Exhibit 10.1

 

100 CALIFORNIA STREET

 

OFFICE LEASE

 

BETWEEN

 

WB 100 CALIFORNIA, LLC

 

(“LANDLORD”)

 

AND

 

EMBARCADERO TECHNOLOGIES, INC.

 

(“TENANT”)

 

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TABLE OF CONTENTS

 

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ARTICLE 1 TERM

   1

ARTICLE 2 POSSESSION

   3

ARTICLE 3 RENT

   3

ARTICLE 4 RENTAL ADJUSTMENT

   5

ARTICLE 5 SECURITY DEPOSIT

   9

ARTICLE 6 USE

   10

ARTICLE 7 NOTICES

   11

ARTICLE 8 BROKERS

   12

ARTICLE 9 HOLDING OVER; SURRENDER

   12

ARTICLE 10 TAXES ON TENANT’S PROPERTY

   13

ARTICLE 11 CONDITION OF PREMISES

   14

ARTICLE 12 ALTERATIONS

   14

ARTICLE 13 REPAIRS

   15

ARTICLE 14 LIENS

   18

ARTICLE 15 ENTRY BY LANDLORD AND RESERVED RIGHTS OF LANDLORD

   18

ARTICLE 16 UTILITIES AND SERVICES

   19

ARTICLE 17 BANKRUPTCY

   19

ARTICLE 18 INDEMNIFICATION

   20

ARTICLE 19 DAMAGE TO TENANT’S PROPERTY

   20

ARTICLE 20 INSURANCE

   21

ARTICLE 21 DAMAGE OR DESTRUCTION

   22

 

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TABLE OF CONTENTS

(Continued)

 

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ARTICLE 22 EMINENT DOMAIN

   23

ARTICLE 23 DEFAULTS AND REMEDIES

   24

ARTICLE 24 ASSIGNMENT AND SUBLETTING

   27

ARTICLE 25 SUBORDINATION; MORTGAGEE PROTECTION

   29

ARTICLE 26 ESTOPPEL CERTIFICATE

   30

ARTICLE 27 SIGNAGE

   31

ARTICLE 28 RULES AND REGULATIONS

   31

ARTICLE 29 CONFLICT OF LAWS

   31

ARTICLE 30 SUCCESSORS AND ASSIGNS

   32

ARTICLE 31 SURRENDER OF PREMISES

   32

ARTICLE 32 ATTORNEYS’ FEES

   32

ARTICLE 33 PERFORMANCE BY TENANT

   32

ARTICLE 34 INTENTIONALLY OMITTED

   33

ARTICLE 35 DEFINITION OF LANDLORD

   33

ARTICLE 36 WAIVER

   33

ARTICLE 37 IDENTIFICATION OF TENANT

   34

ARTICLE 38 TERMS AND HEADINGS

   34

ARTICLE 39 EXAMINATION OF LEASE

   34

ARTICLE 40 TIME

   34

ARTICLE 41 PRIOR AGREEMENT: AMENDMENTS

   34

ARTICLE 42 SEPARABILITY

   35

ARTICLE 43 RECORDING

   35

ARTICLE 44 CONSENTS

   35

 

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TABLE OF CONTENTS

(Continued)

 

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ARTICLE 45 LIMITATION ON LIABILITY

   35

ARTICLE 46 RIDERS

   36

ARTICLE 47 EXHIBITS

   36

ARTICLE 48 INTENTIONALLY OMITTED

   36

ARTICLE 49 INTENTIONALLY OMITTED

   36

ARTICLE 50 HAZARDOUS MATERIALS

   36

ARTICLE 51 ASBESTOS DISCLOSURE

   37

ARTICLE 52 COUNTERPARTS

   37

ARTICLE 53 FORCE MAJEURE

   37

ARTICLE 54 OPTION TO RENEW

   38

ARTICLE 55 RIGHT OF FIRST OFFER

   40

ARTICLE 56 OPTIONS PERSONAL

   41

 

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TABLE OF CONTENTS

(Continued)

 

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LIST OF EXHIBITS

          EXHIBIT A-1    12th Floor Premises      EXHIBIT A-2    13th Floor
Premises      EXHIBIT B    The Project      EXHIBIT C    Standards for Utilities
and Services      EXHIBIT D    Rules and Regulations      EXHIBIT E    Asbestos
Notification      EXHIBIT F    Commencement Date Memorandum      EXHIBIT G   
Landlord’s Work Letter      Schedule 1 to Exhibit G    Landlord’s Improvements
     EXHIBIT H    Letter of Credit Requirements      EXHIBIT I    Form of SNDA
    

 

The exhibits attached hereto are incorporated into and made a part of this
Lease.

 

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OFFICE LEASE

 

(100 California Street - Embarcadero Technologies, Inc.)

 

THIS LEASE (“Lease”) is made as of April 19, 2004, by and between WB 100
CALIFORNIA, LLC, a Delaware limited liability company (“Landlord”), and
EMBARCADERO TECHNOLOGIES, INC., a Delaware corporation (“Tenant”).

 

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the
entire twelfth floor (the “12th Floor Premises”) and a portion of the thirteenth
floor (the “13th Floor Premises”) (collectively, the “Premises”), in each case
as outlined on the floor plan attached hereto and marked as EXHIBITS A-1 and
A-2, of that certain office building located at 100 California Street, San
Francisco, California 94111 (hereinafter referred to as the “Building” or the
“Project”) more particularly described in EXHIBIT B attached hereto. The 12th
Floor Premises consist of approximately 19,193 rentable square feet, and the
13th Floor Premises consist of approximately 5,063 rentable square feet (the
total Premises consist of approximately 24,256 rentable square feet). The
Project contains approximately 273,084 rentable square feet of space. The square
feet of the Premises and the Project have been measured in accordance with BOMA
standards (it being understood and agreed that (y) the parties have each
heretofore independently verified the accuracy of such square footage
measurements and (z) such square footage measurements shall be binding for the
purposes of this Lease).

 

Landlord and Tenant agree that said letting and hiring is upon and subject to
the terms, covenants and conditions herein set forth. Tenant covenants, as a
material part of the consideration for this Lease, to keep and perform each and
all of said terms, covenants and conditions for which Tenant is liable and that
this Lease is made upon the condition of such performance.

 

ARTICLE 1

TERM

 

1.1 Commencement Date. The term (the “Term”) of this Lease shall be for sixty
(60) months, unless sooner terminated as hereinafter provided, commencing on the
date which is the later of:

 

(a) June 1, 2004; or

 

(b) the date on which the Landlord’s Improvements (as defined in the Landlord
Work Letter attached hereto as EXHIBIT G) are Substantially Complete (as defined
hereinafter); provided, however, that if the date on which the Premises are
Substantially Complete is delayed as a result of Delays Caused by Tenant (as
defined in the Landlord’s Work Letter attached hereto as EXHIBIT G), then any
Delays Caused by Tenant shall be deducted from the date on which the Landlord’s
Improvements are Substantially Complete for purposes of calculating the
Commencement Date.

 

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The Premises shall be deemed to be “Substantially Complete” (subject to
completion of the punch-list items with respect to the Landlord’s Improvements
which do not substantially and materially interfere with Tenant’s use and
occupancy of the Premises as a whole) on the date on which: (1) Landlord files
or causes to be filed with the City and County of San Francisco (the “City”), if
required, and delivers to Tenant an architect’s notice of substantial completion
with respect to the Landlord’s Improvements, or similar written notice that the
Premises are substantially complete with respect to the Landlord’s Improvements
(if not required, this requirement shall be waived), and (2) the City issues a
temporary certificate of occupancy for the Premises or if the City does not
issue such temporary certificate of occupancy in the ordinary course of
business, then a reasonably substantial equivalent thereof”. Provided there is
no material interference with the Landlord’s construction of the Landlord’s
Improvements, Tenant shall be permitted access to the Premises, including
reasonable use of the Building’s elevators, loading docks, water, electricity,
HVAC, bathrooms, and related facilities, during reasonable business hours, in
order to ‘inspect the progress of the Landlord’s Improvements and in order to
move its personal property and trade fixtures into the Premises, except that
Tenant shall not be obligated to pay Rent or other charges under this Lease for
the period of Tenant’s early occupancy of the Premises. Immediately after the
date on which the date the Landlord’s Improvements are Substantially Complete,
Tenant shall cause an authorized representative of Tenant to inspect the
Premises with an authorized representative of Landlord to prepare a punch list
of unfinished items with respect to the Landlord’s Improvements. The authorized
representatives for Landlord and for Tenant shall execute said punch list to
indicate their approval thereof, subject to such adjustments thereto that the
parties may have. Landlord shall cause the items listed on such mutually
approved punch list to be completed as soon as reasonably practicable
thereafter. The parties shall pay for the Landlord’s Improvements as provided in
EXHIBIT G attached hereto.

 

1.1.1 The date that the Lease commences in accordance with this Article 1 shall
be referred to herein as the “Commencement Date”.

 

1.1.2 On and after the Commencement Date, the Lease shall continue in full force
and effect for the period of time specified as the Term or until this Lease is
terminated as otherwise provided herein. Landlord may deliver to Tenant a
“Commencement Date Memorandum” in the form attached hereto as EXHIBIT F
acknowledging, among other things, the (a) Commencement Date, (b) scheduled
expiration date of this Lease and (c) Tenant’s acceptance of the Premises, which
Tenant shall execute and return to Landlord within five (5) days of receipt
thereof (it being understood and agreed that the parties shall each use their
good-faith efforts to mutually agree to all matters contained in the
Commencement Date Memorandum within such five (5) day period). Failure of Tenant
to timely execute and deliver the Commencement Date Memorandum shall constitute
an acknowledgement by Tenant that the statements included in such notice are
true and correct, without exception.

 

1.1.3 Reference in this Lease to a “Lease Year” shall mean each consecutive
twelve (12) month period during the Term, with the first Lease Year commencing
on the Commencement Date; however, (a) if the Commencement Date falls on a day
other than the first day of a calendar month, the first Lease Year shall end on
the last day of the eleventh (11th) month after the Commencement Date and the
second (2nd) and each succeeding Lease Year shall

 

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commence on the first day of the next calendar month, and (b) the last Lease
Year shall end on the Expiration Date (defined below).

 

1.2 Expiration Date. The “Expiration Date” shall mean the date immediately
preceding the fifth (5th) anniversary of the Commencement Date; provided,
however, that if the Commencement Date is a date other than the first day of a
month, the Expiration Date shall be the last day of the month which is sixty
(60) months after the month in which the Commencement Date falls, unless
extended or earlier terminated pursuant to this Lease.

 

ARTICLE 2

POSSESSION

 

2.1 Lease in Full Force and Effect. Tenant agrees that, if Landlord is unable to
deliver possession of the Premises to Tenant on the scheduled Commencement Date,
this Lease shall not be void or voidable, but in such event the Term of this
Lease shall not commence until the Commencement Date as determined under in
Section 1.1 above. If the Commencement Date occurs after July 1, 2004, the Base
Rent shall be fully abated for each calendar day occurring thereafter (beginning
on July 2, 2004) through and until the occurrence of the Commencement Date;
provided, however, that if the Commencement Date is delayed as a result of
Delays Caused by Tenant, then for purposes hereof, one day shall be added to
such abatement commencement date for each day that the Premises are/were not
Substantially Complete due to any such Delays Caused by Tenant. In the event the
Commencement Date does not occur on or before September 1, 2004, then, at any
time during thirty (30) day period following such date, Tenant may terminate
this Lease upon ten (10) days written notice delivered to Landlord; provided,
however, that if the Commencement Date is delayed as a result of Delays Caused
by Tenant, then for purposes hereof, one day shall be added to such outside
terminate date for each day that the Premises are/were not Substantially
Complete due to any such Delays Caused by Tenant.

 

2.2 Acceptance by Tenant. Tenant has determined that the Premises are acceptable
for Tenant’s use and Tenant acknowledges that neither Landlord nor any broker or
agent has made any representations or warranties whatsoever in connection with
the physical condition of the Premises or their fitness for Tenant’s use upon
which Tenant has relied directly or indirectly for any purpose. Except as
expressly provided to the contrary in this Lease, Landlord shall not be required
to make any expenditure, incur any obligation, or incur any liability of any
kind whatsoever in connection with this Lease or the ownership, construction,
maintenance, operation or repair of the Premises or the Building.

 

ARTICLE 3

RENT

 

3.1 Rent. Tenant shall pay to Landlord, in lawful money of the United States of
America, at the address of Landlord designated on the signature page of this
Lease or to such other person or at such other place as Landlord may from time
to time designate in writing, the monthly base rent (the “Base Rent”) in
advance, without notice, demand, offset or deduction, on the first day of each
calendar month. Tenant shall pay the first month’s Base Rent on the date

 

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Tenant executes this Lease, and shall continue to pay the Base Rent on the first
day of each month thereafter (subject to adjustment as hereinafter provided) as
follows:

 

Months of Term

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   Base Rent/Per Square Foot

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   Base Rent/Per Month

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01-06

   $ 0.00     

07-12

   $ 24.00     

13-24

   $ 24.75     

25-36

   $ 26.00     

37-48

   $ 28.00     

49-60

   $ 30.00     

 

If the Term commences or ends on a date other than the first or last day of a
month, Base Rent shall be prorated on the basis of a thirty (30) day month.
Tenant shall pay Landlord the Rent (as hereinafter defined) due under this Lease
without any deduction or offset whatsoever by Tenant, foreseeable or
unforeseeable.

 

3.2 Additional Rent. In addition to the Base Rent, Tenant agrees to pay as
additional rental (the “Additional Rent” and together with the Base Rent, the
“Rent”) the amount of rental adjustments and all other charges required by this
Lease. All sums other than the Base Rent that Tenant is obligated to pay under
this Lease will be Additional Rent, whether or not such sums are designated as
Additional Rent. Landlord shall be entitled to exercise the same rights and
remedies upon default in the payment of Additional Rent as Landlord is entitled
to exercise with respect to defaults in the payment of monthly Base Rent.

 

3.3 Late Charge and Interest. Tenant acknowledges and agrees that the late
payment of any Rent will cause Landlord to incur additional costs, including
administration and collection costs, processing and accounting expenses, and
increased debt service (the “Delinquency Costs”). If Landlord has not received
any installment of Rent when due, or, if a grace period is applicable, within
the applicable grace period, Tenant shall pay a late charge (the “Late Charge”)
equal to five percent (5%) of the delinquent amount. Tenant agrees that the Late
Charge represents a reasonable estimate of the Delinquency Costs that will be
incurred by Landlord. In addition, Tenant shall pay interest on all delinquent
amounts from the date the amount was due, or if a grace period is applicable
from the last date of the grace period, until the date the amount is paid in
full at a rate per annum (the “Applicable Interest Rate”) equal to the lesser of
(a) the maximum interest rate permitted by law or (b) five percent (5%) above
the reference rate (the “Reference Rate”) publicly announced by Bank of America,
N.A. (or if Bank of America, N.A. ceases to exist, the largest bank then
headquartered in the State of California) (the “Bank”). If the Bank discontinues
use of the Reference Rate, then the term “Reference Rate” will mean the
announced rate charged by the Bank, from time to time instead of the Reference
Rate. Landlord and Tenant agree that it is difficult to ascertain the damage
that Landlord will suffer as a result of the late payment of any Rent and that
the Late Charge and interest are the best estimates of the damage that Landlord
will suffer in the event of late payment.

 

3.4 Storage Space. During the Term of this Lease, Landlord shall make available
up to 1,000 square feet of storage space, in the aggregate, situated in one or
more locations in the

 

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basement of the Building, for Tenant’s sole use; provided, however, that in
order to exercise such right, Tenant must elect to lease such space on a month
to month basis, subject to each party’s right to terminate the storage agreement
upon 30-day’s notice to the other party, and pursuant to an irrevocable written
notice to be delivered by Tenant to Landlord within sixty (60) days after the
Commencement Date, and by executing Landlord’s form of storage lease for such
space. Tenant shall pay to Landlord rent of $16.00 per square foot per month for
use of such storage space.

 

ARTICLE 4

RENTAL ADJUSTMENT

 

4.1 Rental Adjustment.

 

(a) For the purpose of this Lease, the following terms are defined as follows:

 

(i) Tenant’s Percentage. That portion of the Project occupied by Tenant divided
by the total rentable square footage of the Project, which result is the
following: 8.88% (“ Tenant’s Percentage”).

 

(ii) Direct Expenses Base. The amount of annual Direct Expenses that Landlord
has included in the Base Rent is equal to Tenant’s Percentage of the actual
Direct Expenses to be incurred by Landlord in calendar year 2004 (“Direct
Expenses Base”).

 

(iii) Direct Expenses. The term “Direct Expenses” shall include “Taxes” (as
hereinafter defined) and “Operating Expenses” (as hereinafter defined).

 

(A) “Taxes” means the sum of any and all real and personal property taxes and
assessments, possessory-interest taxes, service payments in lieu of such taxes
or fees, excises, transit and traffic charges, housing fund assessments, open
space charges, childcare fees, school and sewer fees or any other assessments,
levies, fees, exactions or charges, general and special, ordinary and
extraordinary, unforeseen as well as foreseen (including fees “in-lieu” of any
such tax or assessment) which are assessed, levied, charged, conferred or
imposed by any public authority upon the Project (or any real property
comprising any portion thereof) or its operations, together with all taxes,
assessments or other fees imposed by any public authority upon or measured by
any Rent or other charges payable hereunder, including any gross receipts tax or
excise tax levied by any governmental authority with respect to receipt of
rental income (other than local, state and federal partnership or corporate
income taxes measured by the net income of Landlord from all sources and other
than estate or inheritance taxes), or upon, with respect to or by reason of the
development, possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises or any portion
thereof, or documentary transfer taxes upon this transaction or any document to
which Tenant is a party creating or transferring an interest in the Premises,
together with any tax imposed in substitution, partially or totally, of any tax
previously included within the aforesaid definition or any additional tax the
nature of which was previously included within the aforesaid definition,
together with any and all costs and expenses (including, without limitation,
attorneys, administrative and expert witness fees and costs) of challenging any
of the foregoing or seeking,

 

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the reduction in or abatement, redemption or return of any of the foregoing, but
only to the extent of any such reduction, abatement, redemption or return. Taxes
shall include, without limitation, any increase in the foregoing based upon
construction of improvements or change in ownership of any or all of the
Project, related improvements or personal property. All references to Taxes
during a particular year shall be deemed to refer to taxes accrued during such
year, including supplemental tax bills regardless of when they are actually
assessed and without regard to when such taxes are payable. The obligation of
Tenant to pay for supplemental taxes shall survive the expiration or earlier
termination of this Lease. In no event shall Tenant or any Tenant Party (as
hereinafter defined) be entitled to file any property tax assessment appeal.
Tenant’s obligations for Taxes for the last full and/or partial year(s) of the
Term shall survive the expiration or early termination of the Lease.

 

(B) “Operating Expenses” means the total costs and expenses incurred by Landlord
in the operation, maintenance, repair and management of the Project and the
Common Area (as hereinafter defined) (which shall be based upon accounting
principles required by GAAP, consistently applied and implemented by Landlord
with respect to all tenants at the Building), including, but not limited to, (a)
repairs to and maintenance of the roof (and roof membrane), skylights and
exterior walls of the Building; (b) cleaning, maintenance, repair, replacement,
utility costs and landscaping of the entrances, lobbies and other public areas
of the Building, outside plaza areas, walkways, landscaped areas, driveways
necessary for access to the Premises and other common facilities designated by
Landlord from time to time for the common use of all tenants of the Project (the
“Common Area”), common driveways, outdoor lighting, walkways, landscaping, and
other costs which are allocable to the Project or the real property of which the
Premises are a part including any costs under the terms of any recorded
covenants affecting the real property or the Project; (c) the costs and premiums
relating to the insurance maintained by Landlord with respect to the Project,
including, without limitation, Landlord’s cost of any self insurance deductible
or retention; (d) service and maintenance contracts for, and the repair and
replacement of, the heating, ventilation and air-conditioning (HVAC) systems and
elevators, if any, sanitary and storm drainage systems, and maintenance, repair,
replacement, monitoring and operation of the fire/life safety system, (e)
service and maintenance contracts for security, cleaning, janitorial and
landscaping services; (f) trash collection (g) all wage and labor costs,
including fringe benefits, applicable to persons engaged in the operation,
maintenance and repair of the Project as Landlord’s agents or as independent
contractors; (h) capital improvements made to or capital assets acquired for the
Project after the Commencement Date that (1) are intended to reduce Operating
Expenses or (2) are reasonably necessary for the health and safety of the
occupants of the Project (except those that are required under any and all
applicable laws, statutes, codes, ordinances, orders, rules, regulations,
conditions of approval and requirements of all federal, state, county, municipal
and governmental authorities and all administrative or judicial orders or
decrees and all permits, licenses, approvals and other entitlements issued by
governmental entities, and rules of common law, relating to or affecting the
Project, the Premises or the Building or the use or operation thereof, whether
now existing or hereafter enacted, including, without limitation, the Americans
with Disabilities Act of 1990, 42 USC 12111 et seq. (the “ADA”) as the same may
be amended from time to time, all Environmental Laws (as hereinafter defined),
and any covenants, conditions and restrictions (“CC&Rs”), or any corporation,
committee or association formed in connection therewith, or any supplement
thereto

 

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recorded in any official or public records with respect to the Project or any
portion thereof (collectively, “Applicable Laws”), which capital costs, shall be
excluded from “Operating Expenses” and shall be Landlord’s sole cost and
expense), which capital costs, or an allocable portion thereof, shall be
amortized over the period determined by Landlord, together with interest on the
unamortized balance at the Applicable Interest Rate (as hereinafter defined);
(i) any equipment rental agreements; (j) the cost of licenses, certificates,
permits and inspections, and the cost of contesting the validity or
applicability of any governmental enactment’s which may affect Operating
Expenses; (k) payments under any easement, license, operating agreement,
declaration, restrictive covenant, underlying or ground lease (excluding rent),
or instrument pertaining to the sharing of costs by the Building; and (l) any
other costs incurred by Landlord related to the Project as a whole. Operating
Expenses shall also include all costs and fees incurred by Landlord in
connection with the management of this Lease and the Premises including the cost
of those services which are customarily performed by a property management
services company, whether performed internally or through an outside management
company. Operating Expenses shall also include an administrative fee to Landlord
for accounting and project management services relating to the Project including
the cost of those services which are customarily performed by a property
management services company, whether performed internally or through an outside
management company. If Landlord is not furnishing any particular work or service
(the cost of which, if performed by Landlord, would be included in Operating
Expenses) to a tenant who has undertaken to perform such work or service in lieu
of the performance thereof by Landlord, Operating Expenses shall be deemed to be
increased by an amount equal to the additional Operating Expenses which would
reasonable have been incurred during such period by Landlord if it had at its
own expense furnished such work or service to such tenant. In the event, during
any calendar year, including the year of the Direct Expenses Base, the Building
is less than one hundred percent (100%) occupied at all times, Operating
Expenses shall be adjusted to reflect the Operating Expenses of the Building as
though ninety-five percent (95%) were occupied at all times, and the increase or
decrease in the sums owed hereunder shall be based upon such Operating Expenses
as so adjusted.

 

(C) Notwithstanding anything contained herein to the contrary, Direct Expenses
shall not include: the cost of capital expenditures; depreciation; interest;
principal payments of mortgage and other debts of Landlord not incurred in
connection with operating the Building; costs in connection with leasing space
in the Building, including brokerage commissions and construction allowances;
costs incurred in connection with the sale, financing or refinancing of the
Building; organizational expenses associated with the creation and operation of
the entity which constitutes Landlord; any penalties or damages that Landlord
pays to Tenant under this Lease or to other tenants in the Building under their
respective leases; the expense of services provided to other tenants in the
Building for which Tenant is separately charged; attorneys’ fees and court costs
relating to enforcing leases; costs of any item to the extent Landlord has
received reimbursement from insurance or from any third party, other than
reimbursement by tenants pursuant to the Direct Expenses pass through provisions
of their leases; any costs or charges for services or supplies that were not
actually provided or furnished by Landlord to Tenant or to the Building; the
wages and benefits of any employee who does not devote substantially all of his
or her employed time to the operation and management of the Building unless such
wages and benefits are prorated to reflect time spent on operating and

 

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managing the Building vis-à-vis time spent on matters unrelated to operating and
managing the Building; compensation (including benefits) of any employee of
Landlord above the grade of Building manager, general manager or Building
engineer; rentals for leasing heating, ventilation and air conditioning systems,
elevators, or other items (except when needed in connection with normal repairs
and maintenance of the Building and/or to an ameliorate an emergency condition
in the Building) which if purchased, rather than rented, would constitute a
capital improvement not included in Operating Expenses pursuant to this Lease;
amounts paid to Landlord or to subsidiaries or affiliates of Landlord for goods
and/or services in the Building to the extent the same exceed typical costs
incurred by owners of first class office buildings in San Francisco for such
goods and/or services; any costs for which Landlord has been reimbursed or
receives a credit, refund; costs of cleanup, removal and/or remediation of any
Hazardous Materials (as defined below) in, on or under the Building required to
comply with Environmental Laws (also defined below) which are incurred as a
result of (A) the introduction by Landlord of any such Hazardous Materials in,
on or under the Building in violation of Environmental Laws, or (B) as a result
of the presence of Hazardous Materials in, on, or under the Premises as of the
Commencement Date, to the extent such Hazardous Materials are in violation of
Environmental Laws.

 

(D) Tenant hereby waives any right of notice and protest in connection with the
formation and continued existence of assessment districts. Tenant shall execute
all documents, including, but not limited to, petitions and formal waivers of
notice and protest of formation, evidencing such consent and waiver upon request
of Landlord or the City.

 

(b) Payment of Direct Expenses.

 

(i) If Tenant’s Percentage of the Direct Expenses paid or incurred by Landlord
for any calendar year exceeds the Direct Expenses Base included in Tenant’s
Rent, then Tenant shall pay such excess as Additional Rent.

 

(ii) In addition, for each year after the first calendar year, or portion
thereof, Tenant shall pay Tenant’s Percentage of Landlord’s estimate of the
amount by which Direct Expenses for that year shall exceed the Direct Expenses
Base (the “Landlord’s Estimate”). This estimated amount shall be divided into
twelve equal monthly installments. Tenant shall pay to Landlord without offset
or deduction, concurrently with the regular monthly Base Rent payment next due
following the receipt of such statement, an amount equal to one monthly
installment multiplied by the number of months from January in the calendar year
in which said statement is submitted to the month of such payment, both months
inclusive. Subsequent installments shall be payable concurrently with the
regular monthly Base Rent payments for the balance of that calendar year and
shall continue until the next calendar year’s statement is rendered.

 

(iii) As soon as reasonably practicable after the end of each calendar year,
Landlord shall provide Tenant with a statement showing the amount of Tenant’s
Percentage of Direct Expenses, the amount of Landlord’s Estimate actually paid
by Tenant and the amount of the Direct Expenses Base. Thereafter, Landlord shall
reconcile the above amounts and shall either bill Tenant for the balance due
(payable within 30 days after written notice by Landlord)

 

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or credit any overpayment by Tenant towards the next monthly installment of
Landlord’s Estimate falling due, as the case may be. For purposes of making
these calculations, in no event shall Tenant’s Percentage of the Direct Expenses
be deemed to be less than the Direct Expenses Base.

 

(c) Tenant’s obligation to pay Tenant’s Percentage of Direct Expenses shall
survive the expiration or termination of this Lease. Tenant’s Percentage of
Direct Expenses shall be paid by Tenant when due even though the Term has
expired and/or Tenant has vacated the Premises, when the final determination is
made of Tenant’s Percentage of Direct Expenses for the year in which this Lease
terminates, Tenant shall immediately pay any increase due over the estimated
expenses paid and, conversely, any overpayment made in the event said expenses
decrease shall be rebated by Landlord to Tenant, all prorated for the partial
Lease Year in which and to the date Tenant surrenders the Premises to Landlord.

 

4.2 Audit. Tenant shall have the right to review data supporting all or any
portion of any statement of Tenant’s Percentage Share of Direct Expenses and/or
to have such data audited by an independent certified public accountant, but
such audit may occur only twice during the initial Term (provided, however,
Tenant may only audit or review such documentation relating to Building
operations as are reasonably required to determine the accuracy of such
statement under generally accepted accounting standards). If any such audit
discloses that such statement has overstated the Direct Expenses by more than
five percent (5%) in the aggregate, Landlord shall reimburse Tenant for the
reasonable cost of such audit. Furthermore, if Landlord becomes aware of any
inaccuracy in any such statement, whether due to the audit or review activities
of Tenant or otherwise, Landlord shall promptly notify Tenant thereof and refund
to Tenant any overpayment of the Direct Expenses for the year to which such
statement pertains. Any errors disclosed by the review or audit shall be
promptly corrected by Landlord.

 

ARTICLE 5

SECURITY DEPOSIT

 

Upon execution of this Lease, Tenant shall deposit with Landlord the sum of
$121,280.00 (which deposit is equal to the amount of Base Rent due for the last
two months of the Term) (the “Security Deposit”). In lieu of the deposit of the
Security Deposit with Landlord, Tenant may, at its option, have issued to
Landlord an evergreen, irrevocable, transferable letter of credit issued by a
bank approved by Landlord in Landlord’s sole discretion, in the amount of the
Security Deposit, and on the further requirements, terms and conditions set
forth in EXHIBIT H hereto. The Security Deposit shall be held by Landlord as
security for the full and faithful performance by Tenant of all of Tenant’s
obligations hereunder. If Tenant defaults with respect to any provision of this
Lease, including but not limited to the provisions relating to the payment of
Rent, Landlord may, but shall not be required to, use, apply or retain all or
any part of this Security Deposit for the payment of any Rent or any other sum
in default, or for the payment of any other amount which Landlord may spend or
become obligated to spend by reason of Tenant’s default or to compensate
Landlord for any other loss or damage which Landlord may suffer by reason of
Tenant’s default. If any portion of the Security Deposit is so used or applied,
Tenant

 

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shall, upon demand, deposit cash with Landlord (or amend or replace the Letter
of Credit in accordance with EXHIBIT H, as applicable) in an amount sufficient
to restore the Security Deposit to its original amount. Tenant’s failure to do
so shall be a material breach of this Lease. If the Security Deposit is in the
form of cash, Landlord shall not be required to keep the Security Deposit
separate from its general funds, and Tenant shall not be entitled to interest
thereon. If Tenant shall fully and faithfully perform all of its obligations
under this Lease, and if Tenant is not in default under this Lease, the Security
Deposit or any balance thereof shall be returned to Tenant (or, at Landlord’s
option, to the last assignee of Tenant’s interests hereunder) after the
expiration of the Term and after Landlord after such time as any amount due from
Tenant in accordance with Article 4 hereof has been determined and paid in full.
Tenant hereby waives the provisions of Section 1950.7 of the California Civil
Code and all other provisions of law, nor or hereafter in effect, which provide
that Landlord may claim from a security deposit only those sums reasonably
necessary to remedy defaults in the payment of rent, to repair damage caused by
Tenant or to clean the Premises, it being agreed that Landlord may, in addition,
claim those sums specified in this Article 5 above and/or those sums reasonably
necessary to compensate Landlord for any other loss or damage, foreseeable or
unforeseeable, caused by the acts or omissions of Tenant or any officer,
employee, agent, contractor or invitee of Tenant. EXHIBIT H is hereby
incorporated by reference into this Article 5 as if fully restated herein

 

ARTICLE 6

USE

 

Tenant shall use the Premises for general office purposes consistent with the
character of the Building as a first-class office building and shall not use or
permit the Premises to be used for any other purpose without Landlord’s prior
written consent. Nothing contained herein shall be deemed to give Tenant any
exclusive right to such use in the Project. Nothing contained herein shall be
deemed to give Tenant any right to use any portion of the Building or the
Project for parking for Tenant or Tenant’s employees, visitors or invitees.
Tenant shall not use or occupy the Premises in violation of law or of the
certificate of occupancy issued for the Building or Project, and shall, upon
written notice from Landlord, discontinue any use of the Premises which is
declared by any governmental authority having jurisdiction to be a violation of
law or of said certificate of occupancy. Tenant shall comply with any direction
of any governmental authority having jurisdiction which shall, by reason of the
nature of Tenant’s use or occupancy of the Premises, impose any duty upon Tenant
or Landlord with respect to the Premises or with respect to the use or
occupation thereof. Tenant shall not do or permit to be done anything which will
invalidate or increase the cost of any fire, extended coverage or any other
insurance policy covering the Building and/or Project and/or property located
therein and shall comply with all rules, orders, regulations and requirements of
the Insurance Service Offices, formerly known as the Pacific Fire Rating Bureau
or any other organization performing a similar function. Tenant shall promptly,
upon demand, reimburse Landlord for any additional premium charged for such
policy by reason of Tenant’s failure to comply with the provisions of this
Article. Tenant shall not do or permit anything to be done in or about the
Premises which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Project, or injure or annoy them, or use or allow
the Premises to be used for any improper, immoral, unlawful or objectionable

 

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purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about
the Premises. Tenant shall not commit or suffer to be committed any waste in or
upon the Premises. Tenant’s use of the Premises shall be subject to and Tenant
shall comply with the CC&Rs, as the same may be amended from time to time, and
all Applicable Laws. Tenant acknowledges that there have been and may be from
time to time recorded easements and/or declarations granting or declaring
easements for parking, utilities, fire or emergency access, and other matters.
Tenant’s use of the Premises shall be subject to and Tenant shall comply with
any and all such easements and declarations provided such declarations do not
unreasonably, materially interfere with Tenant’s use and enjoyment of the
Premises as a whole. Tenant acknowledges that governmental entities with
jurisdiction over the Premises may, from time to time promulgate laws, rules,
plans and regulations affecting the use of the Premises, including, but not
limited to, traffic management plans and energy conservation plans. Tenant’s use
of the Premises shall be subject to and Tenant shall comply with any and all
such laws, rules, plans, and regulations. Tenant, at its sole cost, shall comply
with any and all federal, state or local environmental, health and/or
safety-related laws, regulations, standards, decisions of courts, ordinances,
rules, codes, orders, decrees, directives, guidelines, permits or permit
conditions, currently existing and as amended, enacted, issued or adopted in the
future which are or become applicable to Tenant, the Premises, the Building, the
Common Area or the Project (“Environmental Laws”). Tenant shall not cause or
permit any “Hazardous Materials” (as hereinafter defined) to be brought, kept or
used in or about the Premises, the Building, the Common Area or the Project by
Tenant, its agents, employees, contractors or invitees. As used herein,
“Hazardous Materials” means any chemical, substance, material, controlled
substance, object, condition, waste, living organism or combination thereof,
whether solid, semi solid, liquid or gaseous, which is or may be hazardous to
human health or safety or to the environment due to its radioactivity,
ignitability, corrosivity, reactivity, explosivity, toxicity, carcinogenicity,
mutagenicity, phytotoxicity, infectiousness or other harmful or potentially
harmful properties or effects, including, without limitation, tobacco smoke,
petroleum and petroleum products, asbestos, radon, polychlorinated biphenyls
(PCBs), refrigerants (including those substances defined in the Environmental
Protection Agency’s “Refrigerant Recycling Rule,” as amended from time to time)
and all of those chemicals, substances, materials, controlled substances,
objects, conditions, wastes, living organisms or combinations thereof which are
now or become in the future listed, defined or regulated in any manner by any
Environmental Law based upon, directly or indirectly, such properties or
effects. Notwithstanding anything contained herein to the contrary, Tenant may
from time to time handle Hazardous Materials so long as in strict compliance
with Environmental Laws.

 

ARTICLE 7

NOTICES

 

All notices, offers, requests, and other communications from any other parties
hereto to the others shall be in writing and shall be considered to have been
duly given or served if: (i) delivered personally to a partner, principal or
senior officer (i.e., vice president or higher ranking office) of the party
served; (ii) sent by first class certified or registered mail, return receipt
requested, postage prepaid; (iii) transmitted by facsimile, copy followed by
mail as required below; or (iv) deposited cost paid with a nationally
recognized, reputable overnight courier, properly addressed to either party as
set forth on the signature hereof (or to such other address as such party may
hereafter designate by written notice to the other party)’. Notices, offers,
requests and other communications shall be deemed effective upon

 

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delivery, if personally delivered, one (1) business day after being deposited
with a nationally recognized overnight air courier, two (2) business days after
mailing by certified or registered mail, or on the day of facsimile transmission
if the sending party receives transmittal confirmation from the sending
facsimile machine and deposits a copy of the notice or other communication with
a nationally recognized overnight air courier or in first class, certified or
registered mail, return receipt requested, postage prepaid, in any such case, on
the date of the transmission addressed to the addressee as set forth above, all
without regard to the actual receipt by addressee.

 

ARTICLE 8

BROKERS

 

Tenant warrants that it has had no dealings with any real estate broker or agent
in connection with the negotiation of this Lease, except CAC Group, Inc. (who
represents both Landlord and Tenant in connection with same), whose commission
shall be payable by Landlord pursuant to a separate agreement between Landlord
and CAC Group, Inc. Tenant warrants that it knows of no other real estate broker
or agent who is or might be entitled to a commission in connection with the
Lease. If Tenant has dealt with any other person or real estate broker with
respect to leasing or renting space in the Project, Tenant shall be solely
responsible for the payment of any fee due said person or firm and Tenant shall
hold Landlord free and harmless against any liability in respect thereto,
including attorneys’ fees and costs.

 

ARTICLE 9

HOLDING OVER; SURRENDER

 

9.1 Holding Over. If Tenant holds over the Premises or any part thereof after
expiration of the Term, such holding over shall, at Landlord’s option,
constitute a month-to-month tenancy, at a rent equal to (y) for the period from
the Expiration Date through the second month thereafter, one hundred fifty
percent (150%) of the greater of (a) the then fair market value of the base rent
for the Premises as determined by Landlord and (b) the Base Rent in effect
immediately prior to such holding over, and (z) thereafter, two hundred percent
(200%) of the greater of (a) the then fair market value of the base rent for the
Premises as determined by Landlord and (b) the Base Rent in effect immediately
prior to such holding over. Tenant’s holdover tenancy shall otherwise be on all
the other terms and conditions of this Lease. The provisions of this Section 9.1
shall not be construed as Landlord’s permission for Tenant to hold over.
Acceptance of Rent by Landlord following expiration or termination shall not
constitute a renewal of this Lease or extension of the Term except as
specifically set forth above. If Tenant fails to surrender the Premises upon
expiration or earlier termination of this Lease, Tenant shall indemnify and hold
Landlord harmless from and against all loss or liability resulting from or
arising out of Tenant’s failure to surrender the Premises, including, but not
limited to, any amounts required to be paid to any tenant or prospective tenant
who was to have occupied the Premises after the expiration or earlier
termination of this Lease and any related attorneys’ fees and brokerage
commissions.

 

9.2 Surrender. Upon the termination of this Lease or Tenant’s right to
possession of the Premises, Tenant will surrender the Premises broom clean,
together with all keys, in good condition and repair, reasonable wear and tear
and acts of God excepted. Tenant shall patch and

 

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fill all holes within the Premises. Tenant shall also remove all alterations or
improvements made by it’, or made by Landlord (other than the Landlord’s
Improvements) at Tenant’s request or direction, to the Premises (which removal
shall include restoration if and to the extent necessary to return the Premises
to its condition at the Commencement Date, reasonable wear and tear excluded),
unless requested not to do so (in writing) by Landlord. In no event may Tenant
remove from the Premises any mechanical or electrical systems or any wiring or
any other aspect of any systems within the Premises. Conditions existing because
of Tenant’s failure to perform maintenance, repairs or replacements shall not be
deemed “reasonable wear and tear.” Notwithstanding the foregoing, Tenant shall
not be required to remove any of the Landlord’s Improvements.

 

ARTICLE 10

TAXES ON TENANT’S PROPERTY

 

(a) Tenant shall be liable for and shall pay, at least ten (10) days before
delinquency, all taxes levied against any personal property or trade fixtures
placed by Tenant in or about the Premises. If any such taxes on Tenant’s
personal property or trade fixtures are levied against Landlord or Landlord’s
property of if the assessed value of the Premises is increased by the inclusion
therein of a value placed upon such personal property or trade fixtures of
Tenant and if Landlord, after written notice to Tenant, pays the taxes based
upon such increased assessment, which Landlord shall have the right to do
regardless of the validity thereof, but only under proper protest if requested
by Tenant, Tenant shall, upon demand, repay to Landlord the taxes so levied
against Landlord, or the portion of such taxes resulting from such increase in
the assessment.

 

(b) Landlord represents and warrants that the Landlord’s Improvements conform
with Landlord’s Project Standard. If the subsequent Improvements in the
Premises, whether installed, and/or paid for by Landlord or Tenant and whether
or not affixed to the real property so as to become a part thereof, are assessed
for real property tax purposes at a valuation higher than the valuation at which
Improvements conforming to Landlord’s “Project Standard,” in other space in the
Project are assessed, then the real property taxes and assessment levied against
the Project by reason of such excess assessed valuation shall be deemed to be
taxes levied against personal property of Tenant and shall be governed by the
provisions of Section 10(a), above. If the records of the County Assessor are
available and sufficiently detailed to serve as a basis for determining whether
said Improvements are assessed at a higher valuation than Landlord’s Project
Standard, such records shall be binding on both the Landlord and the Tenant. If
the records of the County Assessor are not available or sufficiently detailed to
serve as a basis for making said determination, the actual cost of construction
shall be used.

 

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ARTICLE 11

CONDITION OF PREMISES

 

Subject to Landlord’s completion of the Landlord’s Improvements in accordance
with the Landlord’s Work Letter annexed hereto as EXHIBIT G, Tenant hereby
agrees that the Premises shall be taken “as is”, “with all faults” and “without
any representations or warranties”, and Tenant hereby agrees and warrants that
it has investigated and inspected the condition of the Premises and the
suitability of same for Tenant’s purposes, and Tenant does hereby waive and
disclaim any objection to, cause of action based upon, or claim that its
obligations hereunder should be reduced or limited because of the condition of
the Premises, the Building or the Project or the suitability of same for
Tenant’s purposes. Tenant acknowledges that neither Landlord nor any agent nor
employee of Landlord has made any representations or warranty with respect to
the Premises, the Building, the Common Areas or the Project or with respect to
the suitability of either for the conduct of Tenant’s business and Tenant
expressly warrants and represents that Tenant has relied solely on its own
investigation and inspection of the Premises, the Building, the Common Areas and
the Project in its decision to enter into this Lease and let the Premises in the
above-described condition. The Premises shall be initially improved as provided
in, and subject to, the Landlord’s Work Letter attached hereto as EXHIBIT G and
made a part hereof. The existing leasehold improvements in the Premises as of
the date of this Lease, together with the Landlord’s Improvements (as defined in
the Landlord’s Work Letter) may be collectively referred to herein as the
“Improvements.” Subject to the completion of punch-list items with regard to the
initial Landlord’s Improvements to be constructed by Landlord, the taking of
possession of the Premises by Tenant shall conclusively establish that the
Premises, the Building, the Common Areas and the Project were at such time in
satisfactory condition. Tenant hereby waives subsection 1 of Section 1932 and
Sections 1941 and 1942 of the Civil Code of California or any successor
provision of law.

 

ARTICLE 12

ALTERATIONS

 

(a) Except for the initial Landlord’s Improvements to be made to the Premises by
Landlord, ‘Tenant shall make no alterations, additions or improvements in or to
the Premises without Landlord’s prior written consent, which consent shall not
be unreasonably withheld, delayed or conditioned, and then only by contractors
or mechanics approved by Landlord. Tenant agrees that there shall be no
construction or partitions or other obstructions which might interfere with
Landlord’s free access to mechanical installations or service facilities of the
Building or Project or interfere with the moving of Landlord’s equipment to or
from the enclosures containing said installations or facilities. All such work
shall be done at such times and in such manner as Landlord may from time to time
designate in its reasonable discretion. With regard to alterations, additions
and improvements or any other work arising from or related to this Article 12,
Landlord shall be entitled to receive an administrative/coordination fee (which
fee shall vary depending on whether or not Tenant orders the work directly from
Landlord and which fee shall not exceed three percent (3%) of the budgeted
construction costs of such alterations) sufficient to compensate Landlord for
all overhead, general conditions, fees and other costs and expenses arising from
Landlord’s involvement with such work. Tenant covenants and agrees that all work
done by Tenant shall be performed in full compliance with all laws, rules,

 

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orders, ordinances, regulations and requirements of all governmental agencies,
offices, and boards having jurisdiction, and in full compliance with the rules,
regulations and requirements of the Insurance Service Offices formerly known as
the Pacific Fire Rating Bureau, and of any similar body. Before commencing any
work, Tenant shall give Landlord at least ten days written notice of the
proposed commencement of such work and shall, if required by Landlord, secure at
Tenant’s own cost and expense, a completion and lien indemnity bond,
satisfactory to Landlord, for said work. Tenant further covenants and agrees
that any mechanic’s lien filed against the Premises or against the Building or
Project for work claimed to have been done for, or materials claimed to have
been furnished to, Tenant will be discharged by Tenant, by bond or otherwise,
within ten days after the filing thereof, at the cost and expense of Tenant.
Notwithstanding the foregoing, Tenant shall not be required to obtain Landlord’s
prior written consent for cosmetic, non-structural, non-material alterations or
improvements to the Premises (such as painting and carpeting), provided that (i)
such alterations do not include or affect any mechanical, electrical, or
plumbing work or life safety or other Building systems or the structural
integrity of the Building, (ii) the cost of any such alterations does not exceed
$20,000 in the aggregate (per annum), and (iii) such alterations shall otherwise
be performed by Tenant in accordance with the terms and provisions of this Lease
including, without limitation, this Article 12 (any alterations or improvements
meeting the foregoing criteria shall be referred to herein as “Non-Material
Alterations”).

 

(b) All articles of personal property and all business and trade fixtures,
machinery and equipment, furniture and movable partitions owned by Tenant or
installed by Tenant at its expense in the Premises shall be and remain the
property of Tenant and may be removed by Tenant at any time during the lease
term. If Tenant shall fail to remove all of its effects from the Premises upon
termination of this Lease for any cause whatsoever, Landlord may, at its option,
remove the same in any manner that Landlord shall choose, and store said effects
without liability to Tenant for loss thereof. In such event, Tenant agrees to
pay Landlord upon demand any and all expenses incurred in such removal,
including court costs and attorneys’ fees and storage charges on such effects
for any length of time that the same shall be in Landlord’s possession. Landlord
may, at its option, without notice, sell said effects, or any of the same, at
private sale and without legal process, for such price as Landlord may obtain
and apply the proceeds of such sale upon any amounts due under this Lease from
Tenant to Landlord and upon the expense incident to the removal and sale of said
effects.

 

ARTICLE 13

REPAIRS

 

13.1 Tenant. By entry hereunder and subject to completion of the construction of
the initial Landlord’s Improvements, Tenant accepts the Premises as being in
good and sanitary order, condition and repair. Tenant, at Tenant’s sole cost and
expense, shall keep, maintain and preserve the Premises in first class condition
and repair, and shall, when and if needed, at Tenant’s sole cost and expense,
make all repairs to the Premises and every part thereof, including, without
limitation, Tenant’s trade fixtures, installations, equipment and other personal
property items within the Premises; provided, however, that Tenant shall not be
obligated to make any structural changes to the Premises unless caused by Tenant
or Tenant’s alterations, and in no event shall Tenant by obligated to remove ACM
as disclosed by Landlord. All such

 

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repairs, maintenance and replacements by Tenant shall be performed in a good and
workmanlike manner. Tenant shall, upon the expiration or sooner termination of
the term hereof, surrender the Premises to Landlord in the same condition as
when received, usual and ordinary wear and tear and acts of God excepted.
Landlord shall have no obligation to alter, remodel, improve, repair, decorate
or paint the Premises or any part thereof. Tenant acknowledges, agrees and
affirms that Landlord has made no representations to Tenant respecting the
condition of the Premises or the Project. Without limiting the foregoing, Tenant
shall, at Tenant’s sole expense, be responsible for repairing any area damaged
by Tenant, Tenant’s agents, employees, invitees and visitors. All repairs and
replacements by Tenant shall be made and performed: (a) at Tenant’s cost and
expense and at such time and in such manner as Landlord may reasonably
designate, (b) by contractors or mechanics reasonably approved by Landlord, (c)
so that same shall be at least equal in quality, value and utility to the
original work or installation, (d) in a manner and using equipment and materials
that will not interfere with or impair the operations, use or occupation of the
Building or any of the mechanical, electrical, plumbing or other systems in the
Building or the Project, and (e) in accordance with the Rules and Regulations
attached hereto as EXHIBIT D and all Applicable Laws. In the event Tenant fails,
in the reasonable judgment of Landlord, to maintain and/or repair the Premises
in accordance with the obligations under the Lease, Landlord shall have the
right, but not the obligation, to enter the Premises and perform such
maintenance and/or repairs at Tenant’s sole cost and expense (including a sum
for overhead to Landlord equal to five (5%) of the cost of the maintenance,
repairs or refurbishing). Tenant shall maintain written records of maintenance
and repairs, as required by any Applicable Law, and shall use certified
technicians to perform such maintenance and repairs, as so required. Tenant
shall promptly deliver to Landlord full and complete copies of all service or
maintenance contracts entered into by Tenant for the Premises. Tenant shall bear
the cost of replacement of lamps, starters and ballasts for the lighting
fixtures within the Premises.

 

13.2 Landlord. Anything contained in Section 13.1 above to the contrary
notwithstanding, as items of Operating Expenses, Landlord shall repair and
maintain the structural portions of the Building, including the foundations and
roof structure. Landlord shall repair and maintain the basic plumbing,
elevators, life safety systems and other building systems, heating, ventilating,
air conditioning and electrical systems installed or furnished by Landlord, and
perform roof repair and maintenance to the Premises. Landlord shall not be
liable for any failure to make any such repairs or to perform any maintenance
unless such failure shall persist for an unreasonable time after written notice
of the need of such repairs or maintenance is given to Landlord by Tenant.
Landlord shall not be required to make any repair resulting from (i) any
alteration or modification to the Building or to mechanical equipment within the
Building performed by, or on behalf of, Tenant or to special equipment or
systems installed by, or on behalf of, Tenant, (ii) the installation, use or
operation of Tenant’s property, fixtures and equipment, (iii) the moving of
Tenant’s property in or out of the Building or in and about the Premises, (iv)
Tenant’s use or occupancy of the Premises in violation of Article 6 of this
Lease or in a manner not contemplated by the parties at the time of the
execution of this Lease, (v) the acts or omissions of Tenant or any employees,
agents, customers, visitors, invitees, licensees, contractors, assignees or
subtenants of Tenant (individually, a “Tenant Party” and collectively, “Tenant’s
Parties”), (vi) fire and other casualty, except as provided by Article 21 of
this Lease or (vii) condemnation, except as provided in Article 22 of this
Lease. Landlord shall have no

 

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obligation to make repairs under this Section 13.2 until a reasonable time after
(a) Landlord first becomes aware of the need for such repairs, or (b) receipt of
written notice from Tenant of the need for such repairs, whichever is earlier.
There shall be no abatement of Rent during the performance of such work. Except
for the initial Landlord’s Improvements, if any, provided for in the Landlord’s
Work Letter, Landlord shall have no obligation during the Term of this Lease to
remodel, repair, improve, decorate or paint any part of the Premises or to
clean, repair or replace carpeting or window coverings. Landlord shall not be
liable to Tenant for injury or damage that may result from any defect in the
construction or condition of the Premises, nor for any damage that may result
from interruption of Tenant’s use of the Premises during any repairs by
Landlord. Tenant waives any right to repair the Premises, the Building and/or
the Common Area at the expense of Landlord under any Applicable Laws including
without limitation Sections 1941 and 1942 of the California Civil Code.

 

Notwithstanding the foregoing, in the event that Tenant is prevented from using,
and does not use, all or any material portion of the Premises, solely due to (y)
the interruption of essential utility services (which for the purposes hereof,
shall mean only the following utility services: electricity service, HVAC
service, elevator service and water service to restrooms) or (z) the denial of
access to the Premises, and such interruption of essential utility services
and/or denial of access to the Premises is caused solely by Landlord (as opposed
to the action or inaction of any third party) (an “Abatement Event”), then
Tenant shall give Landlord written notice of such Abatement Event, and if such
Abatement Event continues for fifteen (15) consecutive business days after
Landlord’s receipt of any such notice (and Landlord shall have received notice
of each such occurrence from Tenant) (the “Eligibility Period”), then the Base
Rent and Tenant’s Percentage Share of the Direct Expenses shall be abated or
reduced, as the case may be, after expiration of the Eligibility Period for such
time, and to the extent, that Tenant continues to be so prevented from (y) using
all or any material portion of the Premises and (z) conducting its business
activities, in the proportion that the rentable area of the portion of the
Premises that Tenant is prevented from using, and does not use, bears to the
total rentable area of the Premises. If, however, Tenant reoccupies any portion
of the Premises during such period, the Rent allocable to such reoccupied
portion, based on the portion that the rentable area of such reoccupied portion
of the Premises bears to the total rentable area of the Premises, shall be
payable by Tenant from the date Tenant reoccupies such portion of the Premises.
Such right to abate Base Rent and Tenant’s Percentage Share of the Direct
Expenses shall be Tenant’s sole and exclusive remedy for rent abatement at law
or in equity for an Abatement Event; provided, however, that if Landlord, has
not cured such Abatement Event within one hundred twenty days (120) after
receipt of notice from Tenant (described above), Tenant shall have the right to
terminate this Lease during the first ten (10) business days immediately
following the end of such one hundred twenty (120) day period by delivering
written notice to Landlord within such ten (10) business day period (the
“Abatement Event Termination Notice”), and such termination shall be effective
as of a date set forth in such Abatement Event Termination Notice (the
“Abatement Event Termination Date”), which Abatement Event Termination Date
shall not be less than thirty (30) business days and not more than three (3)
calendar months following the delivery of the Abatement Event Termination
Notice. Notwithstanding the foregoing, the parties hereby acknowledge and agree
that (y) if the Premises or the Project (or any portion thereof) shall be
damaged by fire or other casualty, the terms of Article 21 shall apply and

 

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control, and (z) if the Premises or the Project (or any portion thereof) shall
be taken under power of eminent domain (or sold, transferred or conveyed in lieu
thereof), the terms of Article 22 shall apply and control (and that, in either
such case, Tenant shall have no rights under this provision).

 

ARTICLE 14

LIENS

 

Tenant shall not permit any mechanic’s, materialmen’s or other liens to be filed
against the Building or Project, nor against Tenant’s leasehold interest in the
Premises. Landlord shall have the right at all reasonable times to post and keep
posted on the Premises any notices which it deems necessary for protection from
such liens. If any such liens are filed and Tenant fails after timely notice to
immediately cause such lien to be released by bond or otherwise, Landlord may,
without waiving its rights and remedies based on such breach of Tenant and
without releasing Tenant from any of its obligations, cause such liens to be
released by any means it shall deem proper, including payments in satisfaction
of the claim giving rise to such lien. Tenant shall pay to Landlord at once,
upon notice by Landlord, any sum paid by Landlord to remove such liens, together
with interest at the maximum rate per annum permitted by law from the date of
such payment by Landlord.

 

ARTICLE 15

ENTRY BY LANDLORD AND RESERVED RIGHTS OF LANDLORD

 

Landlord shall at any and all times have the right to enter the Premises for any
lawful reason and/or to undertake the following, without limitation: to inspect
the Premises; to supply janitorial service and any service to be provided by
Landlord to Tenant hereunder; to show the Premises to prospective purchasers or
tenants (without notice to or the consent of Tenant); to post notices of
nonresponsibility, to alter, improve or repair any portion of the Premises, the
Building or Project; to install, use, maintain, repair, alter, relocate or
replace any pipes, ducts, conduits, wires, equipment or other facilities in the
common areas or the Building or Project; to grant easements on the Project,
dedicate for public use portions thereof and record covenants, conditions and
restrictions affecting the Project and/or amendments to existing CC&Rs which do
not unreasonably interfere with Tenant’s use of the Premises; change the name of
the Building; affix reasonable signs and displays; and, during the last nine (9)
months of the Term, place signs for the rental of and show the Premises to
prospective tenants, all without being deemed guilty of any eviction of Tenant
and without abatement of Rent. Landlord may, in order to carry out any of the
foregoing purposes, erect scaffolding and other necessary structures where
required by the character of the work to be performed. Landlord may take any of
the above actions so long as it does not substantially and materially interfere
with Tenant’s use and enjoyment of the Premises as a whole. Tenant hereby waives
any claim for damages for any injury or inconvenience to or interference with
Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises, and
any other loss in, upon and about the Premises. Landlord shall at all times have
and retain a key with which to unlock all doors in the Premises. Landlord shall
have the right to use any and all means which Landlord may deem proper to open
said doors in an emergency in order to obtain entry to the Premises. Any entry
to the Premises obtained by Landlord by any of said means, or otherwise, shall
not be construed or deemed to be a forcible or unlawful entry into the Premises,
or any eviction of Tenant from the Premises or any portion thereof, and any
damages

 

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caused on account thereof shall be paid by Tenant, but shall be done so in a
manner to cause as reasonably little interference with Tenant’s use of the
Premises. It is understood and agreed that no provision of this Lease shall be
construed as obligating Landlord to perform any repairs, alterations or
decorations except as otherwise expressly agreed herein by Landlord.

 

ARTICLE 16

UTILITIES AND SERVICES

 

Provided that Tenant is not in default under this Lease, Landlord agrees to
furnish or cause to be furnished to the Premises the utilities and services
described in the Standards for Utilities and Services, attached hereto as
EXHIBIT C, subject to the conditions and in accordance with the standards set
forth therein. Landlord’s failure to furnish any of the foregoing items when
such failure is caused by:

 

  (i) Accident, breakage, or repairs,

 

  (ii) Strikes, lockouts or other labor disturbance or labor dispute of any
character,

 

  (iii) Governmental regulation, moratorium or other governmental action,

 

  (iv) Inability despite the exercise of reasonable diligence to obtain
electricity, water or fuel, or by

 

  (v) Any other cause beyond Landlord’s reasonable control,

 

shall not result in any liability to Landlord. In addition, Tenant shall not be
entitled to any abatement or reduction of rent by reason of such failure, no
eviction of Tenant shall result from such failure and Tenant shall not be
relieved from the performance of any covenant or agreement in this Lease because
of such failure. In the event of any failure, stoppage or interruption thereof,
Landlord shall diligently attempt to resume service promptly.

 

ARTICLE 17

BANKRUPTCY

 

If Tenant shall file a petition in bankruptcy under any provision of the
Bankruptcy Code as then in effect, or if Tenant shall be adjudicated a bankrupt
in involuntary bankruptcy proceedings and such adjudication shall not have been
vacated within thirty (30) days from the date thereof, or if a receiver or
trustee shall be appointed of Tenant’s property and the order appointing such
receiver or trustee shall not be set aside or vacated within thirty days after
the entry thereof, or if Tenant shall assign Tenant’s estate or effects for the
benefit of creditors, or if this Lease shall, by operation of law or otherwise,
pass to any person or persons other than Tenant, then in any such event Landlord
may terminate this Lease, if Landlord so elects, with or without notice of such
election and with or without entry or action by Landlord. In such case,
notwithstanding any other provisions of this Lease, Landlord, in addition to any
and all rights and remedies allowed by law or equity, shall, upon such
termination, be entitled to recover

 

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damages in the amount provided in Section 23(b) hereof. Neither Tenant nor any
person claiming through or under Tenant or by virtue of any statute or order of
any court shall be entitled to possession of the Premises but shall surrender
the Premises to landlord. Nothing contained herein shall limit or prejudice the
right of Landlord to recover damages by reason of any such termination equal to
the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved; whether
or not such amount is greater, equal to, or less than the amount of damages
recoverable under the provisions of this Article 17.

 

ARTICLE 18

INDEMNIFICATION

 

Tenant shall indemnify, protect, defend (by counsel acceptable to Landlord) and
hold harmless Landlord and Landlord’s affiliated entities, and each of their
respective members, managers, partners, directors, officers, employees,
shareholders, lenders, agents, contractors, successors and assigns from and
against any and all claims, judgments, causes of action, damages, penalties,
costs, liabilities, and expenses, including all costs, attorneys’ fees, expenses
and liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon, arising at any time during or after the Term as a
result (directly or indirectly) of or in connection with (a) any default in the
performance of any obligation on Tenant’s part to be performed under the terms
of this Lease, or (b) Tenant’s use of the Premises, the conduct of Tenant’s
business or any activity, work or things done, permitted or suffered by Tenant
or any Tenant Party in or about the Premises, the Building, the Common Area or
other portions of the Project. The foregoing indemnity obligation shall not
apply to any and all claims, judgments, causes of action, damages, penalties,
costs, liabilities, and expenses relating to or arising out of Landlord’s sole
gross negligence or willful misconduct. The foregoing indemnity obligation shall
include, without limitation, any claim by any Tenant Party for any injury or
illness caused or alleged to be caused in whole or in part by any furniture,
carpeting, draperies, stoves or any other materials on the Premises. Tenant, as
a material part of the consideration to Landlord, hereby assumes all risk of
damage to property or injury to person in, upon or about the Premises from any
cause whatsoever, except Landlord’s sole gross negligence or willful misconduct.
The obligations of Tenant under this Article 18 shall survive the termination of
this Lease with respect to any claims or liability arising prior to such
termination.

 

ARTICLE 19

DAMAGE TO TENANT’S PROPERTY

 

Landlord or its agents shall not be liable for (i) any damage to any property
entrusted to employees of the Project, (ii) loss or damage to any property by
theft or otherwise, (iii) any injury or damage to property resulting from fire,
explosion, falling plaster, steam, gas, electricity, water or rain which may
leak from any part of the Project or from the pipes, appliances or plumbing work
therein or from the roof, street or sub-surface or from any other place or
resulting from dampness or from any other cause whatsoever. Landlord or its
agents shall not be liable for interference with light or other incorporeal
hereditaments, nor shall Landlord be liable for any damage caused by latent
defect in the Premises or in the Project. Tenant shall give prompt notice to
Landlord in case of fire or accidents in the Premises or in the Project or of
defects therein or in

 

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the fixtures or equipment. Notwithstanding anything to the contrary contained in
this Lease, Landlord shall not be liable for injury to Tenant’s business or loss
of income therefrom under any circumstances and Landlord shall not be liable for
any indirect or consequential losses or damages suffered by Tenant.

 

ARTICLE 20

INSURANCE

 

(a) Tenant shall, during the term hereof and any other period of occupancy, at
its sole cost and expense, keep in full force and effect the following
insurance:

 

(i) Standard form property insurance insuring against the perils of fire,
extended coverage, vandalism, malicious mischief, special extended coverage
(“All-Risk”) and sprinkler leakage. This insurance policy shall be upon all
property owned by Tenant, for which Tenant is legally liable or that was
installed at Tenant’s expense, and which is located in the Project including,
without limitation, furniture, fittings, installations, fixtures (other than
Tenant improvements installed by Landlord), and any other personal property in
an amount not less than ninety percent of the full replacement cost thereof. In
the event that there shall be a dispute as to the amount which comprises full
replacement cost, the decision of Landlord or any mortgagees of Landlord shall
be conclusive. This insurance policy shall also be upon direct or indirect loss
of Tenant’s earnings attributable to Tenant’s inability to use fully or obtain
access to the Premises or Project in an amount as will properly reimburse
Tenant. Such policy shall name Landlord and any mortgagees of Landlord as
insured parties, as their respective interests may appear.

 

(ii) Commercial General Liability Insurance insuring Tenant against any
liability arising out of the lease, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be in the
amount of $3,500,000 Combined Single Limit for injury to, or death of one or
more persons in an occurrence, and for damage to tangible property (including
loss of use) in an occurrence. The policy shall insure the hazards of premises
and operation, independent contractors, contractual liability (covering the
Indemnity contained in Section 18 hereof) and shall (1) name Landlord as an
additional insured, and (2) contain a cross liability provision, and (3) contain
a provision that “the insurance provided the Landlord hereunder shall be primary
and non-contributing with any other insurance available to the Landlord.”

 

(iii) Workers’ Compensation and Employer’s Liability insurance (as required by
state law).

 

(iv) Rental loss insurance in an amount equal to all unpaid Rent which would be
due for a period of twelve (12) months under the Lease. The amount of such
rental loss insurance shall be increased from time to time during the Term as
and when the Rent increases (including estimated increases in Additional Rent as
reasonably determined by Landlord).

 

(v) Any other form or forms of insurance as Tenant or Landlord or any mortgagees
of Landlord may reasonably require from time to time in form, in amounts and for

 

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insurance risks against which a prudent tenant would protect itself and provided
such insurance is commercially available.

 

(b) All policies shall be written in a form satisfactory to Landlord and shall
be taken out with insurance companies holding a General Policyholders Rating of
“A” and a Financial Rating of “X” or better, as set forth in the most current
issue of Bests Insurance Guide. Within ten days after the execution of this
Lease, Tenant shall deliver to Landlord copies of policies or certificates
evidencing the existence of the amounts and forms of coverage satisfactory to
Landlord. No such policy shall be cancelable or reducible in coverage except
after thirty days prior written notice to Landlord. Tenant shall, within ten
days prior to the expiration of such policies, furnish Landlord with renewals or
“binders” thereof, or Landlord may order such insurance and charge the cost
thereof to Tenant as additional rent. If Landlord obtains any insurance that is
the responsibility of Tenant under this Section, Landlord shall deliver to
Tenant a written statement setting forth the cost of any such insurance and
showing in reasonable detail the manner in which it has been computed.

 

(c) Landlord shall, as a cost to be included in Operating Expenses, procure and
maintain insurance covering the Project and Landlord’s ownership and operation
thereof in such types and amounts as it deems necessary or desirable in its sole
discretion, which may (but need not) include, without limitation, liability,
property damage, earthquake and/or loss of rental income coverage. The costs of
all insurance carried by Landlord shall be included in Operating Expenses.

 

ARTICLE 21

DAMAGE OR DESTRUCTION

 

If the Project is damaged by fire or other insured casualty and the insurance
proceeds have been made available therefor by the holder or holders of any
mortgages or deeds of trust covering the Premises or the Project, the damage
shall be repaired by Landlord to the extent such insurance proceeds are
available therefor and provided such repairs can, in Landlord’s sole opinion, be
completed within one hundred eighty (180) days after the necessity for repairs
as a result of such damage becomes known to Landlord, without the payment of
overtime or other premiums, and until such repairs are completed rent shall be
abated in proportion to the part of the Premises which is unusable by Tenant in
the conduct of its business (but there shall be no abatement of rent by reason
of any portion of the Premises being unusable for a period equal to one (1) day
or less). However, if the damage is due to the fault or neglect of Tenant, its
employees, agents, contractors, guests, invitees and the like, there shall be no
abatement of rent, unless and to the extent Landlord receives rental income
insurance proceeds. Upon the occurrence of any damage to the Premises, Tenant
shall assign to Landlord (or to any party designated by Landlord) all insurance
proceeds payable to Tenant under Section 20(a)(i) above; provided, however, that
if the cost of repair of improvements within the Premises by Landlord exceeds
the amount of insurance proceeds received by Landlord from Tenant’s insurance
carrier, as so assigned by Tenant, such excess costs shall be paid by Tenant to
Landlord prior to Landlord’s repair of such damage. If repairs cannot, in
Landlord’s opinion, be completed within one hundred eighty (180) days after the
necessity for repairs as a result of such damage becomes known to Landlord
without the payment of overtime or other premiums, Landlord may, at its

 

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option, either (i) make such repairs in a reasonable time and in such event this
Lease shall continue in effect and the rent shall be abated, if at all, in the
manner provided in this Article 21, or (ii) elect not to effect such repairs and
instead terminate this Lease, by notifying Tenant in writing of such termination
within sixty (60) days after Landlord learns of the necessity for repairs as a
result of damage, such notice to include a termination date giving Tenant sixty
(60) days to vacate the Premises. In addition, Landlord may elect to terminate
this Lease if the Project shall be damaged by fire or other casualty or cause,
whether or not the Premises are affected, if the damage is not fully covered,
except for deductible amounts, by Landlord’s insurance policies. Finally, if the
Premises or the Project is damaged to any substantial extent during the last
twelve (12) months of the Term, then notwithstanding anything contained in this
Article 21 to the contrary, Landlord shall have the option to terminate this
Lease by giving written notice to Tenant of the exercise of such option within
sixty (60) days after Landlord learns of the necessity for repairs as the result
of such damage. A total destruction of the Project shall automatically terminate
this Lease. Except as provided in this Article 21, there shall be no abatement
of rent and no liability of Landlord by reason of any injury to or interference
with Tenant’s business or property arising from such damage or destruction or
the making of any repairs, alterations or improvements in or to any portion of
the Project or the Premises or in or to fixtures, appurtenances and equipment
therein. Tenant understands that Landlord will not carry insurance of any kind
on Tenant’s furniture, furnishings, trade fixtures or equipment, and that
Landlord shall not be obligated to repair any damage thereto or replace the
same. Tenant acknowledges that Tenant shall have no right to any proceeds of
insurance carried by Landlord relating to property damage. With respect to any
damage which Landlord is obligated to repair or elects to repair, Tenant, as a
material inducement to Landlord entering into this Lease, irrevocably waives and
releases its rights under the provisions of Sections 1932 and 1933 of the
California Civil Code.

 

ARTICLE 22

EMINENT DOMAIN

 

If the whole of the Premises or the Project or so much thereof as to render the
balance unusable by Tenant shall be taken under power of eminent domain, or is
sold, transferred or conveyed in lieu thereof, this Lease shall automatically
terminate as of the date of such condemnation, or as of the date possession is
taken by the condemning authority, at Landlord’s option. No award for any
partial or entire taking shall be apportioned, and Tenant hereby assigns to
Landlord any award which may be made in such taking or condemnation, together
with any and all rights of Tenant now or hereafter arising in or to the same or
any part thereof; provided, however, that nothing contained herein shall be
deemed to give Landlord any interest in or to require Tenant to assign to
Landlord any award made to Tenant for the taking of personal property and trade
fixtures belonging to Tenant and removable by Tenant at the expiration of the
Term hereof as provided hereunder or for the interruption of, or damage to,
Tenant’s business, and provided, further, that Tenant may separately pursue a
claim for compensation against the condemning authority for, among other things,
Tenant’s moving and relocation expenses and Tenant’s leasehold interest, so long
as same does not effect Landlord’s award. In the event of a partial taking
described in this Article 22, or a sale, transfer or conveyance in lieu thereof,
which does not result in a termination of this Lease, the rent shall be
apportioned according to the ratio

 

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that the part of the Premises remaining useable by Tenant bears to the total
area of the Premises. Tenant hereby waives any and all rights it might otherwise
have pursuant to Section 1265.130 of the California Code of Civil Procedure.

 

ARTICLE 23

DEFAULTS AND REMEDIES

 

23.1 Event of Default. The occurrence of any one or more of the following events
shall constitute a default (an “Event of Default”) hereunder by Tenant:

 

(a) Failure or refusal to pay Base Rent, Additional Rent or any other amount to
be paid by Tenant to Landlord hereunder within five (5) calendar days when due.
Provided an Event of Default has not occurred in any prior twelve-month period,
Landlord shall deliver to Tenant written notice of the failure to pay such
amount and an Event of Default shall not have occurred under this Section
23.1(a) if payment is made within there (3) calendar days after written notice
is made;

 

(b) Except where a specific time period is otherwise set forth for Tenant’s
performance in this Lease, in which event the failure to perform by Tenant
within such time period shall be a default under this Section 23(b), and except
as set forth in items (a) above and (c) through and including (h) below, failure
to perform or observe any other covenant or condition of this Lease to be
performed or observed within thirty (30) days following written notice to Tenant
of such failure. Such thirty (30) day notice shall be in lieu of, and not in
addition to, any required under Section 1161 of the California Code of Civil
Procedure or any similar or successor law. Notwithstanding anything contained in
this Section 23.1(b) to the contrary, an Event of Default will not have occurred
under this Section 23.1(b) if Tenant within said 30-day period commences to cure
such default and diligently prosecutes said cure;

 

(c) Abandonment or vacating or failure to accept tender of possession of the
Premises or any significant portion thereof. Tenant shall be deemed to have
abandoned and/or vacated the Premises if the Premises remain substantially
vacant or unoccupied for a period of thirty (30) consecutive days; provided,
however, this Section 23.1(c) shall not apply so long as the reception or
comparable entry areas within the Premises that are visible from the elevator
lobby or multi-tenant corridor on such floor through the entry doors (when
closed) or sidelight panels shall be furnished, lighted and cleaned in a manner
that makes them appear to be occupied;

 

(d) The taking in execution or by similar process or law (other than by eminent
domain) of the estate hereby created;

 

(e) The filing by Tenant or any guarantor hereunder in any court pursuant to any
statute of a petition in bankruptcy or insolvency or for reorganization or
arrangement for the appointment of a receiver of all or a portion of Tenant’s
property; the filing against Tenant or any guarantor hereunder of any such
petition, or the commencement of a proceeding for the appointment of a trustee,
receiver or liquidator for Tenant, or for any guarantor hereunder, or of any of
the property of either, or a proceeding by any governmental authority for the
dissolution

 

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or liquidation of Tenant or any guarantor hereunder, if such proceeding shall
not be dismissed or trusteeship discontinued within thirty (30) days after
commencement of such proceeding or the appointment of such trustee or receiver;
or the making by Tenant or any guarantor hereunder of an assignment for the
benefit of creditors. Tenant hereby stipulates to the lifting of the automatic
stay in effect and relief from such stay for Landlord in the event Tenant files
a petition under the United States Bankruptcy laws, for the purpose of Landlord
pursuing its rights and remedies against Tenant and/or a guarantor of this
Lease;

 

(f) Tenant’s failure to cause to be released any mechanics liens filed against
the Premises or the Project within twenty (20) days after the date the same
shall have been filed or recorded;

 

(g) The making of any material misrepresentation or omission by Tenant or any
successor in interest of Tenant in any materials delivered by or on behalf of
Tenant to Landlord or Landlord’s lender pursuant to this Lease, provided that if
such material misrepresentation or omission is reasonably susceptible of cure,
then no Event of Default shall exist so long as Tenant cures said default within
thirty (30) days following written notice to Tenant of such default; or

 

(h) Tenant’s failure to observe or perform according to the provisions of
Articles 25 or 26 within two (2) business days after notice from Landlord.

 

All defaults by Tenant of any covenant or condition of this Lease shall be
deemed by the parties hereto to be material.

 

At the option of Landlord, in its sole and absolute discretion, if Tenant
occupies any other space in the Project (the “Other Premises”, provided that the
Premises and the Other Premises are both owned by Landlord at the time of the
default), whether by lease, sublease or assignment (in any case, an “Occupancy
Agreement”), the occurrence of an Event of Default hereunder shall also be a
default or event of default under the Occupancy Agreement and a default or event
of default under such Occupancy Agreement shall be an Event of Default
hereunder.

 

23.2. Remedies.

 

23.2.1 Termination. In the event of the occurrence of any Event of Default,
Landlord shall have the right to give a written termination notice to Tenant
(which notice shall be in lieu of any notice required by California Code of
Civil Procedure Section 1161, et seq.) and, on the date specified in such
notice, this Lease shall terminate unless on or before such date all arrears of
Rent and all other sums payable by Tenant under this Lease and all costs and
expenses incurred by or on behalf of Landlord hereunder shall have been paid by
Tenant and all other Events of Default at the time existing shall have been
fully remedied to the satisfaction of Landlord.

 

23.2.2 Repossession. Following termination, without prejudice to other remedies
Landlord may have, Landlord may (i) peaceably re-enter the Premises upon
voluntary surrender

 

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by Tenant or remove Tenant therefrom and any other persons occupying the
Premises, using such legal proceedings as may be available; (ii) repossess the
Premises or relet the Premises or any part thereof for such term (which may be
for a term extending beyond the Term), at such rental and upon such other terms
and conditions as Landlord in Landlord’s sole discretion shall determine, with
the right to make reasonable alterations and repairs to the Premises; and (iii)
remove all personal property therefrom.

 

23.2.3 Unpaid Rent. Landlord shall have all the rights and remedies of a
landlord provided by Applicable Law, including the right to recover from Tenant:
(a) the worth, at the time of award, of the unpaid Rent that had been earned at
the time of termination, (b) the worth, at the time of award, of the amount by
which the unpaid Rent that would have been earned after the date of termination
until the time of award exceeds the amount of loss of rent that Tenant proves
could have been reasonably avoided, (c) the worth, at the time of award, of the
amount by which the unpaid Rent for the balance of the Term after the time of
award exceeds the amount of the loss of rent that Tenant proves could have been
reasonably avoided, and (d) any other amount, and court costs, necessary to
compensate Landlord for all detriment proximately caused by Tenant’s default.
The phrase “worth, at the time of award,” as used in (a) and (b) above, shall be
computed at the Applicable Interest Rate, and as used in (c) above, shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%).

 

23.2.4 Continuation. Even though an Event of Default may have occurred, this
Lease shall continue in effect for so long as Landlord does not terminate
Tenant’s right to possession; and Landlord may enforce all of Landlord’s rights
and remedies under this Lease, including the remedy described in California
Civil Code Section 1951.4 (“lessor” may continue the Lease in effect after
“lessee’s” breach and abandonment and recover Rent as it becomes due, if
“lessee” has the right to sublet or assign, subject only to reasonable
limitations) to recover Rent as it becomes due. Landlord, without terminating
this Lease, may, during the period Tenant is in default, enter the Premises and
relet the same, or any portion thereof, to third parties for Tenant’s account
and Tenant shall be liable to Landlord for all costs Landlord incurs in
reletting the Premises, including, without limitation, brokers’ commissions, and
expenses of remodeling the Premises and like costs. Reletting may be for a
period shorter or longer than the remaining Term. Tenant shall continue to pay
the Rent on the date the same is due. No act by Landlord hereunder, including
acts of maintenance, preservation or efforts to lease the Premises or the
appointment of a receiver upon application of Landlord to protect Landlord’s
interest under this Lease, shall terminate this Lease unless Landlord notifies
Tenant that Landlord elects to terminate this Lease. In the event that Landlord
elects to relet the Premises, the rent that Landlord receives from reletting
shall be applied to the payment of, first, any indebtedness from Tenant to
Landlord other than Base Rent and Additional Rent; second, all costs, including
maintenance, incurred by Landlord in reletting; and, third, Base Rent and
Additional Rent under this Lease. After deducting the payments referred to
above, any sum remaining from the rental Landlord receives from reletting shall
be held by Landlord and applied in payment of future Rent as Rent becomes due
under this Lease. In no event shall Tenant be entitled to any excess rent
received by Landlord. If, on the date Rent is due under this Lease, the rent
received from the reletting is less than the Rent due on that date, Tenant shall
pay to Landlord, in addition to the

 

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remaining Rent due, all costs, including maintenance, which Landlord incurred in
reletting the Premises that remain after applying the rent received from
reletting as provided hereinabove. So long as this Lease is not terminated,
Landlord shall have the right to remedy any default of Tenant, to maintain or
improve the Premises, to cause a receiver to be appointed to administer the
Premises and new or existing subleases and to add to the Rent payable hereunder
all of Landlord’s reasonable costs in so doing, including without limitation,
attorney’s fees and costs, with interest at the Applicable Interest Rate from
the date of such expenditure. Landlord shall have no duty to relet the Premises
so long as it has other unleased space available in the Project.

 

23.2.5 Cumulative. Each right and remedy of Landlord provided for herein or now
or hereafter existing at law, in equity, by statute or otherwise shall be
cumulative and shall not preclude Landlord from exercising any other rights or
remedies provided for in this Lease or now or hereafter existing at law or in
equity, by statute or otherwise. No payment by Tenant of a lesser amount than
the Rent nor any endorsement on any check or letter accompanying any check or
payment as Rent shall be deemed an accord and satisfaction of full payment of
Rent; and Landlord may accept such payment without prejudice to Landlord’s right
to recover the balance of such Rent or to pursue other remedies.

 

23.3 Landlord Default. Landlord shall not be in default under this Lease unless
Landlord fails to perform obligations required of Landlord within sixty (60)
days after written notice is delivered by Tenant to Landlord and to the holder
of any mortgages or deeds of trust (collectively, “Lender”) covering the
Premises whose name and address shall have theretofore been furnished to Tenant
in writing, specifying the obligation which Landlord has failed to perform;
provided, however, that if the nature of Landlord’s obligation is such that more
than sixty (60) days are required for performance, then Landlord shall not be in
default if Landlord or Lender commences performance within such sixty (60) day
period and thereafter diligently prosecutes the same to completion. In the event
of any default, breach or violation of Tenant’s rights under this Lease by
Landlord, Tenant’s exclusive remedies shall be an action for specific
performance or action for actual damages. Without limiting any other waiver by
Tenant which may be contained in this Lease, Tenant hereby waives the benefit of
any laws granting it the right to perform Landlord’s obligation, or the right to
terminate this Lease on account of any Landlord default.

 

ARTICLE 24

ASSIGNMENT AND SUBLETTING

 

24.1 Tenant shall not voluntarily assign or encumber its interest in this Lease
or in the Premises, or sublease all or any part of the Premises, or allow any
other person or entity to occupy or use all or any part of the Premises, without
first obtaining Landlord’s prior written consent, which consent shall not be
unreasonably withheld, delayed, or conditioned. Any consent to sublease,
assignment or other transfer of part or all of Tenant’s interest in the Premises
shall be effected on forms either supplied by Landlord and/or its legal counsel
or reasonably approved by Landlord and/or its legal counsel. Any assignment,
encumbrance or sublease without Landlord’s prior written consent shall be
voidable, at Landlord’s election, and shall constitute an Event of Default and
at the option of the Landlord shall result in a termination of this Lease. No
consent to assignment, encumbrance, or sublease shall constitute a further
waiver of the provisions of this

 

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Section. Tenant shall notify Landlord in writing of Tenant’s intent to sublease,
encumber or assign this Lease and Landlord shall, within fifteen (15) business
days of receipt of such written notice (provided such period shall not begin to
toll until Landlord has received all backup materials and information expressly
required hereunder), elect one of the following:

 

(a) Consent to such proposed assignment, encumbrance or sublease;

 

(b) Refuse such consent, which refusal shall be on reasonable grounds; or

 

(c) During the last 12 months of the then applicable Term of the Lease,
recapture the entire Premises, or at Landlord’s election, such part as Tenant
desires to sublease or assign, in the sole and absolute discretion of Landlord.

 

24.2 As a condition for granting its consent to any assignment, encumbrance or
sublease, twenty-one (21) days prior to any anticipated assignment or sublease
Tenant shall give Landlord written notice (the “Assignment Notice”), which shall
set forth the name, address and business of the proposed assignee or sublessee,
information (including references) concerning the character, ownership, and
financial condition of the proposed assignee or sublessee, and the Assignment
Date, any ownership or commercial relationship between Tenant and the proposed
assignee or sublessee, and the consideration of all other material terms and
conditions of the proposed assignment or sublease, all in such detail as
Landlord shall reasonably require. If Landlord requests additional detail, the
Assignment Notice shall not be deemed to have been received until Landlord
receives such additional detail, and Landlord may withhold consent to any
assignment or sublease until such additional detail is provided to it. Further,
in the case of any assignment, or in the case of any sublease following the
occurrence of an Event of Default hereunder, Landlord may require that the
assignee or sublessee, as applicable, remit directly to Landlord on a monthly
basis, all monies due to Tenant by said assignee or sublessee, as applicable.

 

24.3 The consent by Landlord to any assignment or subletting shall not be
construed as relieving Tenant or any assignee of this Lease or sublessee of the
Premises from obtaining the express written consent of Landlord to any further
assignment or subletting or as releasing Tenant or any assignee or sublessee of
Tenant from any liability or obligation hereunder whether or not then accrued.
Regardless of whether or not Landlord shall consent to an assignment or
sublease, Tenant shall pay Landlord all of Landlord’s attorneys’ fees and
administrative costs incurred in connection with evaluating any Assignment
Notice immediately upon demand, not to exceed $3,500 in connection with each
such transaction. This Section shall be fully applicable to all further sales,
hypothecations, transfers, assignments and subleases of any portion of the
Premises by any successor or assignee of Tenant, or any sublessee of the
Premises.

 

24.4 The assignment, sale or transfer of a twenty-five (25%) interest in Tenant
shall be deemed an assignment requiring Landlord’s consent hereunder.
Notwithstanding the foregoing, Landlord shall consent to the assignment, sale or
transfer if the Assignment Notice states that Tenant desires to assign the Lease
to any entity into which Tenant is merged, with which Tenant is consolidated or
which acquires all or substantially all of the assets of Tenant, provided that
the assignee is reputable, the assignee first executes, acknowledges and
delivers to Landlord an

 

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agreement whereby the assignee agrees to be bound by all of the covenants and
agreements in this Lease which Tenant has agreed to keep, observe or perform,
that the assignee agrees that the provisions of this Section shall be binding
upon it as if it were the original Tenant hereunder and that the assignee shall
have a net worth (determined in accordance with generally accepted accounting
principles consistently applied) immediately after such assignment which is at
least equal to the net worth (as so determined) of Tenant at the commencement of
this Lease.

 

24.5 Except as provided above, Landlord’s consent to any sublease shall not be
unreasonably withheld, delayed or conditioned. If for any proposed assignment or
sublease Tenant receives rent or other consideration attributable to Tenant’s
leasehold interest, either initially or over the term of the assignment or
sublease, in excess of the Rent called for hereunder or, in case of the sublease
of a portion of the Premises, in excess of such rent fairly allocable to such
portion, Tenant shall pay to Landlord as Additional Rent hereunder fifty percent
(50%) of the excess of each such payment of rent or other consideration received
by Tenant promptly after its receipt, less (a) in the case of a subletting: (1)
the cost of reasonable leasehold improvements or tenant improvements made to the
Premises at Tenant’s cost, amortized over the balance of the term of this Lease,
(2) any reasonable rent concessions or free rent given and (3) real estate
commissions, and (b) in the case of an assignment: (1) any reasonable tenant
improvements allowances, (2) any reasonable rent concessions or free rent given,
and (3) real estate commissions. Landlord’s waiver or consent to any assignment
or subletting shall not relieve Tenant from any obligation under the Lease. For
the purpose of this Section, the Rent for each square foot of floor space in the
Premises shall be deemed equal. Notwithstanding anything to the contrary in this
Lease, if Tenant or any proposed transferee claims that Landlord has
unreasonably withheld or delayed its consent under this Article 24 or otherwise
has breached or acted unreasonably under this Article 24, their sole remedies
shall be a declaratory judgment and an injunction for the relief sought without
any monetary damages, and Tenant hereby waives all other remedies, including,
without limitation, any right at law or equity to terminate this Lease, on its
own behalf and, to the extent permitted under all applicable laws, on behalf of
the proposed transferee.

 

ARTICLE 25

SUBORDINATION; MORTGAGEE PROTECTION

 

25.1 Subordination. This Lease shall be subject and subordinate to all ground
leases, master leases and the lien of all mortgages and deeds of trust which now
or hereafter affect the Premises or the Project or Landlord’s interest therein,
the CC&Rs and all amendments thereto, all without the necessity of Tenant’s
executing further instruments to effect such subordination, provided that
Landlord’s lender provide Tenant with a subordination, non-disturbance and
attornment agreement in substantially the form of EXHIBIT I attached hereto or
otherwise in form, substance and scope reasonably acceptable to Landlord and
Tenant. If requested, Tenant shall execute and deliver to Landlord within ten
(10) days after Landlord’s request whatever documentation that may reasonably be
required to further effect the provisions of this Section including, without
limitation, a Subordination, Nondisturbance and Attornment Agreement in such
form as may be required by Landlord’s lender. Should any the holder of a
mortgage or deed of trust request that this Lease and Tenant’s rights hereunder
be made superior, rather than subordinate, to the mortgage or deed of trust,
then Tenant will, within ten (10) days after written

 

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request, execute and deliver such agreement as may be required by such holder in
order to effectuate and evidence such superiority of the Lease to the mortgage
or deed of trust.

 

25.2 Attornment. Tenant hereby agrees that Tenant will recognize as its landlord
under this Lease and shall attorn to any person succeeding to the interest of
Landlord in respect of the land and the buildings governed by this Lease upon
any foreclosure of any mortgage upon such land or buildings or upon the
execution of any deed in lieu of foreclosure in respect to such deed of trust.
If requested, Tenant shall execute and deliver an instrument or instruments
confirming its attornment as provided for herein; provided, however, that no
such beneficiary or successor- in-interest shall be bound by any payment of Base
Rent for more than one (1) month in advance, or any amendment or modification of
this Lease made without the express written consent of such beneficiary where
such consent is required under applicable loan documents.

 

25.3 Mortgagee Protection. Tenant agrees to give Landlord’s lender or any holder
of any mortgage or deed of trust secured by the Project, by registered or
certified mail or nationally recognized overnight delivery service, a copy of
any notice of default served upon the Landlord by Tenant, provided that, prior
to such notice, Tenant has been notified in writing (by way of service on Tenant
of a copy of assignment of rents and leases or otherwise) of the address of such
lender or such holder of a mortgage or deed of trust. Tenant further agrees that
if Landlord shall have failed to cure such default within sixty (60) days after
such notice to Landlord (or if such default cannot be cured or corrected within
that time, then such additional time as may be necessary if Landlord has
commenced within such sixty (60) day period and is diligently pursuing the
remedies or steps necessary to cure or correct such default), then Landlord’s
lender or the holder of any mortgage or deed of trust shall have an additional
ninety (90) days within which to cure or correct such default (or if such
default cannot be cured or corrected within that time, then such additional time
as may be necessary if such holder of any mortgage or deed of trust has
commenced within such ninety (90) day period and is diligently pursuing the
remedies or steps necessary to cure or correct such default). Notwithstanding
the foregoing, in no event shall Landlord’s lender or any holder of any mortgage
or deed of trust have any obligation to cure any default of the Landlord.

 

ARTICLE 26

ESTOPPEL CERTIFICATE

 

(a) Within ten (10) business days following any written request which Landlord
or Landlord’s lender may make from time to time, Tenant shall duly execute (and
if required by Landlord or Landlord’s lender, have such signature acknowledged)
and deliver to Landlord and Landlord’s lender, an estoppel certificate in
writing certifying the following information (but not limited to the following
information in the event further information is requested by Landlord): (i) 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 modified, is
in full force and effect); (ii) the dates to which the rental and other charges
are paid in advance, if any; (iii) the amount of Tenant’s Security Deposit, if
any; and (iv) acknowledging that there are not, to Tenant’s knowledge, any
uncured defaults on the part of Landlord hereunder, and no events or conditions
then in existence which, with the passage of time or notice or both, would
constitute a default on the part of Landlord hereunder, or specifying such
defaults, events or

 

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conditions, if any are claimed. Landlord and Tenant intend that any statement
delivered pursuant to this Article 26 may be relied upon by any mortgagee,
beneficiary, purchaser or prospective purchaser of the Building or Project or
any interest therein.

 

(b) ‘Tenant hereby irrevocably appoints Landlord as Tenant’s attorney-in-fact
and in Tenant’s name, place and stead to execute any and all documents described
in this Article 26 if Tenant fails to do so within the specified time period.

 

If Landlord’s lender should require that this Lease be amended (other than in
the description of the Premises, the Term, the Permitted Use, the Rent or as
will substantially, materially and adversely affect the rights of Tenant
hereunder or materially and adversely increase the obligations of Tenant under
this Lease), Landlord shall give written notice thereof to Tenant, which notice
shall be accompanied by a Lease supplement embodying such amendments. Tenant
shall, within ten (10) days after the receipt of Landlord’s notice, execute and
deliver to Landlord the tendered Lease supplement. If Tenant fails to deliver to
Landlord the tendered Lease supplement within ten (10) days after receipt of
Landlord’s notice, Tenant shall be deemed to have given Landlord a power of
attorney to execute such supplement on behalf of Tenant.

 

ARTICLE 27

SIGNAGE

 

Provided Tenant is not in default hereunder, Tenant, at Tenant’s sole cost and
expense, shall have the right to a building standard number of lines for the
directory board in the Building lobby and building standard suite entrance
signage during the Term. Tenant shall have no other right to maintain a Tenant
identification sign in any other location in, on or about the Premises or the
Building and shall not display or erect any Tenant identification sign, display
or other advertising material that is visible from the exterior of the Building.
All signs shall comply with rules and regulations set forth by Landlord as may
be modified from time to time.

 

ARTICLE 28

RULES AND REGULATIONS

 

Tenant shall faithfully observe and comply with the “Rules and Regulations,” a
copy of which is attached hereto and marked EXHIBIT D, and all reasonable
modifications thereof and additions thereto from time to time put into effect by
Landlord; provided, however, that Landlord uniformly enforces the Rules and
Regulations and amendments thereto in a non-discriminatory manner. Landlord
shall not be responsible to Tenant for the violation or non-performance by any
other tenant or occupant of the Project of any of said Rules and Regulations.

 

ARTICLE 29

CONFLICT OF LAWS

 

This Lease shall be governed by and construed pursuant to the laws of the State
of California.

 

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ARTICLE 30

SUCCESSORS AND ASSIGNS

 

Except as otherwise provided in this Lease, all of the covenants, conditions and
provisions of this Lease shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, personal representatives,
successors and assigns.

 

ARTICLE 31

SURRENDER OF PREMISES

 

The voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation thereof, shall not work a merger, and shall, at the option of
Landlord, operate as an assignment to it of any or all subleases and
subtenancies.

 

ARTICLE 32

ATTORNEYS’ FEES

 

(a) If Landlord should bring suit for possession of the Premises, for the
recovery of any sum due under this Lease, or because of the breach of any
provisions of this Lease, or for any other relief against Tenant hereunder, or
in the event of any other litigation between the parties with respect to this
Lease, then all costs and expenses, including reasonable attorneys’ fees,
incurred by the prevailing party therein shall be paid by the other party, which
obligation on the part of the other party shall be deemed to have accrued on the
date of the commencement of such action and shall be enforceable whether or not
the action is prosecuted to judgment.

 

(b) Should Landlord, without fault on Landlord’s part, be made a party to any
litigation instituted by Tenant or by any third party against Tenant, or by or
against any person holding under or using the Premises by license of Tenant, or
for the foreclosure of any lien for labor or material furnished to or for Tenant
or any such other person or otherwise arising out of or resulting from any act
or transaction of Tenant or of any such other person, Tenant covenants to save
and hold Landlord harmless from any judgment rendered against Landlord or the
Premises or any part thereof and from all costs and expenses, including
reasonable attorneys’ fees and costs incurred by Landlord in connection with
such litigation, except for such claims or actions arising out of or relating to
Landlord’s sole gross negligence or willful misconduct.

 

ARTICLE 33

PERFORMANCE BY TENANT

 

All covenants and agreements to be performed by Tenant under any of the terms of
this Lease shall be performed by Tenant at Tenant’s sole cost and expense and
without any abatement of rent except as otherwise provided under this Lease. If
Tenant shall fail to pay any sum of money owed to any party other than Landlord,
for which it is liable hereunder or if Tenant shall fail to perform any other
act on its part to be performed hereunder and such failure shall continue for
ten (10) days after notice thereof by Landlord, Landlord may, without waiving or
releasing Tenant from obligations of Tenant, but shall not be obligated to, make
any such payment or perform any such other act to be made or performed by
Tenant. All sums so paid by Landlord

 

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and all necessary incidental costs together with interest thereon at the maximum
rate permissible by law, from the date of such payment by Landlord, shall be
payable to Landlord on demand. Tenant covenants to pay any such sums and
Landlord shall have (in addition to any other right or remedy of Landlord) all
rights and remedies in the event of the non-payment thereof by Tenant as are set
forth in Article 23 hereof.

 

ARTICLE 34

INTENTIONALLY DELETED

 

ARTICLE 35

DEFINITION OF LANDLORD

 

The term “Landlord”, as used in this Lease, so far as covenants or obligations
on the part of Landlord are concerned, shall be limited to mean and include only
the owner or owners, at the time in question, of the fee title of the Premises
or the lessees under any ground lease, if any. In the event of any transfer,
assignment or other conveyance or transfers of any such title, Landlord herein
named (and in case of any subsequent transfers or conveyances, the then grantor)
shall be automatically freed and relieved from and after the date of such
transfer, assignment or conveyance of all liability as respects the performance
of any covenants or obligations on the part of Landlord contained in this Lease
thereafter to be performed. Without further agreement, the transferee of such
title shall be deemed to have assumed and agreed to observe and perform any and
all obligations of Landlord hereunder, during its ownership of the Premises.
Landlord may transfer its interest in the Premises without the consent of Tenant
and such transfer or subsequent transfer shall not be deemed a violation on
Landlord’s part of any of the terms and conditions of this Lease.

 

ARTICLE 36

WAIVER

 

The waiver by Landlord of any breach of any term, covenant or condition herein
contained shall not be deemed to be a waiver of any subsequent breach of the
same or any other term, covenant or condition herein contained, nor shall any
custom or practice which may grow up between the parties in the administration
of the terms hereof be deemed a waiver of or in any way affect the right of
Landlord to insist upon the performance by Tenant in strict accordance with said
terms. The subsequent acceptance of Rent hereunder by Landlord shall not be
deemed to be a waiver of any preceding breach by Tenant or any term, covenant or
condition of this Lease, other than the failure of Tenant to pay the particular
rent so accepted, regardless of Landlord’s knowledge of such preceding breach at
the time of acceptance of such rent. Without limiting the generality of the
foregoing, the acceptance of Rent hereunder by Landlord shall not be a waiver of
any preceding breach by Tenant of any provision hereof, other than the failure
of Tenant to pay the particular Rent so accepted. Tenant agrees and acknowledges
that the foregoing provides actual and sufficient knowledge to Tenant, pursuant
to California Code of Procedure Section 1161.1(c), that acceptance of a partial
rent payment by Landlord does not constitute a waiver of any of Landlord’s
rights under said Section 1161.1(c).

 

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ARTICLE 37

IDENTIFICATION OF TENANT

 

If, at any time during the term of this Lease, more than one person executes
this Lease as Tenant (or becomes a successor-in-interest to the original Tenant
hereunder):

 

(i) Each of them is jointly and severally liable for the keeping, observing and
performing of all of the terms, covenants, conditions, provisions and agreements
of this Lease to be kept, observed and performed by Tenant, and

 

(ii) The term “Tenant” as used in this Lease shall mean and include each of them
jointly and severally. The act of or notice from, or notice to refund to, or the
signature of any one or more of them, with respect to the tenancy of this Lease,
including, but not limited to any renewal, extension, expiration, termination or
modification of this Lease, shall be binding upon each and all of the persons
executing this Lease as Tenant with the same force and effect as if each and all
of them had so acted or so given or received such notice or refund or so signed.

 

ARTICLE 38

TERMS AND HEADINGS

 

The words “Landlord” and “Tenant” as used herein shall include the plural as
well as the singular. Words used in any gender include other genders. The
Section headings of this Lease are not a part of this Lease and shall have no
effect upon the construction or interpretation of any part hereof.

 

ARTICLE 39

EXAMINATION OF LEASE

 

Submission of this instrument for examination or signature by Tenant does not
constitute a reservation of or option for lease, and it is not effective as a
lease or otherwise until execution by and delivery to both Landlord and Tenant.

 

ARTICLE 40

TIME

 

Time is of the essence with respect to the performance of every provision of
this Lease in which time or performance is a factor.

 

ARTICLE 41

PRIOR AGREEMENT: AMENDMENTS

 

This Lease contains all of the agreements of the parties hereto with respect to
any matter covered or mentioned in this Lease, and no prior agreement or
understanding pertaining to any such matter shall be effective for any purpose.
No provisions 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.

 

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ARTICLE 42

SEPARABILITY

 

Any provision of this Lease which shall prove to be invalid, void or illegal in
no way affects, impairs or invalidates any other provision hereof, any such
other provisions shall remain in full force and effect.

 

ARTICLE 43

RECORDING

 

Neither Landlord nor Tenant shall record this Lease nor a short form memorandum
thereof without the consent of the other.

 

ARTICLE 44

CONSENTS

 

Unless otherwise expressly set forth herein, whenever the consent of either
party is required hereunder such consent shall not be unreasonably withheld,
delayed or conditioned.

 

ARTICLE 45

LIMITATION ON LIABILITY

 

In consideration of the benefits accruing hereunder, Tenant and all successors
and assigns covenant and agree that, in the event of any actual or alleged
failure, breach or default hereunder by Landlord:

 

(a) The sole and exclusive remedy shall be against the Landlord’s interest in
the Project;

 

(b) No partner, member, shareholder, officer, agent or employee of Landlord
shall be sued or named as a party in any suit or action (except as may be
necessary to secure jurisdiction of Landlord);

 

(c) No service or process shall be made against any partner, member,
shareholder, officer, agent or employee of Landlord (except as may be necessary
to secure jurisdiction of Landlord);

 

(d) No partner, member, shareholder, officer, agent or employee of Landlord
shall be required to answer or otherwise plead to any service of process;

 

(e) No judgment will be taken against any partner, member, shareholder, officer,
agent or employee of Landlord;

 

(f) Any judgment taken against any partner, member, shareholder, officer, agent
or employee of Landlord may be vacated and set aside at any time nunc pro tunc;

 

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(g) No writ of execution will ever be levied against the assets of any partner,
officer, agent or employee of Landlord.

 

ARTICLE 46

RIDERS

 

Clauses, plats and riders, if any, signed by Landlord and Tenant and affixed to
this Lease are a part hereof.

 

ARTICLE 47

EXHIBITS AND SCHEDULES

 

All Exhibits and Schedules attached hereto are incorporated into this Lease.

 

ARTICLE 48

INTENTIONALLY OMITTED

 

ARTICLE 49

INTENTIONALLY OMITTED

 

ARTICLE 50

HAZARDOUS MATERIALS

 

Tenant shall not cause nor permit, nor allow any Tenant Party to cause or
permit, any Hazardous Materials to be brought upon, stored, manufactured,
generated, blended, handled, recycled, treated, disposed or used on, under or
about the Premises, the Building, the Common Area or the Project, except for
routine office, and janitorial supplies and materials installed and used by
Tenant to operate in the Premises in usual and customary quantities stored, used
and disposed of in strict accordance with all applicable Environmental Laws (all
of which must be disclosed in writing to Lender prior to such storage, use
and/or disposal by Tenant). Tenant and Tenant’s Parties shall comply with all
Environmental Laws and promptly notify Landlord in writing of the violation of
any Environmental Law or presence of any Hazardous Materials, other than office
and janitorial supplies as permitted above, on the Premises. Landlord shall have
the right to enter upon and inspect the Premises and to conduct tests,
monitoring and investigations. If such tests indicate the presence of any
environmental condition caused or exacerbated by Tenant or any Tenant Party or
arising during Tenant’s or any Tenant Party’s occupancy, Tenant shall reimburse
Landlord for the cost of conducting such tests. The phrase “environmental
condition” shall mean any adverse condition relating to any Hazardous Materials
or the environment, including surface water, groundwater, drinking water supply,
land, surface or subsurface strata or the ambient air and includes air, land and
water pollutants, noise, vibration, light and odors. In the event of any such
environmental condition, Tenant shall promptly take any and all steps necessary
to rectify the same to the satisfaction of the applicable agencies and Landlord,
or shall, at Landlord’s election, reimburse Landlord, upon demand, for the cost
to Landlord of performing rectifying work. The reimbursement shall be paid to
Landlord in advance of Landlord’s performing such work, based upon Landlord’s
reasonable estimate of the cost thereof; and upon completion of such work by
Landlord, Tenant shall pay to Landlord any

 

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shortfall within thirty (30) days after Landlord bills Tenant therefore or
Landlord shall within thirty (30) days refund to Tenant any excess deposit, as
the case may be. Tenant shall indemnify, protect, defend (by counsel acceptable
to Landlord) and hold harmless Landlord and Landlord’s affiliated entities, and
each of their respective members, managers, partners, directors, officers,
employees, shareholders, lenders, agents, contractors, along with the successors
and assigns of the foregoing, (individually and collectively, “Indemnitees”)
from and against any and all claims, judgments, causes of action, damages,
penalties, fines, taxes, costs, liabilities, losses and expenses arising at any
time during or after the Term as a result (directly or indirectly) of or in
connection with (a) Tenant and/or any Tenant Party’s breach of this Article 50
or (b) the presence of Hazardous Materials on, under or about the Premises or
other property as a result (directly or indirectly) of Tenant’s and/or any
Tenant Party’s activities, or failure to act, in connection with the Premises.
This indemnity shall include, without limitation, the cost of any required or
necessary repair, cleanup or detoxification, and the preparation and
implementation of any closure, monitoring or other required plans, whether such
action is required or necessary prior to or following the termination of this
Lease. Neither the written consent by Landlord to the presence of Hazardous
Materials on, under or about the Premises, nor the strict compliance by Tenant
with all Environmental Laws, shall excuse Tenant from Tenant’s obligation of
indemnification pursuant hereto. Tenant’s obligations pursuant to the foregoing
indemnity shall survive the expiration or termination of this Lease.

 

ARTICLE 51

ASBESTOS DISCLOSURE

 

Landlord has advised Tenant that there is asbestos-containing material (“ACM”)
in the Building. Attached hereto as EXHIBIT E is a disclosure statement
regarding ACM in the Building. Tenant acknowledges that such notice complies
with the requirements of Section 25915 of the California Health and Safety Code.

 

ARTICLE 52

COUNTERPARTS

 

This Lease may be executed in two or more fully or partially executed
counterparts, any one or more of which may be executed and delivered by
facsimile transmission, each of which will be deemed an original binding the
signer thereof against the other signing parties, but all counterparts together
will constitute one and the same instrument.

 

ARTICLE 53

FORCE MAJEURE

 

This Lease and the obligations of Tenant hereunder shall not be affected or
impaired because Landlord 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 any
prevention, delay, stoppage due to strikes, lockouts, acts of God, or any other
cause previously, or at such time, beyond the reasonable control or anticipation
of Landlord (collectively, a “Force Majeure”) and Landlord’s obligations under
this Lease shall be forgiven and suspended by any such Force Majeure.

 

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ARTICLE 54

OPTION TO RENEW

 

(a) Provided that no uncured Event of Default has occurred, Tenant shall have
one (1) option to extend (“Renewal Option”) the Term of this Lease for either
(i) the entire twelfth floor, or (ii) the entire Premises (as so selected, the
“Extension Premises”) for sixty (60) months, commencing upon the expiration of
the initial Term of the Lease (“Extension Term”), subject to the terms of this
Article 54. In the event Tenant elects to exercise its option to extend the
Lease Term by the Extension Term, as provided hereunder, Tenant shall provide
Landlord irrevocable written notice of such election (“Election Notice”), no
earlier than fifteen (15) months and no later than twelve (12) months prior to
the then-existing expiration date of the Term of this Lease (the “Option
Period”), which Election Notice must also specify whether the Extension Premises
will consist of the space identified in clause (i) or (ii), above, of this
Section 54(a). Except for Base Rent which shall be determined as set forth in
Section 54(b), and for the possibility that the Extension Premises will consist
of less than the entire Premises, in which case the Tenant’s Percentage shall be
appropriately adjusted, the terms and conditions of this Lease during the
Extension Term shall be identical to the terms and conditions of this Lease.

 

(b) Base Rent for the Extension Term shall be adjusted to the fair market rental
value (“FMV”), as determined herein. In the event Tenant timely exercises the
Renewal Option, Landlord shall, within fifteen (15) business days after receipt
of Tenant’s Election notice exercising the Renewal Option, notify Tenant of
Landlord’s good faith determination of the Base Rent for the Extension Term (the
“Landlord’s Option Rent Response”). Tenant shall accept or reject Landlord’s
Option Rent Response by notice to Landlord within ten (10) business days
following receipt of Landlord’s Option Rent Response. If Tenant fails to object
to Landlord’s Option Rent Response within such time period, then Landlord’s
determination of FMV set forth in the Landlord’s Option Rent Response shall be
conclusive and binding. If Tenant does not accept Landlord’s Option Rent
Response, then Landlord and Tenant shall attempt to agree upon the Base Rent for
the Extension Term (“Option Rent”) using their good faith efforts. If Landlord
and Tenant fail to reach agreement on the Option Rent within twenty (20) days
following Tenant’s receipt of Landlord’s Option Rent Response, then within three
(3) business days after demand by either Landlord or Tenant, each party shall
simultaneously present to the other and certify to each other such party’s final
offer regarding the Option Rent for the Extension Term (each, a “Last Offer”).
If the parties fail to agree on the Option Rent within such twenty (20) day
period following Tenant’s receipt of Landlord’s Option Rent Response, such Last
Offers shall be submitted to arbitration by Landlord and/or Tenant (the
“Arbitration Demand”) in accordance with Section 54(b)(i) through (b)(viii),
below and in accordance with the then existing Rules for Commercial Arbitration
of the American Arbitration Association, or its successor. The following rules
shall apply to such arbitration, in addition to (and controlling over) the then
existing Rules for Commercial Arbitration of the American Arbitration
Association, or its successor:

 

(i) Landlord and Tenant shall each appoint one (1) arbitrator (each, an
“Original Arbitrator”) who shall be a commercial real estate broker with at
least five (5) years experience in the leasing of commercial office properties
in San Francisco, California. Original Arbitrators shall be appointed within ten
(10) business days after the Arbitration Demand.

 

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(ii) The two Original Arbitrators so appointed shall within seven (7) business
days of the date of the appointment of the last appointed arbitrator agree upon
and appoint a third arbitrator (“Neutral Arbitrator”; and together with the
Original Arbitrators, the “Arbitration Panel”). The Neutral Arbitrator shall be
a commercial real estate broker with at least five (5) years experience in the
leasing of commercial property in San Francisco, California or an appraiser
certified as an “MAI” or “ASA” appraiser who has had at least five (5) years
experience within the previous ten (10) years as a real estate appraiser of
commercial office properties in San Francisco, California. For purposes hereof,
an “MAI” appraiser means an individual who holds an MAI designation conferred
by, and is an independent member of, the American Institute of Real Estate
Appraisers (or its successor organization, or in the event there is no successor
organization, the organization and designation most similar), and an “ASA”
appraiser means an individual who holds the Senior Member designation conferred
by, and is an independent member of, the American Society of Appraisers (or its
successor organization, or, in the event there is no successor organization, the
organization and designation most similar).

 

(iii) The sole role of the Arbitration Panel shall be to determine the FMV for
the Extension Term (and all the arbitrators so appointed must agree upon the
FMV) and the Landlord and Tenant shall instruct the Arbitration Panel to reach
its conclusion within a reasonable period of time after being convened, not to
exceed twenty five (25) days after the appointment of the Original Arbitrators.
In determining the FMV, the Arbitration Panel shall take into account the
following: (A) the Arbitration Demand; and (B) items that professional real
estate appraisers customarily consider, including, but not limited to, space
availability, tenant size, tenant improvement allowances, free rent (except as
set forth below) and any other lease concessions being granted by such landlords
of such similar buildings for leases of a similar term as the Extension Term;
and (C) what a willing, comparable, renewal, non-equity, non-synthetic lease
tenant would pay, and what a willing comparable landlord of a first class office
building in the Central Business District in San Francisco Area of comparable
age, appearance, quality of construction, location, visibility, access and with
comparable parking would accept at arms length. Notwithstanding anything to the
contrary contained herein, FMV shall in no event be higher than Landlord’s Last
Offer or lower than Tenant’s Last Offer.

 

(iv) If either Landlord or Tenant fails to appoint an Original Arbitrator within
ten (10) business days after the other party’s Arbitration Demand, then the
first appointed Original Arbitrator shall select a Last Offer to serve as the
Option Rent for the Extension Term using the same criteria applicable in case of
a Neutral Arbitrator under Section 54(b)(iii) above.

 

(v) If the two (2) Original Arbitrators fail to agree upon and appoint a Neutral
Arbitrator, or if both parties fail to appoint an Original Arbitrator, then the
Neutral Arbitrator shall be appointed by the American Arbitration Association,
or a successor entity.

 

(vi) Except as set forth in Section 54(b)(vii) below, the cost of an Original
Arbitrator shall be borne by the appointing party and the cost of the Neutral
Arbitrator and other customary costs payable in connection with the Arbitration
shall be paid by Landlord and Tenant equally.

 

(vii) If the actual FMV of the Extension Premises as determined by the

 

39

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Arbitration Panel is greater than Landlord’s determination or differs from
Landlord’s determination of FMV as set forth in the Last Offer by five percent
(5%) or less, the costs of arbitration pursuant to this Article shall be paid by
Tenant. If the actual FMV of the Extension Premises as determined by the
Arbitration Panel is less than Landlord’s determination of FMV as set forth in
the Last Offer by greater than five (5%), the costs of arbitration shall be paid
by Landlord.

 

(viii) In the event the dispute is not submitted to the Arbitration Panel solely
as a result of Tenant’s delay, then notwithstanding anything to the contrary set
forth herein, Tenant shall be required to pay as the Option Rent the amount of
Landlord’s Last Offer.

 

(c) If Tenant validly exercises the Renewal Option and provided that no Event of
Default has occurred, then Landlord and Tenant shall enter into an amendment to
this Lease extending the Lease Term for the Extension Term at a Base Rent for
the Extension Premises equal to the FMV as determined pursuant to Article 54
hereof.

 

ARTICLE 55

RIGHT OF FIRST OFFER

 

At any time Landlord determines that (i) the thirteenth floor of the Building or
any portion thereof will become available for lease to third parties during the
Term of this Lease (but not the extended Term), or (ii) a block of space (but
only the first such block of space that becomes available) of 2,000 to 4,000
rentable square feet of space on any floor of the Building will become available
for lease to third parties during the period commencing on the date that is the
first day of the thirteenth month of the Term of this Lease (but not the
extended Term) and ending on date that is the last day of the twenty-fourth
month of the Term of this Lease (in each case, such space is referred to herein
as the “ROFO Space”), and provided that (a) Tenant is not then in default in its
obligations under this Lease as of the scheduled date of the exercise of the
Right of First Offer (as hereinafter defined) or as of the scheduled date of the
commencement of the term of the lease of the ROFO Space, and (b) neither (y) St.
Paul Fire and Marine Insurance Company, a Minnesota corporation (or the
successor-in-interest under its lease for space at the Building) nor (z) any
existing tenant as of the date hereof has an expansion option, right of first
refusal, right of first offer (or similar right) to lease the ROFO Space,
Landlord shall provide written notice within fifteen (15) days thereof to Tenant
(“Landlord ROFO Notice”), which Landlord ROFO Notice shall state that such space
will be available on the terms described in such Landlord ROFO Notice (i.e.,
there is no need that any other party be a party to the same); provided however,
that Landlord shall be obligated to provide a Landlord ROFO Notice only one time
with respect to space covered by clause (ii) above, and only if such space
becomes available during such period of time. The terms and conditions set forth
in the Landlord ROFO Notice shall be reasonably determined by Landlord to be the
then prevailing market terms for comparable office space in the Central Business
District in San Francisco, California market and the proposed term of the lease
of the ROFO Space shall be coterminous with the term of this Lease. Tenant shall
have the right to lease the ROFO Space (“Right of First Offer”) on the terms set
forth in the Landlord ROFO Notice. Landlord shall not execute any lease of the
ROFO Space for a period of five (5) business days after Tenant’s receipt of the
Landlord ROFO Notice (such time period is referred to herein as the “ROFO
Period”). The right to lease the ROFO

 

40

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Space described in the Landlord ROFO Notice shall apply to the entire ROFO Space
only. In the event Tenant intends to lease the ROFO Space on the terms described
therein, Tenant shall provide written notice to Landlord before the expiration
of the ROFO Period that expressly states that Tenant desires to lease the ROFO
Space on the terms described therein (“Acceptance Notice”). Tenant and Landlord
shall then attempt in good faith to enter into a definitive lease of the ROFO
Space on the terms described in the applicable Landlord ROFO Notice, and the
terms of this Lease with respect to the balance thereof, within ten (10)
business days after Landlord’s receipt of Tenant’s Acceptance Notice. In the
event (1) the parties are not able to enter into a definitive lease within such
period of time, (2) Tenant does not provide an Acceptance Notice to Landlord on
before the expiration of the ROFO Period which states that Tenant desires to
lease the ROFO Space on the terms set forth in the Landlord ROFO Notice, or (3)
Tenant’s notice attempts to modify any of the material terms of the Landlord
ROFO Notice (including, without limitation, the term of the proposed lease, the
rentable square footage of the ROFO Space, the amount of rent or tenant
inducements, if any) or unreasonably conditions Tenant’s acceptance of the offer
(the foregoing events are referred to herein collectively as the “ROFO
Expiration Event”), then Tenant shall have irrevocably waived its Right of First
Offer and Landlord may, in its sole and absolute discretion without any further
obligation or liability to Tenant, enter into any lease of the ROFO Space with
any party, upon terms and conditions substantially similar to those set forth in
the Landlord ROFO Notice, except that the amount of base rent payable by such
party under such lease of the ROFO Space shall not be less than 90% of the
amount of base rent (on a rentable square footage basis) set forth in the
Landlord’s ROFO Notice (otherwise Landlord shall be required to re-submit the
Landlord ROFO Notice to Tenant prior to leasing the ROFO Space). Notwithstanding
the foregoing, if Landlord is unable to enter into a lease of the ROFO Space
with any party within six (6) months of a ROFO Expiration Event, in the case of
space covered by clause (i), Landlord shall re-submit the Landlord ROFO Notice
to Tenant prior to leasing space covered by said clause (i), assuming that
Tenant’s rights hereunder then apply.

 

ARTICLE 56

OPTIONS PERSONAL

 

Notwithstanding any other provision of this Lease, neither the Renewal Option
granted to Tenant in Article 54, nor Tenant’s Right of First Offer to lease the
ROFO Space under Article 55 hereunder, shall be exercisable if either (i) at the
time of the exercise of such Renewal Option or Right of First Offer, as
applicable, (y) more than 21% of the rentable square feet of the Premises is
then being sublet (or any portion of the 12th Floor Premises is then being
sublet) or (z) Tenant is not then occupying at least 79% of the rentable square
feet of the Premises (including all of the 12th Floor Premises), or (ii) if the
Tenant then attempting to exercise such Renewal Option or Right of First Offer,
as applicable, succeeded to Embarcadero Technologies, Inc.’s interest as Tenant
hereunder as part of a transaction described in Section 24.4 hereof (unless
Landlord otherwise specifically consented in writing to the assignment of such
Renewal Option and/or Right of First Offer to such successor-in-interest
concurrently with the consummation of such transaction described in Section 24.4
hereof (which consent shall not be unreasonably withheld, delayed or conditioned
by Landlord if so requested in writing by such successor-in-interest at such
time).

 

[signature page follows]

 

41

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

 

LANDLORD:

 

WB 100 CALIFORNIA, LLC, a Delaware limited liability company       ADDRESS      
  c/o Legacy Partners         100 California Street By:           San Francisco,
CA 94111    

--------------------------------------------------------------------------------

                                Attention: Building Manager Name:          
Facsimile No. (415) 781-0025    

--------------------------------------------------------------------------------

          Its:                    

--------------------------------------------------------------------------------

           

 

TENANT:

 

EMBARCADERO TECHNOLOGY, INC., a Delaware corporation       ADDRESS        

Prior to Commencement Date:

425 Market Street, Suite 425

San Francisco, CA 94105

Attention: Stephen Wong

Facsimile No. (415) 434-1721

                    By:              

--------------------------------------------------------------------------------

                    Name:                    

--------------------------------------------------------------------------------

                       

After Commencement Date:

100 California Street

San Francisco, CA 94111

Attention: Stephen Wong

Facsimile No. - To be delivered

by Tenant to Landlord in

writing within three (3) business

days of the occurrence of the

Commencement Date

Its:              

--------------------------------------------------------------------------------

                                                                               
                             

 

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EXHIBIT A-1

 

OUTLINE OF TENANT’S FLOOR PLAN ON THE TWELFTH FLOOR

 

A-1-1

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[GRAPHIC]

 

A-1-2

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EXHIBIT A-2

 

OUTLINE OF TENANT’S FLOOR PLAN ON THE THIRTEENTH FLOOR

 

A-2-1

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[GRAPHIC]

 

A-2-2

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EXHIBIT B

 

THE PROJECT

 

Lot 17, as shown on a Map entitled “Parcel Map, Being a Subdivision of
Assessor’s Lot 15, Block 236, Also Being a portion of Fifty Vara Block No. 10,
San Francisco, California”, recorded October 11, 1978, in Book 9, of Parcel
Maps, at Page 18, in the Office of the County Recorder of the City and County of
San Francisco, California.

 

Assessor’s Parcel No.: Assessor’s Parcel No. Lot 17, Block 236

 

B-1

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EXHIBIT C

 

STANDARDS FOR UTILITIES AND SERVICES

 

The following Standards for Utilities and Services are in effect. Landlord
reserves the right to adopt nondiscriminatory modifications and additions
hereto. In the event of any conflict between the following Standard for
Utilities and Services and this Lease, this Lease shall prevail:

 

Landlord shall:

 

(a) On Monday through Friday, except holidays, from 6 A.M. to 6 P.M. (and other
times for a reasonable additional charge to be fixed by Landlord), ventilate the
Premises and furnish air conditioning or heating on such days and hours, when in
the judgment of Landlord it may be required for the comfortable occupancy of the
Premises. The air conditioning system achieves maximum cooling when the window
coverings are closed. Landlord shall not be responsible for room temperatures if
Tenant does not keep all window coverings in the Premises closed whenever the
system is in operation. Tenant agrees to cooperate fully at all times with
Landlord, and to abide by all regulations and requirements which Landlord may
prescribe for the proper function and protection of said air conditioning
system. Tenant agrees not to connect any apparatus, device, conduit or pipe to
the Building chilled and hot water air conditioning supply lines except “as
otherwise approved in writing by Landlord. Tenant further agrees that neither
Tenant nor its servants, employees, agents, visitors, licensees or contractors
shall at any time enter mechanical installations or facilities of the Building
or adjust, tamper with, touch or otherwise in any manner affect said
installations or facilities except as approved in writing by Landlord. The cost
of maintenance and service calls to adjust and regulate the air conditioning
system shall be charged to Tenant if the need for maintenance work results from
either Tenant’s adjustment of room thermostats or Tenant’s failure to comply
with its obligations under this Section, including keeping window coverings
closed as needed. Such work shall be charged at hourly rates equal to then
current journeymen’s wages for air conditioning mechanics.

 

(b) If Tenant desires to use heat, ventilation or air conditioning during hours
other than those for which Landlord is obligated to supply such utilities
pursuant to the terms of this Lease, (i) Tenant shall give Landlord such prior
notice, as Landlord shall from time to time establish as appropriate, of
Tenant’s desired use, (ii) Landlord shall supply such utilities to Tenant at
such hourly cost to Tenant as Landlord shall from time to time establish,
provided the charges are the same utility cost charged to Landlord (unless
separately metered in which case such supply, usage and costs shall be the sole
responsibility of Tenant), and (iii) Tenant shall pay such cost within ten (10)
days after billing.

 

(c) Landlord shall furnish to the Premises, during the usual business hours on
business days, electric current sufficient for normal office use. Tenant shall
not, without Landlord’s prior written consent, use heat-generating machines,
machines other than normal fractional horsepower office machines, or equipment
or lighting other than building standard lights in the Premises, which may
affect the temperature otherwise maintained by the air conditioning system or
increase the water normally furnished for the Premises by Landlord. If

 

C-1

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Tenant uses water or heat or air conditioning in excess of that supplied by
Landlord pursuant to this Lease, or if Tenant’s consumption of electricity shall
exceed four (4) watts per usable square foot of the Premises, calculated on an
annualized basis for the hours described in Paragraph (a) of this Exhibit,
Tenant shall pay to Landlord, within ten (10) days after billing, the cost of
such excess consumption, the cost of the installation, operation, and
maintenance of equipment which is installed in order to supply such excess
consumption, and the cost of the increased wear and tear on existing equipment
caused by such excess consumption; and Landlord may install devices to
separately meter any increased use and in such event Tenant shall pay the
increased cost directly to Landlord, within ten (10) days after demand,
including the cost of such additional metering devices.

 

(d) Water will be available in public areas for drinking and lavatory purposes
only, but if Tenant requires, uses or consumes water for any purposes in
addition to ordinary drinking and lavatory purposes of which fact Tenant
constitutes Landlord to be the sole judge, Landlord may install a water meter
and thereby measure Tenant’s water consumption for all purposes. Tenant shall
pay Landlord for the cost of the meter and the cost of the installation thereof
and throughout the duration of Tenant’s occupancy, Tenant shall keep said meter
and installation equipment in good working order and repair at Tenant’s own cost
and expense, in default of which Landlord may cause such meter and equipment to
be replaced or repaired and collect the cost thereof from Tenant. Tenant agrees
to pay for water consumed, as shown on said meter, as and when bills are
rendered, and on default in making such payment, Landlord may pay such charges
and collect the same from Tenant. Any such costs or expenses incurred, or
payments made by Landlord for any of the reasons or purposes hereinabove stated
shall be deemed to be additional rent payable by Tenant and collectible by
Landlord as such.

 

(e) Provide janitor service to the Premises. Tenant shall pay to Landlord the
cost of removal of any of Tenant’s refuse and rubbish, to the extent that the
same exceeds the refuse and rubbish usually attendant upon the use of the
Premises as offices.

 

(f) Landlord reserves the right to stop service of the elevator, plumbing,
ventilation, air conditioning and electric systems, when necessary, by reason of
accident or emergency or for repairs, alterations or improvements, in the
judgment of Landlord desirable or necessary to be made, until said repairs,
alterations or improvements shall have been completed, and shall further have no
responsibility or liability for failure to supply elevator facilities, plumbing,
ventilating, air conditioning or electric service, when prevented from so doing
by strike or accident or by any cause beyond Landlord’s reasonable control, or
by laws, rules, orders, ordinances, directions, regulations or requirements of
any federal, state, county or municipal authority or failure of gas, oil or
other suitable fuel supply or inability by exercise of reasonable diligence to
obtain gas, oil or other suitable fuel. It is expressly understood and agreed
that any covenants on Landlord’s part to furnish any service pursuant to any of
the terms, covenants, conditions, provisions or agreements of this Lease, or to
perform any act or thing for the benefit of Tenant, shall not be deemed breached
if Landlord is unable to furnish or perform the same by virtue of a strike or
labor trouble or any other cause whatsoever beyond Landlord’s control.

 

C-2

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EXHIBIT D

 

RULES AND REGULATIONS

 

1. Except as specifically provided in the Lease to which these Rules and
Regulations are attached, no sign, placard, picture, advertisement, name or
notice shall be installed or displayed on any part of the outside or inside of
the Building without the prior written consent of Landlord. Landlord shall have
the right to remove, at Tenant’s expense and without notice, any sign installed
or displayed in violation of this rule. All approved signs or lettering on doors
and walls shall be printed, painted, affixed or inscribed at the expense of
Tenant by a person approved by Landlord.

 

2. If Landlord objects in writing to any curtains, blinds, shades, screens or
hanging plants or other similar objects attached to or used in connection with
any window or door of the Premises, or placed on any windowsill, which is
visible from the exterior of the Premises, Tenant shall immediately discontinue
such use. Tenant shall not place anything against or near glass partitions or
doors or windows which may appear unsightly from outside the Premises.

 

3. Tenant shall not obstruct any sidewalks, halls, passages, exits, entrances,
elevators, escalators, or stairways of the Project. The halls, passages, exits,
entrances, elevators, and stairways are not open to the general public, but are
open, subject to reasonable regulation, to Tenant’s business invitees. Landlord
shall in all cases retain the right to control and prevent access thereto of all
persons whose presence in the judgment of Landlord would be prejudicial to the
safety, character, reputation and interest of the Project and its tenants;
provided that nothing herein contained shall be construed to prevent such access
to persons with whom any tenant normally deals in the ordinary course of its
business, unless such persons are engaged in illegal or unlawful activities. No
tenant and no employee or invitee of any tenant shall go upon the roof of any
building of the Project.

 

4. The directory of the building will be provided exclusively for the display of
the name and location of tenants only, and Landlord reserves the right to
exclude any other names therefrom.

 

5. All cleaning and janitorial services for the Project and the Premises shall
be provided exclusively through Landlord, and except with the written consent of
Landlord, no person or persons other than those approved by Landlord shall be
employed by Tenant or permitted to enter the Building for the purpose of
cleaning the same. Tenant shall not cause any unnecessary labor by carelessness
or indifference to the good order and cleanliness of the Premises.

 

6. Landlord will furnish Tenant, free of charge, with five (5) keys to each door
lock in the Premises. Landlord may make a reasonable charge for any additional
keys. Tenant shall not make or have made additional keys, and Tenant shall not
alter any lock or install a new additional lock or bolt on any door of its
Premises. Tenant, upon the termination of its tenancy,

 

D-1

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shall deliver to Landlord the keys of all doors which have been furnished to
Tenant, and in the event of loss of any keys so furnished, shall pay Landlord
therefor.

 

7. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord’s instructions in
their installation.

 

8. Tenant shall not place a load upon any floor of the Premises which exceeds
the load per square foot which such floor was designed to carry and which is
allowed by law. Landlord shall have the right to prescribe the weight, size and
position of all equipment, materials, furniture or other property brought into
the Project. Heavy objects shall, if considered necessary by Landlord, stand on
such platforms as determined by Landlord to be necessary to properly distribute
the weight, which platforms shall be provided at Tenant’s expense. Business
machines and mechanical equipment belonging to Tenant, which cause noise or
vibration that may be transmitted to the structure of the Premises or to any
space therein to such a degree to be objectionable to Landlord or to any tenants
in the Project, shall be placed and maintained by Tenant, at Tenant’s expense,
on vibration eliminators or other devices sufficient to eliminate noise or
vibration. The persons employed to move such equipment in or out of the Premises
must be acceptable to Landlord. Landlord will not be responsible for loss of, or
damage to, any such equipment or other property from any cause, and all damage
done to the Premises, by maintaining or moving such equipment or other property
shall be repaired at the expense of Tenant.

 

9. Tenant shall not use or keep in the Premises any kerosene, gasoline or
inflammable or combustible fluid or material other than those limited quantities
necessary for the operation or maintenance of office equipment. Tenant shall not
use or permit to be used in the Premises any foul or noxious gas or substance,
or permit or allow the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Project by reason of noise,
odors or vibrations, nor shall Tenant bring into or keep in or about the
Premises any birds or animals.

 

10. Tenant shall not use any method of heating or air-conditioning other than
that supplied by Landlord, except “as otherwise approved in writing by Landlord.

 

11. Tenant shall not waste electricity, water or air-conditioning and agrees to
cooperate fully with Landlord to assure the most effective operation of the
Premises’ heating and air-conditioning and to comply with any governmental
energy-saving rules, laws or regulations of which Tenant has actual notice, and
shall refrain from attempting to adjust controls.

 

12. Landlord reserves the right, exercisable with notice and without liability
to Tenant, to change the name and street address of the Premises, except for
reimbursement of stationary costs of Tenant (not to exceed $2,000.00).

 

13. Landlord reserves the right to exclude from the Project between the hours of
6 p.m. and 7 a.m. the following day, or such other hours as may be established
from time to time by Landlord, and on Sundays and legal holidays, any person
unless that person is known to the person or employee in charge of the Project
and has a pass or is properly identified. Tenant shall

 

D-2

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be responsible for all persons for whom it requests passes and shall be liable
to Landlord for all acts of such persons. Landlord shall not be liable for
damages for any error with regard to the admission to or exclusion from the
Project of any person. Landlord reserves the right to prevent access to the
Project in case of invasion, mob, riot, public excitement or other commotion by
closing the doors or by other appropriate action.

 

14. Tenant shall close and lock the doors of its Premises and entirely shut off
all water faucets or other water apparatus, and electricity, gas or air outlets
before tenant and its employees leave the Premises. Tenant shall be responsible
for any damage or injuries sustained by other tenants or occupants of the
Project or by Landlord for noncompliance with this rule.

 

15. Tenant shall not obtain for use on the Premises ice, drinking water, food
beverages, towel or other similar services upon the Premises, except at such
hours and under such regulations as may be fixed by Landlord except for such
ice, water, food, beverages and similar services for Tenant’s kitchen on the
Premises.

 

16. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein. The expense of
any breakage, stoppage of damage resulting from the violation of this rule shall
be borne by the tenant who, or whose employees or invitees, shall have caused
it.

 

17. Tenant shall not sell, or permit the sale at retail, of newspapers,
magazines, periodicals, theater tickets or any other goods or merchandise to the
general public in or on the Premises. Tenant shall not make any suite-to-suite
solicitation of business from other tenants in the Project.

 

18. Tenant shall not install any radio or television antenna, loudspeaker or
other devices on the roof or exterior walls of the Premises. Tenant shall not
interfere with radio or television broadcasting or reception from or in the
Project or elsewhere.

 

19. Tenant shall not mark, drive nails, screw or drill into the partitions,
woodwork or plaster or in any way deface the Premises (except hanging of office
artwork or other pictures) or any part thereof, except in accordance with the
provisions of the Lease pertaining to alterations. Landlord reserves the right
to direct electricians as to where and how telephone and telegraph wires are to
be introduced to the Premises. Tenant shall not cut or bore holes for wires.
Tenant shall not affix any floor covering to the floor of the Premises in any
manner except as approved by Landlord. Tenant shall repair any damage resulting
from noncompliance with this rule.

 

20. Tenant shall not install, maintain or operate upon the Premises any vending
machines without the written consent of Landlord.

 

21. Canvassing, soliciting and distributing of handbills or any other written
material, and peddling in the Project are prohibited, and Tenant shall cooperate
to prevent such activities.

 

D-3

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22. Landlord reserves the right to exclude or expel from the Project any person
who, in Landlord’s judgment, is intoxicated or under the influence of liquor or
drugs or who is in violation of any of the Rules and Regulations of the Project.

 

23. Tenant shall store all its trash and garbage within its Premises or in other
facilities provided by Landlord. Tenant shall not place in any trash box or
receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal. All garbage and refuse disposal
shall be made in accordance with directions issued from time to time by
Landlord.

 

24. The Premises shall not be used for the storage of merchandise held for sale
to the general public, or for lodging or for manufacturing of any kind, nor
shall the Premises be used for any improper, immoral or objectionable purpose
(it being understood and agreed that Landlord shall act in good-faith when
determining whether or not any such action is improper, immoral or
objectionable). No cooking shall be done or permitted on the Premises without
Landlord’s consent, except that use by Tenant of Underwriter’s Laboratory
approved equipment for brewing coffee, tea, hot chocolate and similar beverages
or use of microwave ovens for employee use shall be permitted, provided that
such equipment and use is in accordance with all applicable federal, state,
county and city laws, codes, ordinances, rules and regulations.

 

25. Tenant shall not use in the Premises any hand truck except those equipped
with rubber tires and side guards or such other material-handling equipment as
Landlord may approve. Tenant shall not bring any other vehicles of any kind into
the Premises.

 

26. Without the written consent of Landlord, Tenant shall not use the name of
the Project in connection with or in promoting or advertising the business of
Tenant except as Tenant’s address.

 

27. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.

 

28. Landlord shall have the right to prescribe the weight, size and position of
all safes and other heavy property brought into the Building. Safes and other
heavy objects shall, if considered necessary by Landlord, stand on supports of
such thickness as is necessary to properly distribute the weight. Landlord will
not be responsible for loss of or damage to any such safe or property in any
case. All damage done to any part of the Building, its contents, occupants or
visitors by moving or maintaining any such safe or other property shall be the
sole responsibility of Tenant and any expense of said damage or injury shall be
borne by Tenant.

 

29. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.

 

30. Tenant’s requirements will be attended to only upon appropriate application
to the Project management office by an authorized individual. Employees of
Landlord shall not perform any work or do anything outside of their regular
duties unless under special instructions

 

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from Landlord, and no employee of Landlord will admit any person (Tenant or
otherwise) to any office without specific instructions from Landlord.

 

31. Landlord may waive any one or more of these Rules and Regulations for the
benefit of Tenant or any other tenant, but no such waiver by Landlord shall be
construed as a waiver of such Rules and Regulations in favor of Tenant or any
other tenant, nor prevent Landlord from thereafter enforcing any such Rules and
Regulations against any or all of the tenants of the Project.

 

32. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of Tenant’s lease of its Premises in the Project. In
the event of any conflict between these Rules and Regulations and Tenant’s
Lease, Tenant’s Lease shall prevail.

 

33. Landlord reserves the right to make such other and reasonable Rules and
Regulations as, in its judgment, may from time to time be needed for safety and
security, for care and cleanliness of the Project and for the preservation of
good order therein. Tenant agrees to abide by all such Rules and Regulations
hereinabove stated and any additional rules and regulations which are adopted.

 

34. Tenant shall be responsible for the observance of all of the foregoing rules
by Tenant’s employees, agents, clients, customers, invitees and guests.

 

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EXHIBIT E

 

ASBESTOS NOTIFICATION

 

The California legislature adopted Assembly Bill 3713 (effective January 1,
1989) which requires, among other things, that a building owner inform tenants,
employees and contractors if the building owner has knowledge of the presence of
asbestos containing materials (ACM’s) in the building. In the California
statutes an ACM is defined as a construction material containing “more than
one-tenth of one percent asbestos by weight.”

 

Annually the building sends a letter to the building’s tenants, employees and
contractors disclosing the presence of ACM’s known to the owner. All of the
buildings consultant’s reports are available for review in the Building Office,
100 California Street, Suite 770, San Francisco, California 94111.

 

During the month of April, 1994 a survey of the building was conducted by
Boelter Environmental Consultants. The survey concludes that during the original
building construction, two layers of materials were applied to the underside of
the floor decks above the ceiling of floors 3 through 12. The outermost material
is a hard layer of fireproofing which does not contain ACM. The innermost
material (which is completely covered by the hard fireproofing) is acoustical
plaster which does contain ACM. This innermost layer is not in contact with the
ventilation systems and is not able to be contacted through routine ceiling
access, nor is it likely to produce levels of asbestos fibers in the air.

 

Asbestos is a naturally-occurring mineral used in many types of construction.
High concentrations of asbestos fibers have been found to be associated with
asbestosis and lung cancer in humans. Most of the evidence for this has come
from individuals who have been associated with mining of the mineral or have
worked with it in shipyards or other settings where concentrations of asbestos
in the air have been high.

 

Based upon the April 1994 survey finding, the building’s consultant has revised
the Operations and Maintenance Program in order to accurately reflect the
condition and location of ACM in the building. All contractors, including those
hired directly by tenants who work in any section of the building will be
required to follow the revised procedures. Employees who are not trained in
handling ACM should not remove, drill or otherwise disturb it. Copies of the
procedures are available in the Building Office, 100 California Street, Suite
770, San Francisco, California.

 

If you should require any additional information regarding this subject, please
do not hesitate to call.

 

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EXHIBIT F

 

COMMENCEMENT DATE MEMORANDUM

 

With respect to that certain lease (“Lease”) dated                     , 2004,
between EMBARCADERO TECHNOLOGIES, INC., a Delaware corporation (“Tenant”), and
WB 100 CALIFORNIA, a Delaware limited liability company (“Landlord”), whereby
Landlord leased to Tenant and Tenant leased from Landlord approximately
                 rentable square feet of the building located at 100 California
Street, San Francisco, California, Suites              and             
(“Premises”), Tenant hereby acknowledges and certifies to Landlord as follows:

 

(1) Landlord delivered possession of the Premises to Tenant in a Substantially
Complete on                                                       (“Possession
Date”);

 

(2) The Lease commenced on                                              
(“Commencement Date”);

 

(3) The Premises contain                      rentable square feet of space; and

 

(4) Tenant has accepted and is currently in possession of the Premises and the
Premises are acceptable for Tenant’s use.

 

(5) Tenant’s Share is                                              

 

(6) Base Rent Per Month is                         

 

IN WITNESS WHEREOF, this Commencement Date Memorandum is executed this day of
                    .

 

“Tenant”

EMBARCADERO TECHNOLOGIES, INC., a Delaware corporation,

By:

       

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Name:

       

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Its:

       

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EXHIBIT G

 

LANDLORD’S WORK LETTER

 

This work letter (“Landlord’s Work Letter”) shall set forth the terms and
conditions relating to the construction of certain tenant improvements by
Landlord or Landlord’s contractor in the Premises.

 

A. Landlord’s Improvements. Provided that no uncured monetary Event of Default
has occurred, Landlord, at Landlord’s sole cost, up to an amount equal to Twelve
and 00/100 Dollars ($12.00) per rentable square foot of the portion of the
Premises on the twelfth floor and Thirty and 00/100 Dollars ($30.00) per
rentable square foot of the portion of the Premises on the thirteenth floor
(collectively, “Landlord’s Share”), shall perform the work set forth on SCHEDULE
1 attached hereto to this EXHIBIT G (“Landlord’s Improvements”). All cost of the
Landlord’s Improvements in excess of Landlord’s Share shall be Tenant’s
responsibility, and Tenant shall, at Landlord’s request, deposit with Landlord,
in advance of Landlord commencing any such work, the excess of Landlord’s
estimate of the cost thereof over Landlord’s Share, and such further shortfalls
as Landlord may identify from time to time. All Landlord’s Improvements shall be
deemed Landlord’s property under the terms of the Lease and shall revert to
Landlord upon termination of the Lease for any reason, it being understood and
agreed that Tenant shall have no ownership interest whatsoever in the Landlord’s
Improvements. Except as expressly provided to the contrary in this Lease,
Landlord shall not be required to make any expenditure, incur any obligation, or
incur any liability of any kind whatsoever in connection with the Lease or the
ownership, construction, maintenance, operation or repair of the Premises. Any
modifications to the Landlord’s Improvements which are requested by Tenant or
required to be performed as a result of Tenant’s particular use of the Premises
shall be made at Tenant’s sole cost and expense. If less than all of the
Landlord’s Share is used for the construction of the Landlord’s Improvements,
Tenant may, at Tenant’s option, utilize up to 50% of Landlord’s Share as a
credit against Base Rent due under this Lease, but only by providing at least
three (3) business days advance written notice of the same to Landlord.

 

B. Space Planning Costs. In addition to the foregoing, Landlord shall pay $0.15
per rentable square foot to Tenant’s architect for initial space planning of the
Premises.

 

C. Contractors. Tenant shall have the right to select such general and
subcontractors subject to Landlord’s reasonable approval.

 

D. Consultants. Tenant shall have the right to select such an interior space
planning firm, engineering company and other consultants to design and develop
all working drawings and specifications necessary for the Landlord’s
Improvements.

 

E. Landlord’s Supervisory Fee. Landlord may charge up to $10,000.00 as an
administrative fee for reviewing the working drawings and specifications and for
supervising the construction of the Landlord’s Improvements.

 

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F. Cooperation of Tenant. Tenant shall reasonably cooperate with Landlord in the
construction and supervision of the Landlord’s Improvements and shall not
interfere with same.

 

G. No Representations or Warranties. Landlord makes no representations or
warranties of any kind with respect to the construction of the Landlord’s
Improvements; provided, however, that Landlord shall be responsible to repair,
maintain or otherwise cure any latent or patent defects in the Landlord’s
Improvements.

 

H. Modifications to Approved Plans. No changes, modifications or alterations to
the Approved Plans may be made without the written consent of Landlord, which
consent may be withheld in Landlord’s reasonable discretion. Any additional
costs and expenses including, without limitation, increased fees which Landlord
may be required to pay for architectural, engineering and other similar services
arising by reason of any change, modification or alteration in the Approved
Plans, any additional construction costs, including costs of change orders
charged by Landlord’s contractor, and any and all other costs, expenses and/or
damages incurred or suffered by Landlord by reason of the changes, modifications
or alterations to the Approved Plans and any delays directly or indirectly
caused by such changes, modifications or alterations to the Approved Plans shall
be at the sole cost and expense of Tenant and shall be paid by Tenant to
Landlord before the performance of any additional work after such requested
changes.

 

I. Delays Caused by Tenant. The term “Delays Caused By Tenant” shall mean any
delay that the Landlord may encounter in the performance of Landlord’s
obligations under the Lease because of any act or omission of any nature by
Tenant or its agents, including, without limitation, delays resulting from
changes in or additions to the Landlord’s Improvements requested by Tenant,
including delays by Tenant in the submission of information requested by
Landlord or giving authorizations or approvals requested by Landlord, delays due
to the postponement of any Landlord’s Improvements at the request of Tenant, or
delays due to the failure of Tenant to provide complete information, or delays
caused by the concurrent installation of Tenant’s fixtures and/or by Tenant
performing Tenant’s Work in the Premises, or delays caused in any other way,
directly or indirectly, by Tenant, or delays due to the failure of Tenant to pay
when due, the amounts required by Tenant pursuant to this Landlord’s Work
Letter. Tenant shall pay all incremental construction and related costs and
expenses incurred by Landlord which result from Delays Caused By Tenant,
including without limitation increases in the cost of labor or materials.
Landlord shall inform Tenant of any delays which Landlord reasonably expects
will occur as a result of changes in or additions to the Landlord’s Improvements
requested by Tenant.

 

J. Landlord’s Work. At Landlord’s sole cost, Landlord shall be responsible and
perform such work to insure that the Building, path of travel, and all common
areas including the bathrooms on each floor are in compliance with all
applicable codes including, by way of illustration but not limitation, current
fire/life safety, ADA and Title 24 energy conservation codes.

 

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SCHEDULE 1 TO EXHIBIT G

 

IMPROVEMENTS

 

The Landlord’s Improvements are more particularly set forth in those certain
Construction Drawings for the 12th Floor Premises and the 13th Floor Premises,
dated April 6, 2004, prepared by David Meckley of Huntsman Architectural Group
(which Construction Drawings were heretofore reviewed and approved by the
parties and submitted to the City of San Francisco).

 

Schedule 1 to Exhibit G

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EXHIBIT H

 

LETTER OF CREDIT REQUIREMENTS

 

The letter of credit shall be for the amount specified in the Lease to which
this Exhibit is attached (as renewed or replaced pursuant to the Lease or this
Exhibit, the “Letter of Credit”). The Letter of Credit (i) shall be irrevocable
and shall be issued by a commercial bank acceptable to Landlord (in its sole
discretion) that has an office in San Francisco, Los Angeles or New York City
that accepts requests for draws on the Letter of Credit, (ii) shall require only
the presentation to the issuer of a certificate of the holder of the Letter of
Credit stating that Landlord is entitled to draw on the Letter of Credit
pursuant to the terms of the Lease, (iii) shall be payable to Landlord or its
successors in interest as the Landlord and shall be freely transferable without
cost to any such successor or any lender holding a collateral assignment of
Landlord’s interest in the Lease, (iv) shall be for an initial term of not less
than one year and contain a provision that such term shall be automatically
renewed for successive one-year periods unless the issuer shall, at least 45
days prior to the scheduled expiration date, give Landlord notice of such
nonrenewal, and (v) shall otherwise be in form and substance reasonably
acceptable to Landlord. Notwithstanding the foregoing, the term of the Letter of
Credit for the final period shall be for a term ending not earlier than the date
thirty (30) days after the Expiration Date (as same may be extended in
accordance with the terms and conditions of the Lease).

 

Landlord shall be entitled to draw upon the Letter of Credit for its full amount
or any portion thereof if (a) Tenant shall fail to perform any of its
obligations under the Lease after the expiration of any applicable notice and
cure period, or fail to perform any of its obligations under the Lease and
transmittal of a default notice is barred by applicable law, or fail to perform
any of its obligations under the Lease and any applicable notice and cure period
would expire prior to the expiration of the Letter of Credit, or (b) not less
than 30 days before the scheduled expiration of the Letter of Credit, Tenant has
not delivered to Landlord a new Letter of Credit in accordance with this
Exhibit. Landlord may, but shall not be obligated to, apply the amount so drawn
to the extent necessary to cure Tenant’s failure. Any amount drawn in excess of
the amount applied by Landlord to cure any such failure shall be held by
Landlord as a cash security deposit for the performance by Tenant of its
obligations under the Lease. Any cash security deposit may be mingled with other
funds of Landlord and no fiduciary relationship shall be created with respect to
such deposit, nor shall Landlord be liable to pay Tenant interest thereon. If
Tenant shall fail to perform any of its obligations under this Lease, Landlord
may, but shall not be obliged to, apply the cash security deposit to the extent
necessary to cure Tenant’s failure. After any such application by Landlord of
the Letter of Credit or cash security deposit, as the case may be, Tenant shall
reinstate the Letter of Credit to the amount originally required to be
maintained under the Lease, upon demand. Provided that Tenant is not then in
default under the Lease, and no condition exists or event has occurred which
after the expiration of any applicable notice or cure period would constitute
such a default, within thirty (30) days after the expiration or sooner
termination of the Term the Letter of Credit and any cash security deposit, to
the extent not applied, shall be returned to the Tenant, without interest.

 

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In the event of a sale of the Building or lease, conveyance or transfer of the
Building, Landlord shall transfer the Letter of Credit or cash security deposit
to the transferee. Upon such transfer, the transferring Landlord shall be
released by Tenant from all liability for the return of such security, and
Tenant agrees to look to the transferee solely for the return of said security.
The provisions hereof shall apply to every transfer or assignment made of the
security to such a transferee. Tenant further covenants that it will not assign
or encumber or attempt to assign or encumber the Letter of Credit or the monies
deposited herein as security, and that neither Landlord nor its successors or
assigns shall be bound by any assignment, encumbrance, attempted assignment or
attempted encumbrance.

 

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EXHIBIT I

 

FORM OF SNDA

 

RECORDING REQUESTED BY

AND WHEN RECORDED

RETURN TO:

 

SunAmerica Life Insurance Company

1 SunAmerica Center, 38th Floor

Los Angeles, CA 90067-6022

Attention: Keith C. Honig

 

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Space Above This Line for Recorder’s Use

 

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

 

NOTICE:    THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT CONFIRMS
THAT YOUR LEASEHOLD ESTATE IN THE PROPERTY IS SUBJECT TO AND OF LOWER PRIORITY
THAN THE LIEN OF SUNAMERICA LIFE INSURANCE COMPANY’S DEED OF TRUST.

 

THIS AGREEMENT, made this          day of                     , 20    , by and
among                         , a                                              
(“Tenant”), having an address at                                     ,
                            ,                              ,
                            , a                                              
(“Landlord”), having an address at                                         
    ,                         ,                          , and SunAmerica Life
Insurance Company, an Arizona corporation (“Lender”), having an address at 1
SunAmerica Center, Los Angeles, CA 90067-6022.

 

RECITALS:

 

A. Landlord is the owner of the property commonly known as
                                ,                         ,
                        , and more specifically described on Exhibit ‘A’
attached hereto (the “Premises”);

 

B. Landlord is the lessor and Tenant is the lessee under that certain unrecorded
Lease Agreement dated                                 , as amended on
                                         by                                 
(collectively, the “Lease”) for a portion of the Premises commonly referred to
as                                     ;

 

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C. Landlord has made, executed and delivered to Lender a certain promissory note
(the “Note”) secured by, among other things, a first lien Deed of Trust [or
Mortgage (the “Deed of Trust [Mortgage]”) on the Premises;

 

D. The Lease has been or may be assigned by Landlord to Lender as further
security for the Note;

 

E. It is a condition precedent to obtaining Lender’s consent to said Lease that
the Deed of Trust shall unconditionally be and remain at all times a lien or
charge upon the Premises prior and superior to the Lease;

 

F. Lender is willing to provide such consent to the Lease provided (i) the Deed
of Trust is a lien or charge upon the Premises prior and superior to the lien or
charge, if any, of the Lease, (ii) Tenant will specifically and unconditionally
subordinate the Lease to the lien or charge of the Deed of Trust in favor of
Lender and (iii) in the event of foreclosure, trustee’s sale or other proceeding
to enforce the Deed of Trust or deed in lieu thereof, Tenant agrees to attorn to
Lender and its successor and assigns;

 

G. Tenant is willing to execute the unrecorded Lease so long as Lender, on
behalf of itself, its successors and assigns, whether by assignment,
foreclosure, trustee’s sale, deed-in-lieu of foreclosure or otherwise,
acknowledges the rights of Tenant in the unrecorded Lease, so long as Tenant is
not then in default thereunder, and

 

H. It is to the mutual benefit of the parties hereto that Lender approve the
Lease, and acknowledge for itself, its successors and assigns, and on the terms
and conditions contained herein, Tenant’s right to the leasehold interest and
Tenant agrees that the Deed of Trust securing the same is a lien or charge upon
the Premises which is unconditionally prior and superior to the Lease.

 

NOW, THEREFORE, in consideration of the mutual promises hereinafter contained
and other good and valuable consideration, the receipt and sufficiency whereof
are hereby acknowledged, Landlord, Tenant and Lender, intending to be legally
bound hereby, covenant and agree as follows:

 

1. Tenant represents and warrants to Lender that the Lease has been duly
authorized, executed and delivered by Tenant. Landlord and Tenant each represent
and warrant to Lender that: (a) the Lease is in full force and effect, (b)
except as expressly set forth in Recital B hereof, the Lease has not been
modified or amended in any way, and (c) neither party to the Lease is in default
with respect to such party’s obligations under the Lease as of the date of this
Agreement.

 

2. The Deed of Trust and any and all terms, conditions and provisions thereof,
all advances made or to be made thereunder, and any other amendments,
modifications, renewals, extensions, alterations or replacements thereof are and
shall unconditionally be and

 

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remain at all times a lien or charge upon the Premises prior and superior to the
Lease, the leasehold estate created thereby and all rights and privileges of
Tenant or any other lessee thereunder. The Lease, the leasehold estate created
thereby and all rights and privileges of Tenant or any other lessee thereunder
are hereby unconditionally subjected and made subordinate to the lien or charge
of the Deed of Trust and to all the terms, conditions and provisions thereof, to
all advances made or to be made thereunder, and to any amendments,
modifications, renewals, extensions, alterations or replacements thereof.

 

3. As long as Tenant is in compliance with the terms of this Agreement and is
not in default in the performance of its obligations under the Lease, which
default has continued beyond any cure periods provided in the Lease or at law,
the Lease shall not be terminated in connection with, or by reason of,
foreclosure, trustee’s sale or other proceedings for the enforcement of the Deed
of Trust, or by reason of a transfer of Landlord’s interest under the Lease
pursuant to the taking of a deed or assignment (or similar device) in lieu or in
contemplation of foreclosure, nor shall Tenant’s use or possession of the
Premises be interfered with, and the rights of Tenant under the Lease shall
remain in full force and effect, except that the person acquiring or succeeding
to the interests of Landlord as the result of any such action or proceeding and
such person’s successors and assigns (any of the foregoing being hereinafter
referred to as the “Successor”) shall not be:

 

(a) bound by any prepayment of rent paid more than thirty (30) days in advance
of the due date or for any security deposit unless actually received by
Successor and then limited to the amount of such security deposit actually
received subject to all rights, privileges and benefits of Landlord set forth in
the Lease with respect thereto;

 

(b) liable for any act or omission of any prior landlord (including, without
limitation, Landlord) or for any claim for damages against any such prior
landlord (including, without limitation, Landlord);

 

(c) subject to any offsets, defenses or counterclaims which Tenant may have
against any prior landlord (including, without limitation, Landlord); or

 

(d) bound by any amendment or modification of the Lease made without the written
consent of Lender.

 

4. If the interest of Landlord under the Lease shall be transferred by reason of
any foreclosure, trustee’s sale or other proceeding for enforcement of the Deed
of Trust or by deed in lieu thereof, then as long as the Tenant is not in
default past any applicable cure periods provided in the Lease or at law, and
except as provided in this Agreement, Successor shall be bound to Tenant, and
Tenant shall be bound to Successor, under all of the terms, covenants and
conditions of the Lease for the balance of the term thereof (if any) with the
same force and effect as if Successor were the original lessor under the Lease.
Tenant does hereby attorn to Successor, including Lender if Lender becomes a
Successor, as the lessor under the Lease, provided such Successor will not
disturb the possession of Tenant and will be bound by all of the obligations
imposed on Landlord by the Lease. Said attornment shall be effective and
self-operative without

 

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the execution of any further instruments upon Successor’s succeeding to the
interest of the lessor under the Lease. Tenant agrees to provide Successor a
written confirmation of his attornment to Successor within ten (10) days after
receipt of a written request therefor from Successor, but failure to receive
such written confirmation from Tenant shall not derogate from Tenant’s
obligations to Successor hereunder.

 

5. Upon the written request of either Successor or Tenant to the other given at
the time of foreclosure, trustee’s sale or other proceeding for enforcement of
the Deed of Trust or by deed in lieu thereof, the parties shall execute a lease
of the Premises upon the same terms and conditions as the Lease between Landlord
and Tenant, which Lease shall cover any unexpired term of the Lease existing
prior to such foreclosure, trustee’s sale or conveyance in lieu thereof.

 

6. Notwithstanding anything to the contrary in the Lease, Tenant shall not
terminate or cancel the Lease or the term thereof by reason of a default or
breach by Landlord thereunder and shall not commence any action against Landlord
or otherwise pursue any right or remedy against Landlord in consequence of a
default or breach by Landlord under the terms and provisions of the Lease unless
written notice by Tenant specifying such default is mailed to Lender at its
address set forth above. Tenant further agrees that Lender shall have the right,
but shall not be obligated, to cure such default on behalf of Landlord within
thirty (30) days after receipt of such notice, or if such default cannot
reasonably be cured in such 30-day period, Lender shall have the right to
commence the cure of such default in such 30-day period and thereafter
diligently pursue such cure until completed. Tenant further agrees not to invoke
any of its remedies either express or implied, under the Lease (except in the
case of emergency repairs) unless such default shall remain uncured at the
expiration of the 30-day period after receipt of such notice of default, or if
such default cannot reasonably be cured in such 30-day period, unless the cure
of such default shall not be commenced within such 30-day period and thereafter
prosecuted diligently to completion.

 

7. Tenant agrees that neither this Agreement nor the Deed of Trust shall, prior
to Successor’s succession to Landlord’s interest in the Premises, through any
foreclosure, trustee’s sale or other proceeding for enforcement of the Deed of
Trust or by deed in lieu thereof, operate to place responsibility for the
control, care, management or repair of the Premises upon Lender, or impose
responsibility for the carrying out of the terms and conditions of the Lease,
nor shall Lender be responsible for or liable for any waste committed on the
Premises by any party whosoever or for any dangerous or defective condition of
the Premises, or for any negligence in the management, upkeep, repair or control
of the Premises resulting in any damage to property or in any loss or injury or
death to any person.

 

8. In the event that Lender notifies Tenant of any default under the Deed of
Trust and demands that Tenant pay rent and all other sums due under the Lease to
Lender, Tenant (waiving any proof of the occurrence of such event of default
other than receipt of Lender’s notice) shall pay rent and all other sums due
under the Lease directly to Lender. Any payments made to Lender by Tenant shall
not affect or impair the other rights and remedies of Lender under the Deed of
Trust or otherwise against Landlord. Any and all payments made to

 

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Lender by Tenant pursuant to the foregoing shall be credited against Tenant’s
rental obligations under the Lease regardless of whether Lender had the right to
make such demand and regardless of any contrary demands which may hereafter be
made by Landlord.

 

9. This Agreement shall be the whole and only agreement between the parties
hereto with regard to the subordination of the Lease to the lien or charge of
the Deed of Trust in favor of Lender, and shall supersede and cancel, but only
insofar as would affect the priority of the Lease as to such subjection or
subordination, all other subjection or subordination agreements including, but
not limited to, those provisions, if any, contained in the Lease which provide
for the subjection or subordination of said Lease to a deed of trust or to a
mortgage or mortgages.

 

10. This Agreement may not be modified except by any agreement in writing signed
by the parties. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.

 

11. Nothing contained in this Agreement shall in any way impair or affect the
lien created by the Deed of Trust, except as specifically set forth herein.

 

12. Tenant acknowledges that this Agreement satisfies any condition or
requirement in the Lease relating to the granting of a non-disturbance agreement
with respect to the Deed of Trust. In the event there is any inconsistency
between the terms and provisions hereof and the terms and provisions of the
Lease dealing with non-disturbance, the terms and provisions hereof shall be
controlling.

 

13. All notices, demands or requests made pursuant to, under or by virtue of
this Agreement shall be in writing and delivered by hand, sent by an overnight
courier service providing dated evidence of delivery or mailed by certified or
registered mail, return receipt requested, to the person to whom the notice,
demand or request is being made at its address set forth herein. Such notices
shall be deemed to have been promptly given and received for all purposes (a) if
hand delivered, effective upon delivery; (b) if mailed, by United States
registered or certified mail, postage prepaid, return receipt requested,
effective on date shown on the return receipt; or (c) if sent by Federal Express
or other reliable express courier, effective on the next business day after
delivery to such express courier service. Any person may change the place that
notices and demands are to be sent by written notice delivered in accordance
with this Agreement.

 

14. This Agreement shall be deemed to have been made in the State of California
and shall be governed by the laws of the State of California. If any of the
terms of this Agreement or the application thereof to any person or
circumstances shall to any extent be invalid or unenforceable, the remainder of
this Agreement or the application of any such terms to any person or
circumstances other than those as to which it is invalid or unenforceable shall
not be affected thereby, and each term of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.

 

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15. In the event any legal action or proceeding is commenced to interpret or
enforce the terms of, or obligations arising out of, this Agreement, or to
recover damages for the breach thereof, the party prevailing in any such action
or proceeding shall be entitled to recover from the non-prevailing party all
reasonable attorneys’ fees, costs and expenses incurred by the prevailing party.

 

16. This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which taken together shall constitute one and the
same instrument.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed under seal as of the day and year first above written.

 

LANDLORD:

                ,

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By:

               

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By:

               

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Its:

               

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TENANT:

                 

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By:

               

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Its:

               

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LENDER:

    SunAmerica Life Insurance Company, an Arizona corporation    

By:

               

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Its:

               

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