Termination and provided that
Lessee is not then in default hereunder beyond any applicable notice and cure
period, remove Lessee’s movable equipment, furnishings, trade fixtures and other
personal property (excluding any Alterations made by Lessee not specifically
designated by Lessor to be removed), provided that Lessee shall, forthwith and
with all due diligence at its sole cost and expense, repair any damages to the
Project caused by such removal. Unless Lessor elects to have Lessee remove any
such Alterations as provided above, all such Alterations except for movable
furniture and trade fixtures of Lessee not permanently affixed to the Premises,
shall become the property of Lessor upon Lease Termination (without any payment
therefor) and remain upon and be surrendered with the Premises. However, Lessee
shall have the right, prior to the expiration of the Term or earlier termination
of this Lease, to remove any of Lessee’s furniture and trade fixtures located in
the Premises, provided that Lessee promptly repairs any damage to the Premises
resulting from such removal. Notwithstanding anything to the contrary contained
in this Lease, in no event shall Lessee be required to remove or pay for the
removal of any of the Lessee Improvements installed pursuant to the terms of
Exhibit “C” attached hereto.
 
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c.  Alterations Required by Law. Lessee shall pay to Lessor as additional rent,
the cost of any structural or non-structural alteration, addition or change to
the Building and/or at Lessor’s election, shall promptly make, at Lessee’s sole
expense and in accordance with the provisions of subsection 10.a. above, any
structural or non-structural alteration, addition or change to the Premises
required to comply with laws, regulations, ordinances or orders of any public
agencies, whether now existing or hereinafter promulgated, where such
alterations, additions or changes are required by reason of: Lessee’s or
Lessee’s Agents’ acts; Lessee’s particular use or change of use to the Premises
or alterations or improvements to the Premises made by Lessee; or Lessee’s
application for any permit or governmental approval.
 
d.  Lessor’s Improvements. All fixtures, improvements or equipment which are
installed, constructed on or attached to the Premises, or any part of the
Project by Lessor at its expense shall be a part of the realty and belong to
Lessor.
 
11.  REPAIRS.
 
a.  By Lessee. Except as otherwise set forth in this Lease, by taking possession
of the Premises, Lessee shall be deemed to have accepted the Premises as being
in good and sanitary order, condition and repair and to have accepted the
Premises in their condition existing as of the date of such possession, subject
to all applicable laws, covenants, conditions, restrictions, easements, and
other matters of public record and the Rules and Regulations from time to time
promulgated by Lessor governing the use of any portion of the Project. Lessee
shall further be deemed to have accepted Lessee Improvements constructed by
Lessor, if any, as being completed in accordance with the plans and
specifications for such improvements, excluding only the punch list items
referred to in Article 4.a. above. Subject to the provisions granting Lessor an
opportunity to perform repairs upon written notice from Lessee as set forth in
Article 11.b., Lessor represents and warrants that as of the Commencement Date
the Premises and Building Systems (as defined in Exhibit C) servicing the
Premises will be in good condition and repair and the roof watertight Except as
set forth in Article 11.b. below, Lessee shall at Lessee’s sole cost and
expense, keep every part of the Premises in good condition and repair, damage
thereto from causes beyond the control of Lessee (and not caused by any act or
omission of Lessee or Lessee’s Agents) and excepting ordinary wear and tear and
repair and restoration required due to casualty or condemnation which Lessee is
not required to repair pursuant to Article 21 or 24, respectively, below. If
Lessee fails to maintain or repair the Premises as required by this Lease,
Lessor may give Lessee written notice thereof and if Lessee fails to commence
such required work immediately in an emergency or where immediate action is
required to protect the Premises or any portion of the Project, or within thirty
(30) days after such notice is given under other circumstances, and diligently
prosecute it to completion, then Lessor or Lessor’s agents, in addition to all
of the rights and remedies available hereunder or by law and without waiving any
alternative remedies, shall have the right to enter the Premises and to do such
acts and expend such funds at the expense of Lessee as are reasonably required
to perform Lessee’s obligations under this Lease. Any amount so expended by
Lessor shall be paid by Lessee to Lessor as additional rent, upon demand. With
respect to any work performed by Lessor pursuant to this Article 11.a., Lessor
shall be liable to Lessee only for physical damage caused to Lessee’s personal
property located within the Premises to the extent such damage is caused by
Lessor’s negligence or willful misconduct, subject to the provisions of Article
15 below. In no event shall Lessor have any liability to Lessee for any
inconvenience or interference with the use of the Premises by Lessee, or for any
consequential damages, including lost profits, as a result of performing any
such work. Except as specifically provided in an addendum, if any, to this Lease
or in connection with Lessor’s obligations under 11.b. or Exhibit C, Lessor
shall have no obligation whatsoever to alter, remodel, improve, repair, decorate
or paint the Premises or any part thereof and the parties hereto affirm that
Lessor has made no representations or warranties, express or implied, to Lessee
respecting the condition of the Premises or any part of the Project except as
specifically set forth in this Lease.
 
b.  By Lessor. The costs of repairs and maintenance which are the obligation of
Lessor under this Lease or which Lessor elects to perform under this Lease
except such repairs and maintenance which are the responsibility of Lessee
hereunder, shall be an Operating Expense except as otherwise set forth in this
Lease. Notwithstanding anything to the contrary contained in this Lease, Lessor
shall repair and maintain the structural portions of the Building at Lessor’s
sole cost and expense, and subject to recovery as an Operating Expense, Lessor
shall repair, maintain and replace, when necessary all non-structural items,
including the roof membrane and all building systems including the basic
plumbing, air conditioning, heating and electrical systems installed or
furnished by Lessor, except to the extent such maintenance or repairs are caused
by the act, neglect, fault or omission of any duty by Lessee or Lessee’s Agents,
in which case Lessee shall pay to Lessor the reasonable cost of such maintenance
or repairs as additional rent (subject to the terms of Article 15 hereof).
Lessor shall not be liable for any failure to make any such repairs or to
perform any maintenance for which Lessor is responsible as provided above unless
Lessor fails to commence such work for a period of more than thirty (30) days
after written notice of the need of such repairs or maintenance is given to
Lessor by Lessee (or within a reasonable period of time in the event of an
emergency) and the failure is due solely to causes within Lessor’s reasonable
control. Except as provided in Article 21 of this Lease, there shall be no
abatement of Rentals, and in any event there shall be no liability of Lessor by
reason of any injury to or interference with Lessee’s business arising from the
making of any repairs, alterations or improvements in or to any portion of the
Project or in or to fixtures, appurtenances and equipment therein. Lessee waives
the benefits of any statute now or hereafter in effect (including, without
limitation, the provisions of subsection l of Section 1932, Section 1941 and
Section 1942 of the California Civil Code and any similar or dissimilar law,
statute or ordinance now or hereafter in effect) which would otherwise afford
Lessee the right to make repairs at Lessor’s expense (or to deduct the cost of
such repairs from Rentals due hereunder) or to terminate this Lease because of
Lessor’s failure to keep the Premises in good and sanitary order.
 
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12.  LIENS. Lessee shall keep the Premises and every portion of the Project free
from any and all mechanics’, materialmen’s and other liens, and claims thereof,
arising out of any work performed, materials furnished or obligations incurred
by or for Lessee. Lessee shall indemnify and defend with counsel acceptable to
Lessor and hold Lessor harmless from and against any liens, demands, claims,
actions, suits, proceedings, orders, losses, costs, damages, liabilities,
penalties, expenses, judgments or encumbrances (including without limitation,
attorneys’ fees) arising out of any work or services performed or materials
furnished by or at the direction of Lessee or Lessee’s Agents or any contractor
employed by Lessee with respect to the Premises. Should any claims of lien
relating to work performed, materials furnished or obligations incurred by
Lessee be filed against, or any action be commenced affecting the Premises, any
part of the Project, and/or Lessee’s interest therein, Lessee shall give Lessor
notice of such lien or action within three (3) business days after Lessee
receives notice of the filing of the lien or the commencement of the action. If
Lessee does not, within twenty (20) days following the imposition of any such
lien, cause such lien to be released of record by payment or posting of a proper
bond, Lessor shall have, in addition to all other remedies provided herein and
by law, the right, but not the obligation, to cause the same to be released by
such means as it shall deem proper, including by payment of the claim giving
rise to such lien or by posting a proper bond, or by requiring Lessee to post
for Lessor’s benefit a bond, surety, or cash amount equal to one and one-half
(l-1/2) times the amount of lien and sufficient to release the Premises and
Project from the lien. All sums paid by Lessor pursuant to this Article 12 and
all expenses incurred by it in connection therewith including attorneys’ fees
and costs shall be payable to Lessor by Lessee as additional rent on demand.
 
13.  ASSIGNMENT AND SUBLETTING.
 
a.  Prohibitions in General. Lessee shall not (whether voluntarily,
involuntarily, or by operation of law) assign this Lease or allow all or any
part of the Premises to be sublet, without Lessor’s prior written consent in
each instance, which consent shall not be unreasonably withheld, subject,
nevertheless, to the provisions of this Article 13. Without limiting the
generality of the foregoing, and provided that Lessee provides reasonable
advance written notice thereof to Lessor, Lessee shall have the right to
sublease one office within the Premises which is not separately demised from the
remainder of the Premises and which is used for the permitted use under this
Lease. Notwithstanding anything to the contrary contained herein, Lessee shall
have the right without Lessor’s prior consent and without being subject to
Article 13.e. or 13.g. below, but upon not less than twenty (20) days prior
written notice to Lessor, to assign this Lease or sublet the Premises to any
entity (i) controlling, controlled by or having fifty percent (50%) or more
common control with Lessee, or (ii) resulting from a merger or consolidation
with Lessee or acquiring substantially all of the assets and/or substantially
all of the stock of Lessee; provided that any such entity shall have a tangible
net worth reasonably sufficient to meet the financial requirements of this
Lease, and shall assume the obligations and liabilities of Lessee under this
Lease (or such of such obligations and liabilities as are to be performed by the
sublessee under the terms of the applicable sublease in the event of a
sublease), and no such assignment or sublease shall in any manner release Lessee
from its primary liability under this Lease (except in the case of an assignment
to the surviving entity in a merger or consolidation transaction permitted
pursuant to the foregoing provisions of this sentence where the prior “Lessee”
does not survive such merger or consolidation transaction). For all purposes of
this Lease, a “Permitted Transfer” shall mean an assignment or subletting by
Lessee which is permitted without Lessor’s prior consent pursuant to clause (i)
or (ii) above. Except for an allowed assignment or subletting pursuant to the
foregoing provisions of this paragraph, Lessee shall not (whether voluntarily,
involuntarily, or by operation of law) (1) allow all or any part of the Premises
to be occupied or used by any person or entity other than Lessee, (2) transfer
any right appurtenant to this Lease or the Premises, (3) mortgage, hypothecate
or encumber the Lease or Lessee’s interest in the Lease or Premises (or
otherwise use the Lease as a security device) in any manner, or (4) permit any
person to assume or succeed to any interest whatsoever in this Lease, without
Lessor’s prior written consent in each instance, which consent may not be
unreasonably withheld or delayed.
 
Any assignment, sublease, hypothecation, encumbrance, or transfer other than a
Permitted Transfer (collectively “Transfer”) without Lessor’s consent shall
constitute a default by Lessee and shall be voidable. Lessor’s consent to any
one Transfer shall not constitute a waiver of the provisions of this Article 13
as to any subsequent Transfer nor a consent to any subsequent Transfer. The
provisions of this subsection 13.a. expressly apply to all heirs, successors,
sublessees, assigns and transferees of Lessee. If Lessor consents to a proposed
Transfer, such Transfer shall be valid and the transferee shall have the right
to take possession of the Premises only if the Assumption Agreement described in
subsection 13.c. below is executed and delivered to Lessor, Lessee has paid the
costs and fees described in subsection 13.i. below, and an executed counterpart
of the assignment, sublease or other document evidencing the Transfer is
delivered to Lessor and such transfer document contains the same terms and
conditions as stated in Lessee’s notice given to Lessor pursuant to subsection
13.d. below, except for any such modifications Lessor has consented to in
writing. The acceptance of Rentals by Lessor from any person or entity other
than Lessee shall not be deemed to be a waiver by Lessor of any provision of
this Lease or to be a consent to any Transfer.
 
b.  Collection of Rent. Lessee irrevocably assigns to Lessor, as security for
Lessee’s obligations under this Lease, all rent not otherwise payable to Lessor
by reason of any Transfer of all or any part of the Premises or this Lease.
Lessor, as assignee of Lessee, or a receiver for Lessee appointed on Lessor’s
application, may collect such rent and apply it toward Lessee’s obligations
under this Lease; provided, however, that until the occurrence of any default by
Lessee or except as provided by the provisions of subsection 13.f. below, Lessee
shall have the right to collect such rent.
 
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c.  Assumption Agreement. As a condition to Lessor’s consent to any Transfer of
Lessee’s interest in this Lease or the Premises, Lessee and Lessee’s assignee,
sublessee, encumbrancer, hypothecate, or transferee (collectively “Transferee”),
shall execute a written Assumption Agreement, in a form approved by Lessor,
which Agreement shall include a provision that Lessee’s Transferee shall
expressly assume all obligations of Lessee under this Lease, and shall be and
remain jointly and severally liable with Lessee for the performance of all
conditions, covenants, and obligations under this Lease from the effective date
of the Transfer of Lessee’s interest in this Lease (except that as to a
subletting, such Assumption Agreement shall relate only to performance of
Lessee’s non-rent payment obligations under this Lease relating to the portion
of the Premises subleased). In no event shall Lessor have any obligation to
materially amend or modify this Lease in connection with any proposed Transfer,
including, without limitation, amending or modifying the use restriction set
forth in subsection 8.a. above.
 
d.  Request for Transfer. Lessee shall give Lessor at least thirty (30) days
prior written notice of any desired Transfer and of the proposed terms of such
Transfer, including but not limited to: the name and legal composition of the
proposed Transferee; an audited financial statement of the proposed Transferee
prepared in accordance with generally accepted accounting principles within one
year prior to the proposed effective date of the Transfer; the nature of the
proposed Transferee’s business to be carried on in the Premises; the payment to
be made or other consideration to be given on account of the Transfer; and other
such pertinent information as may be requested by Lessor, all in sufficient
detail to enable Lessor to evaluate the proposed Transfer and the prospective
Transferee. Lessee’s notice shall not be deemed to have been served or given
until such time as Lessee has provided Lessor with all information specified
above and all additional information requested by Lessor pursuant to this
subsection 13.d. Lessee shall immediately notify Lessor of any modification to
the proposed terms of such Transfer. Lessor shall grant or deny any request for
consent hereunder within fifteen (15) days of receipt of the information
required under this Article 13.a. and any failure to so respond within such time
frame shall be deemed a denial.
 
e.  Excess Consideration. In the event of any Transfer (other than a Permitted
Transfer), Lessor shall receive as additional rent hereunder, fifty percent
(50%) of Lessee’s “Excess Consideration” derived from such Transfer. As used
herein, “Excess Consideration” shall mean all rent, additional rent, key money,
bonus money and/or other consideration received by Lessee from a Transferee
and/or paid by a Transferee on behalf of Lessee in connection with the Transfer
in excess of the rent, additional rent and other sums payable by Lessee under
this Lease (on a per square foot basis if less than all of the Premises is
subject to such Transfer), excluding any consideration attributable to the sale
or lease of Lessee’s furniture, fixtures, or equipment in the Premises, less the
sum of Lessee’s reasonable out-of-pocket costs incurred for brokerage
commissions, attorneys’ fees and any Alterations to the Premises or improvement
allowances in connection with such Transfer, any lease takeover payment paid to
or for the benefit of the Transferee, any reasonable costs of advertising the
Premises (or applicable portion thereof) for sublease or assignment. If part of
the Excess Consideration shall be payable by the Transferee other than in cash,
then Lessor’s share of such non-cash consideration shall be in such form as is
reasonably satisfactory to Lessor.
 
f.  Standards for Consent. Without otherwise limiting the criteria upon which
Lessor may withhold its consent to any proposed Transfer, the parties hereby
agree that it shall be deemed presumptively reasonable for Lessor to withhold
its consent to a proposed Transfer if:
 
(i)  The proposed Transferee’s net worth is not reasonably sufficient given the
obligations to be performed under the proposed Transfer as reasonably determined
by Lessor in good faith;
 
(ii)  The proposed Transferee’s use of the Premises is inconsistent with the
permitted use of the Premises set forth in this Lease or the proposed Transferee
is of a character or reputation which is not consistent with the quality of the
Building or Project;
 
(iii)  As to a Transfer of less than all of the Premises, the space to be
Transferred is not regular in shape with appropriate means of ingress and egress
suitable for normal leasing purposes;
 
(iv)  The proposed Transferee is a governmental agency or instrumentality
thereof or a person or entity (or an affiliate thereof) currently leasing or
occupying space within the Project or with whom Lessor is then negotiating for
the lease or occupancy of space within the Project;
 
(v)  Lessee is in default under this Lease at the time Lessee requests consent
to the proposed Transfer; or
 
(vi)  The proposed Transfer will result in more than a reasonable and safe
number of occupants per floor within the space proposed to be Transferred or
will result in insufficient parking for the Building.
 
g.  Right of Recapture. In addition to and without limitation upon, the other
rights of Lessor in the event of a proposed Transfer by Lessee pursuant to this
Article 13, in the event of a proposed Transfer by Lessee of more than fifty
percent (50%) of the Premises for substantially all of the remaining Term of the
Lease, (other than a Permitted Transfer), Lessor may elect (by written notice
delivered to Lessee within thirty (30) days following Lessee’s submission to
Lessor of all information required pursuant to subsection 13.d. above) to
terminate this Lease effective as of the date Lessee proposes to enter into such
Transfer (or in the case of a proposed Transfer of less than all of the
Premises, terminate this Lease as to the portion of the Premises proposed to be
Transferred as of the date of such proposed Transfer). Nothing contained in this
Article shall be deemed to nullify Lessor’s right to elect to terminate this
Lease in accordance with this subsection 13.g. including, but not limited to,
Lessor’s failure to exercise the right to terminate this Lease with respect to
any previous Transfer. Further, Lessee understands and acknowledges that
Lessor’s option to terminate this Lease rather than approve a proposed Transfer
is a material inducement for Lessor’s agreeing to lease the Premises to Lessee
upon the terms and conditions herein set forth and is deemed a reasonable
limitation upon Lessee’s right to enter into a Transfer.
 
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h.  Corporations and Partnerships. If Lessee is a partnership, a withdrawal or
substitution (whether voluntary, involuntary, or by operation of law and whether
occurring at one time or over a period of time) of any partner(s) owning fifty
percent (50%) or more of the partnership, any assignment(s) of fifty percent
(50%) or more (cumulatively) of any interest in the capital or profits of the
partnership, or the dissolution of the partnership shall be deemed a Transfer of
this Lease. If Lessee is a corporation, limited liability company or other
entity, any dissolution, merger, consolidation or other reorganization of
Lessee, any sale or transfer (or cumulative sales or transfers) of the capital
stock of or equity interests in Lessee in excess of fifty percent (50%) or any
sale (or cumulative sales) of more than fifty percent (50%) of the value of the
assets of Lessee shall be deemed a Transfer of this Lease. This subsection 13.h.
shall not apply to corporations the capital stock of which is traded on any
national exchange.
 
i.  Attorneys’ Fees and Costs. Lessee shall pay, as additional rent, Lessor’s
actual and reasonable costs and attorneys’ fees incurred for reviewing,
investigating, processing and/or documenting any requested Transfer, whether or
not Lessor’s consent is granted, up to a maximum of $1,500.00 per request.
 
j.  Miscellaneous. Regardless of Lessor’s consent, no Transfer shall release
Lessee of Lessee’s obligations under this Lease or alter the primary liability
of Lessee to pay the Rentals and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of Rentals by Lessor from any
other person shall not be deemed to be a waiver by Lessor of any provision
hereof. Upon default by any assignee of Lessee or any successor of Lessee in the
performance of any of the terms hereof, Lessor may proceed directly against
Lessee without the necessity of exhausting remedies against said assignee or
successor. Lessor may consent to subsequent assignments or subletting of this
Lease or amendments or modifications to this Lease with any assignee of Lessee,
without notifying Lessee, or any successor of Lessee, and without obtaining its
or their consent thereto and such action shall not relieve Lessee of liability
under this Lease.
 
k.  Reasonable Provisions. Lessee acknowledges that, but for Lessee’s identity,
financial condition and ability to perform the obligations of Lessee under the
Lease, Lessor would not have entered into this Lease nor demised the Premises in
the manner set forth in this Lease, and that in entering into this Lease, Lessor
has relied specifically on Lessee’s identity, financial condition,
responsibility and capability of performing the obligations of Lessee under the
Lease. Lessee acknowledges that Lessor’s rights under this Article 13, including
the right to terminate this Lease or withhold consent to certain Transfers in
Lessor’s sole and absolute discretion, are reasonable, agreed upon and bargained
for rights of Lessor and that the Rentals set forth in the Lease have taken into
consideration such rights. Lessee expressly agrees that the provisions of this
Article 13 are not unreasonable standards or conditions for purposes of Section
1951.4(b)(2) of the California Civil Code, as amended from time to time, under
the Federal Bankruptcy Code or for any other purpose.
 
14.  HOLD HARMLESS. Lessee shall to the fullest extent permitted by law,
indemnify, defend with counsel acceptable to Lessor, and hold Lessor and
Lessor’s employees, agents, partners, officers, directors and shareholders
harmless from and against any and all claims, damages, losses, liabilities,
penalties, judgments, and costs and expenses (including, without limitation,
attorneys’ fees) and any suit, action or proceeding brought pursuant thereto
(collectively, “Claims”), including, without limitation, Claims for property
damage, or personal injury including death, arising out of (i) Lessee’s use of
the Premises or any part thereof, or any activity, work or other thing done in
or about the Premises by Lessee or Lessee’s Agents, (ii) any activity, work or
other thing done, permitted in or about the Premises, or any part thereof by
Lessee or Lessee’s Agents, (iii) any breach or default in the performance of any
obligation on Lessee’s part to be performed under the terms of this Lease,
(including, without limitation, a failure to maintain insurance as provided in
Article 16), or (iv) any act or negligence of the Lessee or Lessee’s Agents;
provided however, Lessee shall not be required to indemnify Lessor for pursuant
hereto for Claims arising from (i) the negligence or willful misconduct of
Lessor to the extent not covered by the insurance required to be maintained by
Lessee pursuant to this Lease or (ii) a breach of Lessor’s obligations or
representations under this Lease.
 
The indemnity herein shall extend to the costs and expenses incurred by Lessor
for administrative expenses, consultant fees, expert costs, investigation
expenses and costs incurred in settling indemnified claims, whether such costs
occurred before or after any litigation is commenced. The obligations of Lessee
pursuant to this Article 14 and elsewhere in this Lease with respect to
indemnification of Lessor shall survive the Lease Termination and shall continue
in effect until any and all claims, actions or causes of action with respect to
any of the matters indemnified against are fully and finally barred by the
applicable statute of limitations. In no event shall any of insurance provisions
set forth in Article 16 of this Lease be construed as any limitation on the
scope of indemnification set forth herein.
 
Lessee as a material part of the consideration to Lessor hereby assumes all risk
of damage or loss to property or injury or death to person in, upon or about all
portions of the Project from any cause except as hereinafter stated. Lessor or
its agents shall not be liable for any damage or loss to property entrusted to
employees of any part of the Project nor for loss or damage to any property by
theft or otherwise, nor for any injury or death or damage or loss to persons or
property resulting from any accident, casualty or condition occurring in or
about any portion of the Project, or to any equipment, appliances or fixtures
therein, or from any other cause whatsoever. Lessee’s assumption of risk and the
exculpation of Lessor pursuant hereto is unqualified with the single exception
that it shall not apply to the portion of any claim, damage or loss that arises
out of Lessor’s negligence or willful misconduct and which is not covered by the
insurance required to be maintained by Lessee pursuant to this Lease. Lessor or
its agents shall not be liable for interference with the light or other
incorporeal hereditaments, nor shall Lessor be liable for any latent defect in
the Premises or in the Building. Notwithstanding any other provision of this
Lease, in no event shall Lessor have any liability for loss of business
(including, without limitation, lost profits) by Lessee. Lessee shall give
prompt written notice to Lessor in case of fire or accidents in the Premises or
in the Building or of defects therein or in the fixtures or equipment.
 
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If, by reason of any act or omission of Lessee or Lessee’s Agents, Lessor is
made a party defendant to any litigation concerning this Lease or any part of
the Project or otherwise, Lessee shall indemnify, defend with counsel acceptable
to Lessor, and hold Lessor harmless from any liability and damages incurred by
(or threatened against) Lessor as a party defendant, including without
limitation all damages, costs and expenses, including attorneys’ fees.
 
15.  SUBROGATION. Notwithstanding anything to the contrary contained in this
Lease, Lessor releases Lessee and Lessee’s officers, directors, agents,
employees, partners and shareholders from any and all claims or demands for
damages, loss, expense or injury arising out of any perils to the extent covered
by insurance carried by Lessor (or would be insured if the insurance required
under this Lease was maintained by Lessor), whether due to the negligence of
Lessee or Lessee’s officers, directors, agents, employees, partners and
shareholders and regardless of cost or origin, to the extent such waiver is
permitted by Lessor’s insurers and does not prejudice the insurance required to
be carried by Lessor under this Lease. Notwithstanding anything to the contrary
contained in this Lease, Lessee releases Lessor and Lessor’s officers,
directors, agents, employees, partners and shareholders from any and all claims
or demands for damages, loss, expense or injury arising out of any perils which
are insured against under any insurance carried by Lessee (or would be insured
if the insurance required under this Lease was maintained by Lessee), whether
due to the negligence of Lessor or its officers, directors, agents, employees,
partners and shareholders and regardless of cost or origin, to the extent such
waiver is permitted by Lessee’s insurers and does not prejudice the insurance
required to be carried by Lessee under this Lease.
 
16.  LESSEE’S INSURANCE.
 
a.  Lessee shall, at Lessee’s expense, obtain and keep in force during the Term
a policy of commercial general liability insurance, including the broad form
endorsement, insuring Lessor and Lessee against any liability arising out of the
ownership, use, occupancy, maintenance, repair or improvement of the Premises
and all areas appurtenant thereto. Such insurance shall provide single limit
liability coverage of not less than Three Million Dollars ($3,000,000.00) per
occurrence for bodily injury or death and property damage. Such insurance shall
name Lessor and, at Lessor’s request, Lessor’s mortgagee, each as an additional
insured, and shall provide that Lessor and any such mortgagee, although an
additional insured, may recover for any loss suffered by Lessor or Lessor’s
agents by reason of Lessee’s or Lessee’s Agent’s negligence. All such insurance
shall be primary and non-contributing with respect to any insurance maintained
by Lessor and shall specifically insure Lessee’s performance of the indemnity
and hold harmless agreements contained in Article 14 above although Lessee’s
obligations pursuant to Article 14 shall not be limited to the amount of any
insurance required of or carried by Lessee under this Article 16 and Lessee is
responsible for ensuring that the amount of liability insurance carried by
Lessee is sufficient for Lessee’s purposes. Lessee may carry said insurance
under a blanket policy provided that such policy conforms with the requirements
specified in this Article and the coverage afforded Lessor is not diminished
thereby.
 
b.  Lessee acknowledges and agrees that insurance coverage carried by Lessor
will not cover Lessee’s property within the Premises or within the Building.
Lessee shall, at Lessee’s expense, obtain and keep in force during the Term a
policy of “All Risk” property insurance, including without limitation, coverage
for earthquake and flood; boiler and machinery (if applicable); sprinkler
damage; vandalism; malicious mischief; and demolition, increased cost of
construction and contingent liability from changes in building laws on all
leasehold improvements installed in the Premises by Lessee at its expense (if
any), and on all equipment, trade fixtures, inventory, fixtures and personal
property located on or in the Premises, including improvements or fixtures
hereinafter constructed or installed on the Premises. Such insurance shall be in
an amount equal to the full replacement cost of the aggregate of the foregoing
and shall provide coverage comparable to the coverage in the Standard ISO All
Risk form, when such form is supplemented with the coverage required above.
 
c.  If Lessee fails to procure and maintain any insurance required to be
procured and maintained by Lessee pursuant to this Lease, Lessor may, but shall
not be required to, procure and maintain all or any portion of the same, at the
expense of Lessee. Lessor’s election pursuant to this subsection 16.c. to
procure and maintain all or any portion of the insurance which Lessee fails to
procure and maintain is acknowledged by Lessee to be for Lessor’s sole benefit.
Lessee acknowledges that any insurance procured and maintained by Lessor
pursuant to this subsection 16.c. may not be sufficient to adequately protect
Lessee. Any personal property insurance procured and maintained by Lessor for
Lessee’s equipment, trade fixtures, inventory, fixtures and personal property
located on or in the Premises, including improvements or fixtures hereinafter
constructed or installed on the Premises, may not sufficiently cover the
replacement cost thereof. Any insurance procured and maintained by Lessor
pursuant to this subsection 16.c. may provide for less coverage than is required
to be maintained by Lessee pursuant to this Lease. Lessee acknowledges and
agrees that Lessee is and shall remain solely responsible for procuring
insurance sufficient for Lessee’s purposes, notwithstanding the fact that Lessor
has procured or maintained any insurance pursuant to this subsection 16.c. Any
insurance required to be maintained by Lessee hereunder shall be in companies
with a security rating of A or better, and a financial size category rating of X
or better, in the then most recently published “Best’s Insurance Guide.” Prior
to occupancy of the Premises (and thereafter annually with respect to renewals,
not later than thirty (30) days prior to expiration of then existing policies),
Lessee shall deliver to Lessor copies of the policies of insurance required to
be kept by Lessee hereunder, or certificates evidencing the existence and amount
of such insurance, with evidence satisfactory to Lessor of payment of premiums.
No policy shall be cancelable or subject to reduction of coverage except after
thirty (30) days prior written notice to Lessor.
 
d.  Not more frequently than once every year, Lessee shall increase the amounts
of insurance as follows: (i) as recommended by Lessor’s insurance broker
provided that the amount of insurance recommended by such broker shall not
exceed the amount customarily required of tenants in comparable projects located
within Mountain View/Palo Alto, California, or (ii) as required by Lessor’s
lender. Any limits set forth in this Lease on the amount or type of coverage
required by Lessee’s insurance shall not limit the liability of Lessee under
this Lease.
 
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16A. LESSOR’S INSURANCE. Lessor shall carry “All Risk” property insurance on the
Building and Project for the full replacement cost of the Building and Project.
 
17.  SERVICES AND UTILITIES. Lessee shall be entitled to access to and use of
the Premises on a twenty-four (24) hours per day, seven (7) days per week basis,
subject to the provisions of this Lease. Lessor agrees to furnish to the
Premises during “Building Hours” (as hereinafter defined), and subject to the
rules and regulations of the Building of which the Premises are a part,
electricity for normal lighting, water, heat, air-conditioning and elevator
service which are required in Lessor’s good faith judgment for the comfortable
use and occupation of the Premises. As used herein, the term “Building Hours”
shall mean 7:00 a.m. to 7:00 p.m. on Mondays through Fridays and from 9:00 a.m.
to 1:00 p.m. on Saturdays (except generally recognized Building holidays).
During recognized business days for the Building, and subject to the reasonable
rules and regulations of the Building and Project, Lessor shall furnish to the
Premises and the Common Areas, janitorial service, window washing, fluorescent
tube replacement and toilet supplies; provided, however, Lessor shall not be
required to provide janitorial services for any portion of the Premises to the
extent required as a result of the preparation or consumption of food or
beverages (provided that nothing in this paragraph shall be construed as a
consent by Lessor to the preparation of such food or beverages unless otherwise
expressly provided elsewhere in this Lease). Lessor shall also maintain and keep
lighted during Building Hours the common stairs, common entries and toilet rooms
in the Building. Lessor shall not be liable for, and Lessee shall not be
entitled to, any reduction of Rentals by reason of Lessor’s failure to furnish
any of the foregoing when such failure is caused by casualty, act of God,
accident, breakage, repairs, strikes, lockouts or other labor disturbances or
labor disputes of any character, or by any other cause, similar or dissimilar,
beyond the reasonable control of Lessor. Lessor shall not be liable under any
circumstances for injury to or death of or loss or damage to persons or property
or damage to Lessee’s business, however occurring, through or in connection with
or incidental to failure to furnish any of the foregoing. Wherever heat
generating machines or equipment are used in the Premises which affect the
temperature otherwise maintained by the air conditioning system, Lessor reserves
the right to install supplementary air conditioning units in the Premises in the
event that Lessee’s need for HVAC exceeds the capacity of the Building HVAC
systems and the cost thereof, including the cost of installation and the cost of
operation and maintenance thereof, shall be paid by Lessee to Lessor upon demand
by Lessor as additional rent. The costs of all utilities and services furnished
by Lessor to Lessee pursuant to this Article 17 which are not specified as being
reimbursed or paid directly by Lessee or other tenants shall be included as
items of Building Operating Expenses.
 
Lessee will not, without the prior written consent of Lessor, use or permit the
use of any apparatus or device in or upon the Premises (including, but without
limitation thereto, machines using in excess of 120 volts), which will in any
way increase the amount of gas, electricity or water usually furnished or
supplied for the use of the Premises as general office space (which, as to
electricity consumption, the parties hereby agree to mean not more than three
(3) watts per square foot of usable area on a demand load basis); nor will
Lessee connect or permit connection of any apparatus or device for the purpose
of using gas, electric current or water with electric current, gas or water
supply lines, except for electricity through existing electrical outlets in the
Premises. If Lessee requires water or electric current in excess of that usually
furnished or supplied for the use of the Premises as general office space,
Lessee shall first procure the written consent of Lessor (which consent may be
granted or withheld in Lessor’s sole and absolute discretion), to the use
thereof and Lessor may cause a water or gas meter or electric current meter to
be installed in the Premises so as to measure the amount of water, gas and
electric current consumed for any such use. The cost of any such meters and of
installation, maintenance and repair thereof shall be paid for by the Lessee and
Lessee agrees to pay to Lessor, as additional rent, promptly upon demand
therefor by Lessor for all such water, gas and electric current consumed as
shown by said meters, at the rates charged for such services by the local public
utility furnishing the same, plus any additional expense incurred in keeping
account of the water, gas and electric current so consumed. If a separate meter
is not installed, such excess cost for such water, gas and electric current will
be conclusively established by an estimate made by a utility company or
electrical engineer selected by Lessor.
 
If requested by Lessee in writing at least one (1) business day in advance (or
such shorter time in advance as is reasonably practicable given Building
mechanical systems), heating, ventilation and air conditioning (“HVAC”) service
shall be provided to the Premises other than during Building Hours (for a
minimum period of three (3) consecutive hours at a time, except for after-hours
HVAC service immediately following Building Hours, at which time the minimum
period shall be one (1) hour), provided that Lessee shall pay to Lessor for each
such hour of HVAC service during non-Building Hours, the then prevailing charge
by Lessor for such service (which shall equal Lessor’s determination in Lessor’s
reasonable business judgment of the actual cost of providing such non-Building
Hours HVAC service, including, without limitation, a reasonable administrative
charge). Amounts payable by Lessee hereunder shall be paid as additional rent
within thirty (30) days following Lessee’s receipt of Lessor’s billing therefor.
 
Lessor agrees that Lessee may request, and Lessor shall agree to, the
installation of supplemental HVAC to serve the Premises in the event Lessee
reasonably determines that the existing system is inadequate to meet Lessee’s
needs, provided that such HVAC shall be installed at the sole cost and expense
of Lessee, and the design and placement of such HVAC equipment shall be
reasonably approved in advance by Lessor.
 
18.  RULES AND REGULATIONS. Lessee shall faithfully observe and comply with the
rules and regulations that Lessor shall from time to time promulgate for the
Building and the Project. Lessor reserves the right from time to time to make
all reasonable and non-discriminatory modifications to said rules and
regulations. The additions and modifications to these rules and regulations
shall be binding upon Lessee upon delivery of a copy of them to Lessee. Lessor
shall not be responsible to Lessee for the non-performance of any said rules by
any other tenants or occupants. The current “Rules and Regulations” are attached
hereto as Exhibit “D.”
 
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19.  HOLDING OVER. If Lessee remains in possession of the Premises or any part
thereof after Lease Termination, with the express written consent of Lessor,
such occupancy shall be a tenancy from month to month at a Base Rent in the
amount of one hundred twenty-five percent (125%) of the Base Rent in effect
immediately preceding such Lease Termination, plus all other rental charges
payable hereunder, and upon all the terms hereof applicable to a month to month
tenancy. In such case, either party may thereafter terminate this Lease at any
time upon giving not less than thirty (30) days written notice to the other
party. For any possession of the Premises after the Lease Termination without
Lessor’s consent, Lessee shall be liable for all detriment proximately caused by
Lessee’s possession, including without limitation, attorneys’ fees, costs and
expenses, claims of any succeeding tenant founded on Lessee’s failure to vacate
and for payment to Lessor of Base Rent in an amount equal to the greater of (a)
one hundred fifty percent (150%) of the Base Rent in effect immediately
preceding such Lease Termination, or (b) the fair market rental value for the
Base Rent for the Premises, together with such other Rentals provided in this
Lease to the date Lessee actually vacates the Premises, and such other remedies
as are provided by law, in equity or under this Lease, including without
limitation punitive damages recoverable under California Code of Civil Procedure
Section 1174.
 
20.  ENTRY BY LESSOR. Lessor reserves and shall at any and all reasonable times
have the right to enter the Premises upon 24 hour advance notice (delivered via
e-mail if reasonably possible under the circumstances) to Lessee (except in case
of emergency), to inspect the same, supply janitorial service and any other
service to be provided by Lessor to Lessee hereunder, to submit said Premises to
prospective purchasers, mortgagees, lenders or tenants, to post notices of
non-responsibility, and to alter, improve or repair the Premises and any portion
of the Building that Lessor may deem necessary or desirable, without any
abatement of Rentals, and may for such purposes erect scaffolding and other
necessary structures where reasonably required by the character of the work to
be performed, provided that the entrance to the Premises shall not be
unreasonably blocked thereby, and further provided that the business of the
Lessee shall not be interfered with unreasonably. In no event shall Lessor have
any liability to Lessee for, and Lessee hereby waives any claim for, damages or
for any injury or inconvenience to or interference with Lessee’s business, any
loss of occupancy or quiet enjoyment of the Premises, and any other damage or
loss occasioned thereby so long as Lessor uses commercially reasonable efforts
to minimize the interference with Lessee’s use of the Premises. For each of the
aforesaid purposes, Lessor shall at all times have and retain a key with which
to unlock all of the doors in, upon and about the Premises, excluding Lessee’s
vaults, safes and files, and Lessor shall have the right to use any and all
means which Lessor may deem proper to open said doors in an emergency in order
to obtain entry to the Premises, without liability to Lessee except for any
failure to exercise due care for Lessee’s property under the circumstances of
each entry. Any entry to the Premises obtained by Lessor by any of said means or
otherwise shall not under any circumstances be construed or deemed to be a
forcible or unlawful entry into, or a detainer of, the Premises, or an eviction
of Lessee from the Premises or any portion thereof. If Lessee has removed
substantially all of Lessee’s property from the Premises, Lessor may, without
abatement of Rentals, enter the Premises for alteration, renovation or
decoration during the last thirty (30) days of the Term. With respect to any
entry by Lessor into the Premises, Lessor shall be liable to Lessee solely for
physical damage caused to Lessee’s personal property located within the Premises
to the extent such damage is caused by Lessor’s active negligence or willful
misconduct and which is not covered by the insurance required to be maintained
by Lessee pursuant to this Lease. Any entry of Lessor or its agents into the
Premises shall be subject to Lessee’s reasonable security and confidentiality
requirements.
 
21.  RECONSTRUCTION. If the Premises are damaged and rendered substantially
untenantable, or if the Building is damaged (regardless of damage to the
Premises) or destroyed, Lessor may, within ninety (90) days after the casualty,
notify Lessee of Lessor’s election not to repair, in which event this Lease
shall terminate at the expiration of the ninetieth (90th) day. If Lessor elects
to repair the damage or destruction, this Lease shall remain in effect and the
then current Base Rent and Lessee’s Percentage Share of Building Expenses
allocated to the Office Cost Pool shall be proportionately reduced from the date
of damage and during the period of repair. The reduction shall be based upon the
extent to which the making of repairs interferes with Lessee’s business
conducted in the Premises, as reasonably determined by Lessor. All other Rentals
due hereunder shall continue unaffected, and Lessee shall have no claim against
Lessor for compensation for inconvenience or loss of business during any period
of repair or reconstruction. Upon Lessor’s election to repair, Lessor shall
diligently repair the damage to the extent of insurance proceeds available to
Lessor. Lessor shall not be required to repair or replace, whether injured or
damaged by fire or other cause, any items required to be insured by Lessee under
this Lease including Lessee’s fixtures, equipment, merchandise, personal
property, inventory, panels, decoration, furniture, railings, floor covering,
partitions or any other improvements, alterations, additions, or property made
or installed by Lessee to the Premises, and Lessee shall be obligated to
promptly rebuild or restore the same to the same condition as they were in
immediately before the casualty. Lessee hereby waives all claims for loss or
damage to the foregoing. Lessee waives any rights to terminate this Lease if the
Premises are damaged or destroyed, including without limitation any rights
pursuant to the provisions of Subdivision 2 of Section 1932 and Subdivision 4 of
Section 1933 of the Civil Code of California, as amended from time to time, and
the provisions of any similar law hereinafter enacted. If the Lease is
terminated by Lessor pursuant to this Article 21, the unused balance of the
Security Deposit and any Rentals unearned as of the effective date of
termination shall be refunded to Lessee. Lessee shall pay to Lessor any Rentals
or other charges due Lessor under the Lease, prorated as of the effective date
of termination. Notwithstanding anything to the contrary in the foregoing, if
the damage is due to the fault or neglect of Lessee, or Lessee’s Agents, there
shall be no abatement of Base Rent or any other Rentals.
 
Notwithstanding the foregoing, if less than thirty-three percent (33%) of the
Rentable Area of the Building is damaged from an insured casualty and the
insurance proceeds actually available to Lessor for reconstruction (net of costs
to recover such proceeds and after all claimants thereto including lienholders
have been satisfied or waive their respective claims) (“Net Insurance Proceeds”)
are sufficient to completely restore the Building, Lessor agrees to make such
reparations and continue this Lease in effect. If, upon damage of less than
thirty-three percent (33%) of the Rentable Area of the Building there are not
sufficient insurance proceeds actually available to allow Lessor to completely
restore the Building, Lessor shall not be obligated to repair the Building and
the provisions of the first paragraph of this Article shall control.
 
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Lessee shall not be entitled to any compensation or damages from Lessor for loss
of the use of the whole or any part of the Premises, or for any damage to
Lessee’s business, or any inconvenience or annoyance occasioned by such damage,
or by any repair, reconstruction or restoration by Lessor, or by any failure of
Lessor to make any repairs, reconstruction or restoration under this Article or
any other provision of this Lease. However, 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, Lessor shall deliver
written notice to Lessee within sixty (60) days following such casualty damage
or occurrence setting forth Lessor’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, Lessee may elect to terminate this Lease by written notice to Lessor
within fifteen (15) days following Lessee’s receipt of such notice. In addition,
if such repair is not substantially completed so as to permit Lessee’s
resumption of business from the Premises without material interference from any
uncompleted repair work within one hundred fifty (150) days from the occurrence
of the casualty (or thirty (30) days less than such longer period as may have
been estimated in Lessor’s written notice to Lessee pursuant hereto), then
Lessee shall thereafter have the right to terminate this Lease upon thirty (30)
days prior written notice to Lessor (provided that if such repair work is so
substantially completed prior to the expiration of such thirty (30) day period,
then Lessee’s election to terminate shall be nullified and this Lease shall
continue in full force and effect).
 
22.  DEFAULT. The occurrence of any one or more of the following events shall
constitute a material default and breach of this Lease by Lessee:
 
a.  Lessee’s failure to pay when due Base Rent or any other Rentals or other
sums payable hereunder where such failure is not cured within five (5) days
following Lessor’s delivery of written notice thereof (which notice shall be in
lieu of, and not in addition to, any notice required under applicable laws,
including, without limitation, notices required under California Code of Civil
Procedure Section 1161 or any similar or successor statute);
 
b.  Lessee’s abandonment of the Premises.
 
c.  Commencement, and continuation for at least forty five (45) days, of any
case, action, or proceeding by, against, or concerning Lessee, or any guarantor
of Lessee’s obligations under this Lease (“Guarantor”), under any federal or
state bankruptcy, insolvency, or other debtor’s relief law, including without
limitation, (i) a case under Title 11 of the United States Code concerning
Lessee, or a Guarantor, whether under Chapter 7, 11, or 13 of such Title or
under any other Chapter, or (ii) a case, action, or proceeding seeking Lessee’s
or a Guarantor’s financial reorganization or an arrangement with any of Lessee’s
or a Guarantor’s creditors;
 
d.  Voluntary or involuntary appointment of a receiver, trustee, keeper, or
other person who takes possession for more than forty five (45) days of
substantially all of Lessee’s or a Guarantor’s assets, or of any asset used in
Lessee’s business on the Premises, regardless of whether such appointment is as
a result of insolvency or any other cause;
 
e.  Execution of an assignment for the benefit of creditors of substantially all
assets of Lessee or a Guarantor available by law for the satisfaction of
judgment creditors;
 
f.  Commencement of proceedings for winding up or dissolving (whether voluntary
or involuntary) the entity of Lessee or a Guarantor, if Lessee or such Guarantor
is a corporation, partnership, limited liability company or other entity;
 
g.  Levy of a writ of attachment or execution on Lessee’s interest under this
Lease, if such writ continues for a period of ten (10) business days;
 
h.  Any Transfer or attempted Transfer of this Lease by Lessee contrary to the
provisions of Article 13 above; or
 
i.  With respect to any report that Lessee is required to submit hereunder, the
submission by Lessee of any false report;
 
j.  The use or occupancy of the Premises for any use or purpose not specifically
allowed by the terms of this Lease; or
 
k.  Breach by Lessee of any term, covenant, condition, warranty, or provision
contained in this Lease or of any other obligation owing or due to Lessor other
than as described in subsections 22.a., b., c., d., e., f., g., h., i. or j. of
this Article 22, where such failure shall continue for the period specified in
this Lease or if no such period is specified, for a period of thirty (30) days
after written notice thereof by Lessor to Lessee; provided, however, that if the
nature of Lessee’s default is such that more than thirty (30) days are
reasonably required for its cure, Lessee shall not be deemed to be in default if
Lessee commences such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion.
 
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23.  REMEDIES UPON DEFAULT. Upon any default or breach by Lessee, at any time
thereafter, with or without notice or demand, and without limiting Lessor in the
exercise of any right or remedy which Lessor may have hereunder or otherwise at
law or in equity by reason of such default or breach Lessor may do the
following:
 
a.  Termination of Lease. Lessor may terminate this Lease or Lessee’s right to
possession of the Premises by notice to Lessee or any other lawful means, in
which case this Lease shall terminate and Lessee shall immediately surrender
possession of the Premises to Lessor. In such event Lessor shall be entitled to
recover from Lessee:
 
(i)  The worth at the time of award of the unpaid Rentals which had been earned
at the time of termination;
 
(ii)  The worth at the time of award of the amount by which the unpaid Rentals
which would have been earned after termination until the time of award exceeds
the amount of such rental loss that Lessee proves could have been reasonably
avoided;
 
(iii)  The worth at the time of award (computed by discounting at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percent) of the amount by which the unpaid Rentals for the balance of the Term
after the time of award exceeds the amount of such rental loss that Lessee
proves could be reasonably avoided; and
 
(iv)  Any other amounts necessary to compensate Lessor for detriment proximately
caused by the default by Lessee or which in the ordinary course of events would
likely result, including without limitation the reasonable costs and expenses
incurred by Lessor for:
 
(A)  Retaking possession of the Premises;
 
(B)  Cleaning and making repairs and alterations (including installation of
leasehold improvements, whether or not the same shall be funded by a reduction
of rent, direct payment or otherwise) necessary to return the Premises to good
condition and preparing the Premises for reletting;
 
(C)  Removing, transporting, and storing any of Lessee’s property left at the
Premises (although Lessor shall have no obligation to remove, transport, or
store any of the property);
 
(D)  Reletting the Premises, including without limitation, brokerage
commissions, advertising costs, and attorneys’ fees;
 
(E)  Attorneys’ fees, expert witness fees and court costs;
 
(F)  Any unamortized real estate brokerage commissions paid in connection with
this Lease; and
 
(G)  Costs of carrying the Premises, such as repairs, maintenance, taxes and
insurance premiums, utilities and security precautions, if any.
 
The “worth at the time of award” of the amounts referred to in Articles 23.a.(i)
and 23.a.(ii) is computed by allowing interest at an annual rate equal to the
greater of: ten percent (10%); or five percent (5%) plus the rate established by
the Federal Reserve Bank of San Francisco, as of the 25th day of the month
immediately preceding the default by Lessee, on advances to member banks under
Section 13 and 13(a) of the Federal Reserve Act, as now in effect or hereafter
from time to time amended (the “Stipulated Rate”). The computation of the amount
of rental loss that could be or could have been reasonably avoided by Lessor
pursuant to California Civil Code section 1951.2 shall take into account the use
restrictions set forth in Article 8.a. above except to the extent that Lessee
proves that under all circumstances the enforcement of the use restriction would
be unreasonable.
 
b.  Continuation of Lease. Lessor may continue this Lease in full force and
effect, and the Lease shall continue in effect as long as Lessor does not
terminate Lessee’s right to possession, and Lessor shall have the right to
enforce all rights and remedies under this Lease including the right to collect
all Rentals when due. During the period Lessee is in default, Lessor can enter
the Premises and relet them, or any part of them, to third parties for Lessee’s
account. Lessee shall be liable immediately to Lessor for all costs Lessor
incurs in reletting the Premises, including without limitation, those items
outlined in subsections a.(i) through a.(iv) of this Article 23, and other like
costs. Reletting can be for a period shorter or longer than the remaining Term.
Lessee shall pay to Lessor all Rentals due under this Lease on the date the
Rentals are due, less the rent Lessor receives from any reletting. The use
restriction provided in Article 8.a. above shall apply to Lessor’s remedies
under California Civil Code section 1951.4 except to the extent that Lessee
proves that under all circumstances enforcement of the use restriction would be
unreasonable.
 
c.  Other Remedies. Lessor may pursue any other remedy now or hereafter
available to Lessor under the laws or judicial decisions of the State in which
the Premises are located.
 
d.  General. The following shall apply to Lessor’s remedies:
 
(i)  No entry upon or taking of possession of the Premises or any part thereof
by Lessor, nor any letting or subletting thereof by Lessor for Lessee, nor any
appointment of a receiver, nor any other act of Lessor, whether acceptance of
keys to the Premises or otherwise, shall constitute or be construed as an
election by Lessor to terminate this Lease or Lessee’s right to possession of
the Premises unless a written notice of such election be given to Lessee by
Lessor.
 
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(ii)  If Lessor elects to terminate this Lease or Lessee’s right to possession
hereunder, Lessee shall surrender and vacate the Premises in broom-clean
condition, and Lessor may re-enter and take possession of the Premises and may
eject all parties in possession or eject some and not others or eject none. Any
personal property of or under the control of Lessee remaining on the Premises at
the time of such re-entry may be considered and treated by Lessor as abandoned.
 
24.  EMINENT DOMAIN. If more than twenty-five percent (25%) of the area of the
Premises is taken or appropriated for any public or quasi-public use under the
power of eminent domain, or conveyed in lieu thereof, or if such amount of the
Premises is taken or appropriated as makes it impracticable for Lessee to
operate its business in the Premises (as reasonably determined by Lessee),
either party hereto shall have the right, at its option, to terminate this Lease
by written notice to the other party given within ten (10) days of the date of
such taking, appropriation or conveyance, and Lessor shall be entitled to any
and all income, rent, award, or any interest therein whatsoever which may be
paid or made (the “Award”) in connection with such public or quasi-public use or
purpose, and Lessee shall have no claim against Lessor for (and hereby assigns
to Lessor any claim which Lessee may have for) the value of any unexpired Term
of this Lease. Lessee shall be entitled to pursue its own award in the event of
a taking or appropriation that results in the termination of this Lease
including sums to compensate Lessee for trade fixtures, moving expenses and loss
of good will, provided that such award does not decrease the amount or value of
Lessor’s Award If any part of the Building or the Project other than the
Premises may be so taken, appropriated or conveyed, Lessor shall have the right
at its option to terminate this Lease, and in any such event Lessor shall be
entitled to the entire Award whether or not this Lease is terminated. If this
Lease is terminated as provided above: (i) the termination shall be effective as
of the date upon which title to the Premises, the Building, the Project, or a
portion thereof, passes to and vests in the condemnor or the effective date of
any order for possession if issued prior to the date title vests in the
condemnor; (ii) Lessor shall refund to Lessee any prepaid but unearned Rentals
and the unused balance of the Security Deposit; and (iii) Lessee shall pay to
Lessor any Rentals or other charges due Lessor under the Lease, prorated as of
the date of taking.
 
If less than twenty-five percent (25%) of the Premises is so taken, appropriated
or conveyed, or more than twenty-five percent (25%) thereof is so taken,
appropriated or conveyed and neither party elects to terminate as herein
provided, (i) Lessor shall be entitled to the entirety of the Award, and Lessee
shall be entitled to make a claim for any separate award attributable to any
taking of Lessee’s trade fixtures so long as any such award to Lessee does not
reduce the amount of the Award available to Lessor; and (ii) the Rental
thereafter to be paid hereunder for the Premises shall be reduced in the same
ratio that the percentage of the area of the Premises so taken, appropriated or
conveyed bears to the total area of the Premises immediately prior to the
taking, appropriation or conveyance. In addition, if any Rentable Area in the
Building containing the Premises is so taken, appropriated or conveyed and this
Lease is not terminated by Lessor, Lessee’s Percentage Share of Building
Expenses allocated to the Office Cost Pool shall be adjusted pursuant to Article
7.
 
Notwithstanding this Article 24 above, upon a temporary taking of all or any
portion of the Premises, the Lease shall remain in effect and Lessee shall
continue to pay and be liable for all Rentals under this Lease. Upon such
temporary taking, Lessee shall be entitled to any Award for the temporary use of
the portion of the Premises taken which is attributable to the period prior to
the date of Lease Termination, and Lessor shall be entitled to any portion of
the Award for such use attributable to the period after Lease Termination. As
used in this paragraph, a temporary taking shall mean a taking for a period of
one year or less and does not include a taking which is to last for an
indefinite period and/or which will terminate only upon the happening of a
specified event unless it can be determined at the time of the taking when such
event will occur.
 
25.  OFFSET STATEMENT; MODIFICATIONS FOR LENDER. Lessee shall at any time and
from time to time within ten (10) days following request from Lessor execute,
acknowledge and deliver to Lessor a statement in writing, (i) certifying that
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease as so modified is
in full force and effect), (ii) acknowledging that there are not, to Lessee’s
knowledge, any uncured defaults on the part of the Lessor hereunder, or
specifying such defaults if any are claimed, (iii) certifying the date Lessee
entered into occupancy of the Premises and that Lessee is open and conducting
business at the Premises, (iv) certifying the date to which Rentals and other
charges are paid in advance, if any, (v) evidencing the status of this Lease as
may be required either by a lender making a loan affecting or a purchaser of the
Premises, or part of the Project from Lessor, (vi) certifying that all
improvements to be constructed on the Premises by Lessor are substantially
completed (if applicable), except for any punch list items which do not prevent
Lessee from using the Premises for its intended use, and (vii) certifying such
other matters relating to this Lease and/or the Premises as may be requested by
Lessor or a lender making a loan to Lessor or a purchaser of the Premises, or
any part of the Project from Lessor. Any such statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the Project,
or any interest therein. Lessee shall, within ten (10) days following request of
Lessor, deliver such other documents including Lessee’s financial statements as
are reasonably requested in connection with the sale of, or loan to be secured
by, any portion of the Project, or any interest therein.
 
If in connection with obtaining financing for all or any portion of the Project,
any lender shall request modifications of this Lease as a condition to Lessor
obtaining such financing, Lessee will not unreasonably withhold, delay or
condition its consent thereto, provided that such modifications do not increase
the financial obligations of Lessee hereunder or materially and adversely affect
the leasehold interest hereby created or Lessee’s rights hereunder.
 
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26.  PARKING. Lessee shall have the right to use the number of non-exclusive
parking spaces located within the Project as designated in Article 1.k. without
charge during the Term; except, however, notwithstanding anything to the
contrary contained in this Lease, if a charge, fee, tax or other imposition is
assessed against Lessor or the Project by applicable governmental authorities
based upon use of parking spaces at the Project or is required by applicable
governmental authorities to be assessed by Lessor upon users of parking spaces
at the Project, then Lessee shall pay its equitable share of such charge, fee,
tax or other imposition to Lessor monthly in advance as additional rent. Use of
all parking spaces shall be subject to rules and regulations established by
Lessor which may be altered at any time and from time to time during the Term.
The location of all parking spaces may be designated from time to time by
Lessor. Neither Lessee nor Lessee’s Agents shall at any time use more parking
spaces than the number so allocated to Lessee or park or permit the parking of
their vehicles in any portion of the Parcel not designated by Lessor as a
non-exclusive parking area. Lessee and Lessee’s Agents shall not have the
exclusive right to use any specific parking space, except as expressly stated in
this Article 26.
 
Notwithstanding the number of parking spaces designated for Lessee’s
non-exclusive use, in the event by reason of any rule, regulation, order, law,
statute or ordinance of any governmental or quasi-governmental authority
relating to or affecting parking on the Parcel, or any cause beyond Lessor’s
reasonable control, Lessor is required to reduce the number of parking spaces on
the Parcel, Lessor shall have the right to proportionately reduce the number of
Lessee’s parking spaces and the non-exclusive parking spaces of other tenants of
the Building. Lessor reserves the right in its absolute discretion: to determine
whether parking facilities are becoming overcrowded and in such event to
re-allocate the location of parking spaces among Lessee and other tenants of the
Project on a non-discriminatory basis; to have any vehicles owned by Lessee or
Lessee’s Agents which are parked in violation of the provisions of this Article
26 or Lessor’s rules and regulations relating to parking, towed away at Lessee’s
cost, after having given Lessee reasonable notice. In the event Lessor elects or
is required by any law to limit or control parking on the Parcel, by validation
of parking tickets or any other method, Lessee agrees to participate in such
validation or other program under such reasonable rules and regulations as are
from time to time established by Lessor. Lessor shall have the right to close
all or any portion of the parking areas at reasonable times for any purpose,
including, without limitation, the prevention of a dedication thereof, or the
accrual of rights in any person or the public therein. Employees of Lessee shall
be required to park in areas designated for employee parking, if any. The
parking areas shall not be used by Lessee or Lessee’s Agents for any purpose
other than the parking of motor vehicles and the ingress and egress of
pedestrians and motor vehicles.
 
27.  AUTHORITY. If Lessee is a corporation, partnership, limited liability
company or other entity, said entity represents and warrants that the individual
executing the Lease on behalf of the entity is duly authorized to execute and
deliver this Lease on behalf of said entity in accordance with a duly adopted
resolution of the Board of Directors of said corporation or in accordance with
the by-laws of said corporation or on behalf of said partnership in accordance
with the partnership agreement of such partnership or otherwise on behalf of
said entity in accordance with the organizational documents governing such
entity, and that this Lease is binding upon said entity in accordance with its
terms. If Lessee is a corporation or other entity, Lessee shall, upon execution
of this Lease, deliver to Lessor a certified copy of a resolution of the Board
of Directors of said corporation or other evidence of organizational approval
authorizing or ratifying the execution of this Lease. If Lessee fails to deliver
such resolution or other evidence to Lessor upon execution of this Lease, Lessor
shall not be deemed to have waived its right to require delivery of such
resolution or other evidence, and at any time during the Term Lessor may request
Lessee to deliver the same, and Lessee agrees it shall thereafter promptly
deliver such resolution or other evidence to Lessor. If Lessee is a corporation
or other entity, Lessee hereby represents, warrants, and covenants that (i)
Lessee is a valid and existing corporation or other entity; (ii) Lessee is
qualified to do business in California; (iii) all fees and all franchise and
corporate taxes of Lessee are paid to date, and will be paid when due; (iv) all
required forms and reports will be filed when due; and (v) the signers of this
Lease are properly authorized to execute this Lease on behalf of Lessee and to
bind Lessee hereto.
 
28.  SURRENDER OF PREMISES.
 
a.  Condition of Premises. Lessee shall, upon Lease Termination, surrender the
Premises in the condition required pursuant to subsection 10.b. above, and
otherwise in broom clean, trash free, and in good condition, reasonable wear and
tear, and insured casualties to the extent of Net Insurance Proceeds recovered
by Lessor, alone excepted. By written notice to Lessee, Lessor may elect to
cause Lessee to remove from the Premises or cause to be removed, at Lessee’s
expense, any logos, signs, notices, advertisements or displays placed on the
Premises by Lessee. If the Premises is not so surrendered as required by this
Article 28, Lessee shall indemnify, defend and hold harmless Lessor from and
against any loss or liability resulting from Lessee’s failure to comply with the
provisions of this Article 28, including, without limitation, any claims made by
any succeeding tenant or losses to Lessor due to lost opportunities to lease to
succeeding tenants, and the obligations of Lessee pursuant hereto shall survive
the Lease Termination.
 
b.  Removal of Personal Property. Lessee shall remove all its personal property
from the Premises upon Lease Termination, and shall immediately repair all
damage to the Premises, Building and Common Area caused by such removal. Any
personal property remaining on the Premises after Lease expiration or sooner
termination may be packed, transported, and stored at a public warehouse at
Lessee’s expense. If after Lease Termination and, within ten (10) days after
written demand by Lessor, Lessee fails to remove Lessee’s personal property or,
if removed by Lessor, fails to pay the removal expenses, the personal property
may be deemed abandoned property by Lessor and may be disposed of as Lessor
deems appropriate. Lessee shall repair any damage to the Premises caused by or
in connection with the removal of any personal property, including without
limitation, the floor and patch and paint the walls, when required by Lessor, to
Lessor’s reasonable satisfaction, all at Lessee’s sole cost and expense. The
provisions of this Article 28 shall survive Lease Termination.
 
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29.  LESSOR DEFAULT AND MORTGAGEE PROTECTION. Lessor shall not be in default
under this Lease unless Lessee shall have given Lessor written notice of the
breach, and, within thirty (30) days after notice, Lessor has not cured the
breach or, if the breach is such that it cannot reasonably be cured under the
circumstances within thirty (30) days, has not commenced diligently to prosecute
the cure to completion. The liability of Lessor pursuant to this Lease shall be
limited to Lessor’s interest in the Building and any income therefrom and any
money judgment obtained by Lessee based upon Lessor’s breach of this Lease or
otherwise relating to this Lease or the Premises, shall be satisfied only out of
the proceeds of the sale or disposition of Lessor’s interest in the Building
(whether by Lessor or by execution of judgment). Lessee agrees that the
obligations of Lessor under this Lease do not constitute personal obligations of
the individual partners, whether general or limited, members, directors,
officers or shareholders of Lessor, and Lessee shall not seek recourse against
the individual partners, members, directors, officers or shareholders of Lessor
or any of their personal assets for satisfaction of any liability with respect
to this Lease. Upon any default by Lessor under this Lease, Lessee shall give
notice by registered mail to any beneficiary or mortgagee of a deed of trust or
mortgage encumbering the Premises, and/or any portion of the Project, whose
address shall have been furnished to it, and shall offer such beneficiary or
mortgagee a reasonable opportunity to cure the default, including time to obtain
possession of the Premises, and/or Project, or any portion thereof, by power of
sale or judicial foreclosure, if such should prove necessary to effect a cure.
 
30.  RIGHTS RESERVED BY LESSOR. Lessor reserves the right from time to time,
without abatement of Rentals and without limiting Lessor’s other rights under
this Lease and (in the case of subsections (ii), (iii), (v) and (xi) below) so
long as Lessee’s obligations under this Lease are not materially increased
thereby nor Lessee’s rights materially decreased: (i) to install, use, maintain,
repair and replace pipes, ducts, conduits, wires and appurtenant meters and
equipment for service to other parts of the Project above the ceiling surfaces,
below the floor surfaces, within the walls and in the central core areas, and to
relocate any pipes, ducts, conduits, wires and appurtenant meters and equipment
included in the Premises which are located in the Premises or located elsewhere
outside the Premises, and to expand any building within the Project; (ii) to
designate other land outside the current boundaries of the Project be a part of
the Project, in which event the Parcel shall be deemed to include such
additional land, and the Common Areas shall be deemed to include Common Areas
upon such additional land; (iii) to add additional buildings and/or other
improvements (including, without limitation, additional parking structures or
extension of existing parking structures) to the Project, which may be located
on land added to the Project pursuant to clause (ii) above; (iv) to make changes
to the Common Areas, including, without limitation, changes in the location,
size, shape and number of driveways, entrances, parking spaces, parking areas,
loading and unloading areas, ingress, egress, direction of traffic, landscape
areas and walkways; (v) to close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises remains
available; (vi) to use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Building or the Project, or any
portion thereof; (vii) to grant the right to the use of the Exterior Common Area
to the occupants of other improvements located on the Parcel; (viii) to
designate the name, address, or other designation of the Building and/or
Project, without notice or liability to Lessee; (ix) to close entrances, doors,
corridors, elevators, escalators or other Building facilities or temporarily
abate their operation; (x) to change or revise the business hours of the
Building; and (xi) to do and perform such other acts and make such other changes
in, to or with respect to the Common Areas, the Building or any other portion of
the Project as Lessor deems to be appropriate in the exercise of its reasonable
business judgment.
 
31.  EXHIBITS. Exhibits and riders, if any, signed by the Lessor and the Lessee
and endorsed on or affixed to this Lease are a part hereof.
 
32.  WAIVER. No covenant, term or condition in this Lease or the breach thereof
shall be deemed waived, except by written consent of the party against whom the
waiver is claimed. Any waiver of the breach of any covenant, term or condition
herein shall not be deemed to be a waiver of any preceding or succeeding breach
of the same or any other covenant, term or condition. Acceptance by Lessor of
any performance by Lessee after the time the same shall have become due shall
not constitute a waiver by Lessor of the breach or default of any covenant, term
or condition unless otherwise expressly agreed to by Lessor in writing. The
acceptance by Lessor of any sum less than that which is required to be paid by
Lessee shall be deemed to have been received only on account of the obligation
for which it is paid (or for which it is allocated by Lessor, in Lessor’s
absolute discretion, if Lessee does not designate the obligation as to which the
payment should be credited), and shall not be deemed an accord and satisfaction
notwithstanding any provisions to the contrary written on any check or contained
in a letter of transmittal. Lessor’s efforts to mitigate damages caused by any
default by Lessee shall not constitute a waiver of Lessor’s right to recover
damages for any default by Lessee. No custom or practice which may arise between
the parties hereto in the administration of the terms hereof shall be construed
as a waiver or diminution of Lessor’s right to demand performance by Lessee in
strict accordance with the terms of this Lease.
 
33.  NOTICES. All notices, consents and demands which may or are to be required
or permitted to be given by either party to the other hereunder shall be in
writing. All notices, consents and demands by Lessor to Lessee shall be
personally delivered, sent by overnight courier providing receipt of delivery
(such as Federal Express), or sent by United States Certified Mail, postage
prepaid return receipt requested, addressed to Lessee as designated in Article
1.l., or to such other place as Lessee may from time to time designate in a
notice to Lessor pursuant to this Article 33. All notices and demands by Lessee
to Lessor shall be personally delivered, sent by overnight courier providing
receipt of delivery (such as Federal Express) or sent by United States Certified
Mail, postage prepaid return receipt requested (provided that a copy of any such
notice or demand so sent by United States Certified Mail shall be concurrently
sent by Lessee to Lessor by facsimile transmission), addressed to Lessor as
designated in Article 1.l., or to such other person or place as Lessor may from
time to time designate in a notice to Lessee pursuant to this Article 33.
Notices sent by overnight courier shall be deemed delivered upon the next
business day following deposit with such overnight courier for next business day
delivery. Mailed notices shall be deemed delivered three (3) business days after
deposit in the United States mail as required by this Article 33.
 
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34.  JOINT OBLIGATIONS. If Lessee consists of more than one person or entity,
the obligations of each Lessee under this Lease shall be joint and several.
 
35.  MARGINAL HEADINGS. The captions of paragraphs and articles of this Lease
are not a part of this Lease and shall have no effect upon the construction or
interpretation of any part hereof.
 
36.  TIME. Time is of the essence of this Lease and each and all of its
provisions in which performance is a factor except as to the delivery of
possession of the Premises to Lessee.
 
37.  SUCCESSORS AND ASSIGNS. The covenants and conditions herein contained,
subject to the provisions of Article 13, apply to and bind the heirs,
successors, executors, administrators, legal representatives and assigns of the
parties hereto.
 
38.  RECORDATION. Upon request by Lessor, Lessee shall execute and acknowledge a
short form of this Lease in form for recording which may be recorded at Lessor’s
election. Lessee shall not record this Lease or a short form or memorandum
hereof without the prior written consent of Lessor.
 
39.  QUIET POSSESSION. Upon Lessee paying the Rentals reserved hereunder and
observing and performing all of the covenants, conditions and provisions on
Lessee’s part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire Term, subject to all the provisions of
this Lease and subject to any ground or underlying leases, mortgages or deeds of
trust now or hereafter affecting the Premises or the Building and the rights
reserved by Lessor hereunder.
 
40.  LATE CHARGES; ADDITIONAL RENT AND INTEREST.
 
a.  Late Charges. Lessee acknowledges that late payment by Lessee to Lessor of
Rentals or other sums due hereunder will cause Lessor to incur costs not
contemplated by this Lease, the exact amount of which is impracticable or
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any mortgage or trust deed covering the Premises or any
part of the Project. Accordingly, if any installment of Rentals or any other sum
due from Lessee is not received by Lessor or Lessor’s designee within five (5)
days after the due date, then Lessee shall pay to Lessor, in each case, a late
charge equal to ten percent (10%) of such overdue amount; provided, however,
that with respect to the first such late payment in any twelve (12) consecutive
month period during the Term, such late charge shall not be payable unless such
late payment by Lessee shall not be cured within five (5) days following
Lessee’s receipt of written notice from Lessor of such late payment. The parties
agree that such late charge represents a fair and reasonable estimate of the
cost that Lessor will incur by reason of late payment by Lessee. Acceptance of
any late charges by Lessor shall in no event constitute a waiver of Lessee’s
default with respect to such overdue amount, nor prevent Lessor from exercising
any of its other rights and remedies under this Lease.
 
b.  Rentals, Additional Rent and Interest. All taxes, charges, costs, expenses,
and other amounts which Lessee is required to pay hereunder, including without
limitation Lessee’s Percentage Share of Building Expenses allocated to the
Office Cost Pool, and all interest and charges (including late charges) that may
accrue thereon upon Lessee’s failure to pay the same and all damages, costs and
expenses which Lessor may incur by reason of any default by Lessee shall be
deemed to be additional rent hereunder. Upon nonpayment by Lessee of any
additional rent, Lessor shall have all the rights and remedies with respect
thereto as Lessor has for the nonpayment of Base Rent. The term “Rentals” as
used in this Lease is Base Rent and all additional rent. Any payment due from
Lessee to Lessor (including but not limited to Base Rent and all additional
rent) which is not paid within five (5) days of when due shall bear interest
from the date when due until paid, at an annual rate equal to the lesser of 10%
per annum or the maximum rate that Lessor is allowed to contract for by law.
Payment of such interest shall not excuse or cure any default by Lessee. In
addition, Lessee shall pay all costs and attorneys’ fees incurred by Lessor in
collection of such amounts. All Rentals and other moneys due under this Lease
shall survive the Lease Termination. Interest on Rentals past due as provided
herein shall be in addition to the late charges levied pursuant to 40.a. above.
All Rentals shall be paid to Lessor, in lawful money of the United States of
America which shall be legal tender at the time of payment, at the address of
Lessor a provided herein, or to such other person or at such other place as
Lessor may from time to time designate in writing. If at any time during the
Term Lessee pays any Rentals by check which is returned for insufficient funds,
Lessor shall have the right, in addition to any other rights or remedies Lessor
may have hereunder, to require that Rentals thereafter be paid in cash or by
cashier’s or certified check.
 
41.  PRIOR AGREEMENTS. This Lease contains all of the agreements of the parties
hereto with respect to the Premises, this Lease or any matter covered or
mentioned in this Lease, and no prior agreements or understanding pertaining to
any such matters shall be effective for any purpose. No provision of this Lease
may be amended or added to except by an agreement in writing signed by the
parties hereto or their respective successors in interest. This Lease shall not
be effective or binding on Lessor until fully executed by Lessor.
 
42.  INABILITY TO PERFORM. This Lease and the obligations of the Lessee
hereunder shall not be affected or impaired because the Lessor is unable to
fulfill any of its obligations hereunder or is delayed in doing so, if such
inability or delay is caused by reason of strike, labor troubles, Acts of God,
or any other cause, similar or dissimilar, beyond the reasonable control of the
Lessor.
 
43.  ATTORNEYS’ FEES. If any litigation, judicial reference or arbitration
proceeding is commenced between the parties hereto concerning this Lease and/or
the rights and obligations including but not limited to claims in contract, tort
or equity of either party in relation thereto, the party prevailing in such
litigation or arbitration proceeding, or the non-dismissing party in the event
of a dismissal with or without prejudice, shall be entitled, in addition to such
other relief as may be granted, to a reasonable sum for any and all costs and
expenses, including, without limitation, attorneys’ fees, expert witness fees,
consultants’ fees, court costs, cost of paralegals, accounts, business office
expenses of any kind or nature, including but not limited to staff, traveling
expenses, telephone expenses, internal bookkeeping and accounting and any and
all other costs and expenses of defense or prosecution incurred in connection
therewith, whether specified herein or not. Any such attorneys’ fees and other
costs and expenses incurred by the prevailing or non-dismissing party in
enforcing a judgment in its favor under this Lease, whether or not suit is
filed, shall be recoverable separately from and in addition to any other amount
included in such judgment or award, and such obligation is intended to be
severable from the other provisions of this Lease and to survive and not be
merged into any such judgment or award.
 
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44.  SALE OF PREMISES BY LESSOR. Upon a sale or conveyance by the Lessor herein
named (and in case of any subsequent transfers or conveyances, the then grantor)
of Lessor’s interest in the Building, other than a transfer for security
purposes only, the Lessor herein named (and in case of any subsequent transfers
or conveyances, the then grantor) shall be relieved, from and after the date of
such transfer, of all obligations and liabilities accruing thereafter on the
part of Lessor, provided that any funds in the hands of Lessor or the then
grantor at the time of transfer and in which Lessee has an interest, less any
deductions permitted by law or this Lease, shall be delivered to Lessor’s
successor. Following such sale or conveyance by Lessor or the then grantor,
Lessee agrees to look solely to the responsibility of the successor-in-interest
of Lessor in and to this Lease. This Lease shall not be affected by any such
sale or conveyance and Lessee agrees to attorn to the purchaser or assignee.
 
45.  SUBORDINATION/ATTORNMENT. This Lease shall automatically be subject and
subordinate to all ground or underlying leases which now exist or may hereafter
be executed affecting any portion of the Project and to the lien of any
mortgages or deeds of trust (including all advances thereunder, renewals,
replacements, modifications, supplements, consolidations, and extensions
thereof) in any amount or amounts whatsoever now or hereafter placed on or
against any portion of the Project, or on or against Lessor’s interest or estate
therein, or on or against any ground or underlying lease, without the necessity
of the execution and delivery of any further instruments on the part of Lessee
to effectuate such subordination. Lessor agrees to use commercially reasonable
efforts to obtain, at no expense to Lessor, a commercially reasonable
subordination and non-disturbance agreement from any current or future holder of
any ground lease, lien, mortgage or deed of trust (“Holder”) that provides that
so long as Lessee is not in default of this Lease beyond any applicable notice
and cure period, such Holder shall recognize all of Lessee’s rights under this
Lease (an “SNDA”); provided that Lessor’s failure to obtain such SNDA shall not
affect this Lease in any way whatsoever or result in Lessor being deemed in
default under this Lease. Lessee covenants and agrees to execute and deliver
upon demand and without charge therefor, such further instruments evidencing the
subordination of this Lease to such ground or underlying leases and/or to the
lien of any such mortgages or deeds of trusts as may be required by Lessor or a
lender making a loan affecting the Project; provided that such mortgagee or
beneficiary under such mortgage or deed of trust or lessor under such ground or
underlying lease agrees in writing that so long as Lessee is not in default
under this Lease, this Lease shall not be terminated in the event of any
foreclosure or termination of any ground or underlying lease. Failure of Lessee
to execute such instruments evidencing subordination of this Lease shall
constitute a default by Lessee under this Lease. If any mortgagee, beneficiary
or lessor elects to have this Lease prior to the lien of its mortgage, deed of
trust or lease, and shall give written notice thereof to Lessee, this Lease
shall be deemed prior to such mortgage, deed of trust or lease, whether this
Lease is dated prior or subsequent to the date of said mortgage, deed of trust,
or lease or the date of the recording thereof.
 
If any proceedings are brought to terminate any ground or underlying leases or
for foreclosure, or upon the exercise of the power of sale, under any mortgage
or deed of trust covering any portion of the Project, Lessee shall attorn to the
lessor or purchaser upon any such termination, foreclosure or sale and recognize
such lessor or purchaser as the Lessor under this Lease. So long as Lessee is
not in default hereunder and attorns as required above, this Lease shall remain
in full force and effect for the full term hereof after any such termination,
foreclosure or sale.
 
46.  NAME. Lessee shall not use any name, picture or representation of the
Building or Project for any purpose other than as an address of the business to
be conducted by the Lessee in the Premises.
 
47.  SEVERABILITY. Any provision of this Lease which proves to be invalid, void
or illegal shall in no way affect, impair or invalidate any other provision of
this Lease and all such other provisions shall remain in full force and effect;
however, if Lessee’s obligation to pay the Rentals is determined to be invalid
or unenforceable, this Lease shall terminate at the option of Lessor.
 
48.  CUMULATIVE REMEDIES. Except has otherwise expressly provided in this Lease,
no remedy or election hereunder shall be deemed exclusive but shall, wherever
possible, be cumulative with all other remedies at law or in equity.
 
49.  CHOICE OF LAW. This Lease shall be governed by the laws of the State of
California.
 
50.  SIGNS. Lessee shall not inscribe, paint, affix or place any sign, awning,
canopy, advertising matter, decoration or lettering upon any portion of the
Premises, including, without limitation, any exterior door, window or wall,
without Lessor’s prior written consent. Lessor shall provide, at Lessor’s sole
cost and expense, Building standard suite signage at the entrance of the
Premises and identification for Lessee on the Building directories.
 
51.  GENDER AND NUMBER. Wherever the context so requires, each gender shall
include any other gender, and the singular number shall include the plural and
vice-versa.
 
52.  CONSENTS. Whenever the consent of Lessor is required herein, the giving or
withholding of such consent in any one or any number of instances shall not
limit or waive the need for such consent in any other or future instances. Any
consent given by Lessor shall not be binding upon Lessor unless in writing and
signed by Lessor or Lessor’s agents. Notwithstanding any other provision of this
Lease, where Lessee is required to obtain the consent of Lessor to do any act,
or to refrain from the performance of any act, Lessee agrees that if Lessee is
in default with respect to any term, condition, covenant or provision of this
Lease beyond any applicable notice and cure period, then Lessor shall be deemed
to have acted reasonably in withholding its consent if said consent is, in fact,
withheld.
 
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53.  BROKERS. Lessor shall be responsible, pursuant to separate written
agreement, for the payment of the commission in connection with this Lease owing
to the brokers designated in Article 1.m. Lessee warrants that it has had no
dealing with any real estate broker or agents in connection with the negotiation
of this Lease excepting only the broker or agent designated in Article 1.m., and
that it knows of no other real estate broker or agent who is entitled to or can
claim a commission in connection with this Lease. Lessee agrees to indemnify,
defend and hold Lessor harmless from and against any and all claims, demands,
losses, liabilities, lawsuits, judgments, and costs and expenses (including,
without limitation, reasonable attorneys’ fees and expenses) with respect to any
alleged leasing commission or equivalent compensation alleged to be owing on
account of Lessee’s dealings with any real estate broker or agent other than
those designated in Article 1.m. Lessor agrees to indemnify, defend and hold
Lessee harmless from and against any and all claims, demands, losses,
liabilities, lawsuits, judgments, and costs and expenses (including, without
limitation, reasonable attorneys’ fees and expenses) with respect to any alleged
leasing commission or equivalent compensation alleged to be owing on account of
Lessor’s dealings with any real estate broker or agent.
 
54.  SUBSURFACE AND AIRSPACE. This Lease confers on Lessee no rights either with
respect to the subsurface of the Parcel or with regard to airspace above the top
of the Building or above any paved or landscaped areas on the Parcel or Common
Area and Lessor expressly reserves the right to use such subsurface and airspace
areas, including without limitation the right to perform construction work
thereon and in regard thereto. Any diminution or shutting off of light, air or
view by any structure which may be erected by Lessor on those portions of the
Parcel, Common Area and/or Building reserved by Lessor shall in no way affect
this Lease or impose any liability on Lessor. Lessor shall have the exclusive
right to use all or any portion of the roof, side and rear walls of the Premises
and Building for any purpose so long as such use does not materially interfere
with the permitted use or occupancy of the Premises by Tenant. Lessee shall have
no right whatsoever to the exterior of the exterior walls or the roof of the
Premises or any portion of the Project outside the Premises except as provided
in Article 55 of this Lease.
 
55.  COMMON AREA. For purposes of the Lease, “Common Area” shall collectively
mean the following:
 
a.  Exterior Common Area. That portion of the Parcel other than the land
comprising the property, and all facilities and improvements on such portion for
the non-exclusive use of Lessee in common with other authorized users,
including, but not limited to, vehicle parking areas, driveways, sidewalks,
landscaped areas, and the facilities and improvements necessary for the
operation thereof (the “Exterior Common Area”); and
 
b.  Building Common Area. That portion of the Building in which the Premises are
located, and all of the facilities therein, set aside by Lessor for the
non-exclusive use of Lessee in common with other authorized users, including,
but not limited to, entrances, lobbies, halls, atriums, corridors, toilets and
lavatories, passenger elevators and service areas (the “Building Common Area”).
 
Subject to the limitations and restrictions contained in this Lease, and the
Rules and Regulations, Lessor grants to Lessee and Lessee’s Agents the
nonexclusive right to use the Common Area in common with Lessor, Lessor’s agent,
other occupants of the Building and Project, other authorized users and their
agents, subject to the provisions of this Lease. The right to use the Common
Area shall terminate upon Lease Termination.
 
56.  LABOR DISPUTES. If Lessee becomes involved in or is the object of a labor
dispute which subjects the Premises or any part of the Project to any picketing,
work stoppage, or other concerted activity which in the reasonable opinion of
Lessor is in any manner detrimental to the operation of any part of the Project,
or its tenants, Lessor shall have the right to require Lessee, at Lessee’s own
expense and within a reasonable period of time specified by Lessor, to use
Lessee’s best efforts to either resolve such labor dispute or terminate or
control any such picketing, work stoppage or other concerted activity to the
extent necessary to eliminate any interference with the operation of the
Projector its tenants. To the extent such labor dispute interferes with the
performance of Lessor’s duties hereunder, Lessor shall be excused from the
performance of such duties and Lessee hereby waives any and all claims against
Lessor for damages or losses in regard to such duties. If Lessee fails to use
its best efforts to so resolve such dispute or terminate or control such
picketing, work stoppage or other concerted activity within the period of time
specified by Lessor, Lessor shall have the right to terminate this Lease.
Nothing contained in this Article 56 shall be construed as placing Lessor in an
employer-employee relationship with any of Lessee’s employees or with any other
employees who may be involved in such labor dispute. Lessee shall indemnify,
defend and hold harmless Lessor from and against any and all liability
(including, without limitation, attorneys’ fees and expenses) arising from any
labor dispute in which Lessee is involved and which affects any part of the
Project.
 
57.  CONDITIONS. All agreements by Lessee contained in this Lease, whether
expressed as covenants or conditions, shall be construed to be covenants,
conferring upon Lessor, upon breach thereof, the right to terminate this Lease.
 
58.  LESSEE’S FINANCIAL STATEMENTS. At any time during the Term, but only once
per calendar year, Lessee shall, within fifteen (15) days following receipt of
Lessor’s written request, furnish Lessor with financial statements dated no
earlier than one (1) year before such request, or, if available, audited
financial statements prepared by an independent certified public accountant with
copies of the auditor’s statement, reflecting Lessee’s then current financial
condition. Notwithstanding the above, in the event Lessee is in default beyond
any applicable notice and cure period, Lessee shall furnish said financial
statements to Lessor immediately upon receipt of Lessor’s written request.
Lessee hereby warrants that all financial statements delivered by Lessee to
Lessor prior to the execution of this Lease by Lessee, or that shall be
delivered in accordance with the terms hereof, are or shall be at the time
delivered true, correct, and complete, and prepared in accordance with generally
accepted accounting principles. Lessee acknowledges and agrees that Lessor is
relying on such financial statements in accepting this Lease, and that a breach
of Lessee’s warranty as to such financial statements shall constitute a default
by Lessee. The provisions of this Article 58 shall not apply to any tenant whose
stock is traded on any national exchange.
 
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59.  LESSOR NOT A TRUSTEE. Lessor shall not be deemed to be a trustee of any
funds paid to Lessor by Lessee (or held by Lessor for Lessee) pursuant to this
Lease. Lessor shall not be required to keep any such funds separate from
Lessor’s general funds or segregated from any funds paid to Lessor by (or held
by Lessor for) other tenants of the Building. Any funds held by Lessor pursuant
to this Lease shall not bear interest.
 
60.  MERGER. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, shall not work a merger, and shall, at the option
of the Lessor, terminate all or any existing subleases or subtenancies, or may,
at the option of Lessor, operate as an assignment to it of any or all such
subleases or subtenancies.
 
61.  NO PARTNERSHIP OR JOINT VENTURE. Nothing in this Lease shall be construed
as creating a partnership or joint venture between Lessor, Lessee, or any other
party, or cause Lessor to be responsible for the debts or obligations of Lessee
or any other party.
 
62.  LESSOR’S RIGHT TO PERFORM LESSEE’S COVENANTS. Except as otherwise expressly
provided herein, if Lessee fails at any time to make any payment or perform any
other act on its part to be made or performed under this Lease, then upon ten
(10) days written notice to Lessee (provided that no such notice shall be
required in the event of an emergency), and provided that Lessee has not
commenced to cure such failure and is not then diligently prosecuting such cure
to completion, Lessor may, but shall not be obligated to, and without waiving or
releasing Lessee from any obligation under this Lease, make such payment or
perform such other act to the extent that Lessor may deem desirable, and in
connection therewith, pay expenses and employ counsel. All sums so paid by
Lessor and all penalties, interest and costs in connection therewith shall be
due and payable by Lessee to Lessor as additional rent upon demand.
 
63.  PLANS.. Lessee acknowledges that any plan of the Project which may have
been displayed or furnished to Lessee or which may be a part of Exhibit “A” or
Exhibit “B” is tentative; Lessor may from time to time change the shape, size,
location, number, and extent of the improvements shown on any such plan and
eliminate or add any improvements to the Project, in Lessor’s sole discretion.
 
64.  RELOCATION. Intentionally omitted.
 
65.  WAIVER OF JURY. LESSOR AND LESSEE HEREBY WAIVE THEIR RESPECTIVE RIGHT TO
TRIAL BY JURY ON ANY CAUSE OF ACTION, CLAIM, COUNTER-CLAIM OR CROSS-COMPLAINT IN
ANY ACTION, PROCEEDING AND/OR HEARING BROUGHT BY EITHER LESSOR AGAINST LESSEE OR
LESSEE AGAINST LESSOR ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE.
 
66.  FURNITURE. Lessor hereby grants to Lessee the exclusive, irrevocable right
to use the furniture listed on Exhibit “E” hereto (the “Lessor’s Personal
Property”) during the Term, as the same may be extended. Lessee, at Lessee’s
sole cost, shall maintain, repair and (as necessary) replace Lessor’s Personal
Property to keep it in its condition upon delivery of possession of the
Premises, reasonable wear and tear, casualty and condemnation excepted (and any
such replacements shall be deemed to thereafter constitute a part of Lessor’s
Personal Property for purposes of the Lease); provided, however, Lessee shall
not be required to replace any of Lessor’s Personal Property which wears out in
the normal course of use, becomes obsolete during the Term or destroyed by
casualty or condemnation. However, notwithstanding Lessee’s use of Lessor’s
Personal Property and work of maintenance, repair and replacement thereof,
Lessor’s Personal Property shall remain the sole property of Lessor throughout
the Term of the Lease and shall be surrendered with the Premises in the same
condition received, reasonable wear and tear, casualty and condemnation
excepted, upon the expiration of the Term or earlier termination of the Lease.
Lessor agrees that it shall remove any personal property in the Premises on or
before the Commencement Date that is not on Exhibit “E” hereto from the Premises
at its sole cost and expense within a reasonable period of time after receipt of
Lessee’s request.
 
67.  JOINT PARTICIPATION. Lessor and Lessee hereby acknowledge that both parties
have been represented by counsel in connection with this Lease and that both
parties have participated in the negotiation and drafting of all of the terms
and provisions hereof. By reason of this joint participation, no term or
provision of this Lease will be construed against either party as the “drafter”
thereof, which terms and provisions shall include, without limitation, Article
14 hereof.
 
68.  NON DISCLOSURE. Lessee acknowledges that the content of this Lease and the
terms and conditions of Lessee’s lease of the Premises during the Term pursuant
hereto are confidential information. Lessee shall keep, and Lessee shall cause
Lessee’s broker to keep, such confidential information strictly confidential and
neither Lessee nor Lessee’s broker shall disclose such confidential information
to any person or entity other than Lessee’s financial, legal, and space planning
consultants, or as may be required by applicable disclosure laws or other
applicable laws. Without limiting the generality of the foregoing, Lessee shall
cause Lessee’s broker not to include any of the terms and conditions of Lessee’s
lease of the Premises during the Term on Lessee’s broker’s inventory tracking
systems or other systems reporting on lease transactions within the marketplace.
 
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69.  COUNTERPARTS. This Lease may be executed in any number of counterparts,
each of which shall be deemed to be an original, but any number of which, taken
together, shall be deemed to constitute one and the same instrument.
 
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR
ATTORNEY FOR APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE LESSOR
BY THE REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTIONS
RELATING THERETO.

 
[Signatures on following page]
 
29

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IN WITNESS WHEREOF, the parties hereto have entered into this Lease as of the
date first written above.
 

LESSOR:   LESSEE:             EAGLE SQUARE PARTNERS,   SOURCEFORGE, INC., a
California limited partnership   a Delaware corporation             By:  PROM
XX, INC., a California   By: /s/ Patricia S. Morris   corporation, its general
partner               Print Name: Patricia S. Morris   By:  PROMETHEUS REAL
ESTATE          GROUP, INC., a California corporation,   Its: CFO     agent for
owner                 By: /s/ Jaclyn B. Safier   By: /s/ Ali Jenab            
Print Name: Jaclyn B. Safier   Print Name: Ali Jenab             Its: Executive
Vice President/Principal   Its: President and CEO                         By:
/s/ William R. Leira                   Print Name: William R. Leira            
      Its: Assistant Secretary    

   
30

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EXHIBIT “A”
 
FLOOR PLAN OF THE PREMISES
 

 
 
 
 
 
 
 
Exhibit "A" - Page 1

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EXHIBIT “B”
 
DEPICTION OF THE PROJECT
 

  
 
 
 
 
 

Exhibit "B" - Page 1

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EXHIBIT “C”

WORK LETTER

 
 
 
 

 
Exhibit "C" - Page 1

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EXHIBIT “D”
 
RULES AND REGULATIONS
 
 
 
 
 
 
Exhibit "D" - Page 1

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EXHIBIT “E”

LESSOR’S PERSONAL PROPERTY
 
 
 
 
 
 
Exhibit "E" - Page 1

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