Exhibit 10.1

 

SUB-SUBLEASE AGREEMENT

 

THIS SUB-SUBLEASE AGREEMENT (“Sub-sublease”) is made this 30th day of May, 2008,
by and between PROSODIE INTERACTIVE CALIFORNIA, INC., (“Sub-sublandlord”) and
Enernoc, Inc.  (“Sub-Sub-Tenant”)

 

1.   Premises. Sub-sublandlord agrees to Sub-sublease to Sub-subtenant, and
Sub-subtenant agrees to Sub-sublease from Sub-sublandlord, approximately 8,766
rentable square feet  (“RSF”) of space located on the eastern side of the 4th
floor of the building located at 500 Howard Street, San Francisco, CA 94105, as
shown on the floor plan attached hereto as Exhibit A (“Premises”).

 

2.   Master Lease, Sublease and Other Agreements. Except as specifically set
forth herein, this Sub-sublease is subject and subordinate to all of the terms
and conditions of the Master Sublease, dated October 31, 2006, between Sun
Microsystems, Inc., (‘‘Master Sublessor”) and Sub-sublandlord and the lease
dated November 3, 2000 as amended (“Master Lease”) between Utah State Retirement
Investment Fund, as the “Lessor” (“Master Lessor”), and Master Sublessor.   A
copy of the Master Sublease is attached hereto as Exhibit B and incorporated
herein by this reference except that the following sections of the Master
Sublease are not incorporated herein: Sections 1.1 through 1.19; Sections 2.1
and 2.3; Article 3; the first sentence of Section 4.1; Sections 4.2 and
4.3;Section 4.6; Sections 5.1 through 5.3; Article 6; Sections 7.1 and 7.2;
Article 12; Section 13.2.1; Sections 14.1 and 14.4; Article 15; Article 16;
Section 18.3; Section 18.4; Section 18.5;  Section 18.7 and Section 18,9.  Where
incorporated into this Sub-sublease, the terms “Sublandlord”, “Subtenant”,
“Premises” and “Sublease” in the Master Sublease shall refer to
“Sub-sublandlord”, “Sub-subtenant”, “Premises” and “Sub-sublease”.  A copy of
the Master Lease is attached hereto as Exhibit C and is incorporated herein by
this reference to the extent incorporated into the Master Sublease by
Section 13.1 of the Master Sublease. Sub-sublandlord represents and warrants to
Sub-subtenant that (i) the Master Sublease is in full force and effect and has
not been amended, (ii) the Expiration Date of the Master Sublease is March 31,
2012, and (iii) Sub-sublandlord is not aware of any default (or the occurrence
of any events which would constitute a default with the passage of time) on the
part of (A) Sub-sublandlord or Master Sublessor under the Master Sublease or
(B) Master Sublessor or Master Lessor under the Master Lease.

 

Notwithstanding anything to the contrary in the Master Sublease or the Master
Lease, in no event shall Sub-subtenant have any liability, or responsibility,
for the removal or restoration for any alterations, improvements, or additions
that are in existence as of the date of this Sub-sublease.  In addition,
Sub-subtenant shall not be obligated to (i) pay the Rent to be paid by
Sub-sublandlord under the Sublease, (ii) cure any default of Sub-sublandlord
under the Sublease, (iii) perform any obligation of Sub-sublandlord under the
Sublease which arose prior to the Commencement Date and Sub-sublandlord failed
to perform, (iv) repair any damage to the Premises, or cure any violation of
law, caused by Sub-sublandlord or existing prior to the Commencement Date,
(v) indemnify Master Lessor or Master Sublessor with respect to any act,
omission, negligence or willful misconduct of Sub-sublandlord, its agents
employees or contractors, (vi) pay late fees, interest or damages due under the
Master Sublease which relate to the acts, omissions, willful misconduct,
negligence or default of Sub-sublandlord under the Master Sublease,
(vii) separately meter the Premises for utility service, (viii) provide its own
janitorial services.

 

Sub-sublandlord agrees not to voluntarily terminate the Master Sublease before
the expiration of the Term (as defined below). With respect to the,
Sub-subtenant shall be entitled to all utilities, repairs and services furnished
by Master Lessor under the Master Lease and Master

 

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Sublessor under the Master Sublease.  Sub-sublandlord agrees to make reasonable
and diligent efforts to enforce Master Lessor’s obligations under the Master
Lease and Master Sublessor’s obligations under the Master Sublease, to the
extent that Sub-Subtenant is a beneficiary thereof.  Whenever the consent of the
Landlord is required under the Master Lease and/or consent of the Sublandlord
under the Sublease, and whenever the Landlord fails to perform its obligations
under the Master Lease or Sublandlord fails to perform its obligations under the
Sublease, Sub-Sublandlord agrees to use its reasonable, good faith efforts to
obtain that consent or performance on behalf of Sub-Subtenant.

 

3.   Commencement Date.  The Commencement Date of the Sub-sublease shall be upon
the later of (i) delivery of possession of the Premises to Sub-subtenant in the
condition required hereunder and (ii) receipt by Sub-subtenant of the written
consent of both the Sub-Landlord (Sun MicroSystems, Inc.) and the Master
Landlord (Utah State Retirement Investment Fund) (the “Consents”) estimated to
be on or about June 1, 2008.  If Sub-sublandlord is unable to deliver possession
of the Premises and the Consents by July 31, 2008, Sub-subtenant shall have the
option to terminate the Sub-sublease.

 

4.   Term.

 

(a)  The term of this Sub-sublease (“the Term”) shall be for a period the
Commencement Date, and shall expire on February 28, 2012 (the “Expiration Date”)
unless sooner terminated pursuant to any provision of the Master Sublease or
Master Lease applicable to the Premises (the “Expiration Date”).

 

(b) Early Access.  Sub-subtenant shall have the right of early access to the
Premises, rent free, beginning on June 1, 2008, for the purpose of inspecting
and planning the configuration and installation of its IT and telephone
equipment, wiring, etc.  Sub-subtenant shall not be charged for rent,
electricity or any other service during the Early Access period, provided
special building services are not requested in order for Sub-subtenant to
perform their own work.

 

5.   Rent.  Rent shall commence thirty (30) days from Commencement Date.

 

(a) Sub-subtenant shall pay to Sub-sublandlord each month during the Term of
this Sub-sublease, base rent (“Base Rent”) as follows:

 

Year 1:

 

$38.00 PSF

 

$27,759.00 per month

Year 2:

 

$39.00 PSF

 

$28,489.50 per month

Year 3:

 

$40.00 PSF

 

$29,220.00 per month

Year 4:

 

$41.00 PSF

 

$29,950.50 per month

 

(b)     Base Rent shall be abated for the first full calendar month of the
Term.  Monthly Base Rent is due and payable on or before the first of each month
thereafter. If the Commencement Date is not the first day of the month, then
Sub- subtenant shall pay the prorated Base Rent for the first partial month on
the Commencement Date. The rent shall be paid to Sub-sublandlord at the address
set forth in Section 16 of this Sub-sublease, or at such other place as
Sub-sublandlord may designate, in advance, on the first day of each and every
month throughout the term of this Sub-sublease without any notice, set off, or
deduction whatsoever except as permitted hereunder.

 

(c)     Operating Costs and Taxes.  Sub-subtenant shall receive a 2008 Base Year
and commencing January 1, 2009, shall pay its proportionate share of all
Operating Costs and Taxes outlined in the underlying Sublease and Master Lease
in excess of Operating Costs and

 

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Taxes for the 2008 Base Year. Sub-subtenant’s proportionate share shall be the
ratio which the rentable area of the Premises bears to the rentable area of the
Master Premises, which ratio is agreed to be 3.91% as of the date of this
Sub-sublease based on 8,766 rentable square feet of the Premises and 223,681
rentable square feet of the Master Premises. Said sums (including any estimates
of such sums) shall be paid to Sub-sublandlord at the times required pursuant to
the terms and conditions of the Master Sublease. Sub-sublandlord shall provide
Sub-subtenant with full and complete copies of Master Lessor’s annual
reconciliation statements of Operating Costs and Taxes provided to
Sub-sublandlord under the Master Sublease promptly following Sub-sublessor’s
receipt of the same from Master Sublessor. Sub-subtenant shall have the ability
to request and receive after-hours HVAC in the Premises and Sub-sublandlord
shall pursue such request with Master Sublessor upon Sub-subtenants request.
Current building hours are Monday to Friday from 7:00 am until 6:00 pm and
Saturday from 9:00 am to 1:00 pm. After-hours HVAC cost is currently $150 per
hour with a 4 hour minimum; 72 hours notice required.

 

(d) Late Charge. If any rent is not paid within seven (7) days after the due
date, Sub-Subtenant shall pay a late charge to Sub-sublandlord equal to 2% of
the overdue payment and interest on such amount at the Interest Rate (as defined
in the Master Lease).  Neither demand for, nor receipt of, any late charge
called for under this sub-sublease will: (i) operate to waive any obligation to
pay Rent; or (ii) limit the exercise of any other right or remedy
Sub-sublandlord may have under this Sub-sublease in case of Sub-subtenant’s
Default.

 

6.   Security Deposit and Prepaid Rent.   Sub-subtenant shall pay a one
(1) month security deposit to Sub-sublandlord in the form of check in the amount
of Twenty Seven Thousand, Seven Hundred Fifty Nine ($27,759.00) Dollars. 
Sub-subtenant shall not be paid any interest on such deposit.  Security deposit
shall be returned to Sub-subtenant upon the expiration of the Sub-sublease term,
provided the Premises is returned in acceptable condition; normal wear and tear
expected.

 

7.   Use of Premises; Parking; Improvements. Sub-subtenant shall use the
Premises only for general office use and any other use currently permitted by
the Master Lease. Sub-subtenant shall properly observe and comply with all laws
with respect to Sub-subtenant’s use of the Premises to the extent required under
the Master Sublease.

 

(a)  Furniture, Fixtures & Equipment (FF&E):  Sub-subtenant shall have the right
to use the existing FF&E in the Premises throughout the term of the
Sub-sublease.  Sub-subtenant shall also have the right to purchase the existing
FF&E in the Premises at the end of the lease term at a price to be negotiated
within six (6) months but in no event two (2) months from Sub-sublease
expiration.  Sub-subtenant shall provide Sub-sublandlord with written notice of
its intent to purchase or not purchase the furniture.  The existing furniture
inventory will exclude Sub-sublandlord’s Aeron chairs.  A final inventory list
is attached hereto as Exhibit D.

 

(b)  Voice and Data: Sub-subtenant shall be allowed to use and reconfigure the
existing voice and data network wiring during the term of the Sub-sublease. To
the best of Sub-sublandlord’s knowledge, the voice and data wiring are in good
and operable condition.  Sub-subtenant shall be responsible for any and all
repairs and maintenance associated with such wiring and systems that affect the
Premises throughout the term of this Sub-sublease.

 

(c)  Parking Rights: Sub-subtenant shall have the right to use seven (7) parking
spaces in the Building’s parking garage.

 

(d)  24 Hour Access: Sub-subtenant shall have access to the Building and the
Premises, seven (7) days a week, twenty four (24) hours per day, with electric
service being provided at all times. Sub-subtenant shall be responsible for any
charges associated with its

 

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request for and usage of any after-hours HVAC and utilities for the Premises.

 

(e)     Signage: Sub-subtenant shall have the right to the building lobby
directory, elevator lobby and suite signage per Master Lessor’s standard signage
program at Sub-sub-subtenant’s cost.

 

8.     Alterations.  Subject to the terms of the underlying Sublease and of the
Master Lease, Sub-subtenant shall be permitted to make alterations to the
Premises with the prior approval of Sub-sublandlord, Master Sublessor and Master
Landlord’s approval.  Sub-subtenant shall be responsible for the removal of any
alterations installed by Sub-subtenant upon expiration of the Sub-sublease term
which will be determined at the time of granting consent.

 

9.     Assignment; Subletting. Subject to the terms of the Master Sublease and
Master Lease, Sub-subtenant shall be permitted to Sub-sub-sublease the Premises
with Sub-sublandlord’s, Master Sublessor’s and Master Lessor’s prior written
approval which would not be unreasonably withheld or delayed.

 

10.   Insurance. Sub-subtenant shall maintain the insurance required of the
“tenant” under Section 11.1 in the Master Lease, provided, however, that all
rights and benefits specified for Master Lessor pursuant to the Master Lease
shall apply to and inure to the benefit of Master Lessor, Master Sublessor and
Sub-sublandlord.

 

11.   Condition and Delivery of Premises. Sub-sublandlord shall deliver the
Premises on the Commencement Date vacant of all occupants and clean and free of
debris.

 

12.   Relocation. Subject to and in accordance with the terms of Section 18.3 of
the Master Sublease, in the event that the Sub-sublandlord is required to move
to a Substitute Premises (as defined in the Master Sublease), Sub-sublandlord
will notify Sub-subtenant immediately upon receiving notice from Master
Sublessor of any possible relocation of the Premises. Such relocation shall not
entitle Sub-subtenant to terminate this Sub-sublease so long as Master Sublessor
or Sub-sublandlord agrees to pay the costs of Sub-subtenant in relocating the
Premises in accordance with Section 18.3 of the Master Sublease.  Such space
shall be of similar quality, size and attributes of the Premises. 
Sub-sublandlord shall pay all relocation costs, including without limitation,
those identified in Section 18.3 of the Master Sublease.

 

13.   Default. The occurrence of any of the following shall constitute a
material breach of this Sub-sublease and a default by Sub-subtenant (a
“Default”):

 

(a)  Sub-subtenant’s failure to pay any installment of Base Rent, Additional
Rent or any other payment due hereunder within ten (10) days after receipt of
notice from Sub-sublandlord specifying such failure;

 

(b)  Sub-subtenant’s failure to comply with any term, provision or covenant of
this Sub- sublease, Sublease or the Master Lease (other than the payment of Base
Rent, Additional Rent or any other payment due hereunder) for a period of ten
(10) days after written notice thereof; provided that the default cannot
reasonably be cured within a ten (10) day period, Sub-sub-subtenant shall have a
reasonable time to cure the default before Sub-sublandlord exercises its rights
under this Sub-sublease, provided that Sub-subtenant has begun affirmative and
reasonable efforts to cure the default within the initial ten (10) day period
and diligently pursues cure to completion;

 

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(c)  Sub-subtenant becomes insolvent, transfers any property in fraud of
Subtenant’s creditors, or assigns its assets for the benefit of creditors;

 

(d)  Sub-subtenant files a petition under any section of the Federal Bankruptcy
Code, as amended, or under any similar law or statute of the United States of
any State thereof; or Sub-subtenant is adjudicated a debtor or insolvent in
proceedings filed against Sub-subtenant under any laws or statutes;

 

(e)  If any court appoints a receiver or trustee for all or substantially all of
Sub-sub-subtenant’s assets; or

 

(f)  The Sub-sublandlord may exercise, without limitation of any other rights
and remedies available to it hereunder or at law or in equity, and all rights
and remedies of Landlord set forth in the Master Lease in the event of a default
by the tenant hereunder. No receipt of moneys by Sub-sublandlord from
Sub-subtenant after the exercise by Sub-sublandlord of its rights and remedies
in the event of a default hereunder (including, without limitation, the
termination of this Sub-sublease) shall in any way extend the term of this
Sub-sublease or Sub-subtenant’s right of possession hereunder, nor shall the
giving of any notice thereafter reinstate, continue, or extend the term or
affect any notice given to Sub-subtenant or any suit commenced or judgment
entered prior to receipt of such monies, except to the extent expressly agreed
to by Sub-sublessor.

 

14.   Consent of Master Sub-sublandlord and Master Lessor. The Master Lease and
Master Sublease requires that Sub-sublandlord obtain the consent of Master
Lessor and Master Sublessor to any subletting by Sub-sublandlord. This
Sub-sublease shall not be effective unless and until Master Lessor and Master
Sublessor sign a consent to this subletting satisfactory to Sub-sublandlord and
Sub-subtenant. Sub-sublessor agrees that the consent of the Master Lessor must
contain an acknowledgement of the parking rights granted to Sub-subtenant under
Section 7(c) below.  If either Master Lessor or Master Sublessor fails to
consent to this Sub-sublease, including the parking rights, by July 31, 2008,
then Sub-subtenant may terminate this Sub-sublease by written notice to
Sub-sublandlord and in such event neither party shall have any obligations to
the other party under this Sub-sublease.

 

15.   Subtenant’s Insurance and Indemnity. Sub-subtenant hereby waives claims
against Master Lessor, Master Sublessor and Sub-sublessor for death, injury,
loss or damage of every kind and nature, if and to the extent that
Sub-sublandlord waives or releases such claims against Master Sublessor under
the Master Sublease or Master Lessor under the Master Lease. Sub-sublandlord and
Sub-subtenant shall each procure an appropriate clause in or endorsement to any
property insurance covering the Premises (and the premises subleased under the
Master Sublease) and personal property, fixtures and equipment located therein,
wherein the insurer waives subrogation or consents to a waiver of right of
recovery, and, notwithstanding anything to the contrary contained herein,
Sub-sublandlord and Sub-subtenant agree not to make any claim against, or seek
to recover from, the other for any loss or damage to its property or the
property of others resulting from fire or other hazards to the extent of
coverage by such property insurance; provided, however, that the release,
discharge, exoneration and covenant not to sue contained herein and in the
Master Lease shall be limited by and be coextensive with the terms and
provisions of the waiver of subrogation or waiver of right of recovery.
Sub-subtenant acknowledges that Sub-sublandlord shall not carry insurance for
and shall not be responsible for Sub-subtenant’s furniture, fixtures, equipment
or other property, and any loss suffered by Sub- Sub-subtenant due to the
interruption of Sub-subtenant’s business.

 

Sub-subtenant shall indemnify, defend and hold Sub-sublandlord harmless against

 

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any claims, demands, judgments and awards, losses, liabilities and expenses,
including reasonable attorneys fees and costs, resulting from (i) the negligence
or willful misconduct of Sub-subtenant, its employees, agents and invitees in
the Building (ii) any act, omission or negligence of Sub-subtenant, its
employees, agents and invitees in the Premises, (iii) any alterations or
improvements made to the Premises, whether Sub- sublessor gave its consent
thereto or not (iv) any violations of applicable law by Sub-subtenant; and
(v) any Default. Sub-subtenant’s obligation to indemnify and hold
Sub-sublandlord harmless shall not extend to any portion of a loss, judgment or
award directly attributable to Sub- sublessor or its agents, contractors’ or
employees’ gross or active negligence or willful misconduct provided that
Sub-sublandlord give Sun-subtenant prompt written notice of any such claim or
threatened claim, and Sub-subtenant cooperates (at no expense to Sub-subtenant)
in any defense or settlement of such claim. Sub-sublandlord’s and
Sub-subtenant’s obligations under this Section shall survive the expiration or
termination of this Sub-sublease.

 

Sub-sublandlord shall indemnify, defend and hold Sub-subtenant harmless against
any claims, demands, judgments and awards, losses, liabilities and expenses,
including reasonable attorneys fees and costs, resulting from (i) the negligence
or willful misconduct of Sub-sublandlord, its employees, agents and invitees in
the Building (ii) any act, omission or negligence of Sub-subtenant, its
employees, agents and invitees in the remainder to the premises subleased to
Sub-sublandlord under the Master Sublease, and (iii) any default by
Sub-sublandlord under, or early termination of, the Master Sublease.

 

To the fullest extent allowed by applicable law, in the event of any breach of
this Sub- Sublease by either party, each party shall not be liable for any
punitive, exemplary or consequential damages, including, without limitation, any
business interruption damages or loss of income or profit there from, and all
such remedies or damages are expressly waived.

 

16.   Notice. Any notice, approval, request, consent, bill, statement, or other
communication required or permitted to be given, rendered, or made by either
party hereto, shall be deemed given five (5) days from when sent when received
or personally refused, shall be in writing, and shall be sent to the parties
hereto by certified U.S. mail, postage prepaid, return receipt requested, or a
recognized overnight delivery service such as Federal Express, at the following
addresses:

 

If to Sub-sublandlord:

 

 

 

 

 

PROSODIE INTERACTIVE CALIFORNIA, INC.

 

 

855 SW 78th Avenue

 

 

Suite 100

 

 

Plantation, FL 33324

 

 

 

 

 

Attention:

Arlene Matthews

 

 

Telephone:

954 671-6558

 

 

Fax:

954 671-6558

 

 

 

 

 

If to Sub-subtenant:

 

 

 

 

 

ENERNOC, INC.

 

 

75 Federal Street, Suite 300

 

 

Boston, MA 02110

 

 

 

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Attention:

Julia Regan

 

 

Telephone:

617 398-2202

 

 

Fax:

617-227-9910

 

 

 

 

 

With copy to:

 

 

 

 

 

EnerNOC, Inc

 

 

500 Howard Street,

 

 

San Francisco, CA 94105

 

 

 

 

 

Attention:

Kiera Gilhooly

 

 

Telephone:

415.343.9510

 

 

Fax:

415.343.9559

 

 

 

Each party shall have the right to designate by notice, in writing, any other
address to which such party’s notice is to be sent.

 

17.   Surrender. On the date upon which the term hereof shall expire or come to
an end, whether on the Expiration Date, by lapse of time, or otherwise, at
Sub-subtenant’s sole cost and expense, Sub-subtenant agrees to surrender the
Premises to Sub-sublandlord, vacant of all occupants and personal property
belonging to Sub-subtenant, clean and free of debris, with ordinary wear and
tear expected at the end of the sublease term.

 

18.   Holding Over. Sub-subtenant has no right to occupy the Premises or any
portion thereof after the expiration of the Term or earlier termination of this
Sub-sublease.

 

In the event Sub-subtenant or any party claiming by, through or under
Sub-subtenant holds over, Sub-sublandlord may exercise any and all remedies
available to it at law or in equity to recover possession of the Premises, and
to recover damages, including without limitation, all damages payable by
Sub-sublandlord to Master Sublessor by reason of such holdover. Without limiting
the damages recoverable under the foregoing sentence, for each and every month
or partial month that Sub-subtenant or any party claiming by, through or under
Sub-subtenant remains in occupancy of all or any portion of the Premises after
the expiration of the Term or earlier termination of this Sub-sublease,
Sub-subtenant must pay a holdover rent of 150% of the then existing Base Rent
for the first two (2) months of holdover. Beyond the initial two (2) month
period, Sub-subtenant’s holdover rent shall increase to 200% of its then Base
Rent for the Premises as minimum damages and not as a penalty. The acceptance by
Sub-sublandlord of any lesser sum will be construed as payment on account and
not in satisfaction of damages for such holding over.

 

19.   Severability. If any terms or provisions of this Sub-sublease or the
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable, the remainder of this Sub-sublease or the application of such
term or provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby; and each term and
provision of this Sub-sublease shall be valid and be enforceable to the fullest
extend permitted by law.

 

20.   Broker’s Commission. Studley, as Sub-subtenant’s exclusive representative,
shall be paid a commission equal to One Dollar and fifty cents ($1.50) per RSF,
per leased year.  Staubach, as Sub-sublandlord’s broker, shall be paid a
commission equal to Seventy five cents ($0.75) per RSF, per leased year. Said
commission shall be paid by Sub-sublandlord fifty (50%) percent upon lease
execution and fifty (50%) percent upon the Lease

 

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Commencement.

 

21.   Governing Law. The validity, construction, interpretation, and performance
of the covenants and conditions contained herein shall be governed by and
construed in accordance with the domestic laws of the State of California,
excluding, however, such laws as pertain to conflicts of law.

 

22.   Force Majeure. In no event shall  Sub-sublandlord be liable for failure to
perform any obligation under this Sub-sublease in the event that Sub-sublandlord
is prevented from so performing by strike, lockout, breakdown, accident, order
or regulation of or by any governmental authority, or failure of supply, or
because of war or other emergency, or for any similar dissimilar cause beyond
Sub-sublandlords reasonable control or for any cause due to any act or neglect
of Sub-subtenant or its servants, agents, employees, licensees, or any person
claiming by, through or under Sub-subtenant.

 

23.   Attorneys’ Fees. If either party hereto commences an action against the
other to enforce any obligation hereunder, upon the conclusion of such action,
the prevailing party will be entitled to recover from the nonprevailing party,
the prevailing party’s costs for such action, including, but not limited to,
reasonable attorney’s fees and court costs.

 

24.   Entire Agreement. This Sub-sublease contains the entire agreement between
the parties, and no rights are created in favor of either party other than as
specified or expressly contemplated in this Sub-sublease, and the Master
Sublease and Master Lease, to the extent such is incorporated herein. In
addition, no agreement shall be effective to change or modify this Sub-sublease
in whole or in part unless in writing and duly signed by the party against whom
enforcement of such change or modification is sought.

 

IN WITNESS WHEREOF, the parties have hereto executed this Sub-sublease on the
date above written.

 

SUB-SUBLANDLORD

SUB-SUBTENANT

PROSODIE INTERACTIVE CALIFORNIA, INC.

ENERNOC, INC.

 

 

 

 

BY:

/S/ Marie Curtis

 

By:

/S/ Neal Isaacson

 

 

TITLE: Chief Financial Officer

TITLE: Chief Financial Office

 

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EXHIBIT A

 

PREMISES

 

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EXHIBIT B

 

SUBLEASE

500 Howard Street, San Francisco CA

 

This Sublease (“Sublease”), dated October 31, 2006 (the “Effective Date”), is
entered into by and between SUN MICROSYSTEMS, INC., a Delaware corporation
(“Sublandlord”), and PROSODIE INTERACTIVE, CALIFORNIA, a Delaware Corporation
(“Subtenant”).

 

1.               BASIC SUBLEASE PROVISIONS

 

Premises: The Premises under this Sublease initially consist of approximately
seventeen thousand, nine hundred forty-five (17,945) rentable square feet on
floor 4 (the “Premises”), in the building commonly known as Foundry Square IV,
500 Howard Street, San Francisco, California (“Building”). The Premises demised
hereunder consist of a portion of those certain premises (“Master Premises”)
consisting of approximately two hundred twenty-three thousand six hundred
eighty-one (223,681) retable square feet, which is demised pursuant to the
Master Lease. The Premises are depicted on Exhibit A to this Sublease. The final
rentable square feet of the Premises shall be determined by Sublandlord’s
architect using the “Standard Measure for Measuring Floor Area in Office
Buildings” published by the Secretariat, Building Owners and Managers
Association International (ANSI/BOMA Z65.1-1996), approved June 7, 1996.

 

Master Landlord: Utah State Retirement Investment Fund/Cottonwood.

 

Master Lease: Lease Agreement dated November 3, 2000, entered into by
Sublandlord, as tenant, and K3 First Street Associates, LLC, a California
limited liability company, predecessor-in-interest to Master Landlord, as lessor
(therein refereed to as “Landlord”), as subsequently amended by Amendment No. 1
dated November 30,2000 (“First Amendment”), Second Amendment to Lease Agreement
dated March 29,2002 (“Second Amendment”), Third Amendment to Lease Agreement
dated July 1, 2002 (“Third Agreement”), Fourth Amendment to Lease Agreement
dated February 26,2004 (“Fourth Amendment”), and Fifth Amendment to Lease
Agreement dated February_, 2005 (“Fifth Amendment”) with respect to certain
property commonly known as 500 Howard Street, San Francisco, California (the
“Property”). The Lease Agreement, First Amendment, Second Amendment, Third
Amendment, Fourth Amendment and Fifth Amendment are attached hereto as Exhibit B
and are hereinafter collectively refereed to as the “Master Lease.”

 

Term: Approximately sixty (60) months beginning on the Commencement Date and
ending on the Expiration Date, unless terminated earlier in accordance with the
terms and conditions of this Sublease.

 

Estimated Commencement Date: Upon Substantial Completion of Sublandlord work,
but in no event later than One Hundred Thirty Five (135) days after the
Effective Date of this Sublease, subject to Force Majeure.

 

Commencement Date: This Sublease shall be effective for all purposes upon mutual
execution and the Term shall begin on the Commencement Date, which shall be the
date upon which both of the following events have occurred; (i) the date
Sublandlord’s Work is Substantially Complete (as both such terms are defined in
the Work Letter); and (ii) the date the Master Landlord delivers its written
consent to this Sublease. In the event that the Sublandlord is unable to deliver
the Premises within One Hundred (100) days after the Estimated Commencement
Date, unless due to Subtenant Delay (as defined in the Work Letter) or Force
Majeure, then Subtenant shall have the right to terminate this Sublease by
giving written notice thereof to Sublandlord, at no cost or penalty to
Subtenant. In the event the Sublease terminates pursuant to this Section 1.6,
Sublandlord shall return Subtenant’s Security Deposit and any Rent held by
Sublandlord held within forty-five (45) days of the Sublease termination.

 

Rent Commencement Date: Three (3) months after the Commencement Date.

 

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Expiration Date: The last day of the calendar month in which falls the fifth
(5th) anniversary of the Commencement Date. Thus, if the Commencement Date is
the Estimated Commencement Date in Section 1.5 above, the Expiration Date will
be December 31, 2011.

 

Base Rent: The Base Rent for the Premises shall be:

 

Period

 

Annual Rate Per
Square Foot

 

Annual Base Rent

 

Monthly Base Rent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtenant’s Share: 8.02%

 

Improvement Allowance: NONE. See Work Letter attached as Exhibit C to this
Sublease.

 

Permitted Uses: General office use and any other use currently permitted by the
Master Lease.

 

Security Deposit: One (1) month of Base Rent based on an annual rental rate of
$35.50, totaling Fifty Three Thousand, Eighty Seven dollars and 29/100
($53,087.29).

 

Address Payment of Rent:

 

 

 

Jones Lang LaSalle

 

 

C/o Sun Microsystems, Inc.

 

 

525 William Penn Way, 20th Floor

 

 

Pittsburg, PA 15259

 

 

Attn.: Lease Administration

Sublandlord’s Notice Address:

 

 

 

 

Jones Lang LaSalle

 

 

C/o Sun Microsystems, Inc.

 

 

525 William Penn Way, 20th Floor

 

 

Pittsburg, PA 15259

 

 

Attn.: Lease Administration

With a copy to:

 

 

 

 

Sun Microsystems, Inc.

 

 

4150 Network Circle

 

 

MS SCA12-202

 

 

Santa Clara, CA 95054

 

 

Attn.: Real Estate Counsel

Subtenant’s Notice Address:

 

 

 

 

Prosodie Interactive

 

 

Prior to Commencement Date

 

 

160 Spear Street, Suite 330

 

 

San Francisco, CA 94105

 

 

 

 

 

After Commencement Date:

 

 

500 Howard Street, 4th Floor

 

 

San Francisco, CA 94105

 

 

Attn.: Lease Administration

 

 

 

Brokers: For Sublandlord:

Jones Lang LaSalle

 

 

 

For Subtenant:

The Staubach Company

 

 

 

Guarantor: Prosodie S.A.

 

 

Sublease Base Year: 2007

 

 

 

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Building Hours: 7:00 A.M. to 6:00P.M. during Business Days (defined below), and
(:00A.M. to 1:00P.M. on Saturdays, excluding Sundays and Holidays (defined
below).

 

Business Days: Monday through Friday of each week, exclusive of New Year’s Day,
President’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day (“Holidays”). Sublandlord may designate additional Holidays,
provided that any additional Holidays are commonly recognized by other office
building landlords in San Francisco.

 

The Terms in the Basic Sublease Provisions are used in this Sublease as defined
terms and have the meanings given above. Other capitalized words and phrases
have the meanings given to them elsewhere in this Sublease or, if not defined
herein, the meanings described to them in the Master Lease. Unless otherwise
indicated, all section and exhibit references are to the sections and exhibits
of this Sublease.

 

2.     DEMISE OF PREMISES

 

Sublandlord hereby subleases the Premises to Subtenant, and Subtenant hereby
subleases the Premises from Sublandlord for the Term, on and subject to the
terms and conditions of this Sublease.

 

Sublandlord hereby assigns to Subtenant the non-exclusive right to use the
Common Areas within the Building and the Project in the same manner and subject
to the same conditions as Sublandlord is granted such rights under the Master
Lease.

 

Sublandlord hereby assigns to Subtenant its right to sublease up to nine
(9) parking spaces in the Parking Facility on the same terms and conditions as
apply to Sublandlord’s lease of such parking spaces under Section 1 of
Exhibit “E” to the Master Lease (including, without limitation, Subtenant’s
payment of the Monthly Parking Rental). Subtenant shall contract directly with
Master Landlord for such parking spaces and any Monthly Parking Rental shall be
paid directly to Master Landlord and shall not constitute the payment of Rent
under this Sublease.

 

3.     TERM

 

The Term will commence on the Commencement Date specified in the Basic Sublease
Provisions. At Sublandlord’s request, Subtenant shall confirm, in writing on
such reasonable form as Sublandlord may provide, the exact date that the
Commencement Date occurred. If for any reason, the Commencement Date has not
occurred by the Estimated Commencement Date, Sublandlord will not be liable
therefore, nor will such failure affect the validity of this Sublease or the
obligations of Subtenant hereunder. Notwithstanding anything herein to the
contrary: (i) In the event that the Commencement Date is actually delayed beyond
the Estimated Commencement Date due to an act of Sublandlord or its agents or
due to a Sublandlord Delay as defined in Section 3.2 of the Work Letter, then
Subtenant shall be entitled to an additional day of free rent for each day of
such delay; and (ii) in the event that the Commencement Date is actually delayed
beyond the Estimated Commencement Date due to an act of Subtenant or its agents
resulting in a Subtenant Delay as defined in Section 3.2 of the Work Letter,
then the free rent period between the Commencement Date and the Rent
Commencement Date shall be reduced for each day of such delay.

 

The Term will end on the Expiration Date, unless earlier terminated as provided
elsewhere in this Sublease, in which case the Term will end on such earlier
termination.

 

4.              RENT

 

4.1 The consideration payable by Subtenant for the Premises consists of the Base
Rent Specified in the Basic Sublease Provisions and the Additional Rent set
forth in Sections 4.3 and 4.4. Base Rent, Additional Rent and all other amounts,
however designated, required to be paid

 

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or reimbursed by Subtenant constitute and are collectively referred to as
“Rent.” Subtenant’s covenant to pay Rent will be independent of every other
covenant in this Sublease.

 

4.2 Beginning on the Rent Commencement Date and constituting thereafter on the
first day of each month during the Term, Subtenant must pay to Sublandlord in
advance, and without notice, demand, deduction or offset, the monthly amount of
the Base Rent. Subtenant must pay the first full month’s Rent upon the Effective
Date, and it the Commencement Date is not the first day of the month, then the
Subtenant must pay the prorated Base Rent for the first partial month on the
Commencement Date.

 

4.3  If in any calendar year during the Term, the total amount of Operating
Costs and Taxes (as defined in the Master Lease) for the Building exceed the
amount of Operating Expenses in the Sublease Base Year, then Subtenant shall pay
to Sublandlord, as “Additional Rent”, an amount which is the product of (1) the
amount of such increase in Operating Expenses, multiplied by (2) Subtenant’s
Share, Subtenant’s Share of increases in Operating Expenses for any partial
calendar year during the Term shall be determined by multiplying the amount of
Subtenant’s Share of increase in Operating Expense for the full calendar year by
a fraction, the numerator of which is the number of days during such calendar
year falling within the Term and the denominator of which is three hundred
sixty-five (365). If in any calendar year during the Term, the amount of Taxes
exceeds the amount of Taxes for the Sublease Base Year, then Subtenant shall
pay, as Additional Rent, an amount which is the product of (1) the amount of
such increase in Taxes, multiplied by (2) Subtenants Share. Subtenant’s Share of
increases in Taxes for any partial calendar year during the Term shall be
determined by multiplying the amount of Subtenant’s Share of increase in Taxes
for the full calendar year by a fraction, the numerator of which is the number
of days during such calendar year falling within the Term and the denominators
of which is three hundred sixty-five (365).

 

4.4  Subtenant shall also pay as Additional Rent, an amount equal to all
expenses incurred by Sublandlord in providing services to the Premises which are
(i) required to be supplied by Sublandlord under this Sublease but not by Master
Landlord under the Master Lease, or (ii) supplied by Master Landlord under the
Master Lease upon the condition that Sublandlord pay or reimburse Master
Landlord for such services, or (iii) not required by this Sublease but
nevertheless furnished at the request of Subtenant. Subtenant shall not be
required to pay Additional, Rent as a result of Sublandlord’s exclusive use and
needs.

 

Additional Rent shall be paid within ten (10) business days after the delivery
to Subtenant of an invoice therefore, except to the extent the Master Lease
Operating Costs and Taxes are payable by Sublandlord on an estimated basis, in
which case the Additional Rent in respect thereto must be paid in advance when
Base Rent is due without notice or invoice based on Master Landlord’s estimates
(provided, that Subtenant will be notified in writing of Master Landlord’s
estimates (provided, that Subtenant will be notified in writing of Master
Landlord’s estimates of Operating Costs and Taxes and any changes thereto). Upon
any reconciliation of estimated ad actual Master Lease Operating Costs and
Taxes, the corresponding Additional Rent must be adjusted between Sublandlord
and Subtenant (with appropriate reimbursements or additional payments) within
twenty (20) days after delivery to Subtenant of any reconciliation statement
under the Master Lease. For purposes of calculating Master Lease Operating Costs
and Taxes, Sublandlord will be entitled to rely conclusively on Master
Landlord’s determination of estimated and actual Master Lease Operating Costs
and Taxes, in the event that within ninety (90) days after Subtenant’s receipt
of the reconciliation statement, Subtenant reasonably believes that certain of
the Operating Costs and Taxes include costs that are not properly included
within the term Operating Costs and Taxes or Master Landlord has erred in
calculating the same, Subtenant may request in writing that Sublandlord, at
Subtenant’s sole expenses, exercise its rights to inspect and/or audit Master
Landlord’s books and records pertaining to Operating Costs and Taxes to the
extent permitted by Section 3.2 of the Master Lease (“Operating Costs Audit”).
Sublandlord may delay the commencement of any such Operating Costs Audit until
Subtenant deposits with Sublandlord a sum sufficient to cover Sublandlord’s

 

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estimated expenses in connection therewith. If Sublandlord obtains any reduction
from Master Landlord pursuant to any audit of Operating Costs and Taxes under
the Master Lease, it shall make an appropriate adjustment, based on the amount
actually credited to it (less Sublandlord’s reasonable costs and expenses in
procuring such reduction in such expenses) and the period covered by such credit
within sixty (60) days after it receives any adjustment. Subtenant shall work in
good faith to resolve any questions it may have relative to operating expense.
If Subtenant is unable to resolve its questions, it may audit Sublandlord’s
books at a location designated by Sublandlord during normal business hours.
Subtenant shall receive reimbursement of its commercially reasonable audit costs
if it is overcharged by more than five percent (5%) of the actual operating
expenses during the prior year. Subtenant’s auditor shall not be contingency
based. If Subtenant does not find a discrepancy greater than five percent (5%),
Subtenant shall pay the commercially reasonable Sublandlord costs to oversee the
audit. If Master Landlord receives a reduction of its prior year or years Real
Estate Taxes due to an Ad Valorem tax protect (commonly known as a Proposition 8
reduction) and Sublandlord receives a reduction in its prior years Real Estate
Taxes as a result, Subtenant shall also receive its prorate share of any
reduction in its prior years Real Estate Taxes that it had previously paid to
Sublandlord.

 

4.5 All Rent must be paid to Sublandlord at the Address for Payment of Rent
specified in the Basic Sublease Provisions, or to such other person or such
other place as Sublandlord may from time to time designate by giving notice in
writing.

 

4.6 If any Rent is not paid within five (5) days after the date when due,
Subtenant must pay a late charge to Sublandlord equal to all interest and late
charges as Sublandlord would sustain under the Master Lease in the event that
Sublandlord were delinquent in paying such amount under the Master Lease.
Neither demand for, nor receipt of, any late charge called for under this
Sublease will: (i) operate to waive any default by Subtenant or provide a
substitute for Subtenant’s full and timely performance of the obligation to pay
Rent; or (ii) limit the exercise of any other right or remedy Sublandlord may
have under this Sublease in case of Subtenant’s Default.

 

5.              CONDITION AND USE OF PREMISES

 

5.1 On or before the Commencement Date, Sublandlord agrees to perform, at its
cost, that certain improvement work defined as “Sublandlord Work” in the Work
Letter attached as Exhibit C in the accordance with the terms and conditions of
the Work Letter. Except for the Sublandlord Work, Sublandlord shall have no
obligation to improve or otherwise modify the Premises for Subtenant’s use.
Subject to Sublandlord’s obligation to complete the Sublandlord Work, Subtenant
shall accept the Premises in the “as is” and “with all faults” condition as of
the Effective Date, including but not limited to title, physical condition, size
or dimensions of the Premises, and the zoning, building and land use
restrictions applicable to the Premises.  Subtenant acknowledges that
Sublandlord has not made any representations, warrantless or promises to
Subtenant regarding the Premises or the Building. Sublandlord shall deliver the
Premises in a condition suitable for occupancy with all work that has been
defined as “Sublandlord’s Work” ad shall be compliant with current building
codes and regulations as of the Commencement Date. Within the first year of the
term, Sublandlord shall coordinate with its contractor for correction of any
commercially reasonable defects in the construction of the Premises that
Subtenant identifies to Sublandlord.

 

5.2  The Premises may be used and occupied solely for the Permitted Uses
specified in the Basic Sublease Provisions. Subtenant must not use or suffer or
permit the Premises to be used for any other purpose except with Master
Landlord’s and Sublandlord’s prior written consent, which either or both of
Master Landlord and Sublandlord may withhold in its or their sole and absolute
discretion.

 

5.3  Subtenant specifically agrees that it shall maintain, repair and replace
all fixtures and improvements to the Premises (including supplemental HVAC, if
any, serving the Premises)

 

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in the same condition and manner that Sublandlord is required to maintain,
repair and replace such fixtures and improvements under the Master Lease.

 

5.4 Security Services.

 

5.4.1 Subtenant acknowledges that under the Master Lease, Master Landlord (and
not Sublandlord) is the party responsible for providing in accordance with the
standards observed by other comparable first class office buildings in the South
Financial District: (i) a lobby security guard, including, without limitation,
all base salary, bonus, benefits, and the costs of related improvements,
fixtures and equipment in the lobby of the Building, as well as the reasonable
cost of providing security on multi-Subtenant floors, shall be an Operating Cost
under the Sublease. Subtenant acknowledges that Subtenant (and not Master
Landlord or Sublandlord) shall be solely responsible for providing security
services to and in the Premises.

 

5.4.2 Notwithstanding the provisions of 5.4.1 above, Subtenant acknowledges and
agrees that neither Master Landlord’s agreement to provide such security
services or Master Landlord’s actual provision of the same shall directly or
indirectly create any liability (and Subtenant hereby waives any claim based on
any such liability) on the part of the Master Landlord or Sublandlord to
Subtenant or to any persons occupying or visiting the Premises or the Building,
or any other person or entity with respect to any loss by theft, injury or loss
of life, or any other damage suffered or incurred in connection with any entry
into the Premises or any other breach of security with respect to the Premises
or the Building.

 

5.5 Subtenant must comply with all laws, ordinances, orders, rules and
regulations of all governmental authorities and of all insurance bodies and
their fire prevention engineers at any time in force, applicable to the Premises
or to Subtenant’s particular use or manner or use thereof, to the extent
Sublandlord is obligated to perform the same with respect to the Master Premises
under the Master Lease.

 

5.6 Subtenant agrees to comply with all rules and regulations that Master
Landlord has made or may hereafter from time to time make for the Building or
the Project. Sublandlord and Subtenant will not be liable in any way for damage
caused by the non-observance by any of the other tenants of such similar
covenants in their leases or of such rules and regulations.

 

6.              SUBTENANT’S INSURANCE AND INDEMNITY

 

6.1 Sublandlord shall not be required to maintain the insurance required under
Section 11.2 of the Master Lease. Subtenant shall be required to maintain the
insurance required of “tenant” under Section 11.1 of the Master Lease and shall
comply with the requirements set forth in 11.3 of the Master Lease.

 

6.2 Subtenant hereby waives claims against Master Landlord and Sublandlord for
death, injury, loss or damage of every kind and nature, if and to the extent
that Sublandlord waives or releases such claims against Master Landlord under
the Master Lease. Sublandlord and Subtenant shall each procure an appropriate
clause in or endorsement to any property insurance covering the Premises and
personal property, fixtures and equipment located therein, wherein the insurer
waives subrogation or consent to a waiver of right of recovery, and,
notwithstanding anything to the contrary contained herein, Sublandlord and
Subtenant agree not to make any claim against, or seek to recover from, the
other for any loss or damage to its property or the property of others resulting
form the fire or tore hazards to the extent covered by such property insurance;
provided, however, that the release, discharge, exoneration and covenant not to
sue contained herein and in the Master Lease shall be limited by and be
coextensive with the terms and provisions of the waiver of subrogation or the
waiver of right of recovery. Subtenant acknowledges that Sublandlord shall not
carry insurance for and shall not be

 

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responsible for, (i) Subtenant furniture, fixtures, equipment or other property,
and (ii) any loss suffered by Subtenant due to the interruption of Subtenant’s
business.

 

6.3 Subtenant shall indemnify, defend and hold Sublandlord harmless against any
claims, demands, judgments and awards, losses , liabilities and expenses,
including reasonable attorneys fees and costs, resulting from (i) the use and
occupancy of the Premises and the Building by Subtenant, its employees, agents
and invitees, (ii) any act, error, omission or negligence of Subtenant, its
employees agents and invitees in, on or about the Premises and the Building,
(iii) any alterations or improvements made to the Premises, whether Sublandlord
gave its consent thereto or not, (iv) any violations of applicable law by
Subtenant; and (v) any Default. Subtenant’s obligation to indemnify and hold
Sublandlord harmless shall not extend to any portion of a loss, judgment or
award directly attributable to Sublandlord or its agents, contractors’ or
employees’ gross or active negligence or willful misconduct. Sublandlord’s and
Subtenant’s obligations under this Section shall survive the expiration or
termination of this Sublease.

 

6.4 Subtenant hereby agrees to indemnify, defend and hold harmless Sublandlord
and Master Landlord on the same terms and conditions provided in the Master
Lease for Sublandlord (as the “tenant” thereunder) to indemnify the Master
Landlord, as if each of the Master Landlord and Sublandlord were “Landlord”
thereunder; provided, however, that Subtenant will have no obligation to
indemnify, defend or hold harmless either Master Landlord (subject to Master
Landlord’s consent hereto) or Sublandlord under such terms and conditions in the
master Lease to the extent that any of the claims, demands, liabilities or
causes of action at issue are caused by Master Landlord’s, Sublandlord’s or any
of their respective agents, contractors or employees, gross negligence or
willful misconduct.

 

6.5 To the fullest extent allowed by applicable law, in the event of any breach
of this Sublease by Sublandlord, Sublandlord shall not be liable to Subtenant
for any punitive, exemplary or consequential damages incurred by Subtenant,
including, without limitation, any damages related to the interruption of
Subtenant’s business or loss of income or profit therefrom, and Subtenant hereby
releases Sublandlord from any and all such damages.

 

7.              ASSIGNMENT AND SUBLETTING

 

7.1 Subtenant shall not assign, sublease, transfer or encumber any interest in
this Sublease or allow any third party to use any portion of the Premises
(collectively or individually, a “Transfer”) without the prior written consent
of Sublandlord, which consent shall not be unreasonably withheld, conditioned or
delayed. Without limitation, it is agreed that Sublandlord’s consent shall not
be considered unreasonably withheld if (i) the proposed Transferee would not
meet any condition specified in Section 14.2(b) of the Master Lease; or
(ii) Sublandlord is unable to obtain the consent of Master Landlord to the
proposed Transfer, if the proposed Transfer is not otherwise permitted under the
Lease without the Master Landlord’s consent. Subtenant herby waives the
provision of Section 1995.310 of the California Civil Code, or any similar or
successor laws now or hereinafter in effect, and all other remedies, including,
without limitation, any right at law or equity to terminate this Sublease, on
its own behalf and, to the extent permitted under all applicable laws, on behalf
of every proposed transferee. Any willful or deliberate attempted Transfer in
violation of this Section shall constitute a Default by Subtenant without
necessity of notice or any grace or cure period and, at Sublandlord’s option,
the attempted Transfer shall be void. Consent by Sublandlord to one or more
Transfer(s) shall not operate as a waiver of Sublandlord’s rights to approve any
subsequent Transfer. In no event shall any Transfer release or relieve Subtenant
from any obligation under this Sublease.

 

7.2 In addition to the costs of Master Landlord reimbursable by Sublandlord to
Master Landlord under the Master Lease, Subtenant shall pay Sublandlord’s
reasonable actual

 

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out-of-pocket costs (not to exceed $3,000) incurred in connection with the
review of any request for consent to a Transfer.

 

7.3 Any Transfer made by Subtenant in contravention of this Article 7 shall be
void or voidable, at Sublandlord’s option, and shall constitute and irrevocable
breach of this Lease without necessity of notice or opportunity of Subtenant to
cure.

 

7.4 Any Bonus Rent (defined below) realized by Subtenant under any sublease or
assignment shall be divided and paid as follows: fifty percent (50%) to
Subtenant and fifty percent (50%) to Sublandlord. “Bonus Rent” shall mean the
excess of (i) all consideration received by Subtenant on account of a Transfer
over (ii) the sum of the Rent and other charges payable by Subtenant to
Sublandlord under this Sublease, after deducting for any sub-subtenant
improvements, free rent, space planning fees and legal fees.

 

8.              REPAIR AND ALTERATIONS

 

8.1 Subtenant shall, at its sole cost and expense, promptly perform all
maintenance and repairs to the Premises necessary to keep the Premises in good
condition and repair reasonably consistent with the quality of other similar
tenancies in the Building, reasonable wear and tear over the Term and damage by
casualty excepted, and otherwise in compliance with the provisions of the second
sentence of Section 7.1 of the Master Lease, except to the extent that
Sublandlord has expressly assumed any such repair obligation under this
Sublease. Subtenant’s repair obligations include, without limitation, repairs
to: (i) floor covering; (ii) interior partitions; (iii) doors; (iv) the interior
side of demising walls; (v) electronic, phone and data cabling and related
equipment (collectively, “Cable”) that is installed by or for the exclusive
benefit of Subtenant and located in the Premises or other portions of the
Building; (vi) any facilities serving Subtenant exclusively; and
(vii) Alterations performed by contractors retained by Subtenant, including
related HVAC balancing. All work shall be performed in accordance with the
requirements of the Master Lease.

 

8.1.1 Janitorial Services and Day to Day Services.

 

(a) Subtenant acknowledges that under the Master Lease, Master Landlord (and not
Sublandlord) is the party responsible for providing janitorial services to the
Building and, if requested in writing by Subtenant, to the Premises. The
Janitorial Services shall be provided utilizing union labor and to a standard
consistent with comparable first class office building in the South Financial
District. The reasonable cost of providing the Janitorial Services to the
Premises shall be an Operating Cost under the Sublease.

 

(b) Subtenant acknowledges that under the Master Lease, Master Landlord (and not
Sublandlord) is the party responsible for providing day to day services to the
Premises of such types and in such quantities as are customarily furnished by
institutional owners of comparable first class multi-tenant office buildings in
the South Financial District leases on a so-called “fully serviced” basis (the
“Standard Services”). The Standard Services shall include, without limitation:
(i) maintenance, repair servicing and adjustment of all Building Systems whether
installed by Master Landlord, Sublandlord, Subtenant or any other occupant of
the Premises (including without limitation HVAC and sprinkler systems and
equipment) to the point(s) of delivery of the Standard Services within the
Premises (except to the extent Master Landlord has expressly conditioned its
approval for installation of any specialized systems or equipment upon the
requirement that Subtenant, or another tenant of the Premises maintain and
repair the same): (ii) monitoring electricity, water, HVAC services and other
utilities or services supplied to or consumed by various occupants of the
Premises and the Building as necessary to identify and account for usage or
consumption in excess of reasonable and customary amounts for standard office
use; (iii) re-lamping of Building standard fluorescent lights and replacement of
Building standard lenses; (iv) exterior window cleaning at regular intervals;
(vi) day porter service; and (vii) other services customarily provided in well
managed, comparable first class multi-tenant office buildings in the South

 

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Financial District leased on a so-called “fully serviced” basis. The reasonable
cost of providing the Standard Services shall be an Operating Cost under the
Sublease.

 

8.2 Sublandlord shall only maintain the common areas of the Building that are
not the responsibility of Master Landlord to maintain under the Master Lease to
the standard specified in Section 7.1 of the Master Lease. In no event will
Sublandlord have any obligation to maintain or repair any portion of the
Premises or the Building that Master Landlord is obligated to maintain or
repair. Notwithstanding the forgoing, upon written request by Subtenant,
Sublandlord agrees to use commercially reasonable efforts to enforce any
provision of the Master Lease that requires Master Landlord to make repairs or
perform maintenance to the Building or the Premises.

 

8.3 Subtenant may make Alterations (as defined in Article 6 of the Master Lease)
to the Premises only with Sublandlord’s prior written consent (which shall not
be unreasonably withheld) and then only on the terms and conditions specified in
Article 6 of the Master Lease (“Subtenant Alterations”). Subtenant may make
cosmetic alterations or non-structural alterations, which cost less than $5,000
without the consent of the Sublandlord, provided that Subtenant provides
Sublandlord and Master Landlord with written notice of such intended
alterations. In those circumstances where Master Landlord’s consent is required
under Article 6 of the Master Lease, it shall be reasonable for Sublandlord to
withhold its consent if Master Landlord does not consent to such Alterations. To
the extent Subtenant seeks access to the vertical and horizontal raceways in the
Building pursuant to Section 9.4 of the Master Lease, such access shall be
subject to Sublandlord’s reasonable access to such areas is available to
Sublandlord and other occupants of the Building. Upon Subtenant’s written
request, Sublandlord shall indicate at the time of its consent and approval of
any alterations in the Premises whether it will require Subtenant to remove the
alterations upon the Expiration Date. Subtenant shall reimburse Sublandlord for
its reasonable out of pocket fees for reviewing and supervising construction of
improvements.

 

9.              CASUALTY AND EMINENT DOMAIN

 

9.1 In the event of a casualty affecting the Building or the Premises, or of a
taking of all or a part of the Building or the Premises under the power of
eminent domain, Sublandlord will be entitled to exercise any right it may have
to terminate the Master Lease without first obtaining the consent or approval of
Subtenant.

 

9.2 To the extent that the casualty or taking directly affects the Premises, if
Sublandlord obtains from Master Landlord any abatement of rent in connection
with the relevant casualty or condemnation, then Subtenant shall have the
benefit of such abatement of rent (comparable to its then current rental amount)
in the same proportion that the area of the Building affect by such abatement of
rent bears to the area of the Premises, provided Sublandlord shall not be
required to bring any action under the Master Lease to enforce any rent
abatement provisions.

 

9.3 If, in the event of a casualty, the Master Lease imposes on Sublandlord the
obligation to repair or restore leasehold improvements or alterations within the
Master Premises, Subtenant must be responsible for repair or restoration of
leasehold improvements within the Premises, including, but not limited to, the
Subtenant Improvement and any Subtenant Alterations, and the leasehold
improvements existing on the Effective Date. Sublandlord shall not in any event
be responsible for reconstruction of any portion of the Premises that is the
responsibility of Master Landlord under the Master Lease, provided that if
Sublandlord does not terminate the Master Lease, then Sublandlord will use
commercially reasonable efforts to enforce any provision of the Master Lease
that shall require Master Landlord to reconstruct the Building or Premises.

 

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10.       SURRENDER

 

10.1 On the Expiration Date, or upon the earlier termination of the Sublease or
of Subtenant’s right to possession of the Premises, Subtenant must at once
surrender and deliver up the Premises, together with all improvements thereon,
to Sublandlord in good condition and repair, reasonable wear and tear expected:
conditions existing because of Subtenant’s failure to perform maintenance,
repairs or replacements as required of Subtenant under this Sublease will not be
deemed “reasonable wear and tear.”

 

10.2 Subtenant shall remove any of its personal property and fixtures incident
to Subtenant’s business (“subtenant’s Property”) prior to the Expiration Date or
upon the earlier termination of this Sublease or of Subtenant’s right to
possession. Subtenant shall not be required to remove the improvements installed
as part of Sublandlord Work (except insofar as the same are not general office
improvements or include high density filing systems, computer mainframes,
libraries, telecom nodes, satellite dishes and signs), but shall be required to
remove any Subtenant Alterations it construed or installed pursuant to
Section 8.3 of this Sublease, unless Sublandlord has instructed Subtenant
otherwise, in writing. All Subtenant Alterations and Subtenant Improvements in
or upon the Premises Subtenant is not required to remove will become a part of
and will remain upon the Premises upon the Expiration Date or earlier
termination of this Sublease or of Subtenant’s right to possession without
compensation, allowance or credit to Subtenant. Subtenant shall repair any
damage occasioned by such removal of the Subtenant Alterations, and/or
Subtenant’s Property, which obligation will survive termination of this
Sublease. If Sublandlord or Master Landlord required removal of any Subtenant
Alterations or a portion thereof, and Subtenant does not remove such, or
Subtenant does not remove Subtenant’s Property from the Premises on or before
the Expiration Date or the earlier termination of this Sublease, Sublandlord may
remove the same (and repair any damage occasioned thereby, and dispose thereof,
or at its election, remove and/or store the same. Subtenant shall pay the costs
of such removal, repair and/or storage on demand.

 

10.3 Subtenant will not be required to remove any alterations or improvements
made by Sublandlord prior to the Effective Date. If Sublandlord is required
under the Master Lease to remove any such alterations or improvements, Subtenant
must permit Sublandlord to enter the Premises for a reasonable period of time
prior to the Expiration Date, for the purpose of removing such alterations and
improvements and restoring the Premises as required by the Master Lease.

 

11.       HOLDING OVER

 

11.1 Subtenant has no right to occupy the Premises or any portion thereof after
the expiration of the Term or earlier termination of this Sublease.

 

11.2 In the event Subtenant or any party claiming by, through or under Subtenant
holds over, Sublandlord may exercise any and all remedies available to it at law
or in equity to recover possession of the Premises, and to recover damages,
including without limitation, all damages payable by Sublandlord to Master
Landlord by reason of such holdover. Without limiting the damages recoverable
under the foregoing sentence, for each and every month or partial month that
Subtenant or any party claiming by, through or under Subtenant remains in
occupancy of all or any portion of the Premises after the expiration of the Term
or earlier termination of this Sublease, Subtenant must pay, a holdover rent of
150% of the then existing Base Rent for the first two (2) months of holdover.
Beyond the initial two (2) month period, Subtenant’s holdover rent shall
increase to 200% of its then Base Rent for the Premises as minimum damages and
not as a penalty. The acceptance by Sublandlord of any lesser sum will be
construed as payment on account and not in satisfaction of damages for such
holding over.

 

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12. DEFAULT

 

12.1 Any one or more of the following events will be considered a “Default” by
Subtenant:

 

12.1.1 Subtenant fails to make any payment of Rent as and when the same is due,
and such default shall continue for five (5) business days after notice of such
default is given to Subtenant, except that if Sublandlord shall have given two
(2) such notices of default in the payment of any Rent in any 12-month period,
Subtenant shall not be entitled to any further notice of its delinquency in the
payment of any Rent or an extended period in which to make payment until such
time as 12 consecutive months shall have elapsed without Subtenant having failed
to make any such payment when due, and the occurrence of any default in the
payment of any Rent within such 12-month period after the giving of two (2) such
notices shall constitute an Event of Default;

 

12.1.2 The occurrence or existence of any act or omission by Subtenant which is
described as a Default elsewhere in this Lease.

 

12.1.3 Subtenant, by its act or omission, causes an event or condition that is
an Event of Default under the Master Lease, or would be an Event of Default
under the Master Lease, subject only to the delivery of any required notice or
passage of any cure or grace period, and such event or condition is not cured
within a period equal to two thirds the cure or grace period provided in the
Master Lease for Sublandlord to cure such default.

 

12.1.4 Subtenant fails to fulfill, keep, observe, or perform any of the other
covenants and obligations herein contained to be fulfilled, kept, observed and
performed by Subtenant, and such failure continues for more than five business
(5) days after notice thereof in writing to Subtenant, provided however, if such
failure cannot be cured within five business (5) days, then provided that
Subtenant as commenced to cure such failure and diligently pursues a cure of
such failure, Subtenant shall have such reasonable time, not to exceed thirty
(30) days to cure such failure.

 

12.1.5 Subtenant or any Guarantor: (a) ceases doing business as a going concern:
(b) makes an assignment for the benefit of creditors: (c) makes a transfer in
fraud of creditors: (d) admits in writing its inability to pay its debts when
due: (e) is adjudicated as insolvent: (f) files a petition (or files an answer
admitting the material allegations of a petition) under any stat or federal
bankruptcy or other Laws affection creditors’ rights: (g) fails, within sixty
(60) days after the commencement of proceedings for relief under any state or
federal bankruptcy or other Laws affecting creditors’ rights, to have such
proceedings dismissed; (h) has all or substantially all of its assets subject to
judicial seizure or attachment and such seizure or attachment is not released
within sixty (60) days; (i) consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of all or any substantial part of its assets; or
(j) falls within sixty (60) days after the appointment of such a trustee,
receiver or liquidator to have such appointment vacated (each, an “Insolvency
Proceeding”).

 

12.1.6 Subtenant’s leasehold estate under this Sublease is taken by process or
operation of Law.

 

12.2 Upon the occurrence of any one or more Default(s) by Subtenant, Sublandlord
shall have all the remedies specified in Section 15.2 of the Master Lease,
including, without limitation, the remedies prescribed in Section 1951.4 of the
Civil Code of California, as set forth in the Master Lease.

 

12.3 Any notice delivered by Sublandlord in connection with, or as a
precondition to, a Default by Subtenant will be in lieu of and not in addition
to any notice to pay rent or notice to perform covenant required under law.

 

13.       PROVISIONS REGARDING MASTER LEASE

 

Incorporation. The following provisions of the Master Lease are incorporated by
reference into this Sublease so that all obligations of Sublandlord, as “tenant”
thereunder, shall be obligations of Subtenant hereunder, except as expressly
otherwise provided by this Sublease, and then only as applicable to the
Premises:

 

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Articles and Sections 5.1 (as modified by the Fourth Amendment), 5.3, 7.1, 7.3,
8, 9.1 (as modified by the Fourth Amendment), 9.2, 9.4, 10, 11.1, 11.3, 12, 13,
14.2, 14.4, 14.6, 14.7, 14.8, 15.2, 16.1 16.2, 17, 18 (as modified by the Fourth
Amendment), 19.1, 20, 21.1, 23, 26, 27, 29.2, 33, 35, and 38 of the Master
Lease;

 

Articles and Sections 1(d), 1(e), and 6 of the Addition Provisions Rider
attached as Exhibit “E” to the Master Lease; and

 

Exhibits “B” and “D” to the Mater Lease.

 

Limitations. The following limitations shall apply to the interpretation and
enforcement of provisions of the Master Lease which are incorporated in this
Sublease under Section 13.1 above:

 

Any non-liability, release, indemnity or hold harmless provision, and any
provisions pertaining to the waiver or subrogation rights and or the naming of a
party under and insurance policy, in the Master Lease for the benefit of Master
Landlord which are expressly incorporated herein by reference, shall be deemed
to inure to the benefit of Master Landlord and Sublandlord for the purpose of
this Sublease.

 

Any right of the Master Landlord for access or inspection under the Master Lease
and any right of the Master Landlord to do work in the Premises or in the
Building or in, on or under the Common Areas under the Master Lease, and any
right of the Master Landlord in respect of rules and regulations under the
Master Lease, shall be deemed to inure to the benefit of both the Master
Landlord and Sublandlord.

 

If any of the express provisions of this Sublease shall conflict with any of the
provisions of the Master Lease incorporated by reference, such conflict shall be
resolved in every instance in favor of the express provisions of this Sublease.
If any incorporated provision of the Master Lease cross-references a provision
of the Master Lease which is not incorporated in this Sublease, such
cross-referenced Master Lease provision shall be disregarded except to the
extent required for a fair and equitable interpretation of the incorporated
Master Lease provision.

 

Any obligation of Sublandlord which is contained in this Sublease by the
incorporation by reference of the provisions of the Master Lease shall be
observed or performed by Sublandlord using commercially reasonable efforts to
cause Master Landlord under the Master Lease to observe and/or perform the same,
and Sublandlord shall have a reasonable time to do so after written notice from
Subtenant specifying with reasonable particularly the deficiency in
Sublandlord’s performance under this Sublease.

 

With respect to any approval or consent required to be obtained from Sublandlord
under the Master Lease, such approval or consent must be obtained from both
Master Landlord and Sublandlord. Any approval or consent required of Sublandlord
conclusively shall be deemed reasonably withheld if approval or consent also is
required of the Master Landlord, and Master Landlord withholds Master Landlord’s
approval or consent after commercially reasonable efforts by Sublandlord to
obtain same from Master Landlord.

 

Assumption. Subtenant shall assume and perform for the benefit of Sublandlord
and Master Landlord each and all of the conditions, covenants and obligations to
be performed by Sublandlord as Subtenant under the Master Lease to the extent
said terms, covenants, conditions and obligations are incorporated in this
Sublease, are not modified or limited hereby and are applicable to the Premises
demised hereby. Subtenant shall not commit or permit to be committed on the
Premises any act or omission which would constitute a breach of any of the
terms, covenants, conditions and obligations of Sublandlord under the Master
Lease.

 

Subtenant’s Indemnity for Breach of Master Lease. Subtenant shall indemnify and
save Sublandlord harmless against any loss, damage or injury, including, without
limitation, reasonable attorneys’ fees, and/or any amounts assessed against
Sublandlord by Master Landlord under the Master Lease on account of any Default
by Subtenant that shall give rise to an actual or potential Event of Default
under the Master Lease, which Sublandlord may suffer or incur under the Master
Lease as the result of Subtenant’s failure to observe, perform or otherwise
discharge its obligations under this Sublease, including, without limitation,
any

 

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provisions of the Master Lease that are incorporated herein. Subtenant’s
obligations in this Section 13.4 shall survive the Expiration Date or earlier
termination of this Sublease. Notwithstanding any other provision of this
Sublease to the contrary, in the even of any failure of Subtenant to observe,
perform or otherwise discharge its obligations under this Sublease (and after
any notice and opportunity to cure as may be required under this Sublease) that
may cause an Event of Default to occur under the Master Lease, Sublandlord may,
in addition to all other remedies granted to Sublandlord under this Sublease,
take such action as may reasonably be required to prevent such matter from
maturing into an Event of Default under the Master Lease. Subtenant shall pay
all expenses reasonably incurred by Sublandlord in connection therewith
(together with interest thereon at the Interest Rate from the date of
expenditure) within thirty (30) days after demand by Sublandlord.

 

Subtenant recognizes that Sublandlord is not in a position to render any of the
services or to perform any of the obligations required of Master Landlord by the
terms of the Master Lease. Therefore, despite anything to the contrary in this
Sublease, Subtenant agrees that performance by Sublandlord of its obligations
under this Sublease is condition on performance by the Master Landlord of its
corresponding obligations under the Master Lease, and Sublandlord will not be
liable to Subtenant for any default of the Master Landlord under the Master
Lease. Subtenant will not have any claim against Sublandlord based on the Master
Landlord’s failure or refusal to comply with any of the provisions of the Master
Lease unless that failure or refusal is a result of Sublandlord’s act or failure
to act. Despite the Master Landlord’s failure or refusal to comply with any of
those provision of the Master Lease, this Sublease will remain in full force and
effect and Subtenant will pay the Base Rent and Additional Rent and all other
charges provided for in this Sublease without any abatement, deduction or
setoff. In the event of a failure or refusal by Master Landlord to comply with
any provisions of the Master Lease, Sublandlord’s obligation hereunder shall be
limited to using commercially reasonable efforts to enforce the Master Lease
within a reasonable time after Subtenant provides notice to Sublandlord of
Master Landlord’s failure or refusal.

 

Subtenant shall indemnify and save Sublandlord harmless against any loss, damage
or injury, including, without limitation, reasonable attorneys’ fees, and/or any
amounts assessed against Sublandlord by Master Landlord under the Master Lease
on account of any Default by Subtenant that gives rise to a default or potential
default under the Master Lease, which Sublandlord may suffer or incur under the
Master Lease as the result of any breach by Subtenant of its obligations under
this Sublease, including, without limitation, any provision of the Master Lease
that are incorporated herein (except for the Excluded Provisions). Subtenant’s
obligations hereunder shall survive termination of this sublease.
Notwithstanding any other provision of this Sublease to the contrary, in the
event of a breach of this Sublease that may cause an event of default to occur
under the Master Lease, Sublandlord may, in addition to all other remedies
granted to Sublandlord hereunder, at Subtenant’s expense and after notice to
Subtenant, take such action as may reasonably required to prevent such Default
by Subtenant form maturing into an incurable event of default under the Master
Lease, and Subtenant shall pay expenses directly incurred by Sublandlord as a
result of such action within ten (10) days after written demand by Sublandlord.

 

14.       MASTER LANDLORD’S CONSENT

 

This Sublease and the obligations of the parties hereunder are expressly
conditioned upon Sublandlord’s obtaining prior written consent hereto by Master
Landlord, Subtenant must promptly deliver to Sublandlord any information
reasonably requested by Master Landlord (in connection with Master Landlord’s
approval of this Sublease) with respect to the nature and operation of
Subtenant’s business and/or the financial condition of Subtenant.

 

Sublandlord and Subtenant hereby agree, for the benefit of Master Landlord, that
this Sublease will not (a) create privity of contract between Master Landlord
and Subtenant; (b) be deemed to have amended the Master Lease in any regard
(unless Master Landlord will have

 

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expressly agreed in writing to such amendment); or (c) be construed as a waiver
of Master Landlord’s right to consent to any assignment of the Master Lease by
Sublandlord or any further subletting of the Master Premises, or as a waiver of
Master Landlord’s right to consent to any assignment by Subtenant of this
Sublease or any sub-subletting of the Premises or any part thereof.

 

Sublandlord and Subtenant agree, for the benefit of Master Landlord, that Master
Landlord shall not bear responsibility for any delay in commencement of this
Sublease term.

 

If Master Landlord fails to consent to this Sublease within twenty (20) days
after the Effective Date, either party shall have the right to terminate this
Sublease by giving written notice thereof to the other at any time thereafter.

 

15. NOTICES

 

15.1 All notices which may or are required to be given by either party to the
other must be in writing to the addresses specified in the Basic Sublease
Provisions, or at such place as a party may from time to time designate by
notice in writing. Notices will be deemed delivered (a) when receive or refused
if personally delivered; (b) four business days after being sent if sent by
United States registered or certified mail, postage prepaid, return receipt
requested; or (c) two business days after being sent by a nationally recognized
overnight commercial courier services providing receipted delivery.

 

15.2 Subtenant agrees promptly to deliver to Sublandlord a copy of any notice,
demand, request, consent or approval related to the Premises and received from
Master Landlord or any governmental agency.

 

16.       SECURITY DEPOSIT

 

Concurrently with Subtenant’s execution of this Sublease, Subtenant shall
deposit with the Sublandlord the Security Deposit in the amount set forth in the
Basic Sublease Provisions. The Security Deposit shall be held by Sublandlord
without liability for interest (unless required by law). Sublandlord shall not
be required to keep the Security Deposit separate from its other accounts.

 

Sublandlord shall hold the Security Deposit as security for the performance of
Subtenant’s obligations under this Sublease. The Security Deposit is not an
advance payment of Rent or a measure of Subtenant’s liability for damages.

 

Subtenant shall have no right to call upon Sublandlord to apply all or any part
of the Security Deposit to cure any default or fulfill any obligation of
Subtenant, but such use shall be solely in the discretion of Sublandlord.

 

Subtenant waives the provisions of all provisions of law now in force of that
became in force after the Effective Date of this Sublease (including, without
limitation, California Civil Code Section 1950.7) that provide that Sublandlord
may claim from a security deposit only those sums reasonably necessary to remedy
defaults in the payment of Rent, to repair damage caused by Subtenant, or to
clean the Premises. Subtenant aggress that Sublandlord may, in addition, claim
those sums reasonably necessary to compensate Sublandlord for any other
foreseeable or unforeseeable loss or damage caused by the act or omission of
Subtenant or Subtenant’s officers, agents, employees, independent contractors,
or invitees.

 

In the event of a Default, Sublandlord may, from time to time, without prejudice
to any other remedy, use all or a portion of the Security Deposit to satisfy
past due Rent or to cure any uncured Default by Subtenant, or in Sublandlord’s
discretion apply such Security Deposit after a Default, to (a) pay any Rent or
other sum in default; (b) pay any amount that Sublandlord may spend or become
obligated to spend in exercising Sublandlord’s rights under Article 12; or
(c) compensate Sublandlord for any expense, loss or damage that Sublandlord may
suffer because of Subtenant’s Default. In the even that Sublandlord applies any
portion of the Security Deposit as permitted in this Section; Subtenant shall
restore the Security Deposit to its original amount within five (5) days for
Sublandlord’s demand. Sublandlord shall notify Subtenant in writing of

 

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any defaults, including any damages whereby it intends to subtract the cost from
the Security Deposit.

 

Sublandlord shall return any unapplied portion of the Security Deposit to
Subtenant within forty-five (45) days after the last to occur of: (i) the
determination of Subtenant’s Share of any Operating Costs and Taxes for the
final year or portion of a year of the Term; (ii) the date Subtenant surrenders
possession of the Premises to Sublandlord in accordance with this Sublease, or
(iii) the Expiration Date, unless there is a Default by Subtenant in existence
on such date.

 

If Sublandlord conveys Sublandlord’s interests under this Sublease, the Security
Deposit may be assigned or negotiated by Sublandlord to Sublandlord’s grantee,
and if so assigned or negotiated, provided Sublandlord gives Subtenant notice of
the name of such grantee, Subtenant aggress to look solely to such grantee for
the proper application of the security Deposit in accordance with the terms of
this Section and the return thereof in accordance herewith. Upon delivery of
such notice, Subtenant hereby releases the Sublandlord named herein of any and
all liability with respect to the Security Deposit, the application of any
proceeds thereform and its return, and Subtenant agrees to look solely to such
grantee. This provision shall also apply to subsequent grantees. Neither the
holder of a mortgage nor the Master Landlord shall be responsible to Subtenant
for the return or application of the Security Deposit, whether or not it
succeeds to the position of Sublandlord hereunder, unless the Security Deposit
shall have been actually received by such mortgage holder or Master Landlord.

 

17.         OPTION TO RENEW. Provided the Sublease is in full force and effect,
Subtenant is not in default under any of the other terms and conditions of the
Sublease at the time of notification or commencement, and this Sublease has not
been assigned, Subtenant shall have an option to renew (“Renewal Option”) this
Sublease for a term for the period commencing on the date following the
Expiration Date under Section 1.8 above and continuing until April 14, 2018.
(“Renewal Term”), on the same terms and conditions set forth in this Sublease,
except as modified by the terms, covenants and conditions as set forth below:

 

If Subtenant elects to exercise the Renewal Option, then Subtenant shall provide
Sublandlord with written notice no earlier than the date which is eighteen (18)
months prior to the Expiration Date under Section 1.8 above, and no later than
the date which is twelve (12) months before such Expiration Date. If Sublandlord
fails to provide such notice, Subtenant shall have no further or additional
right to extend or renew the Term of this Sublease.

 

The annual Base Rent and Monthly Base Rent in effect at the expiration of the
then current Term of this Sublease shall be adjusted to reflect the Prevailing
Market (defined below) rate as of the date the applicable Renewal Term is to
commence, taking into account the specific provisions of this Sublease which
will remain constant. Sublandlord shall advise Subtenant of the new Annual Base
Rent and Monthly Base Rent for the Premises thirty (30) days after receipt or
Subtenant’s written notice of exercise of the Renewal Option. Unless Subtenant
notifies Sublandlord of its objection to Sublandlord’s determination of the
Prevailing Market Rate within thirty (30) days after receipt thereof, the same
shall be the Annual Base Rent and Monthly Base Rent for the Renewal Term. If
Subtenant makes timely objection to Sublandlord’s determination of the
Prevailing Market Rate, the parties shall negotiate in good faith the Prevailing
Market Rate. However, if the parties have not reached agreement on the
Prevailing Market Rate within ninety (90) days after exercise of the Renewal
Option, Subtenant, by written notice to Sublandlord (the “Arbitration Notice”)
shall have the right to have the Prevailing Market Rate for the Premises within
the ninety day (90) period described and Subtenant fails to timely exercise its
right to arbitrate, Subtenant’s Renewal Option shall be deemed to be null and
void and of no further force and effect. In no event shall the Annual Base Rent
and Monthly Base Rent for the applicable Renewal Term be less than the Annual
Base Rent and Monthly Base Rent in the preceding period.

 

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17.2.1 If Subtenant provides Sublandlord with an Arbitration Notice, Sublandlord
and Subtenant, within five (5) days after the date of the Arbitration Notice,
shall each simultaneously submit to the other, in a sealed envelope, its good
faith estimate of the Prevailing Market rate for the Premises during the Renewal
Term (collectively refereed to as the “Estimates”). If the higher of such
Estimates is not more than 105% of the lower of such Estimates, then prevailing
Market rate shall be the average of the two Estimates. If the Prevailing Market
rate is not resolved by the exchange of Estimates, then, within seven (7) days
after the exchange of Estimates, Sublandlord and Subtenants shall each select an
appraiser to determine which of the two Estimates most closely reflects the
Prevailing Market rate for the Premises during the Renewal Term. Each appraiser
so selected shall be certified as an MAI appraiser of as an ASA appraiser and
shall have had at least five (5) years experience within the previous ten
(10) years as a real estate appraiser working in San Francisco, California, with
working knowledge of current rental rates and practices. For purposes hereof, an
“MAI” appraiser means an individual who holds a MAI designation conferred by,
and its 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 in 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).

 

17.2.2 Upon selection, Sublandlord’s and Subtenant’s appraisers shall work
together in good faith to agree upon which of the two Estimates most closely
reflects the Prevailing Market rate for the Premises. The Estimate chosen by
such appraisers shall be binding on both Sublandlord and Subtenant as the Base
Rent rate for the Premises during the Renewal Term. If either Sublandlord or
Subtenant fails to appoint an appraiser within the seven (7) day period referred
to above, the appraiser appointed by the other party shall be the sole appraiser
for the purposes hereof. If the two appraisers cannot agree upon which of the
two Estimates most closely reflects the Prevailing Market within twenty (20)
days after their appointment, then, within ten (10) days after the expiration of
such twenty (20) day period, the two appraisers shall select a third appraiser
meeting the aforementioned criteria. Once the third appraiser (i.e. arbitrator)
as been selected as provided for above, then, as soon thereafter as practicable
but in any case within fourteen (14) days, the arbitrator shall make his
determination of which of the two Estimates most closely reflects the Prevailing
Market rate and such Estimate shall be binding on by Sublandlord and Subtenant
as the Base Rent rate for the Premises. If the arbitrator believes that expert
advice would materially assist him, he may retain one or more qualified persons
to provide such expert advice. The parties shall share equally in the costs of
the arbitrator and of any experts retained by the arbitrator. Any fees of any
appraiser, counsel or experts engaged directly by Sublandlord or Subtenant,
however, shall be home by the party retaining such appraiser, counsel or expert.

 

17.2.3 If the Prevailing Market rate has not been determined by the commencement
date of the renewal Term, Subtenant shall pay Base Rent upon the terms and
conditions in effect during the last month of the initial Term for the Premises
until such time as the Prevailing Market rate has been determined. Upon such
determination, the Base Rent for the Premises shall be retroactively adjusted to
the commencement of the Renewal Term for the Premise. If such adjustment results
in an underpayment of Base Rent by Subtenant, Subtenant

 

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shall pay Sublandlord the amount of such underpayment within thirty (30) days
after the determination thereof. If such adjustment results in an overpayment of
Base Rent by Subtenant, Sublandlord shall credit such overpayment against the
next installment of Base Rent due under the Sublease and, to the extent
necessary, any subsequent installments, until the entire amount of such
overpayment has been credited against Base Rent.

 

17.3 The Renewal Option is not transferable; the parties hereto acknowledge and
agree that they intend that the Renewal Option shall be “personal” to Subtenant
as set forth above and that in no event will any assignee or sublease have any
right to exercise the aforesaid options to renew.

 

17.4 If Subtenant fails to validly exercise the Renewal Option, Subtenant shall
have no further right extend the term of this Sublease.

 

17.5 For purposes of this Section, “Prevailing Market” shall mean the arms
length fair market annual rental rate per rentable square foot under comparable
transactions entered into on or about the date on which the Prevailing Market
rate is being determined hereunder for space comparable to the Premises in the
Building and comparable buildings, taking into account all then-relevant
factors. The determination of the Prevailing Market rate shall take into account
any material economic differences between the terms of this Sublease and any
comparable transactions, such as rent abatements, construction costs, the value
of replicating existing improvements and other concessions and the manner. If
any, in which the Sublandlord under any such Sublease is reimbursed for
operating expenses and taxes and shall further take into account all other
then-relevant factors.

 

18.       MISCELLANEOUS

 

18.1 Subtenant shall be entitled to signage (a) in the main lobby and (b) in the
fourth floor elevator lobby. The location, quality, design, style, lighting and
size of such signage shall be consistent with the Building’s standard signage
program and shall be subject to Sublandlord’s prior written approval, which
shall not be unreasonably withheld, conditioned or delayed. Provided Sublandlord
installs a lobby directory (although such installation shall not be a condition
to the Commencement Date of this Sublease), Subtenant shall be entitled to one
(1) line on such lobby directory to display the Subtenant’s name and location in
the Building. Subtenant shall not have the right to erect an exterior sign.
Sublandlord shall be responsible for all costs associated with signage.
Subtenant may not erect signage that is visible from outside the Building,
unless it obtains the prior written consent of Sublandlord and Master Landlord,
which consent may be withheld in its or their sole discretion.

 

18.2 Subtenant, upon seventy-two (72) hours advance notice to Sublandlord, shall
have the right to receive supplemental HVAC service during hours other than
Building Hours. Subtenants shall pay Sublandlord the standard charge for such
supplemental HVAC service as reasonably determined by Master Landlord from time
to time, which shall be reasonably related to Sublandlord’s cost to provide any
such service and reasonably competitive with the amounts charged by landlords of
Comparable Building for such services. Subtenant may request same-day “fans
only” service from the Building Manger, which shall be charged at the prevailing
rate for such service.

 

18.3 Sublandlord at its sole expense, on at least ninety (90) days prior written
notice, may require Subtenant to move from the Premises to other space of
comparable size and décor in the Building (the “Substitute Premises”). The
Substitute Premises must substantially contain similar finishes as the Premises
and be in substantially the same condition as the Premises are required to be
under the term of this Sublease, be approximately the same rentable square
footage as the Premise, and not less than be contained all on one (1) floor of
the

 

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Building, and have substantially the same number and type of work stations,
offices, break rooms and reception areas, labs, servers, telephone rooms and
conference rooms as are contained in the Premises as of the date Subtenant
receives Sublandlord’s notice of relocation. In the event of any such
relocation, Sublandlord will pay all expenses of preparing and decorating the
Substitute Premises so that they will be substantially similar to the Premises
from which Subtenant is moving, and Sublandlord will also pay the expense of
moving Subtenant’s furniture and equipment to the Substitute Premises.
Sublandlord also shall pay Subtenant’s other reasonable costs of relocation to
the Substitute Premises, including the cost of printing and distributing change
of address notices to Subtenant’s customers and one month’s supply of stationary
showing the new suite number of the Substitute Premises, the removal of all
existing IT and telephone wiring in the Premises and the installation of all new
IT and telephone wiring in the new premises. Sublandlord may not relocate
Subtenant within 18-months of the expiration of this Sublease. In the event
Sublandlord must relocate Subtenant within 18-months of Sublease expiration,
Subtenant shall have the right to terminate this Sublease at no penalty or cost
to Subtenant.

 

18.4 Each party warrants to the other that it has had no dealings with any
broker or agent in connection with this Sublease, except the Brokers specified
in the Basic Sublease Provisions and whose commissions shall be payable by
separate agreement. Each party covenants to protect, defend, indemnify and hold
harmless the other party from and against any and all costs (including
reasonable attorneys’ fees), expense or liability for any compensation,
commission and charges claimed by any broker or other agent, other than the
Brokers, with respect to this Sublease or the negotiation thereof on behalf of
such party.

 

IN GRAFTON PARTNERS L.P v. SUPERIOR COURT, 36 CAL. 4TH 944 (2005), THE
CALIFORNIA SUPREME COURT RULED THAT CONTRACTUAL, PRE-DISPUTE JURY TRAIL WAIVERS
ARE UNENFORCABLE. THE PARTIES, HOWEVER, ANTICIPATE THAT THE CALIFORNIA
LEGISUATURE WILL ENACT LEGISLATION TO PERMIT SUCH WAIVERS IN CERTAIN CASES. IN
ANTICIPATION OF SUCH LEGISLATION, SUBLANDLORD AND SUBTENANT HEREBY WAIVE, AS OF
THE EFFECTIVE DATE OF SUCH LEGISLATION AND TO THE EXTENT PERMITTED BY APPLICABLE
LAW, TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER
OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY
MATTER ARAISING OUT OF OR IN CONNECTION WITH, EITHER DIRECTLY OR INDIRECTLY,
THIS SUBLEASE, OR THE SUBJECT MATTER HEREOF, SUBTENANTS USE OR OCCUPANCY OF THE
PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE.

 

18.5 This Sublease and the rights and obligations of the parties shall be
interpreted, construed and enforced in accordance with the laws of the state in
which the Premises are located, and Sublandlord and Subtenant hereby irrevocably
consent to the jurisdiction and proper venue of such state.

 

18.6 The expiration of the Term, whether by lapse of time or otherwise, shall
not relive either party of any obligations under this Sublease which accrued
prior to or which may continue to accrue after the expiration or early
termination of this Sublease. Without limited the scope of the prior sentence,
it is agreed that Subtenant’s obligations under any provision of this Sublease,
or the terms of the Master Lease which are expressly incorporated into this
Sublease, that is expressly provided by its terms to survive termination of this
Sublease shall survive the expiration or early termination of this Sublease.

 

18.7 If any term or provision of this Sublease shall to any extent be invalid or
unenforceable, the remainder of this Sublease shall not be affected, and each
provision of this Sublease shall be valid and enforced to the fullest extent
permitted by law.

 

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18.8 The headings and titles to the Articles and Sections of this Sublease are
for convenience only and shall have no effect on the interpretation of any part
of the Sublease.

 

18.9 All understandings and agreements previously made between the parties are
superseded by this Sublease, and neither party is relying upon any warranty,
statement or representation not contained in this Sublease. This Sublease may be
modified only by a written agreement signed by Sublandlord and Subtenant.

 

18.10 Each party represents and warrants to the other that the person or persons
executing this Sublease for the representing party are fully authorized to so
act and no other action is required to bind Sublandlord to this Sublease and
that the representing party has the right and power to execute and deliver this
Sublease and to perform its obligations hereunder, subject only to Master
Landlord’s consent, and that the representing party is duly organized and in
good standing in its state of formation and is authorized to conduct business in
the state where the Premises are located.

 

[Remainder of page intentionally blank.]

 

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In witness whereof, Sublandlord and Subtenant have executed this Sublease on the
dates set forth below, intending to be bound hereby as of the Effective Date.

 

 

SUBLANDLORD:

 

SUBTENANT:

 

 

 

SUN MICROSYSTEMS, INC.,

 

PROSODIE INTERACTIVE,CALIFORNIA

a Delaware corporation

 

a Delaware Corporation

 

 

 

By:

/S/ Charles Barry

 

By:

/S/  Nicolas Dourassoff

Its: Senior Director

 

Its: CEO

Date: 11/7/2006

 

Date: 10/3/06

 

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EXHIBIT C

 

LEASE AGREEMENT

 

between

 

K3 FIRST STREET ASSOCIATES, LLC

 

as “Landlord”

 

and

 

SUN MICROSYSTEMS, INC.

 

as “Tenant”

 

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THIS LEASE AGREEMENT (this “Lease”) is made as of the Lease Date set forth in
the Basic Lease Information, by and between the Landlord identified in the Basic
Lease Information (“Landlord”), and the Tenant identified in the Basic Lease
Information (“Tenant”), Landlord and Tenant hereby agree as follows:

 

1.               PREMISES

 

Grant Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord,
upon the terms and subject to the conditions of this Lease, the office space
identified in the Basic Lease Information as the Premises (the “Premises”), in
the Building located at the address specified in the Basic Lease Information
(the “Building”).  The approximate configuration and location of the Premises is
shown on Exhibit A. Landlord and Tenant agrees that the rentable area of the
Premises for all purposes under this Lease shall be the Rentable Area specified
in the Basic Lease Information, subject to modification per Paragraph 1.2
below.  The Building, together with the parking facilities serving the Building
(the “Parking Facility”), and the parcel(s) of land on which the Building and
the Parking Facility are situated (collectively, the “Property”), is part of the
Project identified in the Basic Lease Information (the “Project”).

 

Rentable Square Footage of Premises, Building and Project

 

(a)          Landlord and Tenant agree that, except as modified per this
Section 1.2 the rentable area of the Premises and of the Building for all
purposes under this Lease shall be the rentable square footage specified in the
Basic Lease Information.  Upon the completion of all of the buildings comprising
the Project, Landlord shall notify Tenant of the rentable square footage of the
Project for purposes of calculating the Building’s Allocable Share.  Upon
completion of the Building Shell (as that term is defined in Exhibit F) for the
Building, Landlord’s base building architect (the “Architect”) shall measure
both the Premises within the Building, the Building and the Project using the
“Standard Measure for Measuring Floor Area in Office Buildings” published by the
Secretarial Building Owners and Managers Association International (ANSI/BOMA
Z65.1-1996), approved June 7, 1996 (the “BOMA Standard”).

 

(b)         Landlord shall promptly notify Tenant of the Architect’s
determination of the rentable square footage of the Premises, the Building and
the Project.  Tenant reserves the right to have its space planner or architect
measure the Premises, the Building and the Project to confirm that the
measurements provided by the Architect are accurate and conform to the BOMA
Standard.  Any discrepancy between the measurements obtained by the Architect
and the measurements obtained by the Tenant with respect to the Premises within
the Building and the Building shall be promptly resolved by the parties through
good faith negotiation in accordance with BOMA Standards.

 

Landlord Warranties.  Landlord warrants that on the delivery date for the
Premises (i) the Premises (solely to the extent constructed by Landlord), the
Building, the Land and the Project shall comply with all laws, codes,
ordinances, and other governmental requirements (including, but not limited to,
zoning ordinances and the Americans with Disabilities Act) then applicable to
the use, construction, condition and occupancy of the Premises, the Building,
the Land and the Project, and (ii) the Premises (solely to the extent
constructed by Landlord), the Building and the Project, including the
improvements and equipment therein, and the Common Areas shall be in good
working order, condition, and repair, with each floor free and clear of debris.

 

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Landlord Maintenance Warranty If Landlord is responsible for the construction of
the Tenant Improvements pursuant to the Work Leuer Agreement, Landlord shall
obtain customary warranties and guaranties from the contractor or contractors
performing such work and/or the manufacturers of equipment installed therein. 
If Tenant makes repairs to any component of the Premises or any of its systems
not covered by the Landlord’s warranty contained in this Section 1.4 but for
which Landlord has obtained a contractor’s or manufacturer’s warranty, then
Landlord shall, upon request by Tenant, use its good faith efforts to pursue its
rights under any such warranties for the benefit of Tenant.

 

2.               TERM POSSESSION

 

2.1 The term of this Lease (the “Term”) shall commence on the Commencement Date
as described below and, unless sooner terminated, shall expire on the Expiration
Date set forth in the Basic Lease Information (The “Expiration Date”).  The
“Commencement Date” shall be the Rent Commencement Date (as that term is defined
below) with respect to the last floor of the Premises delivered by Landlord to
Tenant.  The parties anticipate that the Commencement Date will occur on or
about February 8, 2003 (the “Scheduled Commencement Date”); provided, however,
that Landlord shall not be liable for any claims, damages or liabilities if the
Premises are not ready for occupancy by the Scheduled Commencement Date. If the
Premises are not delivered by the Landlord to Tenant, with all of Landlord’s
Work substantially complete by May 8, 2003 (“Outside Substantial Completion
Date”), subject to the force majeure (not to exceed 180 days) or any Tenant
Delay (as that term is hereinafter defined).  Tenant shall have the right to
terminate this Lease giving Landlord written notice at any time after the
Substantial Completion Deadline and prior to substantial completion of
Landlord’s Work, in which case this Lease will be terminated.  Landlord and
Tenant acknowledge and agree that Landlord shall deliver to Tenant the Premises
in increments of two (2) floors every 30-45 days in the condition required by
Exhibit F attached hereto.  Notwithstanding anything to the contrary contained
herein, all of the terms and conditions of this Lease shall apply to the floors
of the Premises delivered to Tenant prior to Commencement Date; and the rent
commencement date (the “Rent Commencement Date”) with respect to each floor
delivered to Tenant shall be the earlier of (a) one hundred twenty (120) days
after the date on which Landlord tenders possession of such floor of the
Premises to Tenant with Landlord’s Work therein Substantially Complete or the
date such floor would have been Substantially Complete but for Tenant Delays, or
(b) the date upon which Tenant, with Landlord’s written permission, actually
occupies and conducts business on such floor(s) of the Premises. Tenant shall
pay to Landlord Base Rent and Additional Rent with respect to any such
floor(s) of the Premises commencing on the Rent Commencement Date with respect
to such floor(s) of the Premises. Landlord and Tenant acknowledge and agree that
certain rent and other obligations may commence earlier than the Commencement
Date, on a phased basis, as floors within the Premises are delivered to Tenant,
all as provided above.  However, for purposes of determining the Term and the
first and subsequent lease years, there shall be a single Commencement Date,
determined as provided above, with respect to the Building. Promptly after the
Rent Commencement Date with respect to each floor is ascertained, Landlord and
Tenant shall execute, in recordable form, a written declaration setting forth
the Rent Commencement Date for such floor.  Promptly after the Commencement Date
with respect to this Lease, Landlord and Tenant shall confirm such Commencement
Date in writing in the form of the Commencement Date Agreement attached hereto
as Exhibit C. “Tenant Delay” means any act or omission of Tenant or its agents,
employees, vendors or contractors that actually delays the Substantial
Completion of the Landlord Work, including, without limitation: (1) Tenant’s
failure to furnish information or approvals within

 

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any time period specified in this Lease, including the failure to prepare or
approve preliminary or final plans by any applicable due date; (2) informed by
Landlord that the selection may result in a delay; (3) changes requested or made
by Tenant to previously approved plans and specifications, including Additional
Shell Construction Items; (4) performance of work in the Premises by Tenant of
Tenant’s contractor(s) during the performance of the Landlord Work after
reasonable notice from Landlords that such work is interfering with the progress
of Landlord Work; or (5) if the performance of any portion of the Landlord Work
depends on the prior or simultaneous performance of work by Tenant, a delay by
Tenant or Tenant’s contractor(s) in the completion of such work after reasonable
notice from Landlord.  If the parties disagree as to whether or not a “Tenant
Delay” has occurred, the parties shall resolve such dispute through arbitration
as provided in Section 37.  As used in this Lease, “Month” shall mean a calendar
month, except that if the Term beings on a day other than the first day of a
calendar month, the first “month” shall be the period from (and including) the
Commencement Date through (and including) the last day of the first full
calendar month following the Commencement Date falls and if the Term ends on a
day other than the last day of a calendar month, the last “month” shall be the
period from (and including) the day on which the Term ends. Landlord and Tenant
each will use commercially reasonable efforts to accommodate the other’s work,
so that neither unreasonably interferes with or causes delay to the other.

 

2.2 Landlord to Provide Notice.  Landlord shall provide Tenant with six
(6) months prior written notice of any revision in the delivery date for any of
the floors, Landlord shall update the notice upon any material modification
which would affect Tenant’s construction drawings.  Landlord shall provide
Tenant written notice thirty (30) days prior to the completion date for any
floors to be delivered to Tenant for construction of tenant improvements.
Landlord shall provide Tenant not less than 60 days prior written notice of the
date the base building improvements for the floors of the Building will be
completed and a temporary certificate of occupancy issued.

 

3.               RENT

 

3.1 Base Rent. Tenant agrees to pay to Landlord the Base Rent set forth in the
Basic Lease Information, without prior notice or demand, set off or deduction
except as permitted in this Lease, on the first day of each and every calendar
month during the Term as provided above.  The Base Rent shall be increased as of
the end of the fifth (5th) Lease Year and as of the end of the tenth (10th)
Lease Year (each as “Adjustment Date”) if as of an Adjustment Date, the Consumer
Price Index for All Urban Consumers, U.S. City Average (“Index”), published by
the United States Department of Labor’s Bureau of Labor Statistics, has
increased over the Base Period Index.  For purposes of this Lease, the Base
Period Index is the Index for the calendar month in which the Commencement Date
occurs.  The Base Period Index shall be compared with the Index for the month in
which the Adjustment Date occurs (“Comparison Month”). If the Index for any
Comparison Month is higher than the Base Period Index, then the Base Rent shall
be increased by the identical percentage increase of the Index for the
Comparison Month over the Base Index commencing with the next Base Rent payment
date. In no event shall the Base Rent be less than that set forth hereinabove.
If the Bureau of Labor Statistics discontinues publication of the Index,
publishes the Index less frequently, or alters the Index in a material manner,
then Landlord may adopt a substitute Index or procedure which reasonably
reflects and monitors consumer prices. Landlord and Tenant hereby agree to
promptly enter into a written amendment to this Lease evidencing any such
increase in Base Rent.

 

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Base Rent for any partial month at the beginning or end of the Term shall be
prorated based on the actual number of days in that month.

 

3.2 Additional Rent. Landlord and Tenant intend that this shall be a “net”
lease, pursuant to which Tenant pays or reimburses Landlord for all costs and
expenses incurred in connection with the management, operation, maintenance, and
repair of the Property, as further provided herein.

 

(a)          Definitions.

 

(1)          “Operating Costs” means all commercially reasonable, actual and
necessary costs of managing, operating, maintaining and repairing the Property,
including all costs, expenditures, fees and charges for: (A) operation,
maintenance and repair of the Building including all common areas and other
improvements or facilities located on, in or under the Property relating to the
Building, and including structural and non-structural repairs, repair or
replacement of glass (interior or exterior), sky lights located within or on the
Building, floors doors, landscaping and other repairs and replacements, but
excluding all structural repairs, upgrades or replacements except those
necessitated by, or associated with Tenant Improvements of Tenant for other than
general office purposes, such as libraries, high density filing stations,
computer mainframes and vaults: (B) all costs of operating, maintaining,
repairing and replacing the heating, ventilating and air-conditioning (“HVAC”),
and plumbing, electrical, lighting, fire protection, life safety, security,
elevator and mechanical systems serving the Building (“Building Systems”) and
other operating equipment, except those systems which are separately metered for
Tenant’s use for which Tenant shall pay all charges relating thereto separately:
(provided that the amount of any capital expenditures (i.e. expenditures that
are to be capitalized, rather than expensed, under the Internal Revenue Code)
shall be amortized on a straight-line basis over the applicable recovery period
of the capital item so replaced determined in accordance with the Internal
Revenue Code, with interest on the unamortized balance at a rate equal to the
Prime Rate (as that term is defined below) plus one percent (1%)): (C) costs of
maintenance and replacement of landscaping, sidewalks, curbs, gutters, walkways,
driveways, loading areas, utility lines, fences and signs located on the
Property and equipment and all other elements of the Property provided, however
that the amount of any capital expenditure shall be amortized on a straight line
basis over the applicable recovery period of the capital expenditure determined
in accordance with the Internal Revenue Code, with interest on the unamortized
balance at a rate equal to the Prime Rate plus one percent (1%)). (D) Utilities
and services (including recycling programs and trash removal), and associated
supplies and materials, except those utilities and services for which Tenant
pays separately; (E) compensation (including employment taxes and fringe
benefits) for persons who perform duties in connection with the operation,
management, maintenance and repair of the Building, such compensation to be
appropriately allocated for persons who also perform duties unrelated to the
Building; (F) property including coverage for earthquake and flood, if required
by Lender and if so,

 

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policies with commercially reasonable premiums and deductibles) liability,
rental income and other insurance relating to the Property, and expenditures for
deductive amounts paid under such insurance provided, however, that the total
amount of any deductible included as an Operating Cost hall not exceed
(G) licenses, permits and inspections; (H) complying with the requirements of
any law, statue, ordinance or governmental rule or regulation or any orders
pursuant thereto (collectively (“Laws”) enacted, adopted or effective and
enacted or adopted and mandated prior to the Commencement Date but not including
capital expenditures, the cost of which are addressed in subsection (I) below
(1) amortization of capital improvements but only to the extent required to
comply with Laws, or which actually reduce Operating Costs (but only to the
extent that they do), with interest on the unamortized balance at a rate equal
to the Prime Rate plus one percent (1%)), in accordance with generally accepted
accounting practices consistently applied; (J) an office in the Project
(excluding expenses of furnishing and equipping such office); (K) property
management fees (not to exceed two percent (2%) of the gross income from the
Project (i.e. Base rent plus Operating Expenses except Tenant’s separately
measured expenses); (L) accounting, legal and other professional services
incurred in connection with the operation of the Property and the calculation of
Operating Costs and Taxes; (M) a reasonable allowance for depreciation on
machinery and equipment used to maintain the Property and any personal property
tax on personal property owned by Landlord and used in the operation of the
Property; (N) contesting the validity or applicability of any Laws that may
affect the Property provided Landlord notifies Tenant in writing of its intent
to contest such Laws and Tenant fails to object to such contest in writing
delivered to Landlord within fifteen (15) days of Landlord’s notice; (O) the
Building’s Allocable Share of any shared or common area maintenance fees and
expenses (including costs and expenses of operating, managing, owning and
maintaining the common areas of the Project), which costs and expenses are of
kind and nature of Operating Costs and Taxes; and (P) any other expense or
charge, whether or not hereinbefore described, which in accordance with
generally accepted property management practices would be considered an expense
of managing, operating, maintaining and repairing the Property.  Operating Costs
shall also include the Building’s Allocable Share of expenses, costs and
disbursements relating to or incurred or paid in connection with the management,
operation, repair and maintenance of the Project of which the Building is a
part, as equitably determined by Landlord, which expenses, costs and
disbursements relate to or benefit directly the Building or the Project.
Operating costs for any year during which average occupancy of the Building is
less than one hundred percent (100%) during the entire calendar year. For
purposes of this Section 3.2(a)(1), the “Prime Rate” for a particular
expenditure shall be the prime rate as announced by the Bank of America, San
Francisco, or its successor (without subsequent modification), as of the date of
completion of construction of the item for which the expenditure is made.
Landlord acknowledges and agrees that Landlord shall use commercially

 

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reasonable judgment (based upon other landlords of other first class office
projects in the downtown San Francisco area) in determining whether or not to
replace any aspect of the Building, Building systems and the like.

 

Notwithstanding the foregoing, Operating Costs shall not include (i) capital
expenditures other than those specifically enumerated above in Sections
3.2(a)(1)(I) above; (ii) costs of special services rendered to individual
tenants (including Tenant) for which a special charge is made; (iii) interest
and principal payments on loans or indebtedness secured by the Building;
(iv) costs of improvements for Tenant or other tenants of the Building;
(v) costs of services or other benefits of a type which are not available to
Tenant but which are available to other tenants or occupants, and costs for
which Landlord is entitled to be reimbursed by other tenants of the Building
other than through payment of tenants shares of increases in Operating Costs and
Taxes; (vii) depreciation or amortization other than as specifically enumerated
in the definition of Operating Costs above; (viii) costs, fines or penalties
incurred due to Landlord’s violation of any Law; (ix) repairs, alterations,
additions, improvements or replacements made to rectify or correct any defect in
the design, materials or workmanship of the Building or common areas or to
comply with any requirements of any governmental authority in effect as of the
Commencement Date; (x) damage and repairs attributable to fire or other casualty
of the type which Landlord has insured to the extent of proceeds actually
recovered by Landlord or would have been recoverable had Landlord carried any
insurance expressly required to be carried by Landlord her under; (xi) damage
and repairs necessitated by the negligence or willful misconduct of Landlord or
Landlord’s employees, contractors or agents; (xii) executive salaries above the
level of Building Manager; (xiii) that portion of salaries of service personnel
attributable to services that such service personnel perform that are not in
connection with the management, operation, repair or maintenance of the Building
or Common Areas; (xiv) Landlord’s general overhead expenses; (xv) costs
(including permit, license and inspection fees) incurred in renovating or
otherwise improving, decorating, painting or altering space for other tenants or
other occupants or vacant, leasable space in the Building; (xvi) interest,
penalties or other costs arising out of Landlord’s failure to make timely
payment of its obligations; (xvii) overhead and profit paid to subsidiaries or
affiliate of Landlord for management or other services for the Property or the
Building or for supplies or other material to the extent that the costs of the
services, supplies or material exceed the market costs of the services, supplies
or materials if they were not provided by a subsidiary or an affiliate; (xviii)
costs incurred to test, survey, cleanup, contain, abate, remove or otherwise
remedy Hazardous Materials (as defined in Section 5.2(a)) from the Property
unless the Hazardous Materials were in, about or on the Property as a result of
Tenant’s acts or omissions; (xix) costs incurred in connection with any portion
of the Project which is used for parking (e.g. the Parking Facility) and for
which parking fees are charged; (xx) costs incurred in advertising and
promotional activities for the Project (including gifts and promotional services
to tenants or other parties); (xxi) development or impact fees or similar
governmental charges paid by Landlord in order to develop and

 

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construct the Building and the Project; and (xxii) costs incurred in connection
with any portion of the Project which is used for retail purposes. In no event
shall Landlord collect more than 100% of any cost actually incurred by Landlord.

 

(2)          “Taxes” means: all real property taxes and general, special or
district assessments or other governmental impositions, or whatever kind, nature
of origin imposed on or by reason of the ownership or use of the Property;
governmental charges, fees or assessments for transit or traffic mitigation
(including area-wide traffic improvement assessments and transportation system
management fees), housing, plaice, fire or other governmental service or
purported benefits to the Property; service payments in lieu of takes and taxes
and assessments of every kind and nature whatsoever levied or assessed in
addition to, in lieu of or in substitution for existing or additional real
property taxes on the Property; any increases in the foregoing caused by changes
in assessed valuation, tax rate or other factors or circumstances; and the
reasonable cost of contesting by appropriate proceedings the amount or validity
of any taxes, assessments or charges described above, provided Landlord notifies
Tenant in writing of its intent to contest such taxes or assessments and Tenant
fails to object to such contest in writing delivered to Landlord within fifteen
(15) days of Landlord’s notice. To the extent paid or owed by Tenant or other
tenants as “Tenant’s Taxes” (as defined in Section 8-Tenant’s Taxes), “Tenant’s
Taxes” shall be excluded from Taxes.  Taxes for any year in which the building
is less than fully occupied shall be calculated based upon Taxes which would
have been incurred if the Building were fully assessed by the appropriate taxing
authority to reflect a one hundred percent (100%) occupied Building with all
tenant’s improvements completed.  Not withstanding anything to the contrary
contained in this Lease, the following shall not constitute Taxes for purposes
of this Lease; (i) state, local, federal, personal or corporate income tax
measured by the income of Landlord; (ii) any estate or inheritance taxes;
(iii) any franchise, succession or corporate transfer taxes; (iv) interest on
taxes or penalties resulting from Landlord’s failure to pay taxes; and (v) real
estate taxes resulting from over standard improvements made by other tenants. In
no event shall Landlord collect more than 100% of any cost actually incurred by
Landlord.

 

Not withstanding the foregoing, if any sale or change of ownership of all or any
portion of the Property is consummated during the first two (2) years of the
Term and, solely as a result, all or part of the Property is reassessed for tax
purposes by the appropriate governmental authority, then (a) during the first
year of the Term, Tenant shall be required to pay Tenant’s Share of the real
property taxes that would have been in effect if Landlord has not consummated
the transfer, including, without limitation, the amount by which the Taxes would
have increased under Proposition 13 pursuant to the annual mandated or permitted
tax increases there under even if the transfer had not occurred (the “Original
Tax Base”), but no portion of the increase in Taxes resulting solely from the
transfer over the Original

 

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Tax Base (the “Transfer Increase”); and (b) during the second year of the Term,
Tenant shall pay Tenant’s Share of the Original Tax Base and fifty percent (50%)
of the Transfer Increase.

 

(3)          “Tenant’s Share” means the Rentable Area of the Premises divided by
the total Rentable Area of the Building.  Landlord and Tenant acknowledge and
agree that Tenant’s Share of the Building shall be one hundred percent (100%) as
Tenant is leasing all of the rentable office area in such Building.  If the
Rentable Area of the Building is changed or the Rentable Area of the Premises is
changed by Tenant’s leasing of additional space hereunder or for any other
reason, Tenant’s Share shall be adjusted accordingly.

 

(b)         Additional Rent

 

(1)   Tenant shall pay Landlord as “Additional Rent” for each calendar year or
portion of thereof during the Rent Period Tenant’s Share of the sum of
(i) Operating Costs for the period, and (ii) Taxes for such period.

 

(2)   Prior to the Commencement Date, and prior to the end of each calendar year
thereafter, Landlord shall notify Tenant of Landlord’s reasonable estimate of
Operating Costs, Taxes and Tenant’s Additional Rent for the following calendar
year.  Landlord’s estimate with respect to the Building shall include a
comparison, by each category, of the prior year’s Operating Costs (in terms of
both dollars and percentages) and, if requested by Tenant, shall include
reasonable detailed documentation to support Landlord’s estimate. If Landlord
does not provide an estimate (and, if requested by Tenant, reasonable detailed
documentation) to Tenant prior to the commencement of the new calendar year,
Tenant shall continue, until the month after Tenant receives Landlord’s estimate
of the revised Operating Costs (and, if requested by Tenant, reasonable detailed
documentation), to pay the Operating Costs based on the prior year’s estimate. 
Commencing on the first day of January of each calendar year and continuing on
the first day of every month thereafter in such year, Tenant shall pay to
Landlord one-twelfth (1/12th) of the estimated Additional Rent. If Landlord
thereafter reasonably estimates that Operating Costs or Taxes for such year will
vary from Landlord’s prior estimate, Landlord may, by written notice to Tenant,
revise the estimate for such year (and Additional Rent shall thereafter be
payable based on the revised estimate); provided, however that Landlord shall
only be permitted to revise its estimate of the Operating Costs and/or Taxes
once during each calendar year. In the event that Landlord reasonably believes
that one or more categories of Operating Costs will be five percent (5%) or more
than the estimated last provided to Tenant then Landlord shall notify Tenant
prior to issuing the year end statement. Landlord’s statement of Operating Costs
shall be certified by a certified public accountant or signed and certified to
be correct by Landlord.

 

(3)          (i) As soon as reasonably practicable after the end of each
calendar year of the Term, but in no event later than July 1st of each year,
Landlord shall furnish Tenant a statement with respect to such year, showing
Operating Costs, Taxes and Additional Rent for the year, and the total payments
made by Tenant with respect thereto.  Any

 

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objection of Tenant to Landlord’s statement and resolution of any dispute shall
not postpone the time for payment of any amounts due Tenant or Landlord based on
Landlord’s statement, nor shall any failure of Landlord to deliver Landlord’s
statement in a timely manner relieve Tenant of Tenant’s obligation to pay any
amounts due Landlord based on Landlord’s statement.

 

(4)          If Tenant’s Additional Rent as finally determined for the year
exceeds the total payments made by Tenant on account thereof, Tenant shall pay
Landlord the deficiency within thirty (30) days of Tenant’s receipt of
Landlord’s statement. If the total payments made by Tenant on account thereof
exceed Tenant’s Additional Rent as finally determined for the year, Landlord
shall credit toward the rent next due from Tenant under this Lease an amount
equal to Tenant’s excess payment. For any partial calendar year at the beginning
or end of the Term during which period Tenant is required to pay Additional Rent
under this Lease, Additional Rent shall be prorated on the basis of 365-day year
by computing Tenant’s Share of Operating Costs and Taxes for the entire year and
then prorating such amount for the number of days during such year included in
the Term during which period Tenant is required to pay Additional Rent under
this Lease. Notwithstanding the termination of this Lease, Landlord shall pay to
Tenant or Tenant shall pay to Landlord, as the case may be, within thirty (30)
days after Tenant’s receipt of Landlord’s final statement for the calendar year
in which this Lease terminates, the difference between Tenant’s Additional Rent,
as finally determined by Landlord, and the total amount previously paid by
Tenant on account thereof.

 

If for any reason Taxes for any year during the Term are reduced, refunded or
otherwise changed, Tenant’s Additional rent shall be adjusted accordingly. If
Taxes are temporarily reduced as a result of space in the Building being leased
to a tenant that is entitled to an exemption from property, taxes or other
taxes, then for purposed of determining Additional Rent for each year in which
Taxes are reduced by any such exemption, Taxes for such year shall be calculated
on the basis of the amount the Taxes for the year would have been in the absence
of the exemption. The obligations of Landlord to refund any overpayment of
Additional Rent and of Tenant to pay any Additional Rent not previously paid
shall survive the expiration of the Term.

 

(5)          In the event that within one (1) year after Tenant’s receipt of the
Statement for the prior calendar year, Tenant reasonably believes that certain
of the Operating Costs charged by Landlord include costs that are not properly
included within the term “Operating Costs” or that Landlord has erred in
calculating same, Tenant shall have the right to audit Landlord’s books and
records in accordance with this paragraph. Tenant shall e In the event that
within one (1) year after Tenant’s receipt of the Statement for the prior
calendar year, Tenant reasonably believes that certain of the Operating Costs
charged by Landlord include costs that are not properly included within the term
“Operating Costs” or that Landlord has erred in calculating same, Tenant shall
have the right to audit Landlord’s books and records in accordance with this
paragraph. Tenant shall exercise such audit

 

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right by providing Landlord with a written notice of Tenant’s exercise of such
audit right within such one-year period and a statement enumerating reasonably
detailed reasons for Tenant’s objections to the statement issued by Landlord
(the “Audit Notice”). Upon the receipt by Landlord of an Audit Notice, Landlord
shall instruct its property manager at the Building to meet with a designated
employee or representative of Tenant (the “Tenant Representative”) to discuss
the objections set forth in the Audit Notice, Landlord shall provide the Tenant
Representative with reasonable access to Landlord’s books and records at the
Building relating to Operating Costs for the calendar year in question in order
to attempt to resolve the issues raised by Tenant in the Audit Notice. If,
within thirty (30) days after Landlord’s receipt of the Audit Notice, Landlord
and Tenant are unable to resolve Tenant’s objections, then not later than sixty
(60) days after the expiration of such 30-day period, Tenant shall notify
Landlord if Tenant wishes to employ an independent, reputable certified public
accounting firm charging for its services on an hourly rate (and not a
contingent fee) basis (“Acceptable Accountants”) to inspect and audit Landlord’s
books and records for the Building relating to the objections raised in Tenant’s
statement. Such audit shall be limited to a determination of whether or not
Landlord calculated the Operating Costs in accordance with the terms and
conditions of this Lease and normal and customary accounting methods used by
owners of similar buildings in the area for calculating Tenant’s Additional
Rent. All costs and expenses of any such audit shall be paid by Tenant, unless a
discrepancy of three percent (3%) or greater is found in the Operating Expenses
to be paid by Tenant, in which event Landlord shall pay the reasonable
out-of-pocket cost of the audit. Any audit performed pursuant to the terms of
this section shall be conducted only by the Acceptable Accountants at the
offices of Landlord’s property manager at the Building. Notwithstanding anything
contained herein to the contrary, Tenant shall be entitled to exercise its audit
right pursuant to this section only in strict accordance with the foregoing
procedures no more often than once per calendar year and each such audit shall
relate only to the calendar year most recently ended except if such audit
reveals a bona fide error or overcharge in which case Tenant shall have the
right to audit previous years books and records solely as to such expense item
or charge. In the event that Tenant fails to notify Landlord within the
foregoing one-year period that Tenant object to the statements, then Tenant’s
right to audit such year’s statement shall be null and void. In the event of a
bona fide dispute between Landlord and Tenant as to the validity of the results
of any audit by Tenant or amount of any claimed overcharge, Landlord and Tenant
hereby agree to resolve such dispute in accordance with the terms of Section 37
of this Lease.

 

3.3 Payment of Rent  All amounts payable or reimbursable by Tenant under this
Lease, including late charges and interest, shall constitute rent and shall be
payable and recoverable as rent in the manner provided in this Lease. All sums
payable to Landlord on demand under the terms of this Lease shall be payable
within thirty days after the receipt of written invoice from

 

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Landlord of the amounts due. Except as otherwise provided by this Lease, all
rent shall be paid without offset, recoupment or deduction in lawful money of
the United States of America to Landlord at Landlord’s Address for Payment of
Rent as set forth in the Basic Lease Information, or to such other person or at
such other place as Landlord may from time to time designate to Tenant in
writing.

 

4.     SECURITY DEPOSIT. Intentionally Deleted.

 

5.     USE AND COMPLIANCE WITH LAWS

 

5.1 (a) Uses. The Premises shall be used for general office, which shall include
engineering and any other ancillary office use with is consistent with the
operation of the Building as a first class office building and for no other use
or purpose. Tenant shall comply with all present and future Laws relating to
Tenant’s use or occupancy of the Premises (and make any repairs, alterations or
improvements as required to comply with all such Laws), and shall observe the
“Building Rules” (as defined in Section 27-Rules and Regulations); provided,
however, Tenant shall not be responsible for or required to make structural
improvements or alterations to the Premises except to the extent the structural
improvements or alterations are required as a result of Tenant’s use of the
Premises for other than general office purposes, such as the construction or
installation of high density filing systems, libraries, engineering labs or
server rooms. Tenant shall not do, bring, keep or sell anything in or about the
Premises that is prohibited by, or that will cause a cancellation of or a
material increase in the existing premium for, any insurance policy covering the
Property or any part thereof. Tenant shall not permit the Premises to be
occupied or used in any manner that will constitute waste or a nuisance, or
disturb the quiet enjoyment of or otherwise annoy other tenants in the Building.
Without limiting the foregoing, the Premises shall not be used for educational
activities (except Tenant’s business training activities), practice of medicine
or any of the healing arts or providing social services. Tenant shall not,
without the prior consent of Landlord, which consent shall not be unreasonably
withheld, conditioned or delayed, (i) bring into the Building or the Premises
anything that may cause substantial noise, odor or vibration, overload the
floors in the remises or the Building or any of the HVAC or other Building
Systems, or jeopardize the structural integrity of the Building or any part
thereof; or (ii) connect to the utility systems of the Building any apparatus,
machinery or other equipment which has a total connected electrical design load
in excess of the rated design load for the Building. Subject to Landlord’s
rights hereunder to limit access to the Building or the Premises in the event of
an emergency or in connection with work or repairs performed by Landlord and
subject to Landlord’s procedures with respect to after-hours access, Tenant
shall have the right to access the Premises twenty-four (24) hours a day, seven
(7) days a week, 365 days per year. Tenant shall have the right, if and to the
extent permitted by applicable Laws and in accordance therewith to use the
connecting stairways in the Building so long as such use by Tenant does not
create a fire hazard or interfere with the functioning of the HVAC system.
Tenant shall have the right to install its own external security car reader
system for access to the building and as long as Tenant leases all of the office
space in the Building to establish dedicated, secure elevators, including
freight elevators, and secured lobby access to those elevators serving Tenant’s
floors, subject to Landlord’s right of access to all times as provided elsewhere
in this lease and subject to the rules and regulations regarding access/security
procedures developed in accordance with sub clause (b) below.

 

(b) Security/Access Control. Landlord and Tenant hereby agree to cooperate in
good faith to jointly develop access and security procedures and protocol for
the Building. So long as Tenant is leasing all of the office space in the
Building, Tenant, at Tenant’s sole cost and expense, will have the right to:
provide on-site security measure for the Building, including the right to have a
lobby guard 24 hours/7days/365 days per year,

 

 

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installation of security cameras, require the registration of all persons
entering or leaving the Building during non-business hours of operation, and
require identification for access to the Building. In the event Tenant ceases to
lease all of the office space in the Building, Landlord may elect to undertake
such procedures as Landlord deems appropriate for other multi-tenant office
buildings in the Project at Landlord’s expense (subject to Landlord’s right to
be reimbursed as part of Operating Costs). Further, Landlord will evacuate the
Building for cause, suspected cause, or for drill purposes, and take other
actions that Landlord deems necessary or appropriate to prevent any threat of
property loss or damage, bodily injury or business interruption; provided,
however, that such measure shall be implemented in a way as not to inconvenience
Tenants unreasonably with at least thirty (30) days prior notice to Tenant.
Further, Landlord shall provide, at Landlord’s cost (subject to reimbursement by
Tenant as part of Operating Costs), a guard who shall patrol all of the Project,
including the Building, twenty-four (24) hours per day, seven (7) days per week.
Tenant shall pay separately all costs and expenses of any security services or
measures initiated by Tenant. All costs and security measures provided for or
contracted for by Landlord shall be paid by Landlord subject to Tenant’s
obligation to reimburse such costs and expenses as part of Operating Costs. If
and to the extent Landlord is responsible for security/access control for the
Building, Tenant or its Representatives shall cooperate and comply with such
security measures, and Tenant shall request that Tenant’s Visitors cooperate and
comply with such security measures.  Landlord, its agents and employees shall
have no liability to Tenant or its Representatives or Visitors for the
implementation or exercise of, or the failure to implement or exercise, any such
security measures or for any resulting disturbance of Tenant’s use or enjoyment
of the Premises. Landlord agrees that Landlord and any of its agents or
contractors, who will need unaccompanied access to the Premises, must first pass
Tenant’s corporate security screening program, “Sunscreen,” before access is
granted, except in case of emergencies. IF any of Landlord’s agents or
contractors fail such security screening program, such agents and other
contractors shall be accompanied by a representative of Tenant at all times in
the Premises during business hours and shall not be allowed on the Premises
after business hours. Landlord hereby agrees that the areas containing exterior
doors and loading docks shall contain illumination at a minimum of five (5) food
candles of light at six (6) feet above ground.

 

(c) MPOE/Risers, Landlord and Tenant hereby acknowledge and agree that so long
as Tenant leases all of the office space in the Building, Tenant shall have the
sole right to use and control the Building’s main point of entry (MPOE), risers
and chases. The MPOE shall be a single 8 foot by 8 foot closet. While Tenant
shall have the right to secure such MPOE areas, Landlord shall have the right of
access at all times but Landlord must be accompanied by a representative of
Tenant except in cases of emergency.

 

5.2 Use of Project. Throughout the Term, Landlord shall maintain and operate the
Project as a Class A office complex, and shall not allow any portion of the
Project to be used for any use that is not consistent with a Class-A office
complex.

 

5.3 Hazardous Materials

 

(a) Definitions

 

(1) “Hazardous Materials” shall mean any substance: (A) that now or in the
future is regulated or governed by, requires investigation or remediation under,
or is defined as a hazardous waste, hazardous substance, pollutant or
contaminant under any governmental statute, code, ordinance, regulation, rule or
order, and any amendment thereto, including for example only the Comprehensive
Environmental Response Compensation and Liability Act, 42 U.S.C 9601 et seq.,
and the Resource

 

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Conservation and Recovery Act, 42 U.S.C 6901 et seq., or (B) that is toxic,
explosive, corrosive, flammable, radioactive, carcinogenic, dangerous or
otherwise hazardous, including gasoline, diesel fuel, petroleum hydrocarbons,
polychlorinated biphenyls (PCBs), asbestos, radon and urea formaldehyde foam
insulation.

 

(2) “Environmental Requirements” shall mean all present and future Laws, orders,
permits, licenses, approvals, authorizations and other requirements of any kind
applicable to Hazardous Materials.

 

(3) “Handled by Tenant” and “Handling by Tenant” shall mean and refer to any
installation, handling, generation, storage, use, disposal, discharge, release,
abatement, removal, transportation, or any other activity of any type by Tenant
or its agents, employees, contractors, licenses, assignees, sub lessees,
transferees or representatives (collectively, “Representatives”) or its guests,
customers, invitees, or visitors (collectively, “Visitors”), at or about the
Premises in connection with or involving Hazardous Materials.

 

(4) “Environmental Losses” shall mean all costs and expenses of any kind,
damages, including foreseeable and unforeseeable consequential damages, fines
and penalties incurred in connection with any violation of Environmental
Requirements by Tenant or its agents, or contractors and all losses of any kind
attributable to the diminution of value, loss of use or adverse effects on
marketability or use of any portion of the Premises or Property resulting
therefrom.

 

(b)Tenant’s Covenants. No Hazardous Materials shall be handled by Tenant at or
about the Premises or Property without Landlord’s prior written consent, which
consent may be granted, denied, or conditioned upon compliance with Landlord’s
requirements, all in Landlord’s absolute discretion. Notwithstanding the
foregoing, normal quantities and use of those Hazardous Materials customarily
used in the conduct of general office activities, such as copier fluids and
cleaning supplies (“Permitted Hazardous Materials”), may be used and stored at
the Premises without Landlord’s prior written consent, provided that Tenant’s
activities at or about the Premises and Property and the Handling by Tenant of
all Hazardous Materials shall comply at all time with all Environmental
Requirements. At the expiration or termination of this Lease, Tenant shall
promptly remove from the Premises and Property all Hazardous Materials Handled
by Tenant at the Premises of the Property. Tenant shall keep Landlord fully and
promptly informed of all Handling by Tenant of Hazardous Materials other than
Permitted Hazardous Materials. Tenant shall be responsible and liable for the
compliance with all the provisions of this Section by all of Tenant’s
Representatives and Visitors, and all of Tenant’s obligations under this
Section (including its indemnification obligations under paragraph (e) below)
shall survive the expiration or termination of this Lease.

 

(c) Compliance. Tenant shall at Tenant’s expense promptly take all actions
required by any governmental agency or entity, in connection with or as a result
of the Handling by Tenant of Hazardous Materials at or about the Premises or
Property, including inspection and testing, performing all cleanup, removal and
remediation work required with respect to those Hazardous Materials, complying
with all closure requirements and post-closure monitoring, and filing all
required reports or plans. All of the foregoing work and all Handling by Tenant
of all Hazardous Materials shall be performed in a good, safe and workmanlike
manner by consultants qualified and licensed to undertake such work and in a
manner that will not unreasonably interfere with any other tenants quiet
enjoyment of the Property or Landlord’s use, operation, leasing and sale of the
Property. Tenant shall deliver to Landlord prior to delivery, to any
governmental agency, or promptly after receipt from any such agency, copies of
all permits, manifests, closure or

 

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remedial action plans, notices, and all other documents relating to the Handling
by Tenant of Hazardous Materials at or about the Premises or Property. If any
lien attaches to the Premises or the Property in connection with or as a result
of the Handling by Tenant of Hazardous Materials, and Tenant does not cause the
same to be released, by payment, bonding or otherwise, within ten (10) business
days after the attachment thereof, Landlord shall have the right but not the
obligation to cause the same to be released and any sums expended by Landlord in
connection therewith shall be payable by Tenant on demand.

 

(d) Landlord’s Rights. Landlord shall have the right, but not the obligation, to
enter the Premises upon forty-eight (48) hours prior written notice to Tenant,
except in instances in which Landlord, in its reasonable discretion, deems an
emergency to exist, at any reasonable time (i) to confirm Tenant’s compliance
with the provisions of this Section, and (ii) to perform Tenant’s obligations
under this section if Tenant has failed to do so or commence to do so within
five (5) days after written notice to Tenant. Landlord shall also have the right
to engage qualified Hazardous Materials consultants to inspect the Premises and
review the Handling by Tenant of Hazardous Materials, including review of all
permits, reports, plans, and other documents regarding same, the costs of which
shall be reimbursed by Tenant to Landlord within ten (10) days written request
(with supporting invoice) therefore to the extent such costs are incurred by
Landlord in connection with or as a result of Tenant’s breach of any obligations
hereunder or a compliance activity by Tenant that is governmentally mandated.
Tenant shall pay to Landlord on demand the costs of Landlord’s consultants’ fees
and all costs incurred by Landlord in performing Tenant’s obligations under this
Section. Landlord shall use reasonable efforts to minimize any interference with
Tenant’s business caused by Landlord’s entry into the Premises, but Landlord
shall not be responsible for any interference caused thereby.

 

(e) Tenant’s Indemnification. Tenant agrees to indemnify, defend and hold
harmless Landlord and its partners or members and its or their partners,
members, directors, officers, shareholders, employees and agents from all
Environmental Losses and all other claims, actions, losses, damages,
liabilities, costs and expenses of every kind, including reasonable attorneys’,
experts’ and consultants’ fees and costs, incurred at any time and arising from
or in connection with the Handling by Tenant of Hazardous Materials at or about
the Property or Tenant’s failure to comply in full with all Environmental
Requirements with respect to Premises.

 

(f) Landlord’s Indemnification. Landlord shall indemnify, defend, protect and
hold harmless Tenant and its officers, directors, employees, shareholders and
agents from and against any and all claims, loss, proceedings, damages, causes
of action, liability, costs or expenses (including reasonable attorneys’ fees)
arising as a result of the handling, installation, storage, generation, use,
disposal, discharge, release, abatement, removal, or transportation of Hazardous
Materials by Landlord, its agents, employees, contractors or representatives in,
on or about the Premises, the Building or the Property, which are not the result
of the activities of Tenant.

 

6.               Alterations.

 

6.1 Tenant shall not make any alterations, improvements or changes to the
Premises, other than the Tenant Improvements (“Alterations”), without Landlord’s
prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed, which consent shall be given by Landlord if at all,
within five (5) business days after Landlord’s receipt of Tenant’s request to
make such Alterations and all other information required to be submitted to
Landlord pursuant to this Section 6. Any such Alterations shall be completed by
Tenant at Tenant’s sole cost and expense: (i) with due diligence, in a good and
workmanlike manner, using new materials: (ii) in compliance with plans

 

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and specifications reasonably approved by Landlord: (iii) in compliance with the
construction rules and regulations reasonably promulgated by Landlord from time
to time: and (iv) in accordance with all applicable Laws (including all work,
whether structural or non-structural, inside or outside the Premises, required
to comply fully with all applicable Laws and necessitated by Tenant’s work).
Landlord shall notify Tenant in writing at the time that Landlord consents to
the Alterations, or, if no consent is required, within ten (10) days after
Tenant’s written request, as to whether Tenant must remove the Alterations at
the end of the Term: provided, however, that Tenant shall not be required to
remove any general office improvements but shall remove and repair to its
original state, all high density filing systems, server rooms, computer
mainframes, libraries, telecom nodes, satellite dishes and signs erected with
Landlord’s approval under this Lease. Landlord hereby agrees to notify Tenant as
part of Landlord’s review of Tenant’s Final Construction Documents whether or
not any of the tenant improvements to the Premises which Tenant will be making
will be required to be removed by Tenant pursuant to this Section 6.1, provided,
however, that Landlord may not require Tenant to remove the partitions, doors or
other vertical elements of offices, conference rooms, break rooms, copy rooms
and other general purpose office rooms, or other standard general-purpose office
improvements. Landlord will consent to a space plan characterized by a
high-density of private offices similar to Tenant’s preliminary plans attached
hereto as Exhibit G. Notwithstanding anything to the contrary contained in this
Section, Tenant shall have the right, without Landlord’s consent, to make
non-structural alterations, additions or improvements that to not affect the
Building Structure, Building Systems (except for Building Systems included in
Tenant Improvements), the HVAC, or the Common Areas or exterior of the Building
to the extent the cost of any particular alteration, addition or improvement
costs less than Two Hundred Thousand Dollars ($200,000.00), excluding carpet and
paint. If any work outside the Premises or any work on or adjustment to any of
the Building Systems, is required in connection with or as a result of Tenant’s
work, such work shall be performed at Tenant’s expense by contractors reasonably
approved by Landlord. Landlord’s right to review and approve (or withhold
approval of) Tenant’s plans, drawings, specifications, contractor(s) and other
aspects of construction work proposed by Tenant is intended solely to protect
Landlord, the Property and Landlord’s interests. NO approval or consent by
Landlord shall be deemed or construed to be a representation or warranty by
Landlord as to the adequacy, sufficiency, fitness or suitability thereof or
compliance thereof with applicable Laws or other requirements. Except as
otherwise provided in Landlord’s consent, all Alterations shall upon
installation become part of the realty and be the property of Landlord.

 

6.2 Before making any Alterations which require Landlord’s consent, Tenant shall
submit to Landlord for Landlord’s prior approval schematic drawings of the work
to be performed, and the name of the contractor and all subcontractors proposed
by Tenant to make the Alterations. Tenant shall reimburse Landlord within 30
days of receipt of a written invoice for all reasonable and actual out-of-pocket
expenses incurred by Landlord in connection with any Alterations made by Tenant,
including actual and reasonable fees charged by Landlord’s contractors or
consultants to review plans and specifications prepared by Tenant and to update
the existing as-built plans and specifications of the Building to reflect the
Alterations, not to exceed Five Thousand Dollars ($5,000.00). Tenant shall
obtain all applicable permits, authorizations and governmental approvals and
deliver copies of the same to Landlord before commencement of any Alterations.

 

6.3 Tenant shall keep the Premises and the Property free and clear of all liens
arising out of any work performed, materials furnished or obligations incurred
by Tenant. If any such lien attaches to the Premises or the Property, and Tenant
does not cause the same to be released by payment, bonding or otherwise within
ten (10) business days after the attachment thereof, Landlord shall have the
right but not the obligation to cause the

 

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same to be released, and any sums expended by Landlord in connection therewith
shall be payable by Tenant within 30 days after receipt of written invoice with
interest thereon from the date of expenditure by Landlord at the Interest Rate
(as defined in Section 16.2-Interest). Tenant shall give Landlord at least ten
(10) days notice prior to the commencement of any Alterations and cooperate with
Landlord in posting and maintaining notices of non-responsibility in connection
therewith.

 

6.4 Subject to the provisions of Section 5- Use and Compliance with Laws and the
foregoing provisions of this Section, Tenant may install and maintain
furnishings, equipment, movable partitions, business equipment and other trade
fixtures (“Trade Fixtures”) in the Premises, provided that the Trade Fixtures do
not become and integral part of the Premises or the Building. Tenant shall
promptly repair any damage to the Premises or the Building caused by any
installation or removal of such Trade Fixtures.

 

7.               MAINTENANCE AND REPAIRS.

 

7.1 By taking possession of the Premises Tenant agrees that the Premises are
then in a good and tenantable condition, subject to latent defects of which
Tenant must notify Landlord in writing within one (1) year after the delivery of
the Premises affected by the defect to Tenant, except for latent structural
defects of which Tenant must notify Landlord within 10 years after such date.
During the Term, Tenant at Tenant’s expense but under the direction of Landlord,
shall repair and maintain the Premises, including the interior walls, floor
coverings, ceiling (ceiling tiles and grid), Tenant Improvements, Alterations,
fire extinguishers, outlets and fixtures, and any appliances (including
dishwashers, hot water heaters and garbage disposers) in the Premises, in a
condition customary for well managed, high quality office buildings in San
Francisco and keep the Premises in a clean, safe and orderly condition.

 

7.2 Landlord shall maintain or cause to be maintained in a manner customary for
well managed, high quality office buildings in San Francisco, the structural
portions of the roof and roof membrane, foundations, floors and exterior walls
of the Building, the Building Systems (except for Building Systems included in
the Tenant Improvements), and the public and common areas of the Property, such
as elevators, stairs, corridors and public restrooms; provided, however, that
Tenant shall pay the cost of repairs for damaged occasioned by Tenant’s use of
the Premises or the Property (other than normal wear and tear and damage for
which Landlord carries insurance) or any negligent act or omission of Tenant or
Tenant’s Representatives or Visitors. Landlord shall be under no obligation to
inspect the Premises. Tenant shall promptly report in writing to Landlord any
defective condition known to Tenant which Landlord is required to repair.
Landlord shall be responsible for latent defects not discovered by Tenant
through the normal course of inspection. As a material part of the consideration
for this Lease, Tenant hereby waives any benefits of any applicable existing or
future Law, including the provisions of California Civil Code Sections 1932(1),
1941 and 1942, that allows a tenant to make repairs at its landlord’s expense.
In the event that Landlord defaults under its obligations under this Lease,
Tenant shall promptly notify Landlord in writing of such default and Landlord
shall have thirty (30) days within which to cure such default (or if such
default is not capable of being cured within such time, Landlord shall
diligently proceed to cure such default). In the even that Landlord does not
cure the default within such 30-day period or does not diligently proceed to
cure such default if such default is not capable of being cured within such
30-day period, Tenant shall have the right to cure such default on Landlord’s
behalf and Landlord shall promptly reimburse Tenant for all reasonable,
out-of-pocket expenses incurred by Tenant in connection with such cure.

 

7.3 Provided that Landlord’s activities do not materially and adversely affect
Tenant’s use of the Premises or the common areas of the Building during normal
business hours

 

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on business days, Landlord hereby reserves the right, at any time and from time
to time, without liability to Tenant, and without constituting an eviction,
constructive or otherwise, or entitling Tenant to any abatement of rent or to
terminate this Lease or otherwise releasing Tenant from any of Tenant’s
obligations under this Lease:

 

(a) To make alterations, additions, repairs, improvements to or in the Building;

 

(b) To change the Building’s name or street address, subject to the terms of
Section 35.2 hereof;

 

(c) To install and maintain any and all signs on the exterior and interior of
the Building, subject to Tenant’s rights under Section 35(Signage) hereof; and

 

(d)         If any governmental authority promulgates or revises any Law or
imposes mandatory or voluntary controls or guidelines on Landlord or the
Property relating to the use of conservation of energy or utilities or the
reduction of automobile or other emissions or reduction or management of traffic
or parking on the Property (collectively “Controls”), to comply with such
Controls, if mandatory, or make any alterations to the Property related thereto.

 

8.               TENANT’S TAXES. “Tenant’s Taxes” shall mean (a) all taxes,
assessments, license fees and other governmental charger or impositions levied
or assessed against or with respect to Tenant’s personal property or Trade
Fixtures in the Premises, whether any such imposition is levied directly against
Tenant or levied again Landlord or the Property, (b) all actual rental, excise,
sales or transaction privilege taxes arising out of this Lease (excluding,
however, state and federal personal or corporate income taxes measured by the
income of Landlord from all sources) imposed by any taxing authority upon
Landlord or upon Landlord’s receipt of any rent payable by Tenant pursuant to
the terms of this Lease (“Rental Tax”), and (c) any increase in Taxes
attributable to inclusion of a value placed on Tenant’s personal property, Trade
Fixtures or Alterations. Tenant shall pay any Rental Tax to Landlord in addition
to and at the same time as Base Rent is payable under this Lease, and shall pay
all other Tenant’s Taxes before delinquency (and, at Landlord’s request, shall
furnish Landlord satisfactory evidence thereof). If Landlord pays Tenant’s Taxes
or any portion thereof, Tenant shall reimburse Landlord within 30 days after
receipt of written invoice for the amount of such payment, together with
interest at the Interest Rate from the date of Landlord’s payment to the date of
Tenant’s reimbursement; provided, however, Landlord shall not pay Tenant’s Taxes
prior to delinquency and Landlord shall notify Tenant in writing ten (10) days
in advance of its intent to pay Tenant’s Taxes.

 

9.               UTILITIES AND SERVICES.

 

9.1 Description of Services. Landlord shall furnish to the Premises electricity,
hot and cold water, passenger and freight elevator service and heat, ventilation
and air conditioning in accordance with the Base Building description attached
as Exhibit F-1. All such services/utilities shall be separately metered to the
Premises, as provided in Section 9.2(b) below, and Tenant shall pay directly all
such costs relating thereto as provided below. Landlord and Tenant acknowledge
and agree that Tenant shall provide and contract for its own janitorial services
to the Premises, at Tenant’s sole cost and expense, which janitorial services
shall be comparable in quality and services to other janitorial services
rendered in other first class office buildings.

 

9.2 Payment for Additional Utilities and Services.

 

(a) If the temperature otherwise maintained in any portion of the Premises by
the HVAC systems of the Building is affected as a result of (i) any lights,
machines or equipment used by Tenant in the premises other than reasonable and
customary numbers and types of general office equipment customarily used in the
conduct of general office activities, or (ii) the occupancy of the Premises by
more than one person

 

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per 150 square feet of rentable area, then Landlord shall have the right, in
consultation with Tenant, to install any machinery or equipment reasonably
necessary to restore the temperature, including modifications to the standard
air-conditioning equipment. The reasonable cost of any such equipment and
modifications, including the reasonable cost of installation and any additional
cost of operation and maintenance of the same, shall be paid by Tenant to
Landlord within thirty (30) days after Landlord’s written request therefore.

 

(b) As part of the Tenant Improvements, Tenant shall separately meter or
submeter the consumption of all utilities to the Premises and Tenant hereby
agrees to pay, in the case of those utilities which are separately metered, all
utilities charges, as and when due and payable, to the utility provider and in
the case of those utilities which are separately submetered, to pay to Landlord,
when invoiced by Landlord, all changes associated with such submetered
utilities.

 

9.3 Interruption of Services. In the event of an interruption in, or failure or
inability, to provide any of the services or utilities described in Section 9.1-
“Description of Services” (a “Service Failure”), such Service Failure shall not
regardless of its duration, constitute an eviction of Tenant, constructive or
otherwise, or impose upon Landlord any liability whatsoever, including, but not
limited to, liability of consequential damages or loss of business by Tenant or,
except as provided herein, entitle Tenant to an abatement of rent or to
terminate this Lease.

 

(a) If any Service Failure not caused by Tenant or its Representatives prevents
Tenant from reasonably using a material portion of the Premises and Tenant in
fact ceases to use such portion of the Premises, Tenant shall be entitled to an
abatement of Base Rent and Additional Rent with respect to the portion of the
Premises that Tenant is prevented from using by reason of such Service Failure
in the following circumstances: (i) if Landlord fails to commence reasonable
efforts to remedy the Service Failure within two (2) Business Days following the
occurrence of the Service Failure or fails thereafter to pursue diligently
reasonable action to remedy the Service Failure, the abatement of rent shall
commence the next business day following the Service Failure and continue for
the balance of the period during with Tenant is so prevented from using such
portion of the Premises; and (ii) if the Service Failure in all events is not
remedied within ten (10) days following the occurrence of the Service Failure
and Tenant in fact does not use such portion of the Premises for an
uninterrupted period of ten (10) days or more by reason of such Service Failure,
the abatement of rent shall commence no later than the eleventh (11th) day
following the occurrence of the Service Failure and continue for the balance of
the period during which Tenant is so prevented from using such portion of the
Premises.

 

(b) If a Service Failure is caused by Tenant or its Representatives, Landlord
shall nonetheless remedy the Service Failure, at the expense of Tenant, pursuant
to Landlord’s maintenance and repair obligations under Section 7- “Maintenance
and Repair” or Section 12.1- “Landlord’s Duty to Repair,” as the case may be,
but Tenant shall not be entitled to an abatement of rent or to terminate this
Lease as a result of any such Service Failure.

 

(c) Notwithstanding Tenant’s entitlement to rent abatement under the preceding
provisions, Tenant shall continue to pay Tenant’s then current rent until such
time as Landlord and Tenant agree on the amount of the rent abatement, If
Landlord and Tenant are unable to agree on the amount of such abatement within
ten (10) Business Days of the date they commence negotiations regarding the
abatement, then either party may submit the matter to binding arbitration
pursuant to sections 1280 et seq. of the California Code of Civil Procedure.

 

(d) In addition to the foregoing provisions, if there is a Service Failure not
caused by Tenant or its Representatives and such Service Failure prevents Tenant
from conducting its business in the Premises in the manner in which Tenant
intends to conduct such business, and

 

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(i) Landlord fails to commence reasonable efforts to remedy the Service Failure
within ten (10) days following the occurrence of the Service Failure and
thereafter use reasonably diligent efforts to remedy the Service Failure, or
(ii) the Service Failure in all events is not remediated within four (4) months
following its occurrence and Tenant in fact does not substantially conduct its
business in the Premises in the manner in which Tenant intends to conduct
business for an uninterrupted period of four (4) months or more, Tenant shall
have the right to terminate this Lease by written notice delivered to Landlord
within ten (10) Business Days following the event described in clauses (i) or
(ii) above giving rise to the right to terminate.

 

(e) Where the cause of a Service Failure is within the control of a public
utility or other public or quasi-public entity outside Landlord’s control,
written notification to such utility or entity of the Service Failure and
request to remedy the failure shall constitute “reasonable efforts” by Landlord
to remedy the Service Failure.

 

(f) Tenant hereby waives the provisions of California Civil Code
Section 1932(1) or any other applicable existing or future law, ordinance or
governmental regulation permitting the termination of this Lease due to such
interruption, failure or inability.

 

9.4 Tenant’s Access. Landlord shall provide Tenant access to the vertical and
horizontal raceways in the Building to permit Tenant to install Tenant’s utility
and/or telecommunication lines separately or in common with other building
lines. Tenant shall also be permitted reasonable access to roof of the Building
to install, maintain and replace satellite dishes and/or other
telecommunications equipment installed pursuant to Section 37
(Telecommunications Equipment) hereof.

 

10.         EXCULPATION AND INDEMNIFICATION.

 

10.1                           Landlord’s Liability to Tenant.  Landlord shall
not be liable to Tenant for any loss, injury or other damage to any person or
property (including Tenant or Tenant’s property) in or about the Premises or the
Property from any cause (including defects in the Property or in any equipment
in the Property; fire, explosion or other casualty; bursting, rupture, leakage
or overflow of any plumbing or other pipes or lines, sprinklers, tanks, drains,
drinking fountains or washstands in, above, or about the Premises or the
Property; or acts of other tenants in the Property), and Tenant hereby waives
all claims against Landlord for any such loss, injury or damage and the cost and
expense of defending against claims relating thereto, except such loss, injury
or damage to the extent caused by Landlord’s negligence or willful misconduct;
provided, however, that Landlord shall indemnify, protect, defend and hold
Tenant harmless from and against any claims, actions, liabilities, damages,
costs or expenses, including reasonable attorneys’ fees and costs incurred in
defending against the same (“Claims”) asserted by third parties against Tenant
for such loss, injury or damages, to the extent the same are caused by the
willful or negligent acts or omissions of Landlord or its authorized
representatives. Notwithstanding any other provision of this Lease to the
contrary, however, in no event shall Landlord be liable to Tenant for any
punitive or consequential damages or damages for loss of business by Tenant.

 

10.2                           Tenant’s Indemnification of Landlord.  Tenant
shall indemnify, protect, defend and hold harmless Landlord from and against
Claims to the extent arising from (a) the acts or omissions of Tenant of
Tenant’s Representatives or Visitors in or about the Property, or (b) any
construction or other work undertaken by Tenant on the Premises (including any
design defects), or (c) any breach or default under this Lease by Tenant,
excepting only Claims to the extent they are caused by the negligent or willful
acts or omissions of Landlord or its authorized representatives. Notwithstanding
any other provision of this Lease to the contrary, in no event shall tenant be
liable to Landlord for any punitive or

 

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consequential damages, and Tenant and Landlord agree and understand that
Landlord’s remedies set forth in Section 15.2 (Remedies) hereof constitute
actual, not consequential, damages.

 

10.3                           Survival. The obligations of the parties under
this Section 10 shall survive the expiration or termination of this Lease.

 

11                                    INSURANCE

 

11.1                           Tenant’s Insurance.

 

(a)          Tenant shall maintain in full force throughout the Term, commercial
general liability insurance providing coverage on an occurrence form basis with
limits of not less than Two Million Dollars ($2,000,000.00) each occurrence for
bodily injury and property damage combined, and Five Million Dollars
($5,000,000.00) annual general aggregate and Two Million Dollars ($2,000,000.00)
products and completed operations annual aggregate. Tenant’s liability insurance
policy or policies shall; (i) include premises and operations liability
coverage, broad form property damage coverage including completed operations,
blanket contractual liability coverage including, to the maximum extent
possible, coverage for the indemnification obligations of Tenant under this
Lease and personal and advertising injury coverage; (ii) provide that the
insurance company pas the duty to defend all insured’s under the policy;
(iii) provide that defense costs are paid in addition to and do not deplete any
of the policy limits; (iv) cover liabilities arising out of or incurred in
connection with Tenant’s use or occupancy of the Premises or the Property; and
(v) extend coverage to cover liability for the actions of Tenant’s
Representatives and Visitors.

 

(b)         Tenant shall at all time maintain in effect with respect to any
Alterations and Tenant’s Trade Fixtures and personal property, commercial
property insurance providing coverage, on an “all risk” or “special form” basis,
in an amount equal to at least 90% of the full replacement cost of the covered
property. Tenant may carry, such insurance under a blanket policy, provided that
such policy provides coverage equivalent to a separate policy. During the Term,
the proceeds from any such policies of insurance shall be used for the repair or
replacement of the Alterations, Trade Fixtures and personal property so insured.
Landlord will have no obligation to carry insurance on any Alterations or on
Tenant’s Trade Fixtures or personal property.

 

(c)          Each policy of insurance required under this Section shall: (ii) be
maintained at Tenant’s sole cost and expense, and (iii) require at least thirty
(30) days’ written notice to Landlord prior to any cancellation or nonrenewal of
insurance coverage. Insurance companies issuing such policies shall have rating
classifications of “A” or better and financial size category ratings of “X” or
better according to the latest edition of the A.M. Best Key Rating Guide. All
insurance companies issuing such policies shall be license to do business in the
state where the Property is located. Tenant shall provide to Landlord, upon
Landlord’s written request, evidence that the insurance required to be carried
by Tenant pursuant to this Section, is in full force and effect.

 

(d)         [Intentionally Omitted].

 

(e)          Each policy of liability insurance required by this Section shall:
(i) contain a cross liability endorsement or separation of insured’s clause;
(ii) provide that any waiver of subrogation rights or release prior to a loss
does not void coverage; and (iii) provide that it is primary to and not
contributing with, any policy of insurance carried by Landlord covering the same
loss.

 

(f)            Prior to occupancy of the Premises by Tenant, and not less than
thirty (30) days prior to expiration of any policy thereafter, Tenant shall
furnish to

 

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Landlord a certificate of insurance reflecting that the insurance required by
this Section is in force.

 

(g)         All or any portion of the insurance coverages Tenant is required to
maintain under this Lease may be maintained under a program of Tenant
self-insurance or under policies that include self-insurance retentions or
deductibles larger than those typically carried by similarly situated tenants.
Before the Commencement Date, Tenant shall advise Landlord of the self-insurance
program, specifying limits and amounts of umbrella coverage and self-insured
retentions, or deductibles. Landlord is considered to consent to such
self-insurance program as long as it is effective and Tenant’s net worth and
current assets exceed $250,000,000 and $250,000,000 respectively.

 

11.2                           Landlord’s Insurance. At all times during the
Term, Landlord shall maintain in effect insurance on the Building with
responsible insurers, on an “all risk” or “special form” basis, insuring the
Building and the Tenant Improvements in an amount equal to at least 90% of the
replacement cost thereof, excluding land, foundations, footings and underground
installations, together with insurance against sprinkler damager, vandalism and
malicious mischief. In addition, Landlord shall maintain during the Term of this
Lease commercial general liability insurance on an occurrence form basis with
limits of Two Million Dollars ($2,000,000.00) each occurrence for bodily injury
and property damage combined and Three Million Dollars ($3,000,000.00) annual
general aggregate. The insurers shall be authorized to do business in the State
of California and the policies of insurance with respect to property loss or
damage by fire or other casualty shall contain a waiver or subrogation. Landlord
may, but shall not be obligated to, carry insurance against additional perils
and/or in greater amounts.

 

11.3                           Property Insurance-Waiver of Subrogation.
Landlord and Tenant each hereby waive any right of recovery against the other
and the partners, members, shareholders, officers, directors and authorized
representatives of the other for any loss or damage that is covered by any
policy of property insurance maintained by either party (or required by this
Lease to be maintained) with respect to the Premises or the Property or any
operation therein. If any such policy of insurance relating to this Lease or to
the Premises or the Property does not permit the foregoing waiver or if the
coverage under any such policy would be invalidated as a result of such waiver,
the party maintaining such policy shall obtain from the insurer under such
policy a waiver of all rights of recovery, by way of subrogation against either
party in connection with any claim, loss or damage covered by such policy.

 

12.         DAMAGE OR DESTRUCTION.

 

12.1 Landlord’s Duty to Repair.

 

(a) If all or a substantial part of the Premises are rendered untenantable or
inaccessible by damage to all or any part of the Property from fire or other
casualty then, unless either party is entitled to and elect to terminate this
Lease pursuant to Sections 12.1- Landlord’s Right to Terminate and 12.3-
Tenant’s Right to Terminate. Landlord shall, at its expense, use reasonable
efforts to repair and restore the Premises and/or the Property, as the case may
be, to substantially their former condition to the extent permitted by then
applicable Laws; provided, however, that in no event shall Landlord have any
obligation for repair or restoration beyond the extent of insurance process
payable to Landlord for such repair or restoration, or for any of Tenant’s
personal property, Trade Fixtures or Alterations.

 

(b) If Landlord is required or elects to repair damage to the Premises and/or
the Property, this Lease shall continue in effect, but Tenant’s Base Rent and
Additional Rent from the date of this casualty through the date of substantial
completion of the repair shall be abated with regard to any portion of the
Premises that Tenant is prevented from using by

 

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reason of such damage or its repair. In no event shall Landlord be liable to
Tenant by reason of any injury to or interference with Tenant’s business or
property arising form fire or other casualty or by reason of any repairs to any
part of the Property necessitated by such casualty.

 

12.2 Landlord’s Right to Terminate. Landlord may elect to terminate this Lease
following damage by fire or other casualty under the following circumstances:

 

(a) If, in the reasonable judgment of Landlord, the Premises and the Property
cannot be substantially repaired and restored under applicable Laws or as a
result of a dispute with Landlord’s insurer or Mortgagee within one (1) year
from the date of the casualty;

 

(b) If the Building is damaged or destroyed to the extent that, in the
reasonable judgment of Landlord, the cost to repair and restore the Building
would exceed twenty-five percent (25%) of the full replacement cost of the
Building, whether or not the premises are at all damaged or destroyed; or

 

(c) If the fire or other casualty occurs during the last year of the Term or, if
an Extension Option has been exercised, during the last year of the applicable
Extension Period.

 

If any of the circumstances described in subparagraphs (a), (b) or (c) of this
Section 12.2 occur or arise, Landlord shall notify Tenant in writing of that
fact within ninety (90) days after the date of the casualty (such 90 day period
plus any applicable 30 day period set forth in Section 12.3(b) hereof shall be
referred to herein as the “Lease Status Period”) and in such notice Landlord
shall also advise Tenant whether Landlord has elected to terminate this Lease as
provided above. Landlord may elect to terminate this Lease in accordance with
this Section 12.2 to the extent it also terminates all other lease within the
Building. If other buildings in the Project are similarly damaged and destroyed
at the same time that the Building is damaged and destroyed and Landlord owns
and controls suck other buildings, then Landlord may elect to terminate this
Lease (i) only to the extern it also terminates the leases in such other
building(s), and (ii) if Tenant lease space in such other building(s), Landlord
also terminates such other lease(s).

 

12.3 Tenant’s Right to Terminate. If all or a substantial part of the Premises
are rendered untenantable or inaccessible by damage to all or any part of the
Property from fire or other casualty, then Tenant may elect to terminate this
Lease under the following circumstances:

 

(a) Where Landlord either (i) fails to apply for any permits required for such
repair and restoration within thirty (30) days following the expiration of the
Lease Status Period (without either party, terminating this Lease) or Landlord
thereafter fails to proceed to diligently pursue reasonable efforts to obtain
such perm its, or (ii) has failed to commence such repair or restoration within
thirty (30) days after issuance of required permits and approvals or, in any
case, one hundred fifty (150) days after the damage or destruction, or (iii) has
so commenced such repair or restoration and thereafter fails to diligently
pursue reasonable efforts to complete such repair or restoration, which failure
has continued for a continuous period of at least thirty (30) days or the
aggregate of such failures exceed thirty (30) business days; provided, however,
that if Landlord shall be delayed in pursing and completing such repair or
restoration by reason of any Force Majeure Events, then such one hundred fifty
(150) and thirty (30) day periods shall be extended for the period of time (not
to exceed in the aggregate three hundred (300) days) equal to the period of the
delay. In such an event, Tenant may elect to terminate this Lease by notice
given to Landlord within twenty (20) Business Days after such one hundred fifty
(150) or thirty (30) day periods as such periods may have been extended pursuant
to the preceding sentence, effective as of the end of the next calendar month
after Landlord’s receipt of such notice.

 

(b) In the circumstance described in Subsections 12.2(a), (b), and (c) above; in
which event Tenant may elect to terminate this Lease by giving Landlord notice
of such election to terminate within thirty (30) days after Landlord’s notice to
Tenant pursuant to Section 12.2-Landlord’s Right to Terminate.

 

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12.4 Waiver. Landlord and Tenant each hereby waive the provisions of California
Civil Code Sections 1932(2), 1933(4) and any other applicable existing or future
Law permitting the termination of a lease agreement in the event of damage or
destruction under any circumstances other than as provided in Sections
12.2-Landlord’s Right to Terminate and 12.3- Tenant’s Right to Terminate.

 

13. CONDEMNATION.

 

13.1 (a) “Award” shall mean all compensation, sums, or anything of value
awarded, paid or received on a total or partial Condemnation.

 

(b) “Condemnation” shall mean (i) a permanent taking (or a temporary taking for
a period extending beyond the end of the Term) pursuant to the exercise of the
power of condemnation or eminent domain by any public or quasi-public authority,
private corporation or individual having such power (“Condemner”), whether by
legal proceedings or otherwise, or (ii) a voluntary sale or transfer by Landlord
to any such authority, either under threat of condemnation or while legal
proceedings for condemnation are pending.

 

(c) “Date of Condemnation” shall mean the earlier of the date that title to the
property, taken is vested in the Condemner or the date the Condemner has the
right to possession of the property being condemned.

 

13.2 Effect on Lease.

 

(a) If the Premises are totally taken by Condemnation, this Lease shall
terminate as of the Date of Condemnation. If a portion but not all of the
Premises is taken by Condemnation, this Lease shall remain in effect; provided,
however, that if the portion of the Premises remaining after the Condemnation
will be unsuitable for Tenant’s continued use, then upon notice to Landlord
within thirty (30) days after Landlord notifies Tenant of the Condemnation,
Tenant may terminate this Lease effective as of the Date of Condemnation.

 

(b) If twenty-five percent (25%) or more of the Land or of the floor area in the
Building is taken by Condemnation, or if as a result of any Condemnation the
Building is no longer reasonably suitable for use as an office building, whether
or not any portion of the Premises is taken, Landlord may elect to terminate
this Lease, effective as of the Date of Condemnation, by notice to Tenant within
thirty (30) days after the Date of Condemnation.

 

(c) If all or a portion of the Premises is temporarily taken by a Condemner for
a period not extending beyond the end of the Term or exceeding 180 days, this
Lease shall remain in full force and effect.

 

13.3 Restoration. If this Lease is not terminated as provided in Section 13.2-
Effect on Lease, Landlord, at its expense, shall diligently proceed to repair
and resolve the Premises to substantially its former condition (to the extent
permitted by then applicable Laws) and/or repair and restore the Building to an
architecturally complete office building; provided, however, that Landlord’s
obligation to so repair and restore shall be limited to the amount of any Award
paid to Landlord and not required to be paid to any Mortgagee (as defined in
Section 20.2 below). In no event shall Landlord have any obligation to repair or
replace any improvements in the Premises beyond the amount of any Award paid to
Landlord for such repair or to repair or replace any of Tenant’s personal
property, Trade Fixtures, or Alterations.

 

13.4 Abatement and Reduction of Rent. If any portion of the Premises is taken in
a Condemnation or is rendered permanently untenantable by repairs necessitated
by the Condemnation, and this Lease is not terminated, the Base Rent and
Additional Rent payable under this Lease shall be proportionally reduced as of
the Date of Condemnation based upon the percentage of rentable square feet in
the Premises so taken or rendered permanently untenantable. In addition, if this
Lease remains in effect following a Condemnation and Landlord proceeds to repair
and restore the Premises, the Base Rent and Additional Rent payable under this
Lease shall be abated during the period of such repair or restoration to the
extent such repairs prevent Tenant’s use of the Premises.

 

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13.5 Awards. Any Award made shall be paid to Landlord, and Tenant hereby assigns
to Landlord, and waives all interest in or claim to, any such Award, including
any claim for the value of the unexpired Term; provided, however, that Tenant
shall be entitled to receive, or to prosecute a separate claim for, an Award for
a temporary taking of the Premises or a portion thereof by a Condemner where
this Lease is not terminated (to the extent such Award relates to the unexpired
Term), or an Award or portion thereof separately designated for relocation
expenses or the interruption of or damage to Tenant’s business or as
compensation for Tenant’s personal property, Trade Fixtures or Alterations.

 

13.6 Waiver. Landlord and Tenant each hereby waive the provisions of California
Code of Civil Procedure Section 1265.130 and any other applicable existing or
future Laws allowing either party to petition for a termination of this Lease
upon a partial taking of the Premises and/or the Property.

 

14. ASSIGNMENT AND SUBLETTING.

 

14.1       Landlord’s Consent Required. Tenant shall not assign, mortgage,
pledge, hypothecate or encumber this Lease or any interest therein, or sublet or
license, or in any other manner transfer all or any part of Tenant’s interest
under this Lease (each and all a “Transfer”), without the prior written consent
of Landlord, which (subject to the other provisions of this Section 14) shall
not be unreasonably withheld, conditioned or delayed. If Tenant is a
non-publicly traded corporation, any sale or other transfer, including any
consolidation, merger or reorganizations, of the majority of the voting stock of
Tenant issued and outstanding at any given time during the Term of this Lease or
any sale or other transfer of a majority of the partnership interest in Tenant,
if Tenant is a partnership, shall constitute an assignment for purposes of this
Lease. Notwithstanding anything to the contrary contained in this Lease, Tenant
may assign this Lease or may sublet the Premises without Landlord’s consent for
any use permitted under this Lease, without Landlord’s consent, to any
corporation or other entity which controls, is controlled by, or is under common
control with Tenant, or to any corporation or other entity resulting from a
merger, reorganization or consolidation with Tenant, or to any person or entity
which acquires controlling interest in Tenant’s stock or substantially all of
the assets of Tenant as going concern (collectively, an “Affiliate”), provided
that the Affiliate assumes in writing all of Tenant’s obligations under this
Lease and that Tenant gives Landlord such reasonable information as Landlord
shall reasonably request regarding the Affiliate. Notwithstanding any provision
in this Lease to the contrary, Tenant shall not mortgage, pledge, hypothecate or
otherwise encumber all or any portion of Tenant’s interest under this Lease.

 

14.2       Reasonable Consent.

 

(a)          If Tenant complies with the following conditions, Landlord shall
not unreasonably withhold its consent to the subletting of the Premises or any
portion thereof or the assignment of this Lease. Prior to any proposed Transfer,
Tenant shall submit in writing to Landlord (i) the name and legal composition of
the proposed assignee, subtenant, user or other transferee (each a
“Transferee”); (ii) the nature of the business proposed to be carried on in the
Premises; (iii) a current balance sheet, income statements for the last two
years and such other reasonable financial and other publicly available
information concerning the proposed Transferee as Landlord may reasonably
request; and (iv) a copy of the proposed assignment, sublease or other agreement
governing the proposed Transfer. Within ten (10) days after Landlord receives
all such information it shall notify Tenant whether it approves or disapproves
such Transfer.

 

(b)         The parties hereto agree and acknowledge that, among other
circumstances for which Landlord could reasonably withhold consent to a proposed
Transfer, it shall be reasonable for Landlord to withhold consent where (i) the
proposed Transferee does

 

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not intent itself to occupy the entire portion of the Premises assigned or
sublet, (ii) Landlord reasonably disapproves of the character of the business to
be conducted by the Transferee at the Premises, or (iii) the Transferee is a
governmental agency or unit or an existing tenant in the project (unless such
existing tenant’s space needs cannot be accommodated in the Project, which case
Tenant may sublease to such existing tenant, subject to the other terms and
conditions of this Lease). Landlord and Tenant agree that Tenant may utilize the
services or brokers to sublease or assign under this Lease.

 

14.3       Excess Consideration. If Landlord consents to the Transfer, Tenant
shall pay to Landlord as additional rent, within thirty (30) days after receipt
by Tenant, fifty percent (50%) of any net consideration paid by the Transferee
for the Transfer, including, in the case of a sublease, the excess of the rent
and other consideration payable by the subtenant over the amount of Base Rent
and Additional Rent payable hereunder applicable to the subleased space after
reimbursement to Tenant of all costs of the Transfer, including, but not limited
to, brokerage commissions, the cost of any improvements made in connection with
the Transfer, and attorneys’’ fees. All costs paid by Tenant in connection with
the Transfer shall be deducted as of the effective date of the Transfer.

 

14.4       No Release Of Tenant. No consent by Landlord to any Transfer shall
relieve Tenant of any obligation to be performed by Tenant under this Lease,
whether occurring before or after such consent, assignment, subletting or other
Transfer. Each Transferee shall be jointly and severally liable with Tenant (and
Tenant shall be jointly and severally liable with each Transferee) for the
payment of rent (or, in the case of all sublease, rent in the amount set forth
in the Sublease) and for the performance of all other terms and provisions of
this Lease applicable to the space transferred. The consent by Landlord to any
Transfer shall not relieve Tenant or any such Transferee from the obligation to
obtain Landlord’s express prior written consent to any subsequent Transfer by
Tenant or any Transferee. The acceptance of rent by Landlord from any other
person shall not be deemed to be a waiver by Landlord of any provision of this
Lease or to be consent to any Transfer.

 

14.5       Expenses and Attorneys Fees. Tenant shall pay to Landlord within 30
days after receipt of written invoice all actual third-party costs and expenses
(including reasonable attorneys’ fees) incurred by Landlord in connection with
reviewing or consenting to any proposed Transfer (including any request for
consent to, or any waiver of Landlord’s rights in connection with, any security
interest in any of Tenant’s property that the Premises) not to exceed one
thousand dollars ($1,000.00).

 

14.6       Effectiveness of Transfer. Prior to the date on which any permitted
Transfer (whether or not requiring Landlord’s consent) becomes effective, Tenant
shall deliver to Landlord a counterpart of the fully executed Transfer document
and Landlord’s standard form of Consent to Assignment or Consent to Sublease
executed by Tenant and the Transferee in which each of Tenant and the Transferee
confirms its obligations pursuant to this Lease. Failure or refusal of a
Transferee to execute any such instrument shall not release or discharge the
Transferee from liability as provided herein. The voluntary, involuntary or
other surrender of this Lease by Tenant, or a mutual cancellation by Landlord
and Tenant, shall not work a merger, and any such surrender or cancellation
shall, at the option of Landlord, either terminated all or any existing sublease
or operate as an assignment to Landlord of any or all of such subleases.

 

14.7       Landlord’s Rights to Terminate. Notwithstanding any of the above
provisions of this Section to the contrary, if Tenant notifies Landlord that it
desires to enter into a Transfer and if such Transfer (taken separately or in
conjunction with previous Transfers) involve either (i) an assignment of the
Lease or (ii) a sublease of all the Premises or a Material Portion of the
Premises for all or substantially all of the remaining Term of this Lease, then
Landlord, in lieu of consenting to such Transfer may elect (x) in the case of an
assignment or a sublease of the entire Premises to terminate this Lease, or
(y) in the case of a sublease of

 

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less than the entire Premises, to terminate this Lease as it relates to the
space proposed to be subleased by Tenant. In such event, this Lease will
terminate (or the space proposed to be subleased will be removed from the
Premises subject to other terms of this Lease) and the Base Rent and Tenant’s
Share under this Lease shall be proportionately reduced on the date the Transfer
was proposed to be effective, and the Landlord may lease such space to any
party, including the prospective Transferee identified by Tenant. The term
“Material Portion” shall mean fifty percent (50%) of the then current Premises
leased by Tenant hereunder, either individually or when taken together with
previous sublet proportions of the Premises during the initial Term of this
Lease, and any portion of the then current Premises during any Extension Term,
Landlord shall reimburse Tenant for all reasonable, out-out-pockets costs of
Tenant related to any proposed Transfer if Landlord elects to recapture such
space. Landlord’s recapture right shall not apply to any assignments or
subleases to an Affiliate of Tenant.

 

14.8       Assignment of Sublease Rights. Tenant hereby absolutely and
irrevocably assigns to Landlord any and all rights to receive rent and other
consideration from any sublease and agrees that Landlord, as assignee or as
attorney-in-fact for Tenant for purposes hereof, or a receiver for Tenant
appointed on Landlord’s application may (but shall not be obligated to) collect
such rents and other consideration and apply the same toward Tenant’s
obligations to Landlord under this Lease; provided, however, that Landlord
grants to Tenant at all times prior to occurrence of any Event of Default by
Tenant a revocable license to collect such rents (which license shall
automatically and without notice be and be deemed to have been revoked and
terminated immediately upon any Event of Default).

 

15.         DEFAULT AND REMEDIES.

 

15.1 Events of Default. The occurrence of any of the following shall constitute
an “event of Default” by Tenant if remaining uncured after the expiration of any
applicable cure periods:

 

(a) Tenant fails to make any regularly scheduled payment of rent when due if
payment in full is not received by Landlord within five (5) days after written
notice that it is due. With respect to any non regularly scheduled payment of
Rent, if Tenant fails to make any payment of such rent within thirty (30) days
after written notice to Tenant.

 

(b) Tenant violates the restrictions on Transfer set forth in
Section 14-Assignment and Subletting.

 

(c) Tenant ceases doing business as a going concern; makes an assignment for the
benefit of creditors; is adjudicated an insolvent, files a petition (or files an
answer admitting the material allegations of a petition) seeking relief under
any under any state or federal bankruptcy or other statute, law or regulation
affecting the creditors’ rights; all or substantially all of Tenant’s assets are
subject to judicial seizure or attachment and are not released within 30 days,
or Tenant consents to or acquiesces in the appointment of a trustee, receiver or
liquidator for Tenant or for all or any substantial part of Tenant’s assets.

 

(d) Tenant fails, within ninety (90) days after the commencement of any
proceedings against Tenant seeking relief under any state or federal bankruptcy
or other statue, law or regulation affecting creditors’ rights, to have such
proceedings dismissed, or Tenant fails, within ninety (90) days after an
appointment, without Tenant’s consent or acquiescence, of any trustee, receiver
or liquidator for Tenant or for all or any substantial part of Tenant’s assets,
to have such appointment vacated.

 

(e) Tenant fails to perform or comply with any provision of this Lease other
than those described in (a) through (d) above, and does not fully cure such
failure within thirty (30) days after notice to Tenant or, if such failure
cannot be cured within such thirty (30)-day period, Tenant fails within such
thirty (30)-day period to commence, and thereafter diligently proceed with, all
actions necessary to cure such failure as soon as reasonably possible.

 

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15.2 Remedies. Upon the occurrence of an Event of Default, Landlord shall have
the following remedies, which shall not be exclusive bust shall be cumulative
and shall be in addition to any other remedies now or hereafter allowed by law:

 

(a) Landlord may terminate Tenant’s right to possession of the premises at any
time by written notice to Tenant. Tenant expressly acknowledges that in the
absence of such written notice from Landlord, no other act of Landlord,
including reentry into the Premises, efforts to relet the Premise, reletting of
the Premises for Tenant’s account, storage of Tenant’s personal property and
Trade Fixtures, acceptance of keys to the Premises from Tenant or exercise of
any other rights and remedies under this Section, shall constitute an acceptance
of Tenant’s surrender of the Premises or constitute a terminating on this Lease
or of the Tenant’s right to possession of the Premises. Upon such termination in
writing of Tenant’s right to possession of the Premises, as herein provided,
this Lease shall terminate and Landlord shall be entitled to recover damages
from Tenant as provided in California Civil Code Section 1951.2 and any other
applicable existing or future Law providing for recovery of damages for such
breach, including the worth at the time of award of the amount by which the rent
which would be payable by Tenant hereunder for the remainder of the Term after
the date of the award of damages, including Additional Rent as reasonably
estimated by Landlord, exceeds the amount of such rental loss as Tenant proves
could have been reasonably avoided, discounted at the discount rate published by
the Federal Reserve Bank of San Francisco for member banks at the time of the
award plus one percent (1%).

 

(b) Landlord shall have the remedy described in California Civil Code
Section 1951.4 (Landlord may continue this Lease in effect after Tenant’s breach
and abandonment and recover rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations).

 

(c) Landlord may cure the Event of Default as Tenant’s expense. If Landlord pays
any sum or incurs any expense in curing the Event of Default, Tenant shall
reimburse Landlord upon demand for the amount of such payment or expense with
interest at the Interest Rate from the date the sum I paid or the expense is
incurred until Landlord is reimbursed by Tenant.

 

(d) Landlord may remove all Tenants’ property from the Premises, and such
property may be stored by Landlord in a public warehouse or elsewhere at the
sole cost and for the account of Tenant. If Landlord does not elect to store any
or all of Tenant’s property left in the Premises, Landlord may consider such
property, to be abandoned by Tenant, and Landlord may thereupon dispose of such
property in any manner deemed appropriate by Landlord. Any proceeds realized by
Landlord on the disposal of any such property shall be applied first to offset
all expenses of storage and sale, then credited against Tenant’s outstanding
obligations to Landlord under this Lease, and any balance remaining after
satisfaction of all obligations of Tenant under this Lease shall be delivered to
Tenant.

 

16.         LATE CHARGE AND INTEREST.

 

16.1 Late Charge. If any payment of rent is not received by Landlord within five
(5) days after written notice that such amount was due, Tenant shall pay to
Landlord on demand as a late charge an additional amount equal to two percent
(2%) of the overdue payment. A late charge shall not be imposed more than once
on any particular installment not paid when due, but imposition of a late charge
on any payment not maid when due does not eliminate or supersede late charges
imposed on other (prior) payments not made when due or preclude imposition of a
late charge on other installments or payments not made when due. The foregoing
notwithstanding, a late charge shall not be imposed on the first two late
payments made in any twelve (12) month period commencing with the Commencement
Date of this Lease.

 

16.2 Interest. In addition to the late charges referred to above, which are
intended to defray Landlord’s costs resulting from late payments, any payment
due Tenant or Landlord not paid within five (5) days after it was due shall bear
interest from the date due until paid at the Prime Rate plus 2% (as published by
the Bank of America, San Francisco, or its successor) per

 

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annum or the maximum lawful rate under applicable laws, whichever is less (the
“Interest Rate”). Acceptance of any late charge and/or interest shall not
constitute a waiver of Tenant’s or Landlord’s default with respect to the
overdue sum or prevent Tenant or Landlord from exercising any of its other
rights and remedies under this Lease.

 

17.         WAIVER. No provisions of this Lease shall be deemed waived by
Landlord or Tenant unless such waiver is in a writing signed by such party. The
waiver by such party of any breach of any provision of this Lease shall not be
deemed a waiver of such provision or of any subsequent breach of the same or any
other provision of this Lease. No delay pr omission on the exercise of any right
or remedy upon any default shall impair such right or remedy or be constructed
as a waiver. Landlord’s acceptance of any payments of rent due under this Lease
shall not be deemed a waiver of any default by Tenant under this Lease
(including Tenant’s recurrent failure to timely pay rent) other than Tenant’s
nonpayment of the accepted sums, and no endorsement or statement on any other
check or accompanying any check or payment shall be deemed an accord and
satisfaction. Landlord’s consent to or approval of any act by Tenant requiring
Landlord’s consent or approval shall not be deemed to waive or render
unnecessary Landlord’s consent to or approval of any subsequent act by Tenant.

 

18.         ENTRY, INSPECTION AND CLOSURE. Upon not less than two (2) Business
Days’ prior written notice to Tenant (and without notice in emergencies),
Landlord and its authorized representatives may enter the Premises at all
reasonable times to determine whether the Premises are in good condition, to
determine whether Tenant is complying with its obligations under this Lease, to
perform any maintenance or repair of the Premises or the Building that Landlord
has the right or obligation to perform, to install or repair improvements for
other tenants where access to the Premises is required for such installation or
repair, to serve, post or keep posted any notices required or allowed under the
provisions of this Lease and, at any time during the Term, to show the Premises
to prospective brokers, agents, buyers, transferees, Mortgagees or, during the
last twelve (12) months of the Term, to show the Premises to prospective
tenants, or to do any other act or thing necessary for the safety or
preservation of the Premises or the Building. When reasonably necessary Landlord
may temporarily close entrances, doors, corridors, elevators or other facilities
in the Building without liability to Tenant by reason of such closure. Subject
to the other terms of this Lease, Tenant shall have the right to have any agents
or contractors of Landlord escorted by a representative of Tenant at all times.
Landlord shall conduct its activities under this Section in a manner that will
minimize inconvience to Tenant without unreasonable additional expense to
Landlord. In no event shall Tenant be entitled to an abatement of rent on
account of any entry by Landlord, and Landlord shall not be liable in any manner
for any inconvience, loss of business or other damage to Tenant or other persons
arising out of Landlord’s entry, on the Premises in accordance with this
Section. No action by Landlord pursuant to this paragraph shall constitute an
eviction of Tenant, constructive or otherwise, entitle Tenant to an abatement of
rent or to terminate this Lease or otherwise releases Tenant from any of
Tenant’s obligations under this Lease.

 

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19.         SURRENDER AND HOLDING OVER.

 

19.1 Surrender. Upon the expiration or termination of this Lease, Tenant shall
surrender the Premises and all Tenant Improvements and Alterations to Landlord
broom clean and in their original condition, except for reasonable wear and
tear, damage from casualty or condemnation and any changes resulting from
approved Alterations; provided, however, that Tenant shall remove from the
Premises all Tenant’s personal property, Trade Fixtures and Alterations that
Tenant has the right or is required by Landlord to remove under the provisions
of this Lease, and repair any damage caused by such removal. If such removal is
not completed before the expiration or termination of the Term, Landlord shall
have the right (but no obligation) to remove the same, and Tenant shall pay
Landlord within thirty (30) receipt of a written invoice for all costs of
removal and storage thereof. Landlord shall also have the right to retain or
dispose of all or any portion of such property if Tenant does not pay all such
costs and retrieve the property within ten (10) days after notice from Landlord
(in which event title to all such property described in Landlord’s notice shall
be transferred to and vest in Landlord). Tenant waives all Claims against
Landlord for any damage or loss to Tenant resulting from Landlord’s removal,
storage, retention, or disposition of any such property. Upon expiration or
termination of this Lease or of Tenant’s possession, whichever is earliest,
Tenant shall surrender all keys to the Premises or any other part of the
Building and shall deliver to Landlord all keys for or make known to Landlord
the combination of locks on all safes, cabinets and vaults that may be located
in the Premises. Tenant’s obligations under this Section shall survive the
expiration or termination of this Lease.

 

19.2 Holding Over. If Tenant (directly or through any Transferee or other
successor-in-interest of Tenant) remains in possession of the Premises after the
expiration or termination of this Lease, Tenant’s continued possession shall be
on the basis of a tenancy at the sufferance of Landlord. In such event, Tenant
shall continue to comply with or perform all of the terms and obligations of
Tenant under this Lease, expect that the monthly Base Rent during Tenant’s
holding over shall be one hundred thirty-five percent (135%) of the Base Rent
payable in the last full month prior to the termination hereof for the first
four months following the expiration of the Term and thereafter, one hundred
fifty percent (150%) of the Base Rent payable in the last full month prior to
the termination hereof. Acceptance by Landlord of rent after such termination
shall not constitute a renewal of this Lease; and nothing contained in this
provision shall be deemed to waive Landlord’s right of re-entry or any other
right hereunder or at law. Tenant shall indemnify, defend and hold Landlord
harmless from and against all Claims arising or resulting directly or indirectly
from Tenant’s failure to timely surrender the Premises, including (i) any rent
payable by or any loss, cost, or damages claimed by any prospective tenant of
the Premises, and (ii) Landlord’s damages as a result of such prospective tenant
rescinding or refusing to enter into the prospective lease of the Premises by
reason of such failure to timely surrender the Premises.

 

20.         ENCUMBRANCES.

 

20.1 Subordination. This Lease is expressly made subject and subordinate to any
mortgage, deed of trust, ground lease, underlying lease pr like encumbrance
affecting any part of the Property or any interest of Landlord therein which is
now existing or hereafter executed or recorded (“Encumbrance”). The foregoing
notwithstanding, however, as to current and future Encumbrances, Landlord shall
obtain from the holder of any Encumbrance a subordination, non-disturbance and
attornment agreement, reasonably acceptable to Tenant, which shall provide that
the holder of the Encumbrance agrees that this Lease shall survive the
termination of the Encumbrance by lapse of time, foreclosure or otherwise so
long as Tenant is not in default under this Lease after the expiration of any
applicable cure period and pursuant to which Tenant shall agree to attorn to
such holder of the Encumbrance. Provided that the holder of the Encumbrance
provides Tenant with a non-disturbance agreement as provided in the preceding
sentence, Tenant shall execute and deliver to Landlord, within twenty (20) days
after written

 

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request therefore by Landlord and in a form reasonably requested by Landlord,
any additional documents evidencing the subordination of this Lease with respect
to any such Encumbrance and the non-disturbance agreement of the holder of any
such Encumbrance. If the interest of Landlord in the Property is transferred
pursuant to or in lieu of proceedings for enforcement of any Encumbrance, Tenant
shall immediately and automatically attorn to the new owner, and this Lease
shall continue in full force and effect as a direct lease between the transferee
and Tenant on the terms and conditions set forth in this Lease.

 

20.2 Mortgagee Protection. Tenant agrees to give any holder of any Encumbrance
covering any part of the Property (“Mortgagee”), by registered mail, a copy of
any notice of default served upon Landlord, provided that prior to such notice
Tenant has been notified in writing (by way of notice of assignment of rents and
leases, or otherwise) of the address of such Mortgagee. If Landlord shall have
failed to cure such default within thirty (30) days from the effective date of
such notice of default, then the Mortgagee shall have an additional thirty (30)
days within which to cure such default of if such default cannot be cured within
that time, then such additional time as may be necessary to cure such default
(including the time necessary to gain possession of the Property if necessary to
effect such cure and if the default does not materially and adversely affect
Tenant’s tendency), and this Lease shall not be terminated so long as such
remedies are being diligently pursued.

 

21. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS.

 

21.1 Within twenty (20) days after written request therefore, Tenant shall
execute and deliver to Landlord, a certificate stating that to Tenant’s actual
knowledge as of the date of the certificate, this Lease is in full force and
effect, describing any amendments or modifications hereto, acknowledging that
this Lease is subordinate or prior, as the case may be, to any Encumbrance and
stating any other information regarding the status of the Lease Landlord may
reasonably request, including the Term, the monthly Base Rent, the date to which
Rent has been paid, the amount of any security deposit or prepaid rent, whether
to the best of the Tenant’s knowledge, Landlord is in default under the terms of
the Lease, and whether Landlord has completed its construction obligations
hereunder (if any). Any person or entity purchasing, acquiring an interest in or
extending in financing with respect to the Property shall be entitled to rely
upon any such certificate. If Tenant fails to deliver such certificate within
ten (10) days after Landlord’s second written request therefore, Tenant shall be
deemed to have approved and shall be bound by such estoppels certificate.

 

21.2 Within ten (10) days after written request therefore, but no more than once
a year, Tenant shall deliver to Landlord a copy of the financial statements
(including at least a year end balance sheet and a statement of profit and loss)
of Tenant for each of the three most recently completed years, prepared in
accordance with generally accepted accounting principles (and, if such is
Tenant’s normal practice, audited by an independent certified public
accountant), all then available subsequent interim statements, and such other
financial information as may reasonably be requested by Landlord or required by
any Mortgagee. Notwithstanding the foregoing, Landlord hereby waives the right
to request such financial statements so long as the named tenant under this
lease is a public corporation whose shares are traded on a nationally recognized
stock market or exchange.

 

22.         NOTICES. Any notice, demand, request, consent or approval that
either party desires or is required to give to the other party under this lease
shall b in writing and shall be served personally, delivered by messenger or
courier service or sent by U.S. certified mail, return receipt requested,
postage prepaid, addressed to the other party at the party’s address for notices
set forth in the Basic Lease Information. Notices delivered personally will be
effective immediately

 

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upon receipt (or refusal of delivery or receipt); notices sent by independent
messenger or courier service will be effective one (1) day after acceptance by
the independent service for delivery; notices sent by mail in accordance with
this Section will be effective three (3) days after mailing. Either party may
change its address for notices hereunder by a notice to the other party,
complying with this Section. If Tenant sublets the Premises, notices from
Landlord shall be effective on the subtenant when given to Tenant pursuant to
this Section.

 

23.         ATTORNEYS’ FEES.

 

23.1 Prevailing Party. In the event of any litigation or arbitration regarding
any rights and obligations under this Lease, the prevailing party shall be
entitled to recover reasonable attorneys’ fees, and court costs in addition to
any other relief, which may be granted. The “prevailing party” shall mean the
party receiving substantially the relief desired, whether by settlement,
dismissal, summary, judgment, or otherwise.

 

23.2 Other Litigation. If Landlord, without fault on Landlord’s part, is made a
party to any litigation instituted by Tenant or by any third party against
Tenant, or by or against any Transferee or other occupant of the Premises or
otherwise arising out of or resulting from any act or transaction of Tenant or
of any such Transferee or occupant, Tenant shall hold Landlord harmless from any
judgment rendered against Landlord or the Premises or any part thereof, and
reimburse Landlord upon demand for all costs and expenses, including reasonable
attorneys’ fees, incurred by Landlord in or in connection with such litigation.

 

24.         QUIET POSSESSION. Subject to Tenant’s full and timely performance of
all of Tenant’s obligations under this Lease and subject to terms of this Lease,
including Section 20-Emcumbrances, Tenant shall have the quiet possession of the
Premises throughout the Term as against any personas or entities lawfully
claiming by, through or under Landlord.

 

25.         SECURITY MEASURES [INTENTIONALLY OMITTED]

 

26.         FORCE MAJEURE. If Landlord is delayed, interrupted or prevented from
performing any of its obligations under this Lease, including its obligations
under the Work Letter (if any), and such delay, interruption or prevention is
due to fire, act of God, governmental act or failure to act, unavailability of
materials or any cause outside the reasonable control of Landlord, then the time
for performance of the affected obligations of Landlord shall be extended for a
period equivalent to the period of such delay, interruption or prevention.

 

27.         RULES AND REGULATIONS. Tenant shall be bound by and shall comply
with the rules and regulations attached to and made a part of this Lease as
Exhibit C to the extent those rules and regulations are not in conflict with the
terms of this Lease, as well as any reasonable rules and regulations hereafter
adopted by Landlord for all tenants of the Building, upon notice to Tenant
thereof (collectively, the “Building Rules”). Landlord shall not be responsible
to Tenant or to any other person for any violation of, or failure to observe,
the Building Rules by any other tenant or other person.

 

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Landlord shall not discriminate against Tenant in enforcing the rules and
regulations.

 

28.         LANDLORD’S LIABILITY. The term “Landlord,” as used in this Lease,
shall mean only the owner or owners of the Building at the time in question. In
the event of any conveyance and provided that the transferee of Landlord assumes
in writing all of the obligations of Landlord under this lease from and after
the date of such conveyance of title to the Building, then from and after the
date of such conveyance, the transferor Landlord shall be relieved of all
liabi8lity with respect to Landlord’s obligations to be performed under this
Lease after the date of such conveyance. Notwithstanding any other term or
provision of this Lease, the liability of Landlord for its obligations under
this Lease is limited solely to Landlord’s interest in the Building as the same
may from time to time be encumbered, and no personal liability shall at any time
be asserted or enforceable against any other assets of Landlord or against
Landlord’s partners or members or its on their respective partners,
shareholders, members, directors, officers, or managers on account of any
Landlord’s obligations or actions under this Lease.

 

29.         CONSENTS AND APPROVALS.

 

29.1 [INTENTIONALLY OMITTED]

 

29.2 No Liability Imposed on Landlord. The review and/or approval by Landlord of
any intern or matter to be reviewed or approved by Landlord under the terms of
this Lease or any Exhibits or Addenda hereto shall not impose upon Landlord any
liability for the accuracy or sufficiency of any such item or matter or the
quality or sustainability of such item for its intended use. Any such review or
approval is for the sole purpose of protecting Landlord’s interest in the
Property, and no third parties, including Tenant or the Representatives and
Visitors of Tenant or any person or entity claiming by, through or under Tenant,
shall have any rights as a consequence thereof.

 

30.         BROKERS. Each party warrants and represents to the other that in the
negotiating or making of this Lease neither the representing party nor anyone
acting on the representing party’s behalf has dealt with any broker or finder
whatsoever who might be entitled to a fee or commission for this Lease except
Jones Lang LaSalle who represented Tenant. Each party shall indemnify and hold
harmless the other from any claim or claims, including costs, expenses and
attorney’s fees incurred by the non-indemnifying party asserted by any other
broker or finder for a fee or commission based upon any dealings with or
statements made by the indemnifying party or its representatives. Tenant
acknowledges that Tenant shall be solely responsible for the payment of a
brokerage commission or similar fees or compensation for brokers representing
Tenant. Tenant shall, however, have the right to utilize a brokerage allowanced
to be provided by Landlord of up to $5.00 per rentable square foot of space in
the Premises (the “Brokerage Allowance”). Tenant shall elect to receive the
Brokerage Allowance, if at all, by written notice

 

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to Landlord on or before thirty (30) days after the full execution of this
Lease. If and to the extent Landlord elects to utilize the Brokerage Allowance,
Base Rent over the initial Term of this Lease shall be increased monthly to
reflect the monthly amortized amount of such Brokerage Allowance utilized by
Tenant (amortized at eleven percent 11% per annum) over the initial Term of this
Lease.

 

31.         RELOCATION OF PREMISES [INTENTIONALLY OMITTED]

 

32.         ENTIRE AGREEMENT. This Lease, including the Exhibits and any Addenda
attached hereto, and the documents refereed to herein, if any, constitute the
entire agreement between Landlord and Tenant with respect to the leasing of
space by Tenant in the Building, and supersede all prior or contemporaneous
agreements, understandings, proposals and other representations by or between
Landlord and Tenant, whether written or oral. Neither Landlord nor Landlord’s
agents have made any representations or warranties with respect to the Premises,
the Building, the Project or this Lease except as expressly set forth herein,
and no rights, easements or licenses shall be acquired by Tenant by implication
or otherwise unless expressly set forth herein. The submission of this Lease for
examination does not constitute an option fro the Premises and this Lease shall
become effective as a binding agreement only upon execution and delivery thereof
by Landlord to Tenant.

 

33.         MISCELLANEOUS. This Lease may not be amended or modified except by a
writing signed by Landlord and Tenant. Subject to Section 14-Assignment and
Subletting and Section 28-Landlord’s Liability, this Lease shall be binding on
and shall inure to the benefit of the parties and their respective successors,
assigns and legal representatives. The determination that any provisions hereof
may be void, invalid, illegal or unenforceable shall not impair any other
provisions hereof and all such other provisions of this Lease shall remain in
full force and effect. The unenforceability, invalidity or illegality of any
provision of this Lease under particular circumstances shall not render
unenforceable, invalid or illegal other provisions of this Lease, or the same
provisions under other circumstances. This Lease shall be constructed and
interpreted in accordance with the laws (excluding conflict of laws principles)
of the State in which the Building is located. The provisions of this Lease
shall be constructed in accordance with the fair meaning of the language used
and shall not be strictly constructed against either party. When required by the
context of this Lease, the singular includes the plural. Wherever the term
“including” is used in this Lease, it shall be interpreted as meaning
“including, but not limited to” the matter or matters thereafter enumerated. The
captions contained in this Lease are for purposes of convenience only and are
not to used to interpret or construe this Lease. If more than one person or

 

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entity is identified as Tenant hereunder, the obligations of each and all of
them under this Lease shall be joint and several. Time is of the essence with
respect to this Lease, except as to the conditions relating to the delivery of
possession of the Premises to Tenant. Neither Landlord nor Tenant shall record
this Lease.

 

34.         AUTHORITY. If Tenant is a corporation, partnership, limited
liability company or other form of business entity, each of the persons
executing this Lease on behalf of Tenant warrants and represents that Tenant is
a duty organized and validly existing entity that Tenant has full right and
authority to enter into this Lease and that the persons signing on behalf of
Tenant are authorized to do so and have the power to bind Tenant to this Lease.

 

35.         SIGNAGE.

 

35.1 Tenant shall have the right, at no additional cost to Tenant, to display
its corporate identification signs in prominent locations on any lobby
directory, monument signs, and at each entrance to the Premises. Provided that,
and for so long as, Tenant lease and occupies (without regard to any sublease
portion of the Premise) at least fifty percent (50%) of the office space in the
Building, Tenant shall have the right to install and maintain, at its sole cost
and expense, a parapel sign located on the roof or side of the Building and an
eyebrow sign located on the first floor level of the Building. All of Tenant’s
rights hereunder are subject to Tenant’s obtaining all necessary governmental
approvals and permits for such signage and subject tot Landlord’s prior written
approval of the design, size, color, location and all other aspects of such
signage, which approval shall not be unreasonably withheld, condition or
delayed. Tenant shall install and remove such signs in accordance with the
provisions of Article 6 (Alterations) hereof. Tenant shall at all times,
maintain all signs in good condition and repair and shall indemnify, defend and
hold harmless Landlord from any demands, suits, claims, damages, costs or
expenses, losses or liabilities (including reasonable attorneys’ fees and costs)
arising from or associated with the installation and/or maintenance of such
signs. Landlord agrees to reasonably cooperate with Tenant, at no cost to
Landlord, in pursuing the necessary approvals or permits for such signs.

 

35.2 Landlord and Tenant acknowledge and agree that the initial name of the
Project shall be “Foundry Square.” Landlord hereby agrees that if and so long as
Tenant leases and occupies more than fifty percent (50%) of all of the office
space in the Project, then Landlord shall not have the right to change the name
of the Project to the name of any other tenant in the Project. Further, if
Tenant leases and occupies all of the office space in at least three
(3) buildings of the Project, Tenant shall have the right to change the name of
the Project to a name which may include the words “Sun Microsystems” or other
words selected by Tenant, subject to Landlord’s reasonable approval.

 

35.3 Tenant’s right under this Section 35 shall be personal to Tenant and if
Tenant requests any assignment of this Lease (except to an Affiliate), Tenant’s
rights under this Section shall not be transferable to assignable without the
express prior written consent of Landlord, which consent may be granted,
withheld or conditioned in Landlord’s sole and absolute discretion.

 

36.         TELECOMMUNICATIONS EQUIPMENT. Tenant shall have the non-exclusive
right to install at its sole cost and expense, satellite dishes on the roof of
the Building at a location reasonably acceptable to Landlord. Tenant shall
install and remove such telecom node and satellite dish in accordance with the
provisions of Article 6 (Alterations) hereof. Tenant’s rights to install a
satellite dish are and shall be non

 

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exclusive. Prior to any such installation (or relocation) of any satellite dish
by Tenant, Tenant shall furnish detailed plans and specifications for the
installation, including the proposed location and method of attachment, to
Landlord for approval, which approval shall not be unreasonably withheld,
conditioned or delayed. Any such installation shall be attractively screened as
may be required by Landlord or applicable governmental requirements. Landlord
may require use of a non-penetrating roof mount. If reasonably requested by
Landlord, a roofing company acceptable to Landlord shall at Tenant’s expenses
install an appropriate base upon which Tenant’s instillation shall be mounted.
All aspects and phases of Tenant’s installation, including any antenna or camera
and any associated electronic or other equipment, wiring, conduit, roof mount
and, base, shall at all times be subject to supervision and approval by Landlord
and Landlord’s consultants., which consent shall not be unreasonably withheld,
conditioned or delayed. All approval and supervision rights of Landlord are
intended solely to protect Landlord’s interests; Landlord shall have no
obligation to Tenant to exercise any such power of supervision or approval.
Tenant shall be responsible for procuring prior to any installation and
maintaining in force at all times thereafter any and all consents, approvals,
licenses and permits as may be required for the lawful installation, use and
operation of Tenant’s system. Landlord makes no warranties or representations as
to the permissibility of any such installation by Tenant. All costs and expenses
incurred in connection with any such installation or proposed installation by
Tenant, including any reasonably necessary costs or expenses incurred in good
faith by Landlord in connection with review or supervision thereof, shall be
borne by Tenant (and Tenant shall within thirty (30) days after demand from
Landlord pay or reimburse Landlord for such costs and expenses). Tenant shall be
permitted access to the area on the roof where any such installation may be made
as necessary for the installation and maintenance thereof. Tenant shall at all
times and at Tenant’s sole expense be responsible for proper maintenance of any
such installation and all governmental permits and approvals required in
connection therewith (including compliance with any and all conditions attached
thereto). Any such installation and the roof area on which it is located shall
be deemed to be part of the Premises for purposes of Tenant’s insurance and
indemnification obligations under this Lease. Tenant may at any time, and shall
at expiration or earlier termination of the Term, if so requested by Landlord,
remove Tenant’s satellite dish, restore the building to the condition existing
prior to Tenant’s satellite dish, and repair any damage caused by Tenant’s
installation or removal of Tenant’s satellite dish.

 

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37.         ARBRITRATION. IN the event of any bona fide dispute between Landlord
and Tenant as to any matter under this Lease, except with respect to any default
by Tenant under Section 15.1(a) of this Lease and except as may be expressly
provided elsewhere in this Lease, Landlord and Tenant hereby agree that such
disagreement shall be finally settled by binding arbitration pursuant to the
Commercial Arbitration Rules then in effect of the American Arbitration
Association. The arbitrators shall determine the rights and obligations of the
parties according to the terms and conditions of this Lease and the applicable
laws of the State of California. The decision issued by the arbitrators pursuant
to this Section shall be final and not subject to appeal. It is the intent of
the parties that, barring extraordinary circumstances, any arbitration pursuant
to this Section shall be concluded within sixty (60) days of the date such
arbitration is first initiated by one or both of the parties. Except as provided
in Section 23.1 above, Landlord and Tenant shall each pay its own costs,
including attorney fees, incurred in preparing for and participating in the
arbitration proceeding and each shall pay one-half of the cost of the
arbitrators. Any decision by the arbitrators, shall be in writing, signed by the
arbitrators and shall include the reasons for the decision.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, Landlord and Tenant have entered into this Lease as of the
date first above written.

 

TENANT:

LANDLORD:

 

K3 FIRST STREET ASSOCIATES,
LLC, a California limited liability
company

 

By Howard Street Investors, LLC, a
CA limited liability company, a,
manager

 

 

 

 

SUNMICROSYSTEMS, INC., a Delaware

 

Corporation

By: KFRITZ Investors, LLC,a
California limited liability company,
its Manager

 

 

 

By: WWA Investors, LLC, a
California limited liability company,
its Manager

 

By:

/S/ Corey Wong

 

By:

/S/ William Wilson III

Director of Real Estate

Manager

 

 

 

 

By:

/S/ William Agrello

 

 

 

Sr. Vice President

 

 

 

 

 

 

By:

/S/ Michael Morris

 

 

 

Sr. Vice President

 

 

General Counsel & Secretary

 

 

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EXHIBIT D

 

FURNITURE

 

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