Exhibit 10.16

OFFICE LEASE AGREEMENT

Between

Landlord:        PPF OFF 345 SPEAR STREET, LP,

a Delaware limited partnership

and

Tenant:            MEDIVATION, Inc.

a Delaware corporation

HILLS PLAZA

SAN FRANCISCO, CALIFORNIA

Sixth Floor

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TABLE OF CONTENTS

LEASE AGREEMENT

 

          Page 1.    PREMISES AND COMMON AREAS    1 2.    TERM    2 3.   
DELIVERY OF PREMISES    2 4.    QUIET ENJOYMENT    2 5.    BASE RENT    2 6.   
RENT PAYMENT    3 7.    OPERATING EXPENSES AND TAXES    3 8.    LATE CHARGE   
10 9.    PARTIAL PAYMENT    10 10.    LETTER OF CREDIT    11 11.    USE OF
PREMISES    14 12.    COMPLIANCE WITH LAWS    17 13.    WASTE DISPOSAL    18 14.
   RULES AND REGULATIONS    18 15.    SERVICES    19 16.    TELEPHONE AND DATA
EQUIPMENT    23 17.    SIGNS    24 18.    PARKING    24 19.    FORCE MAJEURE   
24 20.    REPAIRS AND MAINTENANCE BY LANDLORD    25 21.    REPAIRS BY TENANT   
25 22.    ALTERATIONS AND IMPROVEMENTS/LIENS    25 23.    DESTRUCTION OR DAMAGE
   28 24.    EMINENT DOMAIN    29 25.    DAMAGE OR THEFT OF PERSONAL PROPERTY   
29 26.    INSURANCE; WAIVERS    29 27.    INDEMNITIES    31 28.    ACCEPTANCE
AND WAIVER    32 29.    ESTOPPEL    32 30.    NOTICES    33 31.    DEFAULT    33
32.    REMEDIES    34 33.    LANDLORD DEFAULT    37 34.    SERVICE OF NOTICE   
38 35.    ADVERTISING    38 36.    SURRENDER OF PREMISES    38 37.    REMOVAL OF
FIXTURES    39 38.    HOLDING OVER    39 39.    ATTORNEYS’ FEES    39 40.   
SECURITY HOLDER’S RIGHTS    39 41.    ENTERING PREMISES    41 42.    RELOCATION
[INTENTIONALLY OMITTED]    41 43.    ASSIGNMENT AND SUBLETTING    41 44.    SALE
   46 45.    LIMITATION OF LIABILITY    46 46.    BROKER DISCLOSURE    46 47.   
JOINT AND SEVERAL    47 48.    CONSTRUCTION OF THIS AGREEMENT    47 49.    NO
ESTATE IN LAND    47

 

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50.    PARAGRAPH TITLES; SEVERABILITY    47 51.    CUMULATIVE RIGHTS    47 52.
   ENTIRE AGREEMENT    47 53.    SUBMISSION OF AGREEMENT    47 54.    AUTHORITY
   48 55.    OPTIONS    48 56.    OFAC CERTIFICATION    53 57.    COUNTERPARTS;
TELECOPIED OR ELECTRONIC SIGNATURES    53

LIST OF EXHIBITS

 

A    Premises B    Work Agreement C    Commencement Letter D    Rules and
Regulations E    Parking Agreement F    Form of Letter of Credit

 

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BASIC LEASE PROVISIONS

The following sets forth some of the Basic Provisions of the Lease. In the event
of any conflict between the terms of these Basic Lease Provisions and the
referenced Sections of the Lease, the referenced Sections of the Lease shall
control.

 

  1. Building (Section 1): The 7-story building located at 345 Spear Street in
the City of San Francisco, California, containing approximately 415,568 rentable
square feet. The Building is part of a combined office, retail and residential
condominium development, including a subterranean parking garage, located on the
entire block of Spear Street between Harrison Street and Folsom Street and
commonly known as Hills Plaza (the “Project”).

 

  2. Property: The Building, the parcel(s) of land on which the Building is
located, the Common Areas (as defined in Section 1), the subterranean parking
garage for the Project and, at Landlord’s discretion, other portions of the
Project and any additional real property, land, buildings or other improvements
serving the Building and/or the parcel(s) of land on which the Building is
located.

 

  3. Premises (Section 1):

 

Suite:    600 Floor:    Sixth (6th) Rentable Square Feet:    63,817

 

  4. Term (Section 2):

Commencement Date (Section 2): The Effective Date

Expiration Date (Section 2): March 31, 2017

 

  5. Base Rent (Section 5):

 

Period

   Annual Rate
Per Square Foot    Monthly
Installment

April 1, 2010 (the “Rent Commencement Date”) - March 31, 2011

   $42.50    $226,018.54*

April 1, 2011 - March 31, 2012

   $43.50    $231,336.63*

April 1, 2012 - March 31, 2013

   $44.50    $236,654.71

April 1, 2013 - March 31, 2014

   $45.50    $241,972.79

April 1, 2014 - March 31, 2015

   $46.50    $247,290.88

April 1, 2015 - March 31, 2016

   $47.50    $252,608.96

April 1, 2016 - March 31, 2017

   $48.50    $257,927.04

 

* Subject to abatement pursuant to Section 5(b) below.

 

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  6. Rent Payment Address (Section 6):

PPF OFF 345 SPEAR STREET, LP

P.O. Box 601125

Los Angeles, CA 90060-1125

Tax ID No.: 20-1389347

 

  7. Base Year (Section 7):

 

Tax Base Year:    2010 Operating Expense Base Year:    2010

 

8.    Tenant’s Share (Section 7):    15.36% 9.   
Letter of Credit Amount (Section 10):    Initially, $1,500,000.00 10.    Parking
Spaces (Section 18):   

Up to twenty-six (26), of which up to ten (10)

may be reserved

11.    Landlord’s Broker (Section 45):    Jones Lang LaSalle Americas, Inc.   
Tenant’s Broker (Section 45):    Jones Lang LaSalle Americas, Inc.

 

  12. Notice Addresses (Section 30):

 

Landlord

  

Tenant

PPF OFF 345 SPEAR STREET, LP    Medivation, Inc. c/o Jones Lang LaSalle
Americas, Inc.    at the Premises 345 Spear Street, Suite 124    Attention: Ann
Mead, Senior San Francisco, California 94105                        Director
Administration Attention: Hal Brownstone, Vice President   

with a copy to:

c/o Morgan Stanley US Real Estate Investing Division

555 California Street, Suite 2200, Floor 21

San Francisco, California 94104

Attention: Keith A. Fink, Executive Director

 

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OFFICE LEASE AGREEMENT

THIS OFFICE LEASE AGREEMENT (hereinafter called the “Lease”) is entered into as
of November 2, 2009 (“Effective Date”), by and between the Landlord and Tenant
identified above.

1. Premises and Common Areas.

(a) Premises; Rentable Area. Landlord does hereby lease to Tenant and Tenant
does hereby lease from Landlord the Premises located in the Building identified
in the Basic Lease Provisions, situated on the Property, such Premises as
further shown on the drawing attached hereto as Exhibit A and made a part hereof
by reference. The Premises shall be prepared for Tenant’s occupancy in the
manner and subject to the provisions of the Work Agreement attached hereto as
Exhibit B attached hereto and made a part hereof. The “rentable square feet” or
“rentable area” of the Premises has been determined based upon the ANSI/BOMA
Z65.1-1996 standard promulgated by the Building Owners and Managers Association,
as interpreted by Landlord’s architect for the Building. Landlord and Tenant
agree that the rentable area of the Premises as described in Paragraph 2 of the
Basic Lease Provisions has been confirmed and conclusively agreed upon by the
parties, and shall not be changed except in connection with the change in the
physical size of the Building or the Premises. No easement for light, air or
view is granted hereunder or included within or appurtenant to the Premises.

(b) Common Areas. Tenant shall have the nonexclusive right (in common with other
tenants or occupants of the Building, Landlord and all others to whom Landlord
has granted or may hereafter grant such rights) to use the Common Areas (defined
below), subject to the Rules and Regulations. Provided that Tenant at all times
has reasonable means of access to, and use of, the Premises and the Common Areas
necessary for access to and use of the Premises, Landlord may at any time alter,
renovate, rearrange, expand or reduce some or all of the Common Areas or
temporarily close any Common Areas to make repairs or changes therein or to
effect construction, repairs, or changes within the Building, or to prevent the
acquisition of public rights in such areas, or to discourage parking by parties
other than tenants and their invitees, and may do such other acts in and to the
Common Areas as in its reasonable judgment may be desirable. Landlord may from
time to time permit portions of the Common Areas to be used exclusively by
specified tenants. Landlord may also, from time to time, place or permit
customer service and information booths, kiosks, stalls, push carts and other
merchandising facilities in the Common Areas. “Common Areas” shall mean any of
the following or similar items: (a) to the extent included in the Building the
total square footage of areas of the Building devoted to nonexclusive uses such
as ground floor lobbies, seating areas and elevator foyers; fire vestibules;
mechanical areas; restrooms and corridors on all floors; elevator foyers and
lobbies on multi-tenant floors; electrical and janitorial closets; telephone and
equipment rooms; and other similar facilities maintained for the benefit of
Building tenants and invitees, but shall not mean Major Vertical Penetrations
(defined below) except for Building stairwells which may be accessed in the case
of emergency; and (b) all parking garage vestibules; loading docks; locker
rooms, exercise and conference facilities available for use by Building tenants
(if any); walkways, roadways and sidewalks; trash areas; mechanical areas;
landscaped areas including courtyards, plazas and patios; and other similar
facilities maintained for the benefit of Building

 

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tenants and invitees. As used herein, “Major Vertical Penetrations” shall mean
the area or areas within Building stairs (excluding the landing at each floor),
elevator shafts, and vertical ducts that service more than one floor of the
Building. The area of Major Vertical Penetrations shall be bounded and defined
by the dominant interior surface of the perimeter walls thereof (or the extended
plane of such walls over areas that are not enclosed). Major Vertical
Penetrations shall exclude, however, areas for the specific use of Tenant or
installed at the request of Tenant, such as special stairs or elevators.

2. Term. Tenant shall have and hold the Premises for the term (“Term”)
identified in the Basic Lease Provisions commencing on the Effective Date (the
“Commencement Date”). The Term shall terminate at 23:59:59 local time on
March 31, 2017 (the “Expiration Date”), unless sooner terminated or extended as
hereinafter provided.

3. Delivery of Premises. As of the Effective Date, the Premises are vacant. Upon
Tenant’s delivery to Landlord of (i) one (1) month’s Base Rent, (ii) the Letter
of Credit (defined in Section 10 below), and (iii) evidence of Tenant’s
procurement of all insurance coverage required hereunder, Landlord will deliver
possession of the Premises to Tenant, with all Building Systems (defined in
Section 20 below) serving the Premises in good working order and repair and with
the interior thoroughly clean so as to allow Tenant to commence the construction
of the Tenant Improvements pursuant to the Work Agreement. Landlord hereby
confirms and agrees that any work necessary to ensure that all Building systems
serving the Premises will be in good working order and repair on the date
possession is delivered to Tenant shall be borne by Landlord and not passed
through to Tenant as a part of Operating Expenses.

4. Quiet Enjoyment. Tenant, upon payment in full of the required Rent and full
performance of the terms, conditions, covenants and agreements contained in this
Lease, shall peaceably and quietly have, hold and enjoy the Premises during the
Term. The foregoing is in lieu of any implied covenant of quiet enjoyment.
Landlord shall not be responsible for the acts or omissions of any other tenant
or third party that may interfere with Tenant’s use and enjoyment of the
Premises.

5. Base Rent.

(a) Generally. Beginning on April 1, 2010 (the “Rent Commencement Date”), (but
subject to abatement as set forth in Section 5(b) below), Tenant shall pay to
Landlord, at the address stated in the Basic Lease Provisions or at such other
place as Landlord shall designate in writing to Tenant, annual base rent (“Base
Rent”) in the amounts set forth in the Basic Lease Provisions.

(b) Abatement. So long as Tenant is not in Default (defined in Section 31,
below) under this Lease, Tenant shall be entitled to an abatement of Base Rent
payable hereunder for the calendar months of April and May, 2010 and April and
May, 2011 (each, an “Abatement Period”). The total amount of Base Rent abated
during the Abatement Periods is referred to herein as the “Abated Rent”. If
Tenant is in Default hereunder at any time during the Term, and such Default
occurs prior to the expiration of the Abatement Periods, there will be no
further abatement of Rent pursuant to this Section 5(b) during the remainder of
the Abatement

 

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Periods unless and until such Default is cured; upon any cure of such Default by
Tenant, any remaining scheduled abatement of Base Rent pursuant to this
Section 5(b) will take place as scheduled, and any abatement of Base Rent which
ceased or did not occur as a result of the pendency of such Default will
commence upon the date that is thirty (30) days following Tenant’s cure of such
Default.

6. Rent Payment. The Base Rent shall be payable in equal monthly installments,
due on the first day of each calendar month commencing as of the Rent
Commencement Date, in advance, in legal tender of the United States of America,
without abatement, demand, deduction or offset whatsoever, except as may be
expressly provided in this Lease. One full monthly installment of Base Rent
shall be due and payable on the date of execution of this Lease by Tenant and
shall be applied to the first full calendar month’s Base Rent payable hereunder
after the Rent Commencement Date (unless returned to Tenant in accordance with
Section 55(a)(ii) below following Tenant’s exercise of its Termination Option),
and a like monthly installment of Base Rent shall be due and payable on or
before the first day of each calendar month thereafter (subject to the
provisions of Section 5(b) above) during the Term. Tenant shall pay, as
additional Rent, all other sums due from Tenant under this Lease (the term
“Rent”, as used herein, means all Base Rent, all amounts payable pursuant to
Section 7 below, and all other amounts payable hereunder from Tenant to Landlord
including, without limitation, Storage Rent (defined in Section 11(c) below), if
applicable). Unless otherwise specified herein, all items of Rent (other than
Base Rent and amounts payable pursuant to Section 7 below) shall be due and
payable by Tenant on or before the date that is ten (10) days after billing by
Landlord. Rent shall be made payable to the entity, and sent to the address,
Landlord designates (initially set forth in Paragraph 6 of the Basic Lease
Provisions) and shall be made by good and sufficient check or by other means
acceptable to Landlord.

7. Operating Expenses and Taxes.

(a) Generally. Tenant will reimburse Landlord throughout the Term, as additional
Rent hereunder, for Tenant’s Share (defined below) of: (i) the annual Operating
Expenses (as defined below) in excess of the Operating Expenses for the
Operating Expense Base Year set forth in the Basic Lease Provisions (hereinafter
called the “Base Year Expense Amount”); and (ii) the annual Taxes (as defined
below) in excess of the Taxes for the Tax Base Year set forth in the Basic Lease
Provisions (hereinafter called the “Base Year Tax Amount”). The term “Tenant’s
Share” as used in this Lease shall mean the percentage determined by dividing
the rentable square footage of the Premises by the rentable square footage of
the Building and multiplying the quotient by 100. Landlord and Tenant hereby
agree that Tenant’s Share with respect to the Premises initially demised by this
Lease is as set forth in the Basic Lease Provisions. Tenant’s Share of excess
Operating Expenses and excess Taxes for any calendar year shall be appropriately
prorated for any partial year occurring during the Term. The obligations of the
parties pursuant to this Section 7 will survive the expiration or sooner
termination of this Lease.

(b) Operating Expenses. “Operating Expenses” shall mean all of those expenses
incurred or paid by Landlord in operating, servicing, managing, maintaining and
repairing the Property. Operating Expenses shall include, without limitation,
the following: (1)

 

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all costs related to the providing of water, heating, lighting, ventilation,
sanitary sewer, air conditioning and other utilities, but excluding those
utility charges actually paid separately by Tenant or any other tenants of the
Building; (2) janitorial and maintenance expenses, including: (a) janitorial
services and janitorial supplies and other materials used in the operation and
maintenance of the Building; and (b) the cost of maintenance and service
agreements on equipment, window cleaning, grounds maintenance, pest control,
security, trash removal, and other similar services or agreements;
(3) management fees (or an imputed charge for management fees if Landlord
provides its own management services) not to exceed three percent (3.0%) of all
Gross Tenant Revenues; for purposes hereof, “Gross Tenant Revenues” shall be
deemed to mean the aggregate of (a) the annual base rentals for all Project
tenants, (b) amounts of commercially reasonable rental abatement, and (c) other
income from the use or occupancy of the Building, accrued or collected with
respect to the Building; and the market rental value (as reasonably determined
by Landlord) of an on-site management office (or the prorated portion of any
off-site management office whose occupants perform management services for the
Property); provided that any such line item inclusion for the cost of a
management office shall not materially exceed the amount generally charged by
owners of similar properties in the downtown San Francisco, California market
(“Comparable Buildings”); (4) the costs, including interest, amortized over the
useful lives thereof as reasonably determined by Landlord, of (a) any capital
improvement made to the Building by or on behalf of Landlord which is required
under any governmental law or regulation (or any judicial interpretation
thereof) or any insurance requirement that was not applicable to, and enforced
against, the Building as of the Effective Date, (b) any capital cost of
acquisition and installation of any device or equipment designed or anticipated
to improve the operating efficiency of any system within the Building or which
is reasonably intended to reduce Operating Expenses and which is properly
capitalized, or (c) the cost of any capital improvement or capital equipment
which is acquired to improve the safety of the Building or Property, or
(d) capital improvements which are replacements or modifications of items
located in the Common Areas required to keep the Common Areas in good order or
condition; (5) all services, supplies, repairs, replacements or other expenses
directly and reasonably associated with servicing, maintaining, managing and
operating the Building, including, but not limited to the lobby, vehicular and
pedestrian traffic areas and other Common Areas; (6) wages, salaries and bonuses
of Landlord’s engineering and management employees (not above the level of
Building or Property Manager or such other title representing the on-site
management representative primarily responsible for management of the Building)
engaged in the maintenance, operation, repair and services of the Building,
including taxes, insurance and customary fringe benefits; (7) legal and
accounting costs (but not including legal costs incurred in collecting
delinquent rent from any occupants of the Property); (8) costs to maintain and
repair the Building and Property; (9) landscaping and security costs unless and
to the extent that Landlord hires a third party to provide such services
pursuant to a service contract and the cost of that service contract is already
included in Operating Expenses as described above; (10) costs or payments under
any easement, license, operating agreement, master declaration, restrictive
covenant, or other instrument pertaining to the sharing of costs by the Building
or Property or related to the use or operation of the Building or Property; and
(11) the amount paid or incurred by Landlord (a) in insuring all or any portion
of the Property under policies of insurance and/or commercially reasonable
self-insurance, which may include commercial general liability insurance,
property insurance, worker’s compensation insurance, rent interruption
insurance,

 

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contingent liability and builder’s risk insurance, and any insurance as may from
time to time be maintained by Landlord and (b) for deductible payments under any
insured claims.

Operating Expenses shall specifically exclude the following: (i) costs of
alterations of tenant spaces (including all tenant improvements to such spaces);
(ii) costs of capital improvements, except as provided in the preceding
paragraph; (iii) depreciation, interest and principal payments on mortgages, and
other debt costs, if any; (iv) real estate brokers’ leasing commissions or
compensation and advertising and other marketing expenses; (v) payments to
affiliates of the Landlord for goods and/or services to the extent the same are
materially in excess of what would be paid to non-affiliated parties of similar
experience, skill and expertise for such goods and/or services in an arm’s
length transaction; (vi) costs or other services or work performed for the
singular benefit of another tenant or occupant (other than for Common Areas of
the Building); (vii) legal, space planning, construction, and other expenses
incurred in procuring tenants for the Building or renewing or amending leases
with existing tenants or occupants of the Building; (viii) costs of advertising
and public relations and promotional costs and attorneys’ fees associated with
the leasing of the Building; (ix) any expense to the extent that Landlord
actually receives reimbursement from insurance, condemnation awards, other
tenants (except through the payment of Operating Expenses) or any other source;
(x) costs incurred in connection with the sale, financing, refinancing,
mortgaging, or other change of ownership of the Building; (xi) all expenses in
connection with the installation, operation and maintenance of any observatory,
broadcasting facilities, luncheon club, athletic or recreation club, cafeteria,
dining facility or other facility not generally available to all office tenants
of the Building, including Tenant; (xii) Taxes; (xiii) rental under any ground
or underlying lease or leases; ; (xiv) sums (other than management fees as
described in clause (3) of the foregoing definition of “Operating Expenses”)
paid to subsidiaries or other affiliates of Landlord for services but only to
the extent that the cost of such service materially exceeds the competitive
costs for such services rendered by persons or entities of similar skill,
competence and experience in the market; (xv) costs incurred in connection with
the removal, encapsulation or other treatment of Hazardous Material (defined in
Section 11(b) below) existing in the Building and classified as a Hazardous
Material as of the date of this Lease, except to the extent such removal,
encapsulation or other treatment is related to the ordinary general repair and
maintenance of the Building (for example, the removal and disposal of oil from
Building machinery in the course of typical building maintenance and not as a
response to any action of any tenant or occupant of the Building or other
release of Hazardous Materials); (xvi) costs that Landlord incurs in restoring
the Building after the occurrence of a fire or other casualty or after a partial
condemnation thereof; (xvii) interest, fines, penalties or damages for violation
of Law or late payment by Landlord, including penalty interest; (xviii) the cost
of defending any lawsuit and of paying any judgment, settlement or arbitration
award resulting from Landlord’s liability for failure to perform its obligations
under any lease or other contract by which it may be bound; (xix) contributions
to civic organizations or charities; (xx) the cost of acquisition of objects of
fine art that Landlord installs in the Building; (xxi) any increased costs
resulting from the negligence or willful misconduct of Landlord or its
employees, agents or contractors (provided that the issue of such negligence or
willful misconduct has been fully adjudicated, beyond the exhaustion of any
appeal rights); (xxii) costs incurred by Landlord to correct construction
defects in the Base Building (defined in Section 12(a) (provided that the issue
of the existence of a construction defect has been fully adjudicated, beyond the
exhaustion of any appeal rights); (xxiii) general or administrative overhead not
directly associated with

 

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operation and management of the Building and (xxiv) costs incurred in connection
with the operation and maintenance of the subterranean parking garage for the
Project.

(c) “Taxes” shall mean all taxes and assessments of every kind and nature which
Landlord shall become obligated to pay with respect to any calendar year of the
Term or portion thereof because of or in any way connected with the ownership,
leasing, or operation of the Building and the Property, as well as any
assessment, tax, fee, levy or charge in addition to, or in substitution,
partially or totally, of any assessment, tax, fee, levy or charge previously
included within the definition of real property tax, it being acknowledged by
Tenant and Landlord that Proposition 13 was adopted by the voters of the State
of California in the June 1978 election (“Proposition 13”) and that assessments,
taxes, fees, levies and charges may be imposed by governmental agencies for such
services as fire protection, street, sidewalk and road maintenance, refuse
removal and for other governmental services formerly provided without charge to
property owners or occupants, and, in further recognition of the decrease in the
level and quality of governmental services and amenities as a result of
Proposition 13, Taxes shall also include any governmental or private assessments
or the Property’s contribution towards a governmental or private cost-sharing
agreement for the purpose of augmenting or improving the quality of services and
amenities normally provided by governmental agencies. Notwithstanding anything
to the contrary contained herein, (i) Landlord shall include in Taxes each year
hereunder (including, without limitation, the Tax Base Year) the amounts levied,
assessed, accrued or imposed for such year, regardless of whether paid or
payable in another year (except that, with respect to personal property taxes,
Landlord shall include in Taxes the amounts paid during each such year), and
Landlord shall each year make any other appropriate changes to reflect
adjustments to Taxes for prior years (including, without limitation, the Tax
Base Year) due to error by the taxing authority, supplemental assessment or
other reason, regardless of whether Landlord uses an accrual system of
accounting for other purposes (the amount of any tax refunds received by
Landlord during the Term of this Lease (subject to the provisions of
Section 7(e) below) shall be deducted from Taxes for the calendar year to which
such refunds are attributable), and Tenant will receive a refund or credit
against Taxes in excess of Base Year Tax Amount, if any, in the amount of any
resulting retroactive reductions in Taxes previously payable (and actually paid)
by Tenant [subject to the provisions of Section 7(e) below]); (ii) the amount of
special taxes and special assessments to be included shall be limited to the
amount of the installments (plus any interest, other than penalty interest,
payable thereon) of such special tax or special assessment payable for the
calendar year in respect of which Taxes are being determined; (iii) the amount
of any tax or excise levied by the State or the City where the Building is
located, any political subdivision of either, or any other taxing body, on rents
or other income from the Property (or the value of the leases thereon) to be
included shall not be greater than the amount which would have been payable on
account of such tax or excise by Landlord during the calendar year in respect of
which Taxes are being determined had the income received by Landlord from the
Building (excluding amounts payable under this subparagraph (iii)) been the sole
taxable income of Landlord for such calendar year; (iv) if any portion of the
Taxes in the Tax Base Year includes an assessment which is no longer payable in
a subsequent calendar year, Taxes for the Tax Base Year shall be adjusted to
eliminate the amount of the annual assessment originally included therein; and
(v) Taxes shall also include Landlord’s reasonable costs and expenses (including
reasonable attorneys’ fees) in contesting or attempting to reduce any Taxes.
Taxes will not include income taxes (except those which may be included pursuant
to

 

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subparagraph (iii) above), excess profits taxes, franchise taxes, capital stock
taxes, personal property taxes (other than taxes on machinery or equipment used
in the operation, maintenance or management of the Property (for example, but
not by way of limitation, window washing equipment) and inheritance or estate
taxes. Without limiting the generality of this Section 7(c), if at any time
prior to or during the Term any sale, refinancing or change in ownership of the
Building is consummated, and if Landlord reasonably anticipates that the
Building will be reassessed for purposes of Taxes as a result thereof, but that
such reassessment may not be completed during the calendar year in which such
event is consummated, then for all purposes under this Lease, Landlord will
calculate Taxes applicable to such calendar year and thereafter based upon
Landlord’s good faith estimate of the Taxes which will result from such
reassessment. Upon the finalization of any such reassessment and Landlord’s
determination of actual Taxes applicable to the Tax Base Year and all calendar
years subsequent thereto, as applicable, Landlord shall have the right to adjust
the applicable Taxes therefor and, upon such adjustment, Landlord or Tenant, as
appropriate, shall promptly make such reconciliation payment (which, in the case
of Landlord, may be made in the form of a credit against the installment(s) of
Tenant’s Share of excess Taxes next coming due) as may be necessary in order
that Tenant pays Tenant’s Share of actual Taxes for each such calendar year.

(d) Cost Pools. Landlord shall have the right, from time to time, to equitably
allocate some or all of the Operating Expenses among different portions or
occupants of the Building or Property (the “Cost Pools”), in Landlord’s
commercially reasonable discretion. Such Cost Pools may, for example, include,
but shall not be limited to, the office space tenants of the Building and the
retail space tenants. The Operating Expenses allocable to each such Cost Pool
shall be allocated to such Cost Pool and charged to the tenants within such Cost
Pool in an equitable manner.

(e) Proposition 8. Notwithstanding anything to the contrary herein, if Taxes for
the Base Year or any subsequent year are decreased as a result of any proceeding
filed by Landlord for a reduction in the Building and Property’s assessed value
obtained in connection with California Revenue and Taxation Code Section 51 (a
“Proposition 8 Reduction”), Landlord shall make the following adjustments in
determining Taxes (i) any Proposition 8 Reduction applicable to the Tax Base
Year (whether actually obtained in the Tax Base Year or obtained retroactively
in any subsequent year) shall be disregarded for purposes of determining the
Base Year Tax Amount; and (ii) any Proposition 8 Reduction applicable to a
subsequent year shall be recognized for purposes of determining Taxes for that
year; however, if and to extent that as a result of any Proposition 8 Reduction
applicable to a subsequent year Taxes are reduced below the Base Tax Year
amount, Tenant will not be entitled to any credit or refund related to such
reduction below the Base Tax Year Amount.

(f) Procedure. As soon as reasonably possible after the commencement of each
calendar year, commencing with 2011, Landlord will provide Tenant with a
statement of the estimated monthly installments of Tenant’s Share of increases
(if any) in Operating Expenses and increases in Taxes (if any) which will be due
for the remainder of such calendar year in accordance with this Section 7.
Landlord shall deliver to Tenant within ninety (90) days after the close of each
calendar year (including the calendar year in which this Lease terminates), or
as soon thereafter as reasonably practical, a statement (“Landlord’s Statement”)
setting forth: (1) the

 

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amount of any increases (if any) in the Operating Expenses for such calendar
year in excess of the Operating Expenses for the Operating Expense Base Year,
and (2) the amount of any increases in the Taxes (if any) for such calendar year
in excess of the Taxes for the Tax Base Year.

(i) For each year following the Base Year, Tenant shall pay to Landlord,
together with its monthly payment of Base Rent as provided in Section 5 above,
as additional Rent hereunder, the estimated monthly installment of Tenant’s
Share of the excess Operating Expenses and excess Taxes for the calendar year in
question. At the end of any calendar year, and upon Landlord’s completion of
Landlord’s Statement for such year, if Tenant has paid to Landlord an amount in
excess of Tenant’s Share of excess Operating Expenses and excess Taxes for such
calendar year, Landlord shall reimburse to Tenant any such excess amount within
thirty (30) days after the date of delivery of the applicable Landlord’s
Statement (or shall apply any such excess amount to any amount then owing to
Landlord hereunder, and if none, to the next due installment or installments of
additional Rent due hereunder, at the option of Landlord); if Tenant has paid to
Landlord less than Tenant’s Share of excess Operating Expenses and excess Taxes
for such calendar year, Tenant shall pay to Landlord any such deficiency within
thirty (30) days after the date of delivery of the applicable Landlord’s
Statement.

(ii) For the calendar year in which this Lease terminates and is not extended or
renewed, the provisions of this Section 7 shall apply, but Tenant’s Share of
excess Operating Expenses and excess Taxes for such calendar year shall be
subject to a pro rata adjustment based upon the number of days in such calendar
year prior to the expiration of the Term of this Lease. Tenant’s obligation to
pay Tenant’s Share of excess Operating Expenses and excess Taxes (or any other
amounts) accruing during, or relating to, the period prior to expiration or
earlier termination of this Lease shall survive such expiration or termination.
Landlord may reasonably estimate all or any of such obligations within a
reasonable time before or after such expiration or termination. Tenant shall pay
the full amount of such estimate, and any additional amount due after the actual
amounts are determined, in each case within thirty (30) days after Landlord
sends a statement therefor. If the actual amount is less than the amount Tenant
has paid as an estimate, Landlord shall refund the difference within thirty
(30) days after such determination is made. Landlord shall use commercially
reasonable efforts to conclude such determination as soon as reasonably
possible.

(iii) If the Building is less than one hundred percent (100%) occupied
throughout any calendar year of the Term, inclusive of the Operating Expense
Base Year, then those actual Operating Expenses for the calendar year in
question which vary with occupancy levels in the Building (including for
example, but not limited to elevator maintenance costs, janitorial costs, trash
collection and disposal costs, utility costs and management fees) shall be
increased by Landlord, for the purpose of determining Tenant’s Share of excess
Operating Expenses, to be the amount of Operating Expenses which Landlord
reasonably determines would have been incurred during that calendar year if the
Building had been at least 100% occupied throughout such calendar year.

(g) Tenant’s Audit Right. Tenant shall have the right to conduct an audit of
Landlord’s books and records relating to Operating Expenses in accordance with
the following terms and provisions, provided that Tenant delivers written notice
of its intent to audit within

 

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ninety (90) days after receipt by Tenant of Landlord’s Statement (which
Landlord’s Statement may be delivered in such manner as is customary for
delivery of statements by Landlord under this Section 7) and completes such
audit within one hundred twenty (120) days after the date Landlord gives access
to its books and records:

(i) No Default is outstanding with respect to payment of Base Rent or additional
Rent.

(ii) Tenant shall have the right to have an employee of Tenant or a Qualified
Auditor (as defined below) inspect Landlord’s accounting records at Landlord’s
office no more than once per calendar year.

(iii) Neither the employee of Tenant nor the Qualified Auditor shall be employed
or engaged on a contingency basis, in whole or in part.

(iv) Prior to commencing the audit, Tenant and the auditor shall: (i) if the
auditor is not an employee of Tenant, provide Landlord with evidence that the
auditor is from a nationally recognized accounting firm and that the individual
performing the audit is a certified public accountant (a “Qualified Auditor”);
(ii) each sign a reasonable confidentiality letter to be provided by Landlord;
and (iii) provide Landlord with evidence of the fee arrangement between the
auditor and Tenant.

(v) The audit shall be limited solely to confirming that the Operating Expenses
in the Base Year and as reported in the Landlord’s Statement are consistent with
the terms of this Lease. The auditor shall not make any judgments as to the
reasonableness of any item of expense and/or the total Operating Expenses, nor
shall such reasonableness be subject to audit except where this Lease
specifically states that a particular item must be reasonable.

(vi) If Tenant’s auditor finds errors or overcharges in Landlord’s Statement
that Tenant wishes to pursue, then within the time period set forth above Tenant
shall advise Landlord thereof in writing with specific reference to claimed
errors and overcharges and the relevant Lease provisions disqualifying such
expenses. Landlord shall have a reasonable opportunity to meet with Tenant’s
auditor (and any third auditor selected hereinbelow, if applicable) to explain
its calculation of Operating Expenses, it being the understanding of Landlord
and Tenant that Landlord intends to operate the Building as a first-class office
building with service levels at or near the top of the market, increased as
circumstances may require in Landlord’s sole and reasonable judgment. If
Landlord agrees with said findings, appropriate rebates or charges shall be made
to Tenant. If Landlord does not agree, Landlord shall engage its own auditor to
review the findings of Tenant’s auditor and Landlord’s books and records. The
two (2) auditors and the parties shall then meet to resolve any difference
between the audits.

(vii) If agreement cannot be reached within two (2) weeks after the two
(2) auditors and the parties first meet to attempt to resolve the dispute, then
the auditors shall together select a third auditor (who shall be a Qualified
Auditor not affiliated with and who does not perform services for either party
or their affiliates) to which they shall each promptly submit their findings in
a final report, with copies submitted simultaneously to the first two
(2) auditors,

 

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Tenant and Landlord. Within two (2) weeks after receipt of such findings, the
third auditor shall determine which of the two reports best meets the terms of
this Lease, which report shall become the “Final Finding”. The third auditor
shall not have the option of selecting a compromise between the first two
auditors’ findings, nor to make any other finding.

(viii) If the Final Finding determines that Landlord has overcharged Tenant,
Landlord shall credit Tenant toward the payment of Base Rent or additional Rent
next due and payable under this Lease the amount of such overcharge, or if the
Term of this Lease has ended, shall refund the overcharged amount to Tenant
within thirty (30) days after the Final Finding. If the Final Finding determines
that Tenant was undercharged, then within thirty (30) days after the Final
Finding, Tenant shall reimburse Landlord the amount of such undercharge.

(ix) If the Final Finding results in a determination that Landlord overstated
Tenant’s Share of the Operating Expenses by more than five percent (5%) for the
calendar year subject to the audit, Landlord shall pay its own audit costs and
reimburse Tenant for its costs associated with said audits. If the Final Finding
results in no credit to Tenant for the calendar year subject to the audit (or in
a determination that Tenant underpaid Operating Expense for such year), Tenant
shall pay its own costs and shall reimburse Landlord for Landlord’s costs
associated with said audits. In all other events, each party shall pay its own
audit costs, including one half (1/2) of the cost of the third auditor.

(x) The results of any audit of Operating Expenses hereunder shall be treated by
Tenant, all auditors, and their respective employees and agents as confidential,
and shall not be discussed with nor disclosed to any third party, except for
disclosures required by applicable law, court rule or order or in connection
with any litigation or arbitration involving Landlord or Tenant.

8. Late Charge. Other remedies for nonpayment of Rent notwithstanding, if any
monthly installment of Base Rent or additional Rent is not received by Landlord
on or before the date due, or if any payment due Landlord by Tenant which does
not have a scheduled due date is not received by Landlord on or before the
thirtieth (30th) day following the date Tenant was invoiced for such charge, a
late charge of five percent (5%) of such past due amount shall be immediately
due and payable as additional Rent; provided, however, that Tenant shall be
entitled to notice and the passage of a five (5) day grace period prior to the
imposition of such late charge on the first (1st) occasion in any calendar year
in which Tenant fails to timely pay any amount due hereunder. Additionally,
interest shall accrue on all delinquent amounts from the date past due until
paid at the rate of ten percent (10%) per year from the date such payment is due
until paid (the “Interest Rate”).

9. Partial Payment. No payment by Tenant or acceptance by Landlord of an amount
less than the Rent herein stipulated shall be deemed a waiver of any other Rent
due. No partial payment or endorsement on any check or any letter accompanying
such payment of Rent shall be deemed an accord and satisfaction, but Landlord
may accept such payment without prejudice to Landlord’s right to collect the
balance of any Rent due under the terms of this Lease or any late charge or
interest assessed against Tenant hereunder.

 

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10. Letter of Credit.

(a) Generally. Concurrently with Tenant’s execution and delivery of this Lease
to Landlord, Tenant shall deliver to Landlord, as collateral for the full
performance by Tenant of all of its obligations under this Lease and for all
losses and damages Landlord may suffer as a result of Tenant’s failure to comply
with one or more provisions of this Lease, including, but not limited to, any
post lease termination damages under Section 1951.2 of the California Civil
Code, a standby, unconditional, irrevocable, transferable (provided that Tenant
will be responsible for the payment of any transfer fee or charge imposed by the
issuing bank) letter of credit (the “Letter of Credit”) in the form of Exhibit F
hereto or such other form approved in writing in advance by Landlord and
containing the terms required herein, in the face amount of $1,500,000.00 (the
“Letter of Credit Amount”), naming Landlord as beneficiary, issued (or
confirmed) by a financial institution acceptable to Landlord (the “Issuing
Bank”), permitting multiple and partial draws thereon from a location in San
Francisco, California (or, alternatively, permitting draws via overnight courier
or facsimile), and otherwise in form acceptable to Landlord in its reasonable
discretion. Tenant shall cause the Letter of Credit to be continuously
maintained in effect (whether through replacement, amendment, renewal, amendment
or extension) in the Letter of Credit Amount through the date (the “Final LC
Expiration Date”) that is the later to occur of (x) the date that is forty-five
(45) days after the scheduled expiration date of the Term or any renewal Term
and (y) the date that is forty-five (45) days after Tenant vacates the Premises
and completes any restoration or repair obligations; provided that the Letter of
Credit Amount may be reduced by amendment to the Letter of Credit in accordance
with Sections 10(f) and 10(g) below. If the Letter of Credit held by Landlord
expires earlier than the Final LC Expiration Date (whether by reason of a stated
expiration date or a notice of termination or non-renewal given by the issuing
bank), Tenant shall deliver a new or amended Letter of Credit or certificate of
renewal or extension to Landlord not later than thirty (30) days prior to the
expiration date of the Letter of Credit then held by Landlord. Any renewal,
amended or replacement Letter of Credit shall comply with all of the provisions
of this Section 10, shall be irrevocable and transferable and shall remain in
effect (or be automatically renewable) through the Final LC Expiration Date upon
the same terms as the expiring Letter of Credit or such other terms as may be
acceptable to Landlord in its reasonable discretion.

(b) Drawing under Letter of Credit. Subject to the provisions of Section 10(f)
below, upon Tenant’s Default under this Lease or as otherwise may be agreed by
Landlord and Tenant in writing, Landlord may, without prejudice to any other
remedy provided in this Lease or by law, draw on the Letter of Credit and use
all or part of the proceeds as set forth in Section 10(c) below. In addition, if
Tenant fails to furnish a renewal or replacement Letter of Credit at least
thirty (30) days prior to the stated expiration date of the Letter of Credit
then held by Landlord, Landlord may draw upon such Letter of Credit and hold the
proceeds thereof (and such proceeds need not be segregated) in accordance with
the terms of this Section 10.

(c) Use of Proceeds by Landlord. Subject to the provisions of Section 10(f)
below, the proceeds of the Letter of Credit shall constitute Landlord’s sole and
separate property (and not Tenant’s property or the property of Tenant’s
bankruptcy estate) and Landlord may immediately upon any draw permitted
hereunder (and without notice to Tenant except as may be expressly provided in
this Lease) apply or offset the proceeds of the Letter of Credit: (i) against

 

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any Rent payable by Tenant under this Lease that is not paid when due following
any applicable notice and cure periods; (ii) against all losses and damages that
Landlord has suffered or that Landlord reasonably estimates that it may suffer
as a result of Tenant’s failure to comply with one or more provisions of this
Lease, including any damages arising under Section 1951.2 of the California
Civil Code following termination of the Lease, to the extent permitted by this
Lease; (iii) against any costs incurred by Landlord permitted to be reimbursed
pursuant to this Lease (including reasonable attorneys’ fees); and (iv) against
any other amount that Landlord may spend or become obligated to spend by reason
of Tenant’s Default for which Landlord shall be entitled to seek reimbursement
in accordance with this Lease. Provided Tenant has performed all of its
obligations under this Lease, Landlord agrees to pay to Tenant by the Final LC
Expiration Date the amount of any proceeds of the Letter of Credit received by
Landlord as a result of previous draw(s) and not applied as allowed above;
provided, that if prior to the Final LC Expiration Date a voluntary petition is
filed by Tenant, or an involuntary petition is filed against Tenant by any of
Tenant’s creditors, under the Federal Bankruptcy Code, then Landlord shall not
be obligated to make such payment in the amount of the unused Letter of Credit
proceeds until either all preference issues relating to payments under this
Lease have been resolved in such bankruptcy or reorganization case or such
bankruptcy or reorganization case has been dismissed, in each case pursuant to a
final court order not subject to appeal or any stay pending appeal.

(d) Additional Covenants of Tenant.

(i) Replacement of Letter of Credit if Issuing Bank No Longer Satisfactory to
Landlord. If, at any time during the Term, Landlord determines that (i) the
Issuing Bank’s credit rating does not meet Landlord’s then-current standards for
banks issuing letters of credit on behalf of Building tenants or (ii) the
Issuing Bank is no longer considered to be well capitalized under the “Prompt
Corrective Action” rules of the FDIC (as disclosed by the Issuing Bank’s Report
of Condition and Income (commonly known as the “Call Report”) or otherwise) or
(iii) the Issuing Bank has been placed into receivership by the FDIC, or
(iv) the Issuing Bank has entered into any other form of regulatory or
governmental receivership, conservatorship or other similar regulatory or
governmental proceeding, or is otherwise declared insolvent or downgraded by the
FDIC or closed for any reason, then, within ten (10) business days following
Landlord’s notice to Tenant, Tenant shall deliver to Landlord a new letter of
credit meeting the terms of this Section 10 issued by an Issuing Bank meeting
Landlord’s credit rating standards and otherwise reasonably acceptable to
Landlord, in which event, Landlord shall return to Tenant the previously held
Letter of Credit. If Tenant fails to timely deliver such replacement Letter of
Credit to Landlord, such failure shall be deemed a default hereunder without the
necessity of additional notice or the passage of additional grace periods.

(ii) Replacement of Letter of Credit Upon Draw. If, as result of any application
or use by Landlord of all or any part of the Letter of Credit, the amount of the
Letter of Credit plus any cash proceeds previously drawn by Landlord and not
applied pursuant to Section 10 (c) above shall be less than the Letter of Credit
Amount, Tenant shall, within ten (10) days thereafter, provide Landlord with
additional letter(s) of credit in an amount equal to the deficiency (or a
replacement or amended letter of credit in the total Letter of Credit Amount),
and any such additional (or replacement or amended) letter of credit shall
comply with all of the

 

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provisions of this Section 10; notwithstanding anything to the contrary
contained in this Lease, if Tenant fails to timely comply with the foregoing, or
to deliver the same shall constitute a default by Tenant without the necessity
of additional notice or the passage of additional grace periods. Tenant further
covenants and warrants that it will neither assign nor encumber the Letter of
Credit or any part thereof and that neither Landlord nor its successors or
assigns will be bound by any such assignment, encumbrance, attempted assignment
or attempted encumbrance.

(e) Nature of Letter of Credit. Landlord and Tenant waive any and all rights,
duties and obligations either party may now or, in the future, will have
relating to or arising from any Law applicable to security deposits in the
commercial context including Section 1950.7 of the California Civil Code (as
such section now exists or as it may be hereafter amended or succeeded,
“Security Deposit Laws”). Tenant hereby waives the provisions of Section 1950.7
of the California Civil Code and all other provisions of Law, now or hereafter
in effect, which (i) establish the time frame by which Landlord must refund a
security deposit under a lease, and/or (ii) provide that Landlord may claim from
a security deposit only those sums reasonably necessary to remedy defaults in
the payment of rent, to repair damage caused by Tenant or to clean the Premises,
it being agreed that Landlord may, in addition, claim those sums specified in
Section 10(c) above and/or those sums reasonably necessary to compensate
Landlord for any loss or damage caused by Tenant’s breach of this Lease or the
acts or omission of Tenant, including any damages Landlord suffers following
termination of this Lease, all to the extent Landlord is entitled to recover the
same from Tenant pursuant to the terms of this Lease.

(f) Application of Letter of Credit Towards Termination Fee or Base Rent Amount.

(i) Application to Termination Fee. If Tenant exercises the Termination Option
(described in Section 55(a) below), Landlord will draw upon the Letter of Credit
to fund Tenant’s obligation to pay the Termination Fee (defined in Section 55(a)
below). If Tenant does not exercise the Termination Option, the terms of
Section 10(f)(ii) below will apply.

(ii) If Tenant Does Not Exercise Termination Option. If Tenant does not exercise
the Termination Option and is not in Default hereunder, Landlord shall, within
five (5) business days following delivery of Tenant’s request therefore, consent
in writing to the amendment of the Letter of Credit to reduce the Letter of
Credit Amount to $1,356,111.25, subject to further reduction pursuant to
Section 10(g) below.

(g) Reduction. Notwithstanding any provision to the contrary in Section 10(a)
above, at such time as the Reduction Condition (defined below) has been met,
upon written request by Tenant, Landlord will allow the Letter of Credit Amount
to be reduced from $1,356,111.25 to $678,755.00 (the “Reduced Letter of Credit
Amount”). Such reduction in the Letter of Credit Amount may be accomplished at
Tenant’s option, by either (i) an amendment to the then-existing Letter of
Credit reducing the face amount thereof to the Reduced Letter of Credit Amount
or (ii) Tenant’s delivery to Landlord of a replacement Letter of Credit in the
Reduced Letter of Credit Amount, in which event Landlord shall return to Tenant
the Letter of Credit then held by Landlord. As used herein, “Reduction
Condition” shall mean that (x)

 

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Tenant is not then in Default hereunder, (y) Tenant has not previously failed to
timely cure any Default hereunder and (z) Tenant has positive EBITDA during the
immediately preceding four (4) consecutive calendar quarters (the “Required
Positive EBITDA”), as evidenced by Tenant’s financial statements, which Tenant
will furnish to Landlord. Such financial statements of Tenant shall be deemed
accepted by Landlord as evidencing the Required Positive EBITDA, unless Landlord
objects thereto within ten (10) business days after receipt thereof from Tenant.
In the event Landlord objects to Tenant’s financial statements within such ten
(10) business day period and the parties are unable to resolve, within thirty
(30) days thereafter, whether or not Tenant has the Required Positive EBITDA,
Landlord and Tenant shall refer the matter to a mutually agreed independent
certified public accountant whose determination on the matter shall be final and
binding on the parties. The cost of such certified public accountant shall be
borne equally by Landlord and Tenant. The term “EBIDTA” as used herein means
earnings before interest, taxes, depreciation and amortization.

11. Use of Premises.

(a) Generally. Tenant may use and occupy the Premises for general office
purposes of a type customary for first-class office buildings and for any other
legally permitted uses consistent with the operation, maintenance and occupancy
of the Building as a first-class office building (any non-office usage is
subject to Landlord’s prior written consent) and for no other purpose. The
Premises shall not be used for any illegal purpose, nor in violation of any
valid regulation of any governmental body, nor in any manner to create any
nuisance or trespass, nor in any manner which will void the insurance or
increase the rate of insurance on the Premises or the Building or which will
violate any recorded easements, covenants, conditions, restrictions,
declarations and similar instruments now or hereafter affecting the Building,
nor in any manner inconsistent with the first-class nature of the Building, nor
in any manner that would cause the occupancy level of the Premises to exceed the
standard density limit for the Building (i.e., five (5) persons per 1,000
rentable square feet); Landlord acknowledges that Tenant intends to occupy the
Premises at a density of not more than approximately one (1) person per one
hundred seventy-five (175) rentable square feet and agrees that, provided that
such occupancy density is in compliance with applicable law, such occupancy
density shall not be a breach of this Lease and that no additional payment or
compensation shall become due and payable under this Lease solely by reason of
such occupancy density; however, Tenant acknowledges that the Building’s HVAC
system is not designed to service space occupied at such density and that if and
to the extent additional HVAC service is required by Tenant in order to provide
for the comfortable occupancy of the Premises due to such density, Tenant will
bear the cost of providing such additional HVAC service. Except when and where
Tenant’s right of access is specifically prevented as a result of (i) an
emergency or casualty, (ii) a requirement of law, or (iii) a specific provision
set forth in this Lease, Tenant shall have the right of ingress and egress to
the Premises, the Building, and the parking areas twenty-four (24) hours per
day, seven (7) days per week, subject to Landlord’s reasonable security
procedures.

(b) Hazardous Materials.

(i) Tenant shall not cause or permit the receipt, storage, use, location or
handling by Tenant, Tenant’s employees, agents, contractors, subtenants or
assignees on the

 

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Property (including the Building and Premises) of any product, material or
merchandise which is explosive, highly inflammable, or a “Hazardous Material,”
as that term is hereafter defined. Nothing contained in this Lease shall be
construed to make Tenant responsible for any Hazardous Material received,
stored, used, located or handled by Landlord or other third party not under the
control of Tenant. “Hazardous Material” shall include all materials or
substances which are listed in, regulated by or subject to any applicable
federal, state or local laws, rules or regulations from time to time in effect,
including, without limitation, hazardous waste (as defined in the Resource
Conservation and Recovery Act); hazardous substances (as defined in the
Comprehensive Emergency Response, Compensation and Liability Act, as amended by
the Superfund Amendments and Reauthorization Act); gasoline or any other
petroleum product or by-product or other hydrocarbon derivative; toxic
substances (as defined by the Toxic Substances Control Act); insecticides,
fungicides or rodenticide, (as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act); and asbestos, radon and substances determined to be
hazardous under the Occupational Safety and Health Act or regulations
promulgated thereunder. Notwithstanding the foregoing, Tenant shall not be in
breach of this provision as a result of the presence in the Premises of minor
amounts of Hazardous Materials which are in compliance with all applicable laws,
ordinances and regulations and are customarily present in a general office use
(e.g., copying machine chemicals and kitchen cleansers).

(ii) Without limiting in any way Tenant’s obligations under any other provision
of this Lease, Tenant and its successors and assigns shall indemnify, protect,
defend (with counsel approved by Landlord) and hold Landlord, its partners,
officers, directors, shareholders, employees, agents, lenders, contractors and
each of their respective successors and assigns (the “Indemnified Parties”)
harmless from any and all claims, damages, liabilities, losses, costs and
expenses of any nature whatsoever, known or unknown, contingent or otherwise
(including, without limitation, attorneys’ fees, litigation, arbitration and
administrative proceedings costs, expert and consultant fees and laboratory
costs, as well as damages arising out of the diminution in the value of the
Premises, the Property or any portion thereof, damages for the loss of the
Premises or the Property or any portion thereof, damages arising from any
adverse impact on the marketing of space in the Premises, and sums paid in
settlement of claims), which arise during or after the Term in whole or in part
as a result of the presence of any Hazardous Materials, in, on, under, from or
about the Premises due to Tenant’s acts or omissions, except to the extent such
claims, damages, liabilities, losses, costs and expenses caused by any of the
Indemnified Parties. Landlord and its successors and assigns shall indemnify and
hold Tenant and its successors and assigns harmless against all such claims or
damages to the extent caused by Landlord, its partners, officers, directors,
shareholders, employees, agents, lenders, contractors and each of their
respective predecessors, successors or assigns. The indemnities contained herein
shall survive the expiration or earlier termination of this Lease.

(c) Storage Space.

(i) Provided such space is available for lease from time to time during the
Term, Tenant will have the option to lease from Landlord certain storage space
located in the basement of the Building (the “Storage Space”) on a
month-to-month basis until Tenant terminates the leasing of such Storage Space;
provided that in no event will the term of Tenant’s leasing of any Storage Space
extend beyond the expiration or sooner termination of this Lease,

 

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such option to be exercised by written notice to Landlord (“Tenant’s Storage
Exercise Notice”); promptly following delivery of Tenant’s Storage Exercise
Notice, Landlord will notify Tenant of the location, size and configuration of
any Storage Space which is then available.

(ii) Provided the Storage Space is available for lease following the date of
Tenant’s Storage Exercise Notice, the Storage Space shall be delivered in its
“as-is” condition and be used by Tenant for the storage of equipment, inventory
or other non-perishable items normally used in Tenant’s business, and for no
other purpose whatsoever. Tenant agrees to keep the Storage Space in a neat and
orderly fashion and to keep all stored items in cartons, file cabinets or other
suitable containers. All items stored in the Storage Space shall be elevated at
least 6 inches above the floor on wooden pallets, and shall be at least 18
inches below the bottom of all sprinklers located in the ceiling of the Storage
Space, if any. Tenant shall not store anything in the Storage Space which is
unsafe or which otherwise may create a hazardous condition, or which may
increase Landlord’s insurance rates, or cause a cancellation or modification of
Landlord’s insurance coverage. Without limitation, Tenant shall not store any
flammable, combustible or explosive fluid, chemical or substance nor any
perishable food or beverage products, except with Landlord’s prior written
approval. Landlord reserves the right to adopt and enforce reasonable rules and
regulations not inconsistent with this Lease governing the use of the Storage
Space from time to time. Upon expiration or earlier termination of Tenant’s
rights to the Storage Space, Tenant shall completely vacate and surrender the
Storage Space to Landlord in the condition in which it was delivered to Tenant,
ordinary wear and tear excepted, broom-clean and empty of all personalty and
other items placed therein by or on behalf of Tenant.

(iii) Tenant shall pay Rent for the Storage Space (“Storage Rent”) in the amount
equal to $20.00 per rentable square foot per annum in equal monthly
installments, plus applicable sale and use taxes, each payable in advance on or
before the first day of each month. Any partial month shall be appropriately
prorated. All Storage Rent shall be payable in the same manner that Base Rent is
payable hereunder.

(iv) All terms and provisions of this Lease shall be applicable to the Storage
Space, except that Landlord need not supply air-cooling, heat, water, janitorial
service, cleaning, window washing or electricity to the Storage Space and Tenant
shall not be entitled to any allowances, rent credits, or expansion rights with
respect to the Storage Space unless such concessions or rights are specifically
provided for herein with respect to the Storage Space. Landlord shall not be
liable for any theft or damage to any items or materials stored in the Storage
Space, it being understood that Tenant is using the Storage Space at its own
risk. The Storage Space shall not be included in the determination of Tenant’s
Share nor shall Tenant be required to pay Operating Expenses, Insurance Expenses
or Property Taxes in connection with the Storage Space.

(v) At any time and from time to time, Landlord shall have the right to relocate
the Storage Space to a new location which shall be no smaller than the square
footage of the Storage Space. Landlord shall pay the direct, out-of-pocket,
reasonable expenses of such relocation.

 

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12. Compliance with Laws.

(a) By Tenant. Tenant, at its sole cost and expense, shall promptly comply with
all statutes, codes, ordinances, orders, rules and regulations of any municipal
or governmental entity which are now in force or which may hereafter be enacted
or promulgated, including, without limitation, the Americans with Disabilities
Act of 1990, as amended (collectively, “Law(s)”), regarding the operation of
Tenant’s business and the use, condition, configuration and occupancy of the
Premises. In addition, Tenant, at its sole cost and expense, shall promptly
comply with any Laws that relate to the “Base Building” (defined below) and/or
any areas of the Building or the Property outside the Premises, but only to the
extent such obligations are triggered by Tenant’s particular use of the Premises
(as opposed to office use in general), by Alterations or improvements in the
Premises performed or requested by Tenant, or by Tenant’s occupancy of the
Premises in excess of the standard density limit for the Building. “Base
Building” shall include the structural portions of the Building, the public
restrooms (it being acknowledged that restrooms on any full floor comprising the
Premises are not “public” restrooms) and the Building mechanical, electrical,
life-safety and plumbing systems and equipment located in the internal core of
the Building. Tenant shall promptly provide Landlord with copies of any notices
it receives regarding an alleged violation of Law. Tenant, at Tenant’s expense,
may contest by appropriate proceedings in good faith the legality or
applicability of any Law affecting the Premises, provided that (i) the Property
or any part thereof (including the Premises) shall not be subject to being
condemned or vacated by reason of non-compliance or otherwise by reason of such
contest, (ii) no unsafe or hazardous condition remains unremedied as a result of
such contest, (iii) such non-compliance or contest is not prohibited under any
Security Documents (defined in Section 40) and Tenant posts any security
required under such Security Documents in connection with such contest (or the
non-compliance that is the subject thereof), (iv) such non compliance or contest
shall not prevent Landlord from obtaining any and all permits and licenses then
required by applicable Laws in connection with the operation of the Building,
and (v) the Certificate of Occupancy for the Building (or any portion) is
neither subject to being suspended by reason such of non-compliance or contest
(any such proceedings instituted by Tenant being referred to herein as a
“Compliance Challenge”). If Landlord may be subject to any civil fines or
penalties or other criminal penalties or may be liable to any third party by
reason of the Compliance Challenge, then Tenant shall furnish to Landlord, at
Tenant’s option, either (x) a bond of a surety company that is issued by, and in
form and substance, reasonably satisfactory to Landlord, or (y) such other
security that is reasonably satisfactory to Landlord, and, in either case, in an
amount equal to one hundred twenty percent (120%) of the sum of (A) the cost of
such compliance, (B) the criminal or civil penalties or fines that may accrue by
reason of such non-compliance (as reasonably estimated by Landlord), and (C) the
amount of such liability to third parties (as reasonably estimated by Landlord).
If Tenant initiates any Compliance Challenge, then Tenant shall keep Landlord
advised regularly as to the status of such proceedings. Landlord shall have the
right to use the aforesaid bond or other security to satisfy any such fines or
penalties that are levied or assessed against Landlord as a result of the
Compliance Challenge; Landlord’s obligation to so return such bond or other
security shall survive the expiration or sooner termination of this Lease.
Landlord shall return to Tenant the aforesaid bond or other security (or the
unapplied portion thereof, as the case may be), promptly after Tenant completes
the Compliance Challenge. If Tenant institutes a Compliance Challenge which
concludes on or after the date of expiration or termination of this Lease,
Tenant’s

 

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obligations hereunder with respect to the compliance in question will survive
the expiration or sooner termination of this Lease to the extent that the result
of any Compliance Challenge is that Tenant is required to perform any compliance
work.

(b) By Landlord. Landlord represents to Tenant that, as of the Effective Date,
Landlord has not received written notice from any governmental authority of any
currently existing condition in the Premises or Base Building which has been
interpreted as a material violation of Laws for which Landlord’s compliance is
currently required. Landlord shall comply with all Laws relating to the Base
Building (exclusive of any Base Building systems that were constructed by or for
the benefit of Tenant) and the Common Areas, provided that such compliance with
Laws is not the responsibility of Tenant under this Lease. Landlord’s obligation
hereunder shall include the obligation to perform, at Landlord’s sole cost and
expense and not as an Operating Expense, any work necessary to bring the
restrooms located on the sixth (6th) floor of the Building, into compliance with
Law as applicable to the restrooms as of the date of Landlord’s delivery of the
Premises to Tenant, and to perform any “path of travel” work applicable to the
Premises as of the date of Landlord’s delivery of the Premises to Tenant (the
“ADA Work”). Notwithstanding the foregoing, except with respect to the ADA Work,
Landlord shall have the right to contest in good faith any alleged violation of
Law, including, without limitation, the right to apply for and obtain a waiver
or deferment of compliance, the right to assert any and all defenses allowed by
Law and the right to appeal any decisions, judgments or rulings to the fullest
extent permitted by Law. Landlord shall be permitted to include in Operating
Expenses any costs or expenses incurred by Landlord under this Section 12 (other
than in connection with the ADA Work) to the extent consistent with the terms of
Section 7(b) above.

13. Waste Disposal. All normal trash and waste (i.e., waste that does not
require special handling pursuant to the provisions of this Section 13 set forth
below), including, without limitation, recycling, trash and composted materials,
shall be placed in appropriate receptacles in the Premises in conformance with
the guidelines of the local waste disposal plan then in effect and the rules and
regulations issued by Landlord and shall be disposed of through the janitorial
service. Tenant shall be responsible for the removal and disposal of any waste
deemed by any governmental authority having jurisdiction over the matter to be
hazardous or infectious waste or waste requiring special handling, such removal
and disposal to be in accordance with any and all applicable governmental rules,
regulations, codes, orders or requirements. Tenant agrees to separate and mark
appropriately all waste to be removed and disposed of through the janitorial
service pursuant to the first sentence of this Section 13, and hazardous,
infectious or special waste to be removed and disposed of by Tenant pursuant to
the immediately preceding sentence.

14. Rules and Regulations. The current rules and regulations of the Building
(the “Rules and Regulations”), a copy of which is attached hereto as Exhibit D,
and all reasonable rules and regulations and modifications thereto not
inconsistent with the terms of this Lease which Landlord may hereafter from time
to time adopt and promulgate after notice thereof to Tenant are hereby made a
part of this Lease and shall be observed and performed by Tenant, its agents,
employees and invitees.

 

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15. Services.

(a) Generally. The normal business hours of the Building (“Building Service
Hours”) shall be from 7:00 A. M. to 6:00 P.M. on Monday through Friday,
exclusive of Building holidays as reasonably designated by Landlord in
Landlord’s sole discretion (“Building Holidays”). Initially and until further
notice by Landlord to Tenant, the Building Holidays shall be: New Year’s Day,
Presidents’ Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Landlord shall furnish the following services during the Building
Service Hours except as noted:

(i) Passenger elevator service at all times;

(ii) Heating, ventilation and air conditioning (“HVAC”) reasonably adequate to
allow for the comfortable occupancy of the Premises and commensurate with the
service provided at Comparable Buildings, subject to governmental regulations,
so long as the occupancy level of the Premises and the heat generated by
electrical lighting and fixtures do not exceed the following thresholds:

 

  (A) Occupant Load: The maximum occupancy load permitted by the San Francisco
Department of Building Inspection with respect to the Premises;

 

  (B) Equipment & Lighting Load: 5.0 watts per usable square foot, including
overhead lighting.

(iii) Water at all times for all restrooms and lavatories;

(iv) Janitorial service Monday through Friday (exclusive of Building Holidays),
commensurate with the service provided at Comparable Buildings;

(v) Electric power at all times except during required maintenance or repair or
unless due to casualty or a Force Majeure Event (defined in Section 19 below)
for lighting and outlets not in excess of the total watts per usable square foot
of the Premises described in clause 15(a)(ii) above at 100% connected load
(Tenant shall pay for any electrical service in excess of such amount); and

(vi) Replacement of Building standard lamps and ballasts as needed from time to
time.

(b) Extra Services. Except as expressly set forth herein, Tenant shall have no
right to any services in excess of those provided herein:

(i) Tenant shall have the right to receive HVAC service during hours other than
Building Service Hours by paying Landlord’s then standard charge for additional
HVAC service and providing such prior notice as is reasonably specified by
Landlord (as of the Effective Date, Landlord’s charge for after hours HVAC is
$189.00 per hour plus the cost of

 

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engineering (currently $75.00 per hour)). The foregoing charges are subject to
change from time to time to the extent necessary to meet changes in Landlord’s
cost of providing such service. Any such increased charge shall be based upon
the actual cost of electricity consumed by the Building’s HVAC equipment and
Landlord’s reasonable, good faith estimate of the cost of increased maintenance
and wear and tear on the Building’s HVAC equipment plus such after-hours usage,
and labor costs, if any, related to the provision of such after-hours HVAC
service.

(ii) if Tenant is permitted to connect any supplemental HVAC units to the
Building’s condenser water loop, such permission shall be conditioned upon
Landlord having adequate excess capacity from time to time and such connection
and use shall be subject to Landlord’s reasonable approval and reasonable
restrictions imposed by Landlord, and Landlord shall have the right to charge
Tenant a connection fee and/or a monthly usage fee, as reasonably determined by
Landlord;

(iii) Landlord shall have the right to measure Tenant’s electrical usage by
commonly accepted methods, including the installation of measuring devices such
as submeters and check meters. If it is determined that Tenant is using
electricity in such quantities or during such periods as to cause the total cost
of Tenant’s electrical usage, on a monthly, per rentable square foot basis, to
exceed that which Landlord reasonably deems to be standard for the Building,
Tenant shall pay Landlord as additional Rent the estimated cost of such excess
electrical usage and, if applicable, for the cost of purchasing, installing and
maintaining the measuring device(s);

(iv) If Tenant installs or operates a server room or supplemental HVAC units or
other forms of high-consumption equipment or areas, Landlord will have the right
to install, at Tenant’s sole cost and expense, a separate electrical meter to
measure Tenant’s electrical consumption in such areas or from such equipment and
to require that Tenant pay Landlord directly for the electricity consumed in
such areas or by such equipment, on a monthly basis, within ten (10) days after
the delivery and an invoice from Landlord at the rates charged to Landlord by
the electric company, without markup.

(v) if Tenant uses any other services in an amount or for a period in excess of
that provided for herein, then Landlord reserves the right to charge Tenant as
additional Rent hereunder a reasonable sum as reimbursement for the cost of such
added services, and to charge Tenant for the cost of any administrative time,
additional equipment or facilities or modifications thereto which are necessary
to provide the additional services, and/or to discontinue providing such excess
services to Tenant.

(c) Interruptions. Landlord shall not be liable for any damages directly or
indirectly resulting from the interruption in any of the services described
above, nor shall any such interruption entitle Tenant to any abatement of Rent
or any right to terminate this Lease or be deemed an eviction, constructive or
actual. Landlord shall use reasonable efforts to furnish uninterrupted services
as required above. Notwithstanding the foregoing, in the event that any
interruption or discontinuance of services provided pursuant to Section 15(a)
was within the reasonable control of Landlord to prevent (and was not caused in
any way by the act or omission of Tenant or Tenant’s employees, invitees or
contractors), (ii) continues beyond five (5) business days

 

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after the date of delivery of written notice from Tenant to Landlord,
(iii) materially and adversely affects Tenant’s ability to conduct business in
the Premises, or any material portion thereof, and (iv) on account of such
interruption or disturbance Tenant ceases doing business in the Premises, Base
Rent shall abate proportionately, beginning on the sixth (6th) business day
after delivery of said notice and continuing for so long as Tenant remains
unable to (and in fact does not) conduct its business in the Premises or such
portion thereof. To the extent within Landlord’s reasonable control, Landlord
agrees to use reasonable efforts to restore such interrupted or discontinued
service as soon as reasonably practicable.

(d) Back-Up Power. The options described in this Section 15(d) are available to
Tenant for back-up electrical power to the Premises. Tenant shall have until the
date that is one hundred eighty (180) days following the Commencement Date (the
“Back-Up Outside Date”) in which to elect, by written notice to Landlord, one
(1) of the following options:

(i) UPS Battery Installation. The Premises, as configured as of the Effective
Date, includes an area (the “Battery Area”) located adjacent to the room used by
the prior occupant of the Premises as a server room, which is configured to
accommodate the installation of a UPS battery. If Tenant elects to so install a
UPS battery within the Battery Area, any such installation shall be subject to
the terms and conditions of this Lease, including, without limitation,
Section 11(b) above.

(ii) Portable Generator. Tenant may install a portable generator within the
Premises which can be plugged into the existing server room; the installation of
any such portable generator shall be in compliance with Landlord’s reasonable
guidelines therefore, and all applicable Laws, including, without limitation,
the requirement that any such generator be properly vented and that any noise
attenuation measures reasonably requested by Landlord be taken, all at Tenant’s
sole cost and expense.

(iii) Building Generator.

(1) At Tenant’s option, Landlord shall make the currently unused emergency
generator located at the 2 Harrison Street building (the “Offsite Building
Generator”) available for the exclusive use of Tenant for the purpose of
providing emergency electric power service (“EPS”) to the Premises, for a
minimum term (the “EPS Term”), measured from the date Tenant connects to the
Transfer Switch (defined below), through the Term of this Lease. To Landlord’s
knowledge, the Offsite Building Generator is currently configured for 480v
output, however, Landlord does not represent or warrant that the Offsite
Building Generator will perform in accordance with such configuration or is
suitable for Tenant’s use, and Tenant will accept the Offsite Building Generator
in its “as-is” condition. Landlord shall not be liable in any way to Tenant for
any delay, interruption, failure, variation or defect in or with regard to the
Offsite Building Generator or EPS, and in no event shall Landlord be liable to
Tenant for special, indirect or consequential damages which may result from any
such delay, interruption, failure, variation or defect, except to the extent
caused by Landlord’s or its employee’s, contractor’s or agent’s gross negligence
or willful misconduct or breach of this Lease. If Tenant elects to use the
Offsite Building Generator, Tenant, at Tenant’s cost, may perform the work
necessary to ‘step down’ any EPS provided by the Offsite Building Generator to
the Premises as may be necessary to EPS, all in

 

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accordance with the provisions of Section 22 below; Tenant’s work may include
the installation of. (i) an automatic transfer switch (the “Transfer Switch”) in
the Premises at a location to be designated by Tenant and reasonably
satisfactory to Landlord, to supply the EPS to the Premises at connection points
dedicated exclusively to Tenant, and (ii) a connection from the Offsite Building
Generator to the Transfer Switch.

(2) Tenant shall pay all actual costs and expenses incurred in making EPS
available to the Premises, including the costs to furnish and install the
Transfer Switch and all cabling and other devices necessary to connect the
Offsite Building Generator to the Transfer Switch, as well as the commercially
reasonable fees of any consultant or engineer retained by Landlord to monitor
the performance of Tenant’s work; and

(3) Tenant shall not transfer or assign the right to receive EPS service except
in connection with an assignment of this Lease consented to by Landlord as and
to the extent required under Section 43, and under no circumstances shall this
right be transferred or assigned to any party who is not a tenant under this
Lease. Tenant acknowledges that the Offsite Building Generator (and any
replacement or substitute therefor), and all connections thereto, are and shall
remain the sole property of Landlord and may not be removed by Tenant.

(4) Landlord shall have the right, in Landlord’s sole discretion and at
Landlord’s expense, at any time and from time to time during the EPS Term, upon
not less than thirty (30) days prior written notice to Tenant, to relocate the
Offsite Building Generator to other areas of the Project, or to substitute
different or additional generators for those comprising the Offsite Building
Generator system as of the date hereof, so long as Landlord uses diligent
efforts in accordance with then-prevailing industry standards to insure that at
no time during any such relocation will the EPS be inaccessible to Tenant.
Tenant shall cooperate with Landlord to effectuate any such relocation or
substitution affecting the Offsite Building Generator.

(5) If Tenant elects to use the Offisite Building Generator, Tenant, at Tenant’s
sole cost, shall maintain and repair the Offsite Building Generator in
first-class working order throughout the EPS Term in accordance with
then-prevailing industry standards, and shall maintain such service contracts
and take such other actions as may be necessary in Landlord’s reasonable
judgment to keep the Offsite Building Generator in good working order. Tenant
will conduct tests of the Offsite Building Generator as and when necessary in
accordance with manufacturer’s specifications and prevailing industry
provisions, but not more frequently than quarterly, and only in accordance with
a schedule approved in writing in advance by Landlord (such approval not to be
unreasonably withheld, conditioned or delayed). At the end of the EPS Term,
Tenant will return the Offsite Building Generator to Landlord in good working
order and repair, commercially reasonable wear and tear excepted.

(iv) Outside Generator. A prior occupant of Premises constructed an
infrastructure on the exterior of the Building for the installation of a
temporary “drop ship” generator. Tenant, at Tenant’s sole cost and expense, may
use such infrastructure and contract with a third-party provider for a
deliverable portable generator which can be connected to such infrastructure to
provide back-up electrical power to the Premises. Any work required to configure
such infrastructure to the Premises shall be performed in accordance with all
applicable Laws and

 

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with Landlord’s prior written approval (not to be unreasonably withheld,
conditioned or delayed). Landlord will have no responsibility to maintain or
guarantee the performance of any such infrastructure, and the cost of repair and
maintenance of any such infrastructure shall be borne by Tenant during the Term.

(e) Tenant’s Security. Tenant may, at its sole cost and expense, install its own
security system (“Tenant’s Security System”) in the Premises (and in common
stairwells in the core of the Building if the Premises are expanded to include
contiguous floors); provided, however, that Tenant’s Security System shall at
all times be compatible with all Building Systems now or hereafter existing.
Tenant shall be solely responsible for ensuring such full compatibility, and
acknowledges and agrees that Tenant shall not install, nor shall Tenant have any
right to operate, any Tenant’s Security System that is not so compatible. By way
of example, and without limiting the generality of the foregoing, Tenant’s
Security System shall be considered incompatible if it is not completely
independent of all other security systems at the Building or if the
installation, monitoring, use, operation, maintenance or removal thereof could
reasonably be expected to adversely affect any base Building systems (including
any other security systems). Tenant shall, at Tenant’s sole cost and expense,
cause Tenant’s Security System to be properly installed, monitored, maintained
and operated at all times during the Term. Tenant’s Security System, if any,
shall be part of Tenant’s property and at Landlord’s option will be removed from
the Premises at Tenant’s cost at the expiration or sooner termination of this
Lease.

16. Telephone and Data Equipment. Landlord shall have no responsibility for
providing to Tenant any telephone or data equipment, including wiring, within
the Premises or for providing telephone or data service or connections from the
utility to the Premises, except as required by law. Landlord shall be
responsible for removing any of the severed cabling which exists in the Premises
as of the Effective Date within forty-five (45) days after the later to occur of
(x) Tenant’s delivery of its removal request notice to Landlord and (y) the date
that Tenant elects (or is deemed to elect) not to exercise the Termination
Option. If Tenant requests that Landlord remove any such existing cabling,
Tenant and Tenant’s contractors will cooperate with Landlord and Landlord’s
contractors in a effort to coordinate the timely and efficient removal of such
existing cabling. Tenant shall not alter, modify, add to or disturb any
telephone or data wiring in the Premises or elsewhere in the Building without
Landlord’s prior written consent. Tenant shall be liable to Landlord for any
damage to the telephone or data wiring in the Building due to the act, negligent
or otherwise, of Tenant or any employee, contractor or other agent of Tenant.
Tenant shall have no access to the telephone or data closets within the
Building, except in the manner and under procedures reasonably established by
Landlord. Tenant shall promptly notify Landlord of any actual or suspected
failure of telephone or data service to the Premises. Subject to the third
sentence of this Section 16, all costs incurred by Landlord for the
installation, maintenance, repair and replacement of telephone or data wiring
within the Building shall be an Operating Expense unless and to the extent
Landlord is otherwise reimbursed for such costs by any tenants of the Building.
Landlord shall not be liable to Tenant and Tenant waives all claims against
Landlord whatsoever, whether for personal injury, property damage, loss of use
of the Premises, or otherwise, due to the interruption or failure of telephone
or data services to the Premises, except (a) in the case of property damage, to
the extent caused by Landlord’s or its employee’s, contractor’s or agent’s gross
negligence, willful misconduct or Landlord’s breach of this Lease (and, in such
event, subject to the provisions of Section 26(e) below), and (b) in the

 

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case of loss of use of the Premises, the provisions of Section 15(c) above will
be deemed to apply. All electronic, fiber, phone and data cabling and related
equipment that is installed by or for the exclusive benefit of Tenant is
referred to herein as “Cable”. Landlord may designate specific contractors with
respect to oversight, installation, repair, connection to, and removal of
vertical Cable (provided Landlord’s contractors charge commercially reasonable
rates for services rendered by persons or entities of similar skill, competence
and experience). All Cable shall be clearly marked with adhesive plastic labels
(or plastic tags attached to such Cable with wire) to show Tenant’s name, suite
number, and the purpose of such Cable (i) every 6 feet outside the Premises
(specifically including, but not limited to, the electrical room risers and any
Common Areas), and (ii) at the termination point(s) of such Cable. At the
expiration or sooner termination of this Lease, Tenant will remove all Cable
installed by or on behalf of Tenant or Tenant’s subtenants or assignees from the
Building at Tenant’s sole cost. Subject to the foregoing, Landlord will provide
Tenant with reasonably sufficient capacity to install a reasonable quantity of
telecommunications Cable in the Building’s vertical riser system to the Building
closet on the sixth (6th) floor (the “Closet”) and, if requested by Tenant, from
the Premises to the Building rooftop. All work of installing Cable in the
Building’s vertical riser system to the Closet shall be performed, at Tenant’s
cost, using Landlord’s designated telecommunications service provider. All work
of installing Cable from the Closet to Premises (and distribution of same within
the Premises) shall be performed by Tenant’s contractor, at Tenant’s cost.
Tenant shall not be charged any “access” or “riser” fees in connection with its
use of the Building’s risers, conduits, shafts or similar Common Areas for
Tenant’s Cable; provided that Tenant will be required to pay the fees and costs
of Landlord’s riser management company incurred in connection with Tenant’s
installation, use and/or removal of Cable.

17. Signs.

(a) Generally. Tenant shall not paint or place any signs, placards, or other
advertisements of any character upon the windows of the Premises (except with
the prior consent of Landlord, which consent may be withheld by Landlord in its
absolute discretion), and Tenant shall place no signs upon the outside walls,
Common Areas or the roof of the Building, provided that suite door signage and
elevator lobby signage shall be permitted if in keeping with Landlord’s Building
standard signage specifications, at Tenant’s cost.

(b) Building-Standard Signage. Landlord, at Landlord’s sole cost and expense,
shall initially provide Tenant with Building-standard signage in the Building’s
ground floor lobby and any Building sign directories. Any subsequent changes to,
or revisions or replacements of such signage, shall be at Tenant’s sole cost and
expense.

18. Parking. Tenant will have the right to the license to park in the number of
parking spaces described in the Basic Lease Provisions pursuant to the terms of
Exhibit E attached hereto.

19. Force Majeure. In the event of a strike, lockout, labor trouble, civil
commotion, an act of God, or any other event beyond a party’s control (a “Force
Majeure Event”) which results in such party being unable to timely perform its
obligations hereunder (other than the inability to pay any amount due
hereunder), and so long as such party diligently proceeds to

 

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perform such obligations after the end of such force majeure event, such party
shall not be in breach hereunder.

20. Repairs and Maintenance By Landlord. Landlord hereby represents that all
Building Systems serving the Premises are in good working order and repair as of
the Effective Date. Tenant, by taking possession of the Premises, shall accept
and shall be held to have accepted the Premises as suitable for the use intended
by this Lease. In no event shall Tenant be entitled to compensation or any other
damages or any other remedy against Landlord in the event the Premises are not
deemed suitable for Tenant’s use. Landlord shall not be required, after
possession of the Premises has been delivered to Tenant, to make any repairs or
improvements to the Premises, except as expressly set forth in this Lease.
Except for damage caused by casualty and condemnation (which shall be governed
by Sections 23 and 24 below), and subject to normal wear and tear, Landlord
shall maintain in first-class condition and repair throughout the Term (i) the
structural elements of the Building, including the roof, exterior walls,
exterior windows and foundation, (ii) Common Areas, (iii) the mechanical,
electrical, plumbing (from the point where such plumbing connects to the
interior of the Premises) and HVAC systems which serve the Building in general
(the “Building Systems”), provided such repairs are not occasioned by Tenant,
Tenant’s invitees or anyone in the employ or control of Tenant. Tenant hereby
waives any and all rights under and benefits of subsection 1 of Section 1932,
and Sections 1941 and 1942 of the California Civil Code, or any similar or
successor Laws now or hereafter in effect.

21. Repairs By Tenant. Except as described in Section 20 above, Tenant shall, at
its sole cost and expense, maintain the Premises below the ceiling grid in good
repair, including making all necessary repairs and replacements. Tenant’s repair
and maintenance obligations include, without limitation, repairs to: (a) floor
coverings; (b) interior partitions; (c) doors; (d) the interior side of demising
walls; (e) Alterations (defined in Section 22); (f) supplemental air
conditioning units, if any, (g) kitchens (including hot water heaters),
plumbing, and similar facilities exclusively serving Tenant, whether such items
are installed by or on behalf of Tenant or are currently existing in the
Premises and (h) Cable. Tenant shall further, at its own cost and expense,
(except as set forth in Section 23) repair or restore any damage or injury to
all or any part of the Building or Property caused by Tenant or Tenant’s agents,
employees, invitees, licensees, visitors or contractors, including but not
limited to any repairs or replacements necessitated by (i) the construction or
installation of improvements to the Premises by or on behalf of Tenant, and
(ii) the moving of any property into or out of the Premises. If Tenant fails to
make such repairs or replacements within fifteen (15) days after notice from
Landlord, Landlord may, at its option, upon prior reasonable notice to Tenant
(except in an emergency) make the required repairs and replacements and the
costs of such repair or replacements (including Landlord’s commercially
reasonable administrative charge) shall be charged to Tenant as additional Rent
and shall become due and payable by Tenant with the monthly installment of Base
Rent next due hereunder.

22. Alterations and Improvements/Liens.

(a) Generally. Except for minor, decorative alterations performed below the
ceiling of the Premises which do not affect the Building’s structure or systems,
will not create excessive noise or result in the dispersal of odors or debris
(including dust or airborne particulate

 

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matter), are not visible from outside the Premises, do not require, in
Landlord’s reasonable opinion, the procurement of a building permit and do not
cost in excess of $50,000.00 (the “Permissible Alterations Threshold”) in the
aggregate in any one year, Tenant shall not make or allow to be made any
alterations, physical additions or improvements in or to the Premises
(“Alterations”) without first obtaining in writing Landlord’s written consent
for such alterations or additions, which consent will not be unreasonably
withheld, conditioned or delayed; provided, however, that such consent may be
granted or withheld in Landlord’s sole discretion if the Alterations will affect
the Building’s structure or systems, or will be visible from outside the
Premises. The Permissible Alterations Threshold will be increased, effective as
of every third (3rd) anniversary of the Commencement Date, to an amount equal to
the original Permissible Alterations Threshold increased by the aggregate
increase (expressed as a percentage) in the CPI (defined below) most recently
issued prior to such anniversary over the CPI most recently issued prior to the
Commencement Date. As used herein, the “CPI” shall mean the Consumer Price
Index, All Items, San Francisco - Oakland - San Jose, All Urban Consumers,
published by the Bureau of Labor Statistics of the United States Department of
Labor or such successor index as may be established to provide a measure of the
current purchasing power of the dollar (provided, however, that if no successor
index is published by the United States Department of Labor, Landlord may select
in its reasonable discretion a substitute index or method of measuring inflation
). If Landlord’s consent to proposed Alterations is required, prior to starting
work, Tenant shall furnish Landlord with plans and specifications (which shall
be in CAD format if requested by Landlord) to the extent typically prepared for
such type of Alteration prepared by an architect and engineers reasonably
acceptable to Landlord (provided that Landlord may designate specific engineers
with respect to work affecting the Base Building); names of contractors
reasonably acceptable to Landlord (provided that Landlord may designate specific
contractors with respect to Base Building and vertical Cable (provided
Landlord’s contractors charge commercially reasonable rates for services
rendered by persons or entities of similar skill, competence and experience) and
Landlord, in Landlord’s sole and absolute discretion, may also require that
Tenant use only union labor for any work in the Building); required permits and
approvals; evidence of contractor’s and subcontractor’s insurance in amounts
reasonably required by Landlord and naming Landlord, the managing agent for the
Building and such other person or entities as Landlord may reasonably request as
additional insureds, in the case of any Alterations which will cost in excess of
$100,000.00. Landlord shall use reasonable efforts to respond to Tenant’s
request for consent to a proposed Alteration within ten (10) business days after
receipt of the above required information. Tenant shall reimburse Landlord for
any reasonable out-of-pocket sums paid by Landlord for third party examination
of Tenant’s plans for Alterations. Landlord’s approval of an Alteration shall
not be deemed a representation by Landlord that the Alteration complies with
Law. In addition, Tenant shall pay Landlord a fee for Landlord’s oversight and
coordination of any Alteration equal to three percent (3%) of the total cost of
the Alteration. Upon completion, Tenant shall furnish Landlord with at least
three (3) sets of “as-built” plans (as well as a set in CAD format, if requested
by Landlord) for Alterations, completion affidavits and full and final,
unconditional waivers of lien and will cause a Notice of Completion to be
recorded in the Office of the Recorder of the County of San Francisco in
accordance with Section 3093 of the California Civil Code or any successor
statute and will timely provide all notices required under Section 3259.5 of the
California Civil Code or any successor statute or any successor statute. Any
Alterations shall at once become the property of Landlord; provided, however,
that Landlord, at its option, may require Tenant to remove any

 

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Tenant Improvements constructed pursuant to the Work Agreement and any
Alterations prior to the expiration or sooner termination of this Lease if in
Landlord’s good faith determination such Alteration(s) or Tenant Improvement(s)
constitute Specialty Improvements (defined below). If Tenant requests in writing
as of the date of Tenant’s request for Landlord’s consent to any Tenant
Improvements or Alterations (“Removal Request”), Landlord will notify Tenant at
the time of Landlord’s consent to any such Tenant Improvements or Alterations as
to whether Landlord deems the same to be Specialty Improvements (defined below)
and will require their removal. All costs of any Alterations (including, without
limitation, the removal thereof) shall be borne by Tenant. If, prior to the
expiration or sooner termination of this Lease, Tenant fails to timely complete
the removal of any Tenant Improvements or Alterations required to be removed
hereunder and/or to repair any damage caused by the removal in a manner
satisfactory to Landlord in Landlord’s reasonable discretion, Landlord may do so
and may charge the cost thereof to Tenant. All Alterations shall be made in a
good, first-class, workmanlike manner and in a manner that does not disturb
other tenants (i.e., any loud work must be performed during non-business hours)
in accordance with Landlord’s then-current guidelines for construction, and
Tenant shall maintain appropriate liability and builder’s risk insurance
throughout the construction. “Specialty Improvements” shall mean Alterations or
Tenant Improvements, installed by or at the request of Tenant following the
Effective Date, that (i) perforate, penetrate or require reinforcement of a
floor slab (such as interior stairwells [not including any interior stairwells
existing in the Premises as of the Effective Date or in any interior stairwells
existing in any space leased by Tenant pursuant to Section 55(b) below as of the
date such space is delivered to Tenant]) or high-density filing or racking
systems), (ii) consist of the installation of a raised flooring system (not
including any raised flooring system existing in the Premises as of the
Effective Date or existing in any space leased by Tenant pursuant to
Section 55(b) below as of the date such space is delivered to Tenant),
(iii) consist of the installation of a vault or other similar device or system
intended to secure the Premises or a portion thereof in a manner that exceeds
the level of security necessary for ordinary office space, (iv) involve material
plumbing connections (for example, a shower, executive washroom or kitchen), or
(v) consist of the construction of substantial non-office improvements of a type
which are unlikely to be used by future tenants of the Building. Tenant will
indemnify, defend, protect and hold Landlord harmless from and against any and
all claims for injury to or death of persons or damage or destruction of
property arising out of or relating to the performance of any Alterations by or
on behalf of Tenant, except to the extent caused by Landlord, its employees,
contractors or agents. Under no circumstances shall Landlord be required to pay,
during the Term (as the same may be extended or renewed), any ad valorem or
Property tax on such Alterations, Tenant hereby covenanting to pay all such
taxes when they become due.

(b) Liens. Nothing contained in this Lease shall authorize or empower Tenant to
do any act which shall in any way encumber Landlord’s title to the Building,
Property, or Premises, nor in any way subject Landlord’s title to any claims by
way of lien or encumbrance, whether claimed by operation of law or by virtue of
any expressed or implied contract of Tenant, and any claim to a lien upon the
Building, Property or Premises arising from any act or omission of Tenant shall
attach only against Tenant’s interest and shall in all respects be subordinate
to Landlord’s title to the Building, Property, and Premises. If Tenant has not
removed any such lien or encumbrance or (provided that Tenant is in good faith
contesting such lien or encumbrance) delivered to Landlord a title indemnity,
bond or other security reasonably

 

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satisfactory to Landlord, within ten (10) days after written notice to Tenant by
Landlord, Landlord may pay the amount necessary to remove such lien or
encumbrance, without being responsible for making any investigation as to the
validity thereof, and the amount so paid shall be deemed additional Rent
reserved under this Lease due and payable forthwith.

23. Destruction or Damage.

(a) Completion Estimate. If all or any portion of the Premises becomes
untenantable or inaccessible by fire or other casualty to the Premises or the
Common Areas (collectively a “Casualty”), Landlord, with reasonable promptness,
shall cause a general contractor selected by Landlord to provide Landlord with a
written estimate of the amount of time required, using standard working methods,
to substantially complete the repair and restoration of the Premises and any
Common Areas necessary to provide access to the Premises (“Completion
Estimate”). Landlord shall promptly forward a copy of the Completion Estimate to
Tenant. If the Completion Estimate indicates that the Premises or any Common
Areas necessary to provide access to the Premises cannot be made tenantable
within two hundred seventy (270) days from the date the repair is started, then
either Tenant or Landlord shall have the right to terminate this Lease upon
written notice delivered to other within thirty (30) days following delivery of
the Completion Estimate. In addition, (x) Landlord and Tenant, by notice
delivered to the other within ninety (90) days after the date of the Casualty,
shall have the right to terminate this Lease if the Premises have been
materially damaged and there are less than two (2) years of the Term remaining
on the date of the Casualty; and (y) Landlord, by notice to Tenant delivered
within ninety (90) days after the date of the Casualty, shall have the right to
terminate this Lease if (1) any Holder requires that the insurance proceeds be
applied to the payment of the mortgage debt; or (2) a material uninsured loss to
the Building or Premises occurs.

(b) Landlord’s Repair; Abatement. If this Lease is not terminated, Landlord
shall promptly and diligently, subject to reasonable delays for insurance
adjustment or other matters beyond Landlord’s reasonable control, restore the
Premises and Common Areas. Such restoration shall be to substantially the same
condition and finish that existed prior to the Casualty, except for
modifications required by Law or any other modifications to the Common Areas
deemed desirable by Landlord. If this Lease is not terminated, upon notice from
Landlord, Tenant shall assign or endorse over to Landlord (or to any party
designated by Landlord) all property insurance proceeds payable to Tenant under
Tenant’s insurance with respect to any Alteration. Landlord will have no
obligation to restore, or bear the cost of restoration of, any Alterations
except to the extent that Landlord receives funds therefore from Tenant (either
as a direct payment or as part of Tenant’s insurance proceeds). In no event
shall Landlord be required to spend more for the restoration of the Premises and
Common Areas than the proceeds received by Landlord and the amount of any
deductible, whether insurance proceeds or proceeds from Tenant. Landlord shall
not be liable for any inconvenience to Tenant or injury to Tenant’s business
resulting in any way from the Casualty or the repair thereof. Provided that
Tenant is not in default, during any period of time that all or a material
portion of the Premises is rendered untenantable or inaccessible as a result of
a Casualty, Base Rent shall abate for the portion of the Premises that is
untenantable or inaccessible and not used by Tenant.

 

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(c) Statutory Waiver. The provisions of this Lease, including this Section 23,
constitute an express agreement between Landlord and Tenant with respect to any
and all damage to, or destruction of, all or any part of the Premises, Building
or Property, and any Laws, including, without limitation, Sections 1932(2) and
1933(4) of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any similar or successor Laws now or hereafter in effect, shall
have no application to this Lease or any damage or destruction to all or any
part of the Premises, Building or Property.

24. Eminent Domain. Either party may terminate this Lease if any material part
of the Premises is taken or condemned for any public or quasi-public use under
Law, by eminent domain or conveyance in lieu thereof (a “Taking”), it being
agreed that a “material part” shall be any part which materially impairs
Tenant’s ability to conduct its business in the Premises, or materially
increases its cost of doing so. Landlord shall also have the right to terminate
this Lease if there is a Taking of any portion of the Building or Property that
would have a material adverse effect on Landlord’s ability to profitably operate
the remainder of the Building. The terminating party shall provide written
notice of termination to the other party within forty-five (45) days after it
first receives notice of the Taking. The termination shall be effective as of
the effective date of any order granting possession to, or vesting legal title
in, the condemning authority. If this Lease is not terminated, Base Rent and
Tenant’s Share shall be appropriately adjusted to account for any reduction in
the square footage of the Building or Premises. All compensation awarded for a
Taking shall be the property of Landlord. The right to receive compensation or
proceeds is expressly waived by Tenant, provided, however, Tenant may file a
separate claim for Tenant’s personal property and Tenant’s reasonable relocation
expenses, provided the filing of such claim does not diminish the amount of
Landlord’s award. If only a part of the Premises is subject to a Taking and this
Lease is not terminated, Landlord, with reasonable diligence, will restore the
remaining portion of the Premises as nearly as practicable to the condition
immediately prior to the Taking. Tenant hereby waives any and all rights it
might otherwise have pursuant to Section 1265.130 of the California Code of
Civil Procedure, or any similar or successor Laws.

25. Damage or Theft of Personal Property. All personal property brought into the
Premises shall be at the risk of Tenant only and Landlord shall not be liable
for theft thereof or any damage thereto occasioned by any acts of co-tenants,
other occupants of the Building, or any other person, except, with respect to
damage to the Premises, as may be occasioned by the proven negligence or willful
misconduct of Landlord, its employees, contractors or agents (but subject to the
waiver of subrogation provisions set forth in Section 26(e) below).

26. Insurance; Waivers.

(a) Tenant’s Insurance. Tenant covenants and agrees that from and after the date
of delivery of the Premises from Landlord to Tenant, Tenant will carry and
maintain, at its sole cost and expense, the following types of insurance, in the
amounts specified and in the form hereinafter provided for:

 

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(i) Commercial General Liability (“CGL”) Insurance written on an occurrence
basis, covering the Premises and all operations of Tenant in or about the
Premises against claims for bodily injury, death, property damage and products
liability and to include contractual liability coverage insuring Tenant’s
indemnification obligations under this Lease, to be in combined single limits of
not less than $2,000,000 each occurrence for bodily injury, death and property
damage, $2,000,000 for products/completed operations aggregate, $2,000,000 for
personal injury, and to have general aggregate limits of not less than
$2,000,000 and Umbrella Liability Insurance in an amount not less than
$5,000,000 for each policy year. The certificate of insurance evidencing the CGL
form of policy shall specify all endorsements required herein.

(ii) Insurance covering all of the items included in Tenant’s heating,
ventilating and air conditioning equipment maintained by Tenant, all trade
fixtures, merchandise and personal property from time to time in, on or upon the
Premises, and all Tenant Improvements and any Alterations in an amount not less
than one hundred percent (100%) of their full replacement value from time to
time during the Term, providing protection against perils included within the
standard form of “all-risk” (i.e., “Special Cause of Loss”) fire and casualty
insurance policy. Any policy proceeds from such insurance shall be held in trust
by Tenant’s insurance company for the repair, construction and restoration or
replacement of the property damaged or destroyed unless this Lease shall cease
and terminate under the provisions of Section 23 above.

(iii) Workers’ Compensation insurance in amounts required by law.

(iv) Employer’s Liability coverage of at least $1,000,000.00 per occurrence.

(b) Requirements for Tenant’s Policies. All policies of the insurance provided
for in Section 26(a) above shall be issued by insurance companies with a rating
and financial size of not less than A:VI in the most current available “Best’s
Insurance Reports”, and licensed to do business in the state in which the
Building is located. Each and every such policy:

(i) shall designate Landlord (as well as Landlord’s managing agent and any
mortgagee of Landlord) as an additional insured, except with respect to the
insurance described in Sections 26(a)(iii) and 26(a)(iv) above;

(ii) shall be delivered in its entirety (or, in lieu thereof, a certificate in
form and substance satisfactory to Landlord) to each of Landlord and any such
other parties in interest prior to any entry by Tenant or Tenant’s employees or
contractors onto the Premises and thereafter within five (5) days after the
inception (or renewal) of each new policy, and as often as any such policy shall
expire or terminate. Renewal or additional policies shall be procured and
maintained by Tenant in like manner and to like extent or, if not commercially
available, in such form as Landlord reasonably approves;

(iii) shall contain (or the certificate evidencing such policy shall contain) a
provision that the insurer will endeavor to give to Landlord and such other
parties in interest at least thirty (30) days notice in writing (and ten
(10) days in the case of non-payment)

 

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in advance of any material change, cancellation, or the effective date of any
material reduction in the amounts of insurance; and

(iv) shall be written as a primary policy which does not contribute to and is
not in excess of coverage which Landlord may carry.

(c) Additional Insurance Obligations. Tenant shall carry and maintain during the
entire Term, at Tenant’s sole cost and expense, increased amounts of the
insurance required to be carried by Tenant pursuant to this Section 26 and such
other reasonable types of insurance coverage and in such reasonable amounts
covering the Premises and Tenant’s operations therein, as may be reasonably
requested from time to time by Landlord, so long as the coverage required is not
materially in excess of such types and amounts of coverage as are then typically
required by owners of Comparable Buildings.

(d) Landlord’s Insurance. During the Term, Landlord shall keep in effect
(i) commercial property insurance on the Base Building (but not on the Tenant
Improvements or any Alterations or any of Tenant’s personal property) at
replacement cost value, as reasonably estimated by Landlord, and (ii) a policy
or policies of CGL insurance in combined single limits of not less than
$5,000,000.00 each occurrence for bodily injury, death, property damage and
personal insury insuring against liability arising out of the risks of death,
bodily injury, property damage and personal injury liability with respect to the
Building and Property and (iii) such other types of insurance coverage, if any,
as Landlord, in Landlord’s sole discretion, may elect to carry.

(e) Subrogation. Notwithstanding anything to the contrary set forth in this
Lease, Landlord and Tenant do hereby waive any and all claims against one
another for damage to or destruction of real or personal property to the extent
such damage or destruction can be covered by “all risks” property insurance of
the type described in Section 26(a)(ii) and Section 26(d) above. The risk to be
borne by each party shall also include the satisfaction of any deductible
amounts required to be paid under the applicable “all risks” fire and casualty
insurance carried by the party whose property is damaged, and each party agrees
that the other party shall not be responsible for satisfaction of such
deductible (this will not preclude Landlord from including deductible payments
in Operating Expenses). These waivers shall apply if the damage would have been
covered by a customary “all risks” insurance policy, even if the party fails to
obtain such coverage. The intent of this provision is that each party shall look
solely to its insurance with respect to property damage or destruction which can
be covered by “all risks” insurance of the type described in Section 26(a)(ii)
and Section 26(d). Each such policy shall include a waiver of all rights of
subrogation by the insurance carrier against the other party, its agents and
employees with respect to property damage covered by the applicable “all risks”
fire and casualty insurance policy.

27. Indemnities.

(a) Tenant’s Indemnity. Except to the extent caused by the negligence or willful
misconduct of Landlord or any of Landlord’s employees, contractors or agents,
Tenant will indemnify, defend, protect and hold harmless Landlord, its agents
and employees from and against any and all loss, cost, damage or liability
arising in any manner (i) caused anywhere in the Building or on the Property due
to the negligence or willful misconduct of Tenant, its agents,

 

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contractors or employees or (ii) due to any occurrence in the Premises (or
arising out of actions taking place in the Premises) unless such damage is
caused by the negligence or willful misconduct of Landlord, its agents,
contractors, or employees, or (iii) arising out of Tenant’s breach or Default
under the terms of this Lease. Tenant hereby waives all claims against and
releases Landlord and its trustees, members, principals, beneficiaries,
partners, officers, directors, employees, Holders (defined in Section 39(a)) and
agents from all claims for any injury to or death of persons, damage to property
or loss of profits or revenue in any manner related to (a) force majeure,
(b) acts of third parties, (c) the bursting or leaking of any tank, water
closet, drain or other pipe, and/or (d) the inadequacy or failure of any
security or protective services, personnel or equipment.

(b) Landlord’s Indemnity. Except to the extent caused by the negligence or
willful misconduct of Tenant or Tenant’s employees, contractors, invitees,
subtenants or assignees, Landlord will indemnify, defend, protect and hold
Tenant harmless from and against all loss, cost, damage or liability caused by
the negligence or willful misconduct of Landlord, its employees, contractors or
agents which occur on the Property or Common Areas.

(c) Reasonable Expenses. The indemnities set forth hereinabove shall include the
obligation to pay reasonable expenses incurred by the indemnified party,
including, without limitation, reasonable, actually incurred attorneys’ fees.
Notwithstanding any other provision of this Lease to the contrary, in no case
shall Landlord be liable to Tenant for any lost profits, damage to business, or
any form of special, indirect or consequential damage on account of any breach
of this Lease or otherwise, notwithstanding anything to the contrary contained
in this Lease.

(d) Subject to Subrogation Waivers. The indemnities contained herein do not
override the waivers contained in Section 26(e) above.

28. Acceptance and Waiver. Except to the extent caused by the negligence or
willful misconduct of Landlord, its agents, contractors or employees (but
subject to the insurance provisions in Section 26 above), Landlord shall not be
liable to Tenant, its agents, employees, guests or invitees (and, if Tenant is a
corporation, its officers, agents, employees, guests or invitees) for any damage
caused to any of them due to the Building or any part or appurtenances thereof
being improperly constructed or being or becoming out of repair, or arising from
the leaking of gas, water, sewer or steam pipes, or from electricity; provided,
however, that this Section shall not preclude Tenant from seeking recovery from
any third party responsible for such damage or injury.

29. Estoppel. Tenant shall, from time to time, within ten (10) business days’
prior written request by Landlord, execute, acknowledge and deliver to Landlord
a written statement certifying that this Lease is unmodified and in full force
and effect (or, if there have been modifications, that the same is in full force
and effect as modified and stating the modifications), the dates to which the
Rent has been paid, that Tenant is not in Default hereunder, whether Tenant has
any offsets or defenses against Landlord under this Lease and whether or not to
the best of Tenant’s knowledge Landlord is in Landlord Default (defined in
Section 33 below) hereunder (and if so, specifying the nature of the Landlord
Default), and any other information reasonably requested by Landlord regarding
this Lease, it being intended that any such statement

 

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delivered pursuant to this paragraph may be relied upon by a prospective
purchaser of Landlord’s interest or by a mortgagee of Landlord’s interest or
assignee of any security deed upon Landlord’s interest in the Premises. If
Tenant fails to timely deliver to Landlord either (i) an executed estoppel
certificate or (ii) good faith comments to a proposed estoppel certificate and
thereafter fails again to deliver the same within five (5) business days after
delivery of a further request for same, the estoppel prepared by Landlord will
be irrevocably deemed true and correct and binding upon Tenant. Additionally,
Landlord shall, from time to time, upon not less than fifteen (15) days prior to
the request by Tenant, execute and deliver to Tenant a written statement
certifying that this Lease is unmodified and in full force and effect (or, if
there have been modifications, that the same is in full force and effect as
modified and stating the modifications), the dates to which Rent has been paid,
that Landlord is not in Landlord Default (defined in Section 33) hereunder and
whether to the best of Landlord’s knowledge Tenant is in Default hereunder (and
if so, specifying the nature of the Default), being it intended that any such
statement delivered by Landlord may be relied upon by a prospective subtenant,
or assignee of Tenant or an entity providing financing to Tenant.

30. Notices. Any notice which is required or permitted to be given by either
party under this Lease shall be in writing and must be given only by certified
mail, return receipt requested, by hand delivery or by nationally recognized
overnight courier service and sent (a) if to Landlord, to the addresses set
forth in Paragraph 13 of the Basic Lease Provisions and (b) if to Tenant, (i) to
the address set forth in Paragraph 13 of the Basic Lease Provisions or (ii) in
Landlord’s sole discretion, if sent after the Commencement Date, to the
Premises. Any such notice shall be deemed given on the earlier of two
(2) business days after the date sent in accordance with one of the permitted
methods described above or the date of actual receipt thereof (unless receipt
occurs on a weekend or holiday, in which case notice will be deemed given on the
next-succeeding business day) or refusal to accept delivery. Either party may
change its notice address set forth in Paragraph 13 of the Basic Lease
Provisions by notice to the other party in accordance with the terms of this
Section 30.

31. Default. The occurrence of any of the following events shall constitute a
default on the part of Tenant (“Default”) without notice from Landlord unless
otherwise provided:

(a) Payment. Failure to pay any installment of Base Rent, additional Rent or
other monies due and payable hereunder upon the date when said payment is due,
where such failure continues for a period of five (5) business days after
receipt by Tenant of written notice from Landlord of such failure to pay when
due (which notice shall be in lieu of, and not in addition to, any notice
required under California Code of Civil Procedure Section 1161 or any similar
successor statute) (a “Monetary Default”);

(b) Performance. Failure to perform any of Tenant’s covenants, agreements or
obligations hereunder (except default in the payment of Rent), where such
default continues for thirty (30) days after written notice thereof from
Landlord (which notice shall be in lieu of, and not in addition to, any notice
required under California Code of Civil Procedure Section 1161 or any similar
successor statute); provided, however, that if the nature of Tenant’s default
obligation is such that more than thirty (30) days are reasonably required for
its cure, then Tenant shall not be deemed to be in Default if Tenant shall
promptly commence such cure within such

 

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thirty (30) day period and thereafter continuously and diligently prosecute such
cure to completion;

(c) [INTENTIONALLY OMITTED];

(d) Assignment. A general assignment by Tenant for the benefit of creditors;

(e) Bankruptcy. The filing of a voluntary petition by Tenant or, unless removed
within ninety (90) days of filing, the filing of an involuntary petition by any
of Tenant’s creditors seeking the rehabilitation, liquidation or reorganization
of Tenant under any law relating to bankruptcy, insolvency or other relief of
debtors;

(f) Receivership. The appointment of a receiver or other custodian to take
possession of substantially all of Tenant’s assets or of the Premises or any
interest of Tenant therein;

(g) Insolvency or Dissolution. Tenant shall become insolvent or unable to pay
its debts, or shall fail generally to pay its debts as they become due; or any
court shall enter a decree or order directing the winding up or liquidation of
Tenant or of substantially all of its assets which is not vacated within ninety
(90) days after entry of an order; or Tenant shall take any action toward the
dissolution or winding up of its affairs or the cessation or suspension of its
use of the Premises; and

(h) Attachment. Attachment, execution or other judicial seizure of substantially
all of Tenant’s assets or the Premises or any interest of Tenant under this
Lease which is not vacated within ninety (90) days after entry of an order.

32. Landlord’s Remedies. Upon the occurrence of any Default under this Lease,
whether enumerated in Section 31 or not, Landlord shall have the option to
pursue any one or more of the following remedies without any notice (except as
expressly prescribed herein) or demand whatsoever (and without limiting the
generality of the foregoing, Tenant hereby specifically waives notice and demand
for payment of Rent or other obligations, except for those notices specifically
required pursuant to the terms of this Lease):

(a) Termination. Terminate this Lease and Tenant’s right to possession of the
Premises and recover from Tenant an award of damages equal to the sum of the
following:

(i) The Worth at the Time of Award of the unpaid Rent which had been earned at
the time of termination;

(ii) The Worth at the Time of Award of the amount by which the unpaid Rent which
would have been earned after termination until the time of award exceeds the
amount of such Rent loss that Tenant affirmatively proves could have been
reasonably avoided;

 

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(iii) The Worth at the Time of Award of the amount by which the unpaid Rent for
the balance of the Term after the time of award exceeds the amount of such Rent
loss that Tenant affirmatively proves could be reasonably avoided;

(iv) Any other amount necessary to compensate Landlord for all the detriment
either proximately caused by Tenant’s failure to perform Tenant’s obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom; and

(v) All such other amounts in addition to or in lieu of the foregoing as may be
permitted from time to time under applicable law.

The “Worth at the Time of Award” of the amounts referred to in parts (i) and
(ii), above, shall be computed by allowing interest at the Interest Rate. The
“Worth at the Time of Award” of the amount referred to in part (iii), above,
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus 1%;

(b) Continue Lease. Employ 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); provided that
notwithstanding Landlord’s exercise of the remedy described in California Civil
Code Section 1951.4 in respect of an event or events of default, at such time
thereafter as Landlord may elect in writing, Landlord shall have the right to
terminate this Lease and Tenant’s right to possession of the Premises and
recover an award of damages as provided above in Section 32(a).

(c) Acceptance Not Waiver. The subsequent acceptance of Rent hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of
any term, covenant or condition of this Lease, other than the failure of Tenant
to pay the particular Rent so accepted, regardless of Landlord’s knowledge of
such preceding breach at the time of acceptance of such Rent. No waiver by
Landlord of any breach hereof shall be effective unless such waiver is in
writing and signed by Landlord.

(d) Waiver of Redemption. TENANT HEREBY WAIVES ANY AND ALL RIGHTS CONFERRED BY
SECTION 3275 OF THE CIVIL CODE OF CALIFORNIA AND BY SECTIONS 1174 (c) AND 1179
OF THE CODE OF CIVIL PROCEDURE OF CALIFORNIA AND ANY AND ALL OTHER LAWS AND
RULES OF LAW FROM TIME TO TIME IN EFFECT DURING THE LEASE TERM OR THEREAFTER
PROVIDING THAT TENANT SHALL HAVE ANY RIGHT TO REDEEM, REINSTATE OR RESTORE THIS
LEASE FOLLOWING ITS TERMINATION BY REASON OF TENANT’S BREACH.

(e) Jury Trial. THE PARTIES HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
LAW, THE RIGHT TO TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF OR RELATING TO
THIS LEASE. IF THE JURY WAIVER PROVISIONS OF THIS SECTION 32(e) ARE NOT
ENFORCEABLE UNDER CALIFORNIA LAW, THEN THE FOLLOWING PROVISIONS SHALL APPLY. It
is the desire and intention of the parties to agree upon a mechanism and
procedure under which controversies and disputes

 

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arising out of this Lease or related to the Premises will be resolved in a
prompt and expeditious manner. Accordingly, except with respect to actions for
unlawful or forcible detainer or with respect to the prejudgment remedy of
attachment, any action, proceeding or counterclaim brought by either party
hereto against the other (and/or against its officers, directors, employees,
agents or subsidiaries or affiliated entities) on any matters whatsoever arising
out of or in any way connected with this Lease, Tenant’s use or occupancy of the
Premises and/or any claim of injury or damage, whether sounding in contract,
tort, or otherwise, shall be heard and resolved by a referee under the
provisions of the California Code of Civil Procedure, Sections 638 - 645.1,
inclusive (as same may be amended, or any successor statute(s) thereto) (the
“Referee Sections”). Any fee to initiate the judicial reference proceedings and
all fees charged and costs incurred by the referee shall be paid by the party
initiating such procedure (except that if a reporter is requested by either
party, then a reporter shall be present at all proceedings where requested and
the fees of such reporter – except for copies ordered by the other parties –
shall be borne by the party requesting the reporter); provided however, that
allocation of the costs and fees, including any initiation fee, of such
proceeding shall be ultimately determined in accordance with Section 38 below.
The venue of the proceedings shall be in the county in which the Premises are
located. Within ten (10) days of receipt by any party of a written request to
resolve any dispute or controversy pursuant to this Section 32(e), the parties
shall agree upon a single referee who shall try all issues, whether of fact or
law, and report a finding and judgment on such issues as required by the Referee
Sections. If the parties are unable to agree upon a referee within such ten
(10) day period, then any party may thereafter file a lawsuit in the county in
which the Premises are located for the purpose of appointment of a referee under
the Referee Sections. If the referee is appointed by the court, the referee
shall be a neutral and impartial retired judge with substantial experience in
the relevant matters to be determined, from Jams/Endispute, Inc., the American
Arbitration Association or similar mediation/arbitration entity. The proposed
referee may be challenged by any party for any of the grounds listed in the
Referee Sections. The referee shall have the power to decide all issues of fact
and law and report his or her decision on such issues, and to issue all
recognized remedies available at Law or in equity for any cause of action that
is before the referee, including an award of attorneys’ fees and costs in
accordance with this Lease. The referee shall not, however, have the power to
award punitive damages, nor any other damages which are not permitted by the
express provisions of this Lease, and the parties hereby waive any right to
recover any such damages. The parties shall be entitled to conduct all discovery
as provided in the California Code of Civil Procedure, and the referee shall
oversee discovery and may enforce all discovery orders in the same manner as any
trial court judge, with rights to regulate discovery and to issue and enforce
subpoenas, protective orders and other limitations on discovery available under
California law. The reference proceeding shall be conducted in accordance with
California law (including the rules of evidence), and in all regards, the
referee shall follow California law applicable at the time of the reference
proceeding. The parties shall promptly and diligently cooperate with one another
and the referee, and shall perform such acts as may be necessary to obtain a
prompt and expeditious resolution of the dispute or controversy in accordance
with the terms of this Section 32(e). In this regard, the parties agree that the
parties and the referee shall use best efforts to ensure that (a) discovery be
conducted for a period no longer than six (6) months from the date the referee
is appointed, excluding motions regarding discovery, and (b) a trial date be set
within nine (9) months of the date the referee is appointed. In accordance with
Section 644 of the California Code of Civil Procedure, the decision of the
referee upon the whole issue must stand

 

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as the decision of the court, and upon the filing of the statement of decision
with the clerk of the court, or with the judge if there is no clerk, judgment
may be entered thereon in the same manner as if the action had been tried by the
court. Any decision of the referee and/or judgment or other order entered
thereon shall be appealable to the same extent and in the same manner that such
decision, judgment, or order would be appealable if rendered by a judge of the
superior court in which venue is proper hereunder. The referee shall in his/her
statement of decision set forth his/her findings of fact and conclusions of law.
The parties intend this general reference agreement to be specifically
enforceable in accordance with the Code of Civil Procedure. Nothing in this
Section 32(e) shall prejudice the right of any party to obtain provisional
relief or other equitable remedies from a court of competent jurisdiction as
shall otherwise be available under the Code of Civil Procedure and/or applicable
court rules.

(f) Remedies Cumulative. No right or remedy herein conferred upon or reserved to
Landlord is intended to be exclusive of any other right or remedy, and each and
every right and remedy shall be cumulative and in addition to any other right or
remedy given hereunder or now or hereafter existing by agreement, applicable Law
or in equity. In addition to other remedies provided in this Lease, Landlord
shall be entitled, to the extent permitted by applicable Law, to injunctive
relief, or to a decree compelling performance of any of the covenants,
agreements, conditions or provisions of this Lease, or to any other remedy
allowed to Landlord at law or in equity. Forbearance by Landlord to enforce one
or more of the remedies herein provided upon an event of default shall not be
deemed or construed to constitute a waiver of such default.

(g) Landlord’s Right to Perform. If Tenant is in Default of any of its
non-monetary obligations under this Lease, Landlord shall have the right to
perform such obligations. Tenant shall reimburse Landlord for the cost of such
performance upon demand together with an administrative charge equal to five
percent (5%) of such cost.

(h) Unenforceability. This Section 32 shall be enforceable to the maximum extent
such enforcement is not prohibited by applicable Law, and the unenforceability
of any portion of this Section 32 shall not thereby render unenforceable any
other portion.

33. Landlord Default Landlord shall be considered to be in default in the
performance of any obligation to be performed by Landlord under this Lease if
(i) Landlord fails to perform any of its obligations hereunder and said failure
continues for a period of thirty (30) days after the date of delivery of written
notice of such failure; provided, however, that if such failure cannot
reasonably be cured within said thirty (30) day period (other than Landlord’s
payment of any monetary obligation to Tenant), Landlord shall be in default
thereunder only if Landlord fails to commence the cure of said failure as soon
as reasonably practicable under the circumstances, or fails diligently to pursue
the same to completion (but in no event later than sixty (60) days after the
date of delivery of Tenant’s notice of such failure); and (ii) each Holder of
whose identity Tenant has been notified in writing shall have failed to cure
such default within thirty (30) days (or such longer period of time as may be
specified in any written agreement between Tenant and such Holder regarding such
matter) after receipt of written notice from Tenant of Landlord’s failure to
cure within the time periods provided above (a “Landlord Default”). In the event
of a Landlord Default, Tenant shall use reasonable efforts to mitigate its

 

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damages and losses arising from any such Landlord Default and Tenant may pursue
any and all remedies available to it at law or in equity; provided, however, in
no event shall Tenant claim a constructive or actual eviction or that the
Premises have become unsuitable or unhabitable prior to a Landlord Default and
failure to cure by Landlord and its Holder under this Lease and, further, in no
event shall Tenant be entitled to terminate this Lease or receive more than its
actual direct damages arising from such Landlord Default, it being agreed that
Tenant hereby waives any claim it otherwise may have for special or
consequential damages or any damages attributable to loss of or interruption to
Tenant’s business operations. Except as otherwise expressly set forth in this
Section, no right or remedy herein conferred upon or reserved to Tenant is
intended to be exclusive of any other right or remedy, and each and every right
and remedy shall be cumulative and in addition to any other right or remedy
given hereunder or now or hereafter existing by agreement, applicable Law or in
equity. In addition to other remedies provided in this Lease, Tenant shall be
entitled, to the extent permitted by applicable Law, to injunctive relief, or to
a decree compelling performance of any of the covenants, agreements, conditions
or provisions of this Lease, or to any other remedy allowed to Tenant at law or
in equity. Forbearance by Tenant to enforce one or more of the remedies herein
provided upon an Landlord Default shall not be deemed or construed to constitute
a waiver of such Landlord Default.

34. Service of Notice Except as otherwise provided by law, Tenant hereby
appoints as its agent to receive the service of all dispossessory or distraint
proceedings and notices thereunder, the person in charge of or occupying the
Premises at the time of such proceeding or notice; and if no person is then in
charge of or occupying the Premises, then such service may be made by attaching
the same to the front entrance of the Premises.

35. Advertising. Landlord may advertise the Premises as being “For Rent” at any
time within one hundred eighty (180) days prior to the expiration, cancellation
or termination of this Lease for any reason, and during any such periods
Landlord may exhibit the Premises to prospective tenants upon prior reasonable
notice to Tenant. Landlord shall have the right to so exhibit the Premises
provided it complies with reasonable procedures established by Tenant.

36. Surrender of Premises. Whenever under the terms hereof Landlord is entitled
to possession of the Premises, Tenant at once shall surrender the Premises and
the keys thereto to Landlord. The Premises will be delivered in broom clean
condition and otherwise in the same condition as on the Commencement Date,
damage due to casualty and ordinary wear and tear associated with the
responsible use of first-class office space only excepted, and Tenant shall
remove all of its personal property therefrom and all Cable installed by or for
the benefit of Tenant and shall, to the extent required in accordance with the
provisions of this Lease and if directed to do so by Landlord, in accordance
with the provisions of Section 22, remove any Tenant Improvements or Alterations
and restore the Premises to its original condition prior to the construction of
such Tenant Improvements or Alterations which have been made therein by or on
behalf of Tenant. If Tenant previously performed Specialty Improvements
requiring Landlord’s consent pursuant to Section 22(a) above but for which
Tenant failed to procure Landlord’s consent (“Non-Approved Alterations”),
Landlord may, on or before the Expiration Date, require that Tenant remove all
or any of such Non-Approved Alterations if Landlord in good faith determines
that any of such items constitutes a Specialty Improvement. Landlord and

 

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Tenant will jointly tour the Premises prior to the Expiration Date in order to
create a schedule of Non-Approved Alterations. Landlord may forthwith re-enter
the Premises and repossess itself thereof and remove all persons and effects
therefrom, using such force as may be reasonably necessary without being guilty
of forcible entry, detainer, trespass or other tort. Tenant’s obligation to
observe or perform these covenants shall survive the expiration or other
termination of the Term.

37. Removal of Fixtures. Tenant may, prior to the expiration of the Term, or any
extension thereof, remove any trade fixtures and personal equipment which Tenant
has placed in the Premises which can be removed without significant damage to
the Premises, provided Tenant promptly repairs all damages to the Premises
caused by such removal. Unless otherwise approved in writing by Landlord in
Landlord’s sole and absolute discretion, CRAC units or other supplementary
server room cooling devices, additional transformers, computer and
telecommunications and sound system infrastructure, racks, plumbing lines and
sinks, millwork, built-in furniture and above standard lighting fixtures shall
in no event be deemed to be removable trade fixtures or personal equipment for
purposes of this Section 36.

38. Holding Over. In the event Tenant remains in possession of the Premises
after the expiration of the Term hereof, or any renewal term, without Landlord’s
written consent, Tenant shall be a tenant at sufferance and may be evicted by
Landlord without any notice, but Tenant shall be obligated to pay Base Rent for
such period that Tenant holds over without written consent at the rate of 150%
of the monthly Base Rent payable hereunder upon such expiration of the Term and
shall also be liable for any and all other damages Landlord suffers as a result
of such holdover including, without limitation, the loss of a prospective tenant
for such space. There shall be no renewal of this Lease by operation of law or
otherwise. Nothing in this Section 38 shall be construed as a consent by
Landlord for any holding over by Tenant after the expiration of the Term or to
prevent Landlord from immediate recovery of possession of the Premises by
summary proceedings or otherwise.

39. Attorneys’ Fees. In case Landlord shall, without fault on its part, be made
a party to any litigation commenced by or against Tenant, then Tenant shall pay
all costs, expenses and reasonable attorneys’ fees incurred or paid by Landlord
in connection with such litigation. In the event of any action, suit or
proceeding brought by Landlord or Tenant to enforce any of the other’s covenants
and agreements in this Lease, the prevailing party shall be entitled to recover
from the non-prevailing party any costs, expenses and reasonable attorneys’ fees
incurred in connection with such action, suit or proceeding. Without limiting
the generality of the foregoing, if Landlord utilizes the services of an
attorney for the purpose of collecting any Rent due and unpaid by Tenant or in
connection with any other breach of this Lease by Tenant following a written
demand of Landlord to pay such amounts or cure such breach, Tenant agrees to pay
Landlord reasonable actual attorneys’ fees as determined by Landlord for such
services, irrespective of whether any legal action may be commenced or filed by
Landlord.

40. Security Holder’s Rights.

(a) Landlord hereby represents that there is, as of the Effective Date, no
Holder of Security Document. Conditioned upon Tenant’s receipt of a
non-disturbance

 

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agreement, this Lease shall be subject and subordinate (i) to any ground lease,
mortgage, deed of trust or other security interest encumbering the Property
after the Effective Date and to all advances which may be hereafter made, to the
full extent of all debts and charges secured thereby and to all renewals or
extensions of any part thereof, and to any ground lease, mortgage, deed of trust
or other security interest which any owner of the Property may hereafter, at any
time, elect to place on the Property; (ii) to any assignment of Landlord’s
interest in the leases and rents from the Building or Property which includes
this Lease which now exists or which any owner of the Property may hereafter, at
any time, elect to place on the Property; and (iii) to any Uniform Commercial
Code Financing Statement covering the personal property rights of Landlord or
any owner of the Property which now exists or any owner of the Property may
hereafter, at any time, elect to place on the foregoing personal property (all
of the foregoing instruments set forth in (i), (ii) and (iii) above being
hereafter collectively referred to as “Security Documents”). Tenant agrees upon
request of the holder of any Security Documents (“Holder”) to hereafter execute
any documents which Landlord or Holder may reasonably deem necessary to evidence
the subordination of this Lease to the Security Documents. Tenant will either
execute or make good faith comments to any proposed Security Documents within
ten (10) business days following delivery of same to Tenant.

(b) In the event of a foreclosure pursuant to any Security Documents, Tenant
shall at the election of Landlord, thereafter remain bound pursuant to the terms
of this Lease as if a new and identical Lease between the purchaser at such
foreclosure (“Purchaser”), as landlord, and Tenant, as tenant, had been entered
into for the remainder of the Term hereof and Tenant shall attorn to the
Purchaser upon such foreclosure sale and shall recognize such Purchaser as the
Landlord under this Lease. Such attornment shall be effective and self-operative
without the execution of any further instrument on the part of any of the
parties hereto. Tenant agrees, however, to execute and deliver at any time and
from time to time, upon the request of Landlord or of Holder, any instrument or
certificate that may be necessary or appropriate in any such foreclosure
proceeding or otherwise to evidence such attornment.

(c) If the Holder of any Security Document or the Purchaser upon the foreclosure
of any of the Security Documents shall succeed to the interest of Landlord under
this Lease, such Holder or Purchaser shall have the same remedies, by entry,
action or otherwise for the non-performance of any agreement contained in this
Lease, for the recovery of Rent or for any other default hereunder that Landlord
had or would have had if any such Holder or Purchaser had not succeeded to the
interest of Landlord. Any such Holder or Purchaser which succeeds to the
interest of Landlord hereunder, shall not be (a) liable for any act or omission
of any prior Landlord (including Landlord); or (b) subject to any offsets or
defenses which Tenant might have against any prior Landlord (including
Landlord); or (c) bound by any Rent which Tenant might have paid for more than
the current month to any prior Landlord (including Landlord); or (d) bound by
any amendment or modification of the Lease made without its consent.

(d) Notwithstanding anything to the contrary set forth in this Section 40, the
Holder of any Security Documents shall have the right, at any time, to elect to
make this Lease superior and prior to its Security Document. No documentation,
other than written notice to Tenant, shall be required to evidence that this
Lease has been made superior and prior to such Security Documents, but Tenant
hereby agrees to execute any documents reasonably requested

 

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by Landlord or Holder to acknowledge that the Lease has been made superior and
prior to the Security Documents.

(e) Landlord will use reasonable efforts to obtain a subordination,
non-disturbance and attornment agreement from any future mortgagee on such
mortgagee’s then current standard form of agreement. “Reasonable efforts” of
Landlord shall not require Landlord to incur any cost, expense or liability to
obtain such agreement, it being agreed that Tenant shall be responsible for any
fee or review costs charged by the mortgagee. Landlord’s failure to obtain a
non-disturbance, subordination and attornment agreement for Tenant shall have no
effect on the rights, obligations and liabilities of Landlord and Tenant or be
considered to be a default by Landlord hereunder.

41. Entering Premises. Landlord may enter the Premises at reasonable hours,
provided that Landlord will use reasonable efforts not to unreasonably interrupt
Tenant’s business operations and that 24 hours’ prior notice (which notice may
be given by electronic mail or telephonically) is given (except that if in the
opinion of Landlord any emergency exists, such entry may be at any time and
without notice): (a) to make repairs, perform maintenance and provide other
services (no prior notice is required to provide routine services) which
Landlord is obligated to make to the Premises or the Building pursuant to the
terms of this Lease or to the other premises within the Building pursuant to the
leases of other tenants; (b) to inspect the Premises in order to confirm that
Tenant is complying with all of the terms and conditions of this Lease and with
the rules and regulations hereof, (c) to remove from the Premises any articles
or signs kept or exhibited therein in violation of the terms hereof; (d) to run
pipes, conduits, ducts, wiring, cabling or any other mechanical, electrical,
plumbing or HVAC equipment through the areas behind the walls, below the floors
or above the drop ceilings in the Premises and elsewhere in the Building; (e) to
show the Premises to prospective purchasers, lenders or, during the last 180
days of the Term, to tenants and (f) to exercise any other right or perform any
other obligation that Landlord has under this Lease. Landlord shall be allowed
to take all material into and upon the Premises that may be required to make any
repairs, improvements and additions, or any alterations, without in any way
being deemed or held guilty of trespass and without constituting a constructive
eviction of Tenant. The Rent reserved herein shall not abate while such repairs,
alterations or additions are being made and Tenant shall not be entitled to
maintain a set-off or counterclaim for damages against Landlord by reason of
loss from interruption to the business of Tenant or otherwise because of the
prosecution of any such work. Unless any work would unreasonably interfere with
Tenant’s use of the Premises if performed during business hours, all such
repairs, decorations, additions and improvements shall be done during ordinary
business hours, or, if any such work is at the request of Tenant to be done
during any other hours, Tenant shall pay all overtime and other extra costs.

42. Relocation. [INTENTIONALLY OMITTED]

43. Assignment and Subletting.

(a) Generally. Except as otherwise provided herein (including, without
limitation, in connection with a “Permitted Transfer” as defined in
Section 43(h) below), Tenant may not, without the prior written consent of
Landlord, which consent shall not be unreasonably

 

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withheld, conditioned or delayed, assign this Lease or any interest hereunder,
or sublet the Premises or any part thereof, or permit the use of the Premises by
any party other than Tenant. In the event that Tenant is a corporation or entity
other than an individual, any transfer of a majority or controlling interest in
Tenant (whether by stock transfer, merger, operation of law or otherwise), but
excluding transfers of stock over a recognized securities exchange) shall be
considered an assignment for purposes of this paragraph and shall require
Landlord’s prior written consent, except in connection with a Permitted
Transfer. Consent to one assignment or sublease shall not nullify or waive this
provision, and all later assignments and subleases other than Permitted
Transfers shall likewise be made only upon the prior written consent of
Landlord. Subtenants or assignees shall become liable to Landlord for all
obligations of Tenant hereunder (but in the case of a sublease, only to the
extent allocable to the sublessee pursuant to the sublease), without relieving
Tenant’s liability hereunder and, in the event of any Default by Tenant,
Landlord may, at its option, but without any obligation to do so, elect to treat
any sublease as a direct lease with Landlord and/or to collect rent payable
under the sublease directly from the subtenant.

(b) Transfer Notice. If Tenant desires to assign or sublease other than in
connection with a Permitted Transfer (“Transfer”), Tenant shall provide written
notice to Landlord describing the proposed transaction in detail (“Transfer
Notice”) and provide all documentation (including detailed financial information
for the proposed assignee or subtenant (a “Transferee”)) reasonably necessary to
permit Landlord to evaluate the proposed transaction, including without
limitation the following:

(i) the proposed effective date of the Transfer, which shall not be less than
thirty (30) days nor more than one hundred eighty (180) days after the date of
delivery of the Transfer Notice;

(ii) a description of the portion of the Premises to be transferred (the
“Subject Space”);

(iii) all of the terms of the proposed Transfer and the consideration therefor,
including a calculation of the “Transfer Premium,” as that term is defined in
Section 43(e) below, in connection with such Transfer, the name and address of
the proposed Transferee, and a copy of all existing and/or proposed
documentation pertaining to the proposed Transfer, including all existing
operative documents to be executed to evidence such Transfer or the agreements
incidental or related to such Transfer; and,

(iv) current financial statements of the proposed Transferee certified by an
officer, partner or owner thereof, and any other information required by
Landlord, which will enable Landlord to determine the financial responsibility,
character, and reputation of the proposed Transferee, nature of such
Transferee’s business and proposed use of the Subject Space, and such other
information as Landlord may reasonably require. Any Transfer made without
Landlord’s prior written consent or not in compliance with this Section 43
shall, at Landlord’s option, be null, void and of no effect, and shall, at
Landlord’s option, constitute an incurable default by Tenant under this Lease.

 

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(c) Landlord’s Options. Upon any request by Tenant for Landlord’s consent to a
Transfer, Landlord may elect to terminate this Lease and recapture all of the
Premises (in the event of an assignment request) or the Subject Space (in the
event of a subleasing request). Landlord shall notify Tenant within thirty
(30) days after Landlord’s receipt of the subject Transfer Notice (“Recapture
Notice”) and all other documentation and information required to be provided
pursuant to Section 43(b) above, whether Landlord intends to exercise Landlord’s
recapture right and, if not, whether Landlord consents to the requested
Transfer; in such event, Landlord’s consent to a Transfer will not be
unreasonably withheld, conditioned or delayed. Tenant may, no more than once in
any twelve (12) month period, withdraw its request for consent by notice
delivered to Landlord within five (5) business days after delivery of Landlord’s
Recapture Notice. The parties hereby agree that it shall be reasonable under
this Lease and under any applicable Law for Landlord to withhold consent to any
proposed Transfer where one or more of the following apply:

(i) The Transferee is of a character or reputation or engaged in a business
which is not consistent with the quality of the Building;

(ii) The Transferee intends to use the Subject Space for purposes which are not
permitted hereunder;

(iii) The Transferee is either a governmental agency or instrumentality thereof;

(iv) The Transfer will result in more than five (5) occupants per 1,000 square
feet of rentable area;

(v) The Transferee, in the case of a proposed assignment of Tenant’s interest in
this Lease, is not a party of reasonable financial worth and/or financial
stability in light of the responsibilities involved under this Lease on the date
consent is requested;

(vi) The proposed Transfer would cause Landlord to be in violation of another
lease or agreement to which Landlord is a party, or would give an occupant of
the Building a right to cancel or seek monetary or injunctive relieve under its
lease;

(vii) Except in the case of an assignment of Tenant’s interest in this Lease to
an Affiliate or Permitted Transferee (as said terms are defined in, and subject
to and in accordance with the terms of, Section 43(h) below), the terms of the
proposed Transfer will allow the Transferee to exercise any right of renewal,
right of expansion, right of first offer, or any other similar right held by
Tenant (or will allow the Transferee to occupy space leased by Tenant pursuant
to any such right);

(viii) Landlord has comparable space for lease in the Building at the time and
the proposed Transferee, (1) occupies space in the Building at the time of the
request for consent, (2) is actively negotiating with Landlord (i.e., the
parties are engaged in the exchange of term sheets) to lease space in the
Building at such time, or (3) has so negotiated with Landlord during the two
(2) month period immediately preceding the Transfer Notice; or

 

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(ix) The Transferee fails to execute Landlord’s reasonable standard form of
consent to assignment or subleasing.

(d) Landlord’s Consent. Tenant shall pay all reasonable costs incurred by
Landlord in preparing the documents for any requested Transfer, including but
not limited to Landlord’s attorneys’ fees, not to exceed $3,000.00, regardless
of whether Landlord consents to any such Transfer. If Landlord consents to any
Transfer pursuant to the terms of this Section 43, Tenant may within six
(6) months after Landlord’s consent, but not later than the expiration of said
six (6) month period, enter into such Transfer of the Subject Space, upon
substantially the same terms and conditions as are set forth in the Transfer
Notice furnished by Tenant to Landlord, provided that if there are any changes
in the terms and conditions from those specified in the Transfer Notice (i) such
that Landlord would initially have been entitled to refuse its consent to such
Transfer under this Section 43, or (ii) which would cause the proposed Transfer
to be more favorable to the Transferee than the terms set forth in Tenant’s
original Transfer Notice, Tenant shall again submit the Transfer to Landlord for
its approval and other action under this Section 43.

(e) Transfer Premium. If Landlord consents to any Transfer request and the
assignee or subtenant pays to Tenant an amount in excess of the Rent due under
this Lease (after deducting Tenant’s reasonable, actual expenses in obtaining
such assignment or sublease, amortized in equal monthly installments over the
then remainder of the Term, such expenses being limited to (i) any Alterations
to the subject space made in connection with the Transfer, or contributions to
the cost thereof (and any such Alterations shall be made only in compliance with
the applicable provisions of this Lease, including Section 22 above) and
(ii) any commercially reasonable brokerage commissions, reasonable attorneys’
fees and reasonable advertising and marketing costs reasonably incurred by
Tenant in connection with the Transfer) (“Transfer Premium”), Tenant shall pay
fifty percent (50%) of such Transfer Premium to Landlord as and when the monthly
payments are received by Tenant. “Transfer Premium” shall also include, but not
be limited to, key money and bonus money paid by the Transferee to Tenant in
connection with such Transfer, and any payment materially in excess of fair
market value for services rendered by Tenant to Transferee or for assets,
fixture, inventory, equipment or furniture transferred by Tenant to Transferee
in connection with such Transfer.

(f) No Releases. No Transfer or Permitted Transfer shall release or discharge
Tenant of or from any liability, whether past, present or future, under this
Lease, and Tenant shall continue to be fully liable hereunder. Each assignee of
Tenant’s interest in this Lease shall agree in a form reasonably satisfactory to
Landlord to comply with and be bound by all of the terms, covenants, conditions,
provisions and agreements of this Lease, and Tenant shall deliver to Landlord
promptly after execution, an executed copy of each such Transfer and an
agreement of compliance by each such assignee.

(g) Conditions. If Landlord consents to a Transfer, (i) the terms and conditions
of this Lease shall in no way be deemed to have been waived or modified,
(ii) such consent shall not be deemed consent to any further Transfer by either
Tenant or any Transferee, (iii) Tenant shall deliver to Landlord, promptly after
execution, an original executed copy of all documentation

 

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pertaining to the Transfer in form reasonably acceptable to Landlord,
(iv) Tenant shall furnish upon Landlord’s request a complete statement,
certified by an independent certified public accountant, or Tenant’s chief
financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, (v) any assignee
shall assume in writing all obligations and covenants of Tenant thereafter to be
performed or observed under this Lease, and (vi) no Transfer relating to this
Lease or agreement entered into with respect thereto, whether with or without
Landlord’s consent, shall relieve Tenant or any guarantor of this Lease from
liability under this Lease. Landlord or its authorized representatives shall
have the right at all reasonable times to audit the books, records and papers of
Tenant relating to the calculation of any Transfer Premium in connection with a
Transfer, and shall have the right to make copies thereof. If the Transfer
Premium respecting any Transfer shall be found understated, Tenant shall, within
thirty (30) days after demand, pay the deficiency and Landlord’s costs of such
audit.

(h) Affiliates; Permitted Transfers. Notwithstanding anything to the contrary
contained in this Section 43, Tenant may permit the use of the Premises by
persons employed by an Affiliate (defined below), and Tenant may assign its
interest in this Lease or sublet all or a portion of the Premises without the
need for Landlord’s prior consent (collectively, a “Permitted Transfer”) if such
assignment or sublease is to any parent, subsidiary or affiliate business entity
which the initially named Tenant controls, is controlled by or is under common
control with (each, an “Affiliate”) provided that: (i) if the transfer is an
assignment, the assignee assumes, in full, the obligations of Tenant under this
Lease; (ii) Tenant remains fully liable under this Lease; and (iii) the use of
the Premises set forth herein remains unchanged. Additionally, the term
Permitted Transfer shall include, without the need for Landlord’s prior consent,
any instance in which Tenant assigns its interest in this Lease or sublets all
or a portion of the Premises if such assignment or subleasing is to an entity
with whom Tenant merges or which purchases substantially all of the assets,
stock or other ownership interests of Tenant provided that (i) within thirty
(30) days following Permitted Transfer, Tenant delivers to Landlord the
financial statements or other financial and background information of the
assignee or sublessee as required for other Transfers; (ii) the Permitted
Transferee who is an assignee assumes, in full, the obligations of Tenant under
this Lease; (iii) the net worth of the assignee as of the time of the proposed
Transfer is sufficient to meet its obligations under this Lease. Each transferee
of a Permitted Transfer shall be a “Permitted Transferee”. As used in this
section, “control” (including, with its correlative meanings, “controlled by”
and “under common control with”) shall mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies through
ownership of at least fifty-one percent (51%) of the securities or partnership
or other ownership interests of the entity subject to control. Tenant agrees to
reasonably cooperate in responding to any reasonable inquiries of Landlord with
respect to any reasonable requests for information which are made in order to
allow Landlord to confirm compliance with this Section 43(h).

(i) Statutory Waiver. Notwithstanding anything to the contrary in this Lease, if
Tenant and/or any proposed Transferee asserts any claim against Landlord in
connection with the withholding or delay of its consent hereunder or otherwise
asserting that Landlord has breached this Section 42, their sole remedies shall
be a declaratory judgment and an injunction for the relief sought without any
monetary damages, and Tenant hereby waives all other remedies at law or in
equity, including, without limitation, the provisions of Section 1995.310 of the
California Civil

 

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Code, or any similar or successor Laws, now or hereafter in effect. Tenant shall
indemnify, defend and hold harmless Landlord from any and all liability, losses,
claims, damages, costs, expenses, causes of action and proceedings involving any
third party or parties (including without limitation Tenant’s proposed
Transferee) who claim they were damaged by Landlord’s withholding or
conditioning of Landlord’s consent.

(j) Prohibited Transaction. Notwithstanding anything to the contrary contained
in this Section 43, neither Tenant nor any other person having a right to
possess, use or occupy (for convenience, collectively referred to in this
subsection as “Use”) the Premises shall enter into any lease, sublease, license,
concession or other agreement for Use of all or any portion of the Premises
which provides for rental or other payment for such Use based, in whole or in
part, on the net income or profits derived by any person that Uses all or any
portion of the Premises (other than an amount based on a fixed percentage or
percentages of receipts or sales), and any such purported lease, sublease,
license, concession or other agreement shall be absolutely void and ineffective
as a transfer of any interest in or the right to the Use of all or any part of
the Premises.

44. Sale. In the event the original Landlord hereunder, or any successor owner
of the Building, shall sell or convey the Building, all liabilities and
obligations on the part of the original Landlord, or such successor owner, under
this Lease accruing thereafter shall terminate, and thereupon all such
liabilities and obligations shall be binding upon the new owner. Tenant agrees
to attorn to such new owner.

45. Limitation of Liability. Landlord’s obligations and liability with respect
to this Lease shall be limited solely to the lesser of (a) the interest of
Landlord in the Property, or (b) the equity interest Landlord would have in the
Property if the Property were encumbered by third party debt in an amount equal
to seventy percent (70%) of the value of the Property. Neither Landlord nor any
partner of Landlord, or any officer, director, shareholder, or partner or member
of any partner or member of Landlord, shall have any individual or personal
liability whatsoever with respect to this Lease.

46. Broker Disclosure.

(a) The Landlord’s Broker identified in the Basic Lease Provisions has acted as
agent for Landlord in this transaction and, if Tenant does not exercise the
Termination Option, is to be paid a commission by Landlord pursuant to a
separate agreement. The Tenant’s Broker identified in the Basic Lease Provisions
has acted as agent for Tenant in this transaction and if Tenant does not
exercise the Termination Option, is to be paid its commission out of Landlord’s
Broker’s commission pursuant to a separate agreement with Landlord’s Broker.
Landlord represents that Landlord has dealt with no other broker other than the
broker(s) identified herein. Landlord agrees that, if any other broker makes a
claim for a commission based upon the actions of Landlord, Landlord shall
indemnify, defend, protect and hold Tenant harmless from any such claim. Tenant
represents that Tenant has dealt with no broker other than the broker(s)
identified herein. Tenant agrees that, if any other broker makes a claim for a
commission based upon the alleged actions of Tenant, Tenant shall indemnify,
defend, protect and hold Landlord harmless from any such claim.

 

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(b) In addition, if Tenant does not exercise the Termination Option, Tenant
agrees to pay Landlord’s Broker the sum of $300,000.00 on or before April 15,
2010. If Tenant fails to timely pay such sum, Landlord shall have the right, but
not the obligation, to draw upon the Letter of Credit in the amount of
$300,000.00 to forward proceeds of such draw to Landlords Broker, in which
event, Tenant shall be required to reinstate the Letter of Credit Amount to
$1,356,111.25 within ten (10) days following the date of such draw.

47. Joint and Several. If there is more than one Tenant, the obligations imposed
upon Tenant under this Lease shall be joint and several.

48. Construction of this Agreement. No failure of either party to exercise any
power given such party hereunder, or to insist upon strict compliance by the
other party of its obligations hereunder, and no custom or practice of the
parties at variance with the terms hereof shall constitute a waiver of the
party’s right to demand exact compliance with the terms hereof. No amendment of
this Lease shall be valid unless the same is in writing and signed by the
parties. Subject to the provisions of Section 43, this Lease shall be binding
upon and inure to the benefit of the parties hereto and their respective legal
representatives, successors, and permitted assigns. This Lease shall be
construed in accordance with and governed by the laws of the State of
California. Nothing in this Lease creates any relationship between the parties
other than that of lessor and lessee and nothing in this Lease constitutes
Landlord a partner of Tenant or a joint venturer or member of a common
enterprise with Tenant.

49. No Estate In Land. This contract shall create the relationship only of
landlord and tenant between Landlord and Tenant; no estate shall pass out of
Landlord; Tenant has only a right of use, not subject to levy or sale, and not
assignable by Tenant except with Landlord’s consent.

50. Paragraph Titles; Severability. The paragraph titles used herein are not to
be considered a substantive part of this Lease, but merely descriptive aids to
identify the paragraph to which they refer. Use of the masculine gender includes
the feminine and neuter, and vice versa, where necessary to impart contextual
continuity. If any paragraph or provision herein is held invalid by a court of
competent jurisdiction, all other paragraphs or severable provisions of this
Lease shall not be affected thereby, but shall remain in full force and effect.

51. Cumulative Rights. All rights, remedies, powers and privileges conferred
upon Landlord under this Lease shall be cumulative with, and not restricted to,
those available to Landlord at law or in equity (all of which rights, remedies,
powers and privileges shall be distinct, separate and cumulative),

52. Entire Agreement. This Lease contains the entire agreement of the parties
and no representations, inducements, promises or agreements, oral or otherwise,
between the parties not embodied herein shall be of any force or effect.

53. Submission of Agreement. Submission of this Lease to Tenant for signature
does not constitute a reservation of space or an option to acquire a right of
entry. This Lease is not binding or effective until execution by and delivery to
both Landlord and Tenant.

 

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54. Authority. If Tenant or Landlord executes this Lease as a corporation,
limited partnership, limited liability company or any other type of entity, each
entity hereby represents and warrants that Tenant or Landlord, as the case may
be, is a duly organized and validly existing corporation, limited partnership,
limited liability company or other type of entity, that Tenant or Landlord, as
the case may be, is qualified to do business in the state where the Building is
located, that Tenant or Landlord, as the case may be, has full right, power and
authority to enter into this Lease, and that each person signing on behalf of
Tenant or Landlord, as the case may be, is authorized to do so. Upon Landlord’s
or Tenant’s request, as the case may be, the requested party shall provide to
the requesting party evidence reasonably satisfactory to the requesting party
confirming the foregoing representations and warranties.

55. Options.

(a) Termination Option.

(i) Generally. Tenant shall have the one-time right to terminate this Lease
(“Termination Option”), with respect to the entire Premises only, effective as
of March 15, 2010 (the “Early Termination Date”), provided that:

(A) Tenant is not in Default hereunder as of the date Tenant provides Landlord
with a Termination Notice (hereinafter defined); and

(B) no part of the Premises is subleased for a term extending past the Early
Termination Date; and

(C) as of the date Tenant delivers its Termination Notice, no portion of the
Allowance (defined in the Work Agreement) has been funded;

(D) as of the date Tenant delivers its Termination Notice, Tenant has not
commenced any construction work in the Premises (inclusive of any demolition);

(E) Landlord receives irrevocable notice of exercise of the Termination Option
(“Termination Notice”) on or before March 15, 2010.

(ii) Termination Fee; Return of Pre-Paid Rent. If Tenant timely exercises the
Termination Option, Tenant shall pay to Landlord, as a fee (in connection with,
and as a condition precedent to the effectiveness of Tenant’s exercise of, the
Termination Option and not as a penalty) equal to $1,500,000.00 (the
“Termination Fee”), which Termination Fee shall be payable through the mechanism
of Landlord’s draw on the Letter of Credit, subject to the provisions of the
following paragraph; and Landlord shall return all pre-paid Rent to Tenant
within five (5) days of Landlord’s receipt of the Termination Fee.

If Tenant timely exercises the Termination Option, Landlord shall promptly draw
down upon the Letter of Credit to fund the Termination Fee and Tenant will have
no obligation to fund additional amounts towards payment of the Termination Fee
so long as the Issuing Bank timely

 

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funds the draw upon the Letter of Credit in the full amount of the Termination
Fee. If for any reason the Termination Fee is not so funded by the Landlord’s
draw upon the Letter of Credit, Landlord will promptly notify tenant and Tenant
will fund any remaining portion of the Termination Fee within ten (10) days
following delivery of Landlord’s notice. Notwithstanding Tenant’s payment of the
Termination Fee and the termination of this Lease as described herein, Tenant
shall remain liable for any sums due under this Lease, if any, up to and
including the Early Termination Date even though billings for such may occur
subsequent to the Early Termination Date.

(iii) Effect on Extension/Expansion Rights. As of the date Tenant provides
Landlord with a Termination Notice, any unexercised rights or options of Tenant
to renew the Term of this Lease or to expand the Premises (whether expansion
options, rights of first or second refusal, rights of first or second offer, or
other similar rights), and any outstanding tenant improvement allowance not
claimed and properly utilized by Tenant in accordance with this Lease as well as
Tenant’s rights to perform work in or about the Premises pursuant to this Lease
(inclusive of the Work Agreement) shall immediately be deemed terminated and no
longer available or of any further force or effect.

(b) Right of First Offer.

(i) Generally. Tenant shall have a continuing right of first offer (the “Right
of First Offer”) with respect to Available (defined below) space located on the
fifth (5th) floor of the Building (all or any portion of which is referred to
herein as “ROFO Space”) for a term that is the greater of (A) the remainder of
then-applicable Term and (B) three (3) years.

(ii) ROFO Interest Notice. Landlord shall notify Tenant if any portion of the
ROFO Space is expected to become Available during the period which commences no
earlier than ten (10), and no later than twelve (12), full calendar months
following the dates of such notice (“Landlord’s Availability Notice”);
Landlord’s Availability Notice will set forth the location and configuration of
any such ROFO Space, the date upon which such ROFO Space is anticipated to
become Available and the terms upon which Landlord proposes to lease such ROFO
Space to Tenant (i.e., Landlord’s good faith estimate of the Fair Market Rent
for such ROFO Space), as well as any improvement allowance Landlord is willing
to provide for such space. If Tenant desires to lease any ROFO Space which
Landlord has included as Available in Landlord’s Availability Notice, and
provided the conditions described in Section 55(b)(iv) below are satisfied,
Tenant shall have fifteen (15) business days following delivery of Landlord’s
Availability Notice in which to provide Landlord with a notice exercising the
Right of First Offer with respect to all (but not a portion) of one or more
specific ROFO Spaces described in Landlord’s Availability Notice (a “ROFO
Exercise Notice”).

(iii) Deemed Available. ROFO Space shall be deemed Available if (i) the existing
tenant in such space is expected to actually vacate the space and (ii) Landlord
is not contemplating negotiating a renewal of the existing tenant’s lease for
such space.

 

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(iv) Conditions. Notwithstanding any other provision of this Section 55(b) to
the contrary, the Right of First Offer shall be available to Tenant if and only
if each of the following conditions are satisfied:

(1) Tenant is not in Default on the date that any Landlord’s Availability Notice
is delivered;

(2) Tenant (without reference to any subtenants other than those which qualify
under Section 43(h)) is in occupancy of at least 70% of the then-applicable
rentable area of the Premises pursuant to this Lease (the “ROFO Occupancy
Threshold”) at the time of Tenant’s exercise of the Right of First Offer;

(3) Tenant has not assigned its interest in this Lease (other than pursuant to
the provisions of Section 43(h)) at the time of Tenant’s exercise of the Right
of First Offer.

(v) Condition of ROFO Space. If Tenant exercises the Right of First Offer,
Landlord shall deliver the applicable ROFO Space to Tenant in its then “as
built” condition and configuration (the date of such delivery being referred to
as the “ROFO Delivery Date”).

(vi) Term; Rent Commencement. The term for any ROFO Space shall commence on the
applicable ROFO Delivery Date and will continue for the longer of (A) the
then-remaining term and (B) a period of three (3) years following the ROFO
Delivery Date. Any such ROFO Space shall be subject to all the terms and
conditions of this Lease, except that (i) no allowances, credits, abatements or
other concessions (if any) set forth in this Lease shall apply to the ROFO Space
and (ii) the Base Rent rate per square foot for any ROFO Space shall be the rate
set forth in the applicable Landlord’s Availability Notice.

(vii) ROFO Amendment. If Tenant is entitled to and properly exercises the Right
of First Offer, then upon the determination of the Base Rent for the ROFO Space,
Landlord shall prepare an amendment (the “ROFO Amendment”) to reflect the
commencement date of the term for the applicable ROFO Space and the Base Rent,
Base Year, rentable area of the Premises, applicable Tenant’s Share and other
appropriate terms. Tenant shall execute (or make good faith comments to) and
return the ROFO Amendment to Landlord within fifteen (15) business days after
Tenant’s receipt of same, but an otherwise valid exercise of the Right of First
Offer shall be fully effective whether or not the ROFO Amendment is executed and
delivered.

(viii) Tenant’s Failure to Exercise ROFO. Notwithstanding the foregoing, if
following delivery of Landlord’s Availability Notice with respect to any ROFO
Space, Tenant does not timely exercise the Right of First Offer with respect to
any space described in Landlord’s Availability Notice, then, Landlord shall be
free to negotiate and enter into leases for such ROFO Space with any other
parties of its choosing, upon such terms and conditions as it chooses, with no
obligation to Tenant unless Tenant again delivers a ROFO Interest Notice to
Landlord.

 

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(c) Option to Renew.

(i) Grant of Option(s); Conditions. Landlord hereby grants to Tenant the option
to extend the Term with respect to all of the Premises (the “Renewal Option”)
for two (2) additional periods of five (5) years each (each, a “Renewal Term”)
on the same terms and conditions set forth in this Lease, except that (x) the
Base Rent during any Renewal Term shall be as set forth below, and (y) Tenant
shall accept the Premises in their “AS IS” condition as of the commencement of
any Renewal Term, subject to all of the following conditions:

(1) Landlord receives irrevocable notice of exercise (“Renewal Notice”) no
earlier than fifteen (15) full calendar months and no later than twelve
(12) full calendar months, prior to the Expiration Date (or the date of
expiration of the first Renewal Term, as applicable); and

(2) Tenant is not in Default at the time that Tenant delivers its Renewal
Notice;

(3) Tenant (and not any subtenants) occupy at least seventy-five percent
(75%) of the then-rentable area of the Premises as of the date Tenant delivers
its Renewal Notice; and

(4) Tenant’s interest in this Lease has not been assigned (other than pursuant
to Section 43(h)) prior to the date that Tenant delivers its Renewal Notice.

(ii) Base Rent Payable During Renewal Term; Base Year. The Base Rent rate for
the Renewal Premises during the Renewal Term shall equal the Fair Market Rate
(hereinafter defined) per rentable square foot for the Premises determined as
described below and the Base Year will be the calendar year in which the Renewal
Term commences.

(iii) Renewal Amendment. If Tenant is entitled to and properly exercises a
Renewal Option, Landlord shall prepare an amendment (the “Renewal Amendment”) to
reflect changes in the Base Rent, Base Year, Term, Expiration Date and other
appropriate terms. Tenant shall execute (or make good faith comments to) and
return the Renewal Amendment to Landlord within fifteen (15) Business Days after
Tenant’s receipt of same, but an otherwise valid exercise of the Renewal Option
shall be fully effective regardless of whether the Renewal Amendment is actually
executed.

(iv) Procedure for Determining Fair Market Rent; Definition of Fair Market Rent.
Fair Market Rent will be determined as follows:

(1) Landlord’s Fair Market Rent Notice. Promptly following Landlord’s receipt of
Tenant’s Initial Renewal Notice, Landlord shall initially advise Tenant of
Landlord’s good faith determination of the Fair Market Rate for the Renewal Term
(“Landlord’s FMR Notice”).

 

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(2) Negotiation Period. For the thirty (30) day period following delivery of
Landlord’s FMR Notice (the “Negotiation Period”), Landlord and Tenant shall work
together in good faith in an effort to agree upon the Fair Market Rent for the
Premises. Notwithstanding the foregoing, if Landlord and Tenant fail to agree
upon the Fair Market Rent prior to the expiration of the Negotiation Period,
failing which the Fair Market Rent will be determined in accordance with the
arbitration procedures set forth below.

(d) Arbitration Procedure.

(i) Within five (5) days after the date of expiration of the Negotiation Period,
Landlord and Tenant shall each simultaneously submit to the other, in a sealed
envelope, its good faith estimate of the Fair Market Rent for the Premises
(collectively referred to as the “Estimates”). If the higher of such Estimates
is not more than 105% of the lower of such Estimates, then Fair Market Rent
shall be the average of the two Estimates. If the Fair Market Rent is not
resolved by the exchange of Estimates, then, within fourteen (14) days after the
exchange of Estimates, Landlord and Tenant shall each select a real estate
broker to determine which of the two Estimates most closely reflects the Fair
Market Rent. Each such real estate broker so selected shall have had at least
the immediately preceding ten (10) years’ experience as a real estate broker
leasing first-class office space in the San Francisco financial district, with
working knowledge of current rental rates and practices.

(ii) Upon selection, Landlord’s and Tenant’s brokers shall work together in good
faith to agree upon which of the two Estimates most closely reflects the Fair
Market Rent for the Premises. The Estimate chosen by the brokers shall be
binding on both Landlord and Tenant. If either Landlord or Tenant fails to
appoint a broker within the fourteen (14) day period referred to above, the
broker appointed by the other party shall be the sole broker for the purposes
hereof. If the two brokers cannot agree upon which of the two Estimates most
closely reflects the applicable Fair Market Rent within twenty (20) days after
their appointment, then, within fourteen (14) days after the expiration of such
twenty (20) day period, the two brokers shall select a third broker meeting the
aforementioned criteria. Once the third broker (the “Arbitrator”) has 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 or her
determination of which of the two Estimates most closely reflects the Fair
Market Rent and such Estimate shall be binding on both Landlord and Tenant. The
parties shall share equally in the costs of the Arbitrator. Any fees of any
appraiser, counsel or experts engaged directly by Landlord or Tenant, however,
shall be borne by the party retaining such appraiser, counsel or expert.

(e) Definition of Fair Market Rent. For purposes hereof, “Fair Market Rent”
shall mean the fair market rental rate for lease transactions for comparable
space in premier “Class A” office buildings in the San Francisco financial
district. In determining the Fair Market Rent, all relevant factors will be
taken into consideration, including without limitation, the applicable lease
term, base year, lease rates, escalations, the then-existing condition of the
space in question (i.e., existing improvements within the space used in
comparison and within the subject space), the condition of the applicable
property and the views

 

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afforded by the space in question as well as improvement allowances, free rent
and other concessions then offered in the relevant market.

56. OFAC and Anti-Money Laundering Compliance Certifications. Tenant hereby
represents, certifies and warrants to Landlord as follows: (i) Tenant is not
named and is not acting, directly or indirectly, for or on behalf of any person,
group, entity or nation named by any Executive Order, including without
limitation Executive Order 13224, or the United States Treasury Department as a
terrorist, “Specially Designated National and Blocked Person,” or other banned
or blocked person, entity, nation or transaction pursuant to any law, order,
rule or regulation that is enacted, enforced or administered by the Office of
Foreign Assets Control (“OFAC”); (ii) Tenant is not engaged in this transaction,
directly or indirectly, for or on behalf of, or instigating or facilitating this
transaction, directly or indirectly on behalf of, any such person, group, entity
or nation; and (iii) none of the proceeds used to pay rent have been or will be
derived from a “specified unlawful activity” as defined in, and Tenant is not
otherwise in violation of, the Money Laundering Control Act of 1986, as amended,
or any other applicable laws regarding money laundering activities. Furthermore,
Tenant agrees to immediately notify Landlord if Tenant was, is, or in the future
becomes, a “senior foreign political figure” or an immediate family member or
close associate of a “senior foreign political figure,” within the meaning of
Section 312 of the USA PATRIOT Act of 2001. Notwithstanding anything in this
Lease to the contrary, Tenant understands that this Lease is a continuing
transaction and that the foregoing representations, certifications and
warranties are ongoing and shall be and remain true and in force on the date
hereof and throughout the Term of this Lease and that any breach thereof shall
be a Default (not subject to any notice or cure rights) giving rise to any and
all Landlord remedies hereunder, and Tenant hereby agrees to defend, indemnify
and hold harmless Landlord from and against any and all claims, damages, losses,
risks, liabilities, fines, penalties, forfeitures and expenses (including
without limitation costs and attorneys’ fees) arising from or related to any
breach of the foregoing representations, certifications and warranties.

57. Counterparts; Telecopied or Electronic Signatures. This Lease may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which, together, shall constitute one and the same
instrument. In order to expedite the transaction contemplated herein, telecopied
signatures or signatures transmitted by electronic mail in so-called “pdf”
format may be used in place of original signatures on this Lease. Landlord and
Tenant intend to be bound by the signatures on the telecopied or e-mailed
document, are aware that the other party will rely on the telecopied or e-mailed
signatures, and hereby waive any defenses to the enforcement of the terms of
this Lease based on such telecopied or e-mailed signatures. Promptly following
request by either party, the other party shall provide the requesting party with
original signatures on this Lease.

 

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IN WITNESS WHEREOF, Landlord and Tenant have executed this instrument as of the
date set forth on the first page hereof.

 

LANDLORD:    PPF OFF 345 SPEAR STREET, LP, a Delaware limited partnership    By:
  

PPF OFF, GP, LLC

a Delaware limited liability company, its general partner

      By:   

PPF OFF, LLC

a Delaware limited liability company, its member

         By:   

PPF OP, LP,

a Delaware limited partnership, its member

            By:   

PPF OPGP, LLC,

a Delaware limited liability company, its general partner

               By:   

PRIME PROPERTY FUND, LLC,

a Delaware limited liability company, its member

                  By:   

MORGAN STANLEY REAL ESTATE

ADVISOR, INC., its manager

                     By:   

/s/ Keith Fink

                     Name:   

Keith Fink

                     Title:   

Executive Director

  

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

 

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TENANT:

MEDIVATION, INC.,

a Delaware corporation

  By:  

/s/ C.P. Machado

Name:   C.P. Machado Title:   CFO By:  

 

Name:  

 

Title:  

 

 

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EXHIBIT “A”

PREMISES

LOGO [g61660g49x68.jpg]

 

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EXHIBIT “B”

WORK AGREEMENT

THIS WORK AGREEMENT (“Work Agreement”) is attached to and made a part of that
certain Lease (the “Lease”) between PPF OFF 345 SPEAR STREET, LP, a Delaware
limited partnership (“Landlord”), and MEDIVATION, INC., a Delaware corporation
(“Tenant”). All capitalized terms used but not defined herein shall have the
respective meanings given such terms in the Lease. This Work Agreement shall set
forth the terms and conditions relating to Tenant’s construction of the Tenant
Improvements in, the Premises.

SECTION 1

TENANT IMPROVEMENTS

1.1 Construction of Tenant Improvements. The “Tenant Improvements” shall consist
of any and all improvements and work required to improve the Premises for
Tenant’s occupancy. The Tenant Improvements shall be undertaken and prosecuted
in accordance with the following requirements:

1.1.1 The Tenant Improvements shall be designed and constructed by Tenant in
accordance with the Approved Working Drawings (defined below) and the terms of
this Work Agreement. Tenant shall abide by the reasonable written rules
established by Landlord or Landlord’s property manager with respect to the
construction of the Tenant Improvements in the Building, the use of freight,
loading dock and service areas, storage of materials, coordination of work with
the contractors of other tenants. Other than the fees of Landlord’s construction
manager, as set forth in Section 1.7.1 below, there shall be no charge to Tenant
for the use of freight, loading dock and service areas or storage of materials,
or coordination of work, except to the extent Tenant’s work schedule requires
Landlord to incur overtime charges. All construction drawings (defined below)
prepared by the Architect (defined below) shall follow Landlord’s commercially
reasonable CAD standards and requirements, which standards and requirements
shall be provided to Tenant or the Architect upon request.

1.1.2 The Tenant Improvements shall be undertaken and performed at all times in
accordance with all state, federal and local laws, regulations and ordinances,
including without limitation all OSHA and other safety laws and with all
applicable rules, orders, regulations and requirements of the California Board
of Fire Underwriters and the California Fire Insurance Rating Organization or
any similar body.

1.1.3 Tenant shall deliver to Landlord a copy of the final application for
permit and issued permit for the construction of the Tenant Improvements prior
to commencement of construction, if the nature of the Tenant Improvements
requires such a permit; in order to determine whether all or any portion of the
Tenant Improvements require the issuance of a construction permit, the Approved
Working Drawings will be submitted to the City of San Francisco (“City”) in
order allow City to determine whether a permit is required. Prior to the
commencement of construction of any portion of the Tenant Improvements, Tenant
shall have

 

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procured and paid for and exhibited to Landlord all required permits, approvals
and authorizations of all applicable governmental authorities. Landlord will use
reasonable efforts to cooperate with Tenant in Tenant’s efforts to procure
applicable construction permits.

1.1.4 Contractor (defined below) as well as all subcontractors, laborers,
materialmen, and suppliers used by Tenant for the Tenant Improvements (such
subcontractors, laborers, materialmen, and suppliers, and Contractor, referred
to herein collectively as “Tenant’s Agents”) shall comply with Landlord’s
written guidelines generally imposed on third party contractors including
without limitation all insurance coverage requirements and the obligation to
furnish appropriate certificates of insurance to Landlord prior to commencement
of construction. Contractor and each of its subcontractors shall guarantee to
Tenant and for the benefit of Landlord that the portion of the Tenant
Improvements for which it is responsible shall be free from any defects in
workmanship and materials for a period of not less than one (1) year from the
date of completion thereof. Each of Tenant’s Agents shall be responsible for the
replacement or repair, without additional charge, of all work done or furnished
in accordance with its contract that shall become defective within one (1) year
after the completion of the work performed by such contractor or subcontractors.
The correction of such work shall include, without additional charge, all
additional expenses and damages incurred in connection with such removal or
replacement of all or any part of the Tenant Improvements, and/or the Building
and/or common areas that may be damaged or disturbed thereby. All such
warranties or guarantees as to materials or workmanship of or with respect to
the Tenant Improvements shall be contained in the applicable contract or
subcontract and shall be written such that such guarantees or warranties shall
inure to the benefit of both Landlord and Tenant, as their respective interests
may appear, and can be directly enforced by either. Tenant shall give to
Landlord any assignment or other assurances that may be necessary to effect such
right of direct enforcement.

1.1.5 Tenant and Contractor shall use commercially reasonable efforts to hold
weekly job meetings and shall provide Landlord with reasonable advance notice of
such meetings; Landlord’s construction manager will attend such meetings. Said
meetings may be attended by parties telephonically. Landlord’s construction
manager will use commercially reasonable effort to cooperate with Contractor and
Tenant to facilitate efficient completion of the Tenant Improvements.

1.1.6 All of the relevant provisions of the Lease shall apply to any activity of
Tenant, its agents and contractors, in the Premises during the construction of
the Tenant Improvements.

1.1.7 It shall be the responsibility of Tenant and Tenant’s contractors to
remove all trash and debris from the Premises on a regular basis and to break
down all boxes and place all such trash and debris in the containers supplied
for that purpose. If trash and debris are not removed on a regular basis by
Tenant or Tenant’s contractors, then Landlord shall have the right to remove
such trash and debris or have such trash and debris removed at the sole cost and
expense of Tenant by deduction from the Allowance. A dedicated construction-only
roll-off container may be required, at Landlord’s election.

 

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1.1.8 Following completion of the Tenant Improvements, Tenant shall cause any
necessary Notice of Completion to be recorded in the office of the Recorder of
San Francisco County in accordance with Section 3093 of the California Civil
code or any successor statute, shall furnish a copy thereof to Landlord upon
such recordation, and shall timely give all notices required pursuant to
Section 3259.5 of the California Civil Code or any successor statute and will
provide to Landlord:

(a) as-built drawings of the Premises signed by Architect; Tenant shall cause
the Architect and Contractor to update the Approved Working Drawings as
necessary to reflect all changes made to the Approved Working Drawings during
the course of construction and a certificate, in a form reasonably acceptable to
Landlord, from Architect certifying that the construction of the Tenant
Improvements have been substantially completed;

(b) CAD files of the improved space compatible with Landlord’s CAD standards;

(c) a final punchlist signed by Tenant;

(d) final and unconditional lien waivers from all contractors and
subcontractors;

(e) signed copies of the permit or job card indicating passing of the final
inspection; and

(f) a copy of all warranties, guaranties, and operating manuals and information
relating to the Tenant Improvements.

The foregoing materials are referred to herein collectively as the “Close-out
Package”. Should Tenant fail to provide complete CAD files compatible with
Landlord’s standards as required herein, Landlord may cause its architect to
prepare same and the cost thereof shall be reimbursed to Landlord by Tenant as
additional Rent under the Lease within thirty (30) days of invoice therefor.

1.2 Preparation and Approval of Construction Drawings.

1.2.1 Selection of Architect/Construction Drawings. Tenant shall retain an
architect approved in writing by Landlord (such approval not to be unreasonably
withheld, conditioned or delayed) to prepare the Construction Drawings (the
“Architect”). Tenant shall retain the engineering consultants designated by
Landlord (the “Building Consultants”) and to prepare all plans and engineering
working drawings relating to the structural, mechanical, electrical, plumbing,
HVAC, life-safety, sprinkler and riser work; provided that such consultants will
charge commercially competitive rates for consultants of similar skill and
experience. The following are the engineering consultants designated by
Landlord:

 

Structural:    Murphy Burr Curry, Inc. David Murphy @ 415 546-0431 MEP:   

Anderson, Rowe & Buckley, Inc. Bob Buckley @ 415 282-1625

Randall Lamb Chris Lloyd @ 415 512-9771 (Electrical)

 

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Life Safety:    Diversified Fire Products Tom Sammons @ 510 588-3100 Sprinkler:
   Superior Automatic Sprinkler Company Rob Canepa @ 408 946-7272 Air Balancing:
   RSAnalysis, Inc. Tony Tamburini @ 916 358-5672 Riser Management:   
Montgomery Technologies Glen Carolo @ 415 277-7400

The plans and drawings to be prepared by Architect and the Engineers hereunder
shall be referred to collectively as the “Construction Drawings”. Tenant and
Architect shall verify, in the field, the dimensions and conditions of the
Premises, and Tenant and Architect shall be solely responsible for the same, and
Landlord shall have no responsibility in connection therewith. Landlord’s review
of the Construction Drawings as set forth herein shall not imply Landlord’s
review of the same for quality, design, Code compliance or other like matters.
Accordingly, notwithstanding that any Construction Drawings are reviewed by
Landlord or its space planner, architect, engineers and consultants, and
notwithstanding any advice or assistance which may be rendered to Tenant by
Landlord or Landlord’s space planner, architect, engineers, and consultants,
Landlord shall have no liability whatsoever in connection therewith and shall
not be responsible for any omissions or errors contained in the Construction
Drawings.

1.2.2 Space Plan. Tenant shall supply Landlord with four (4) copies of its final
space plan for each floor of the Premises, each signed by Architect and approved
by Tenant. The final space plans (collectively, the “Space Plan”) shall include
a layout and designation of all offices, rooms and other partitioning, their
intended use, and equipment to be contained therein. Landlord may request
clarification or more specific drawings for special use items not included in
the Final Space Plan. Landlord’s approval of Tenant’s draft Space Plan shall not
be unreasonably withheld, conditioned or delayed. Landlord shall respond to
Tenant’s submission of the draft Space Plan within ten (10) business days
following Tenant’s submission, and Landlord’s failure to respond within such
time shall be a Landlord Delay (defined in Section 1.8.7 below). If Landlord
disapproves Tenant’s Space Plan, Landlord shall specify in reasonable detail,
within such ten (10) business day period, the basis of such disapproval and the
changes necessary to obtain Landlord’s approval of the Space Plan. Thereafter,
Tenant may revise and re-submit its draft Space Plan to Landlord, which Landlord
will review and respond to within ten (10) business days, and Landlord’s failure
to respond within such time shall be a Landlord Delay. This process shall
continue until the Space Plan has been approved in writing by Landlord.

1.2.3 Final Working Drawings. After the Space Plan has been approved by
Landlord, Tenant shall supply the Building Consultants with a complete listing
of standard and non-standard equipment and specifications, including, without
limitation, B.T.U. calculations, electrical requirements and special electrical
receptacle requirements for the Premises, to enable the Building Consultants and
the Architect to complete the Final Working Drawings (defined below) in the
manner as set forth below. Tenant shall cause Architect to compile a fully
coordinated set of architectural, structural, mechanical, electrical and
plumbing working drawings in a form which is sufficiently complete to allow
subcontractors to bid on the work and to obtain all applicable permits
(collectively, the “Final Working Drawings”) and shall submit

 

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the same to Landlord for Landlord’s approval, not to be unreasonably withheld,
conditioned or delayed. Tenant shall supply Landlord with four (4) copies of
such Final Working Drawings, each signed by Architect and approved by Tenant.
Landlord’s approval of Tenant’s Final Working Drawings shall not be unreasonably
withheld, conditioned or delayed. Landlord shall respond to Tenant’s submission
of the Final Working Drawings within ten (10) business days following Tenant’s
submission, and Landlord’s failure to respond within such time shall be a
Landlord Delay. If Landlord disapproves Tenant’s Final Working Drawings,
Landlord shall specify in reasonable detail, within such ten (10) business day
period, the basis of such disapproval and the changes necessary to obtain
Landlord’s approval of the Final Working Drawings. Thereafter, Tenant may revise
and re-submit its draft Final Working Drawings to Landlord, which Landlord will
review and respond to within ten (10) business days, and Landlord’s failure to
respond within such time shall be a Landlord Delay. This process shall continue
until the Final Working Drawings have been approved in writing by Landlord.

1.2.4 Permits. The Final Working Drawings as approved by Landlord, including any
changes thereto approved by Landlord (to the extent Landlord’s approval is
required hereunder), are referred to herein as the “Approved Working Drawings”.
After approval of the Approved Working Drawings, Tenant may submit the same to
the appropriate municipal authorities for all applicable building permits.
Neither Landlord nor Landlord’s consultants shall be responsible for obtaining
any building permit or certificate of occupancy for the Tenant Improvements;
obtaining the same shall be Tenant’s responsibility. However, Landlord will
promptly cooperate with Tenant in executing permit applications and performing
other ministerial acts reasonably necessary to enable Tenant to obtain any such
permit or certificate of occupancy. No material changes, modifications or
alterations to the Approved Working Drawings may be made without the prior
written consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed; in the event that Tenant so requests any changes,
modifications or alterations to the Approved Working Drawings, Landlord will
review and respond to any suggested changes as promptly as practicable, but in
any event within the time period described in Section 1.2.3 above, and
Landlord’s failure to respond within such time shall be a Landlord Delay. In all
cases, the strictest standards shall be applied in determining whether or not a
permit is necessary, and whether or not engineered drawings are necessary, it
being the established policy to not perform design/build work.

1.3 Contractor. Tenant may competitively bid the Tenant Improvements to several
mutually acceptable and qualified union labor contractors to act as the General
Contractor to perform the Tenant Improvements (“Contractor”) and subsequent
qualified union subcontractors. Landlord’s approval of such entities shall not
be unreasonably withheld, conditioned or delayed, provided that Landlord may
withhold its consent to any general contractor who is not union-affiliated. All
of Tenant’s Agents shall be licensed in the State of California, capable of
being bonded and union-affiliated in compliance with all then existing master
labor agreements.

1.4 Construction Contract; Excess Costs. Tenant shall execute a construction
contract and general conditions with Contractor (the “Contract”). Prior to the
commencement of the construction of the Tenant Improvements, Tenant shall
provide Landlord with a detailed breakdown, by trade, of the final costs
anticipated to be incurred or which have been incurred, in connection with the
design and construction of the Tenant Improvements to be performed by or

 

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at the direction of Tenant or Contractor, which costs form a basis for the
amount of the Contract. In the event that the costs relating to the design and
construction of the Tenant Improvements shall be in excess of the Allowance
(defined below), any such additional costs (except to the extent resulting from
Landlord Delays, as defined below) shall be paid by Tenant out of its own funds
on a pro rata basis (i.e., a proportional amount of each payment to the
Contractor shall be made by Tenant), but Tenant shall continue to provide
Landlord with the documents described in this Work Agreement, above, for
Landlord’s approval.

1.5 Inspection by Landlord. Landlord shall have the right to inspect the Tenant
Improvements at all times, provided however, that Landlord’s failure to inspect
the Tenant Improvements shall in no event constitute a waiver of any of
Landlord’s rights hereunder nor shall Landlord’s inspection of the Tenant
Improvements constitute Landlord’s approval of the same, and, provided further
that such inspection is solely for the purpose of determining whether or not the
Tenant Improvements are being constructed in strict accordance with the Approved
Working Drawings. Should Landlord disapprove any portion of the Tenant
Improvements, Landlord shall promptly notify Tenant in writing of such
disapproval and shall specify the items disapproved and the basis for such
disapproval, provided that Landlord shall only disapprove any portion of the
Tenant Improvements to the extent that same materially deviate from the Approved
Working Drawings. Any material defects or material deviations in, and/or
disapproval by Landlord of, the Tenant Improvements shall be rectified by Tenant
at no expense to Landlord, provided however, that in the event Landlord
determines that a defect or deviation exists or disapproves of any matter in
connection with any portion of the Tenant Improvements and such defect,
deviation or matter might immediately or materially adversely affect the
mechanical, electrical, plumbing, heating, ventilating and air conditioning or
life-safety systems of the Building, the structure or exterior appearance of the
Building, and if Tenant fails to correct such matter within five (5) business
days following written notice from Landlord, Landlord may take such action as
Landlord reasonably deems necessary, at Tenant’s expense and without incurring
any liability on Landlord’s part, to correct any such defect, deviation and/or
matter.

1.6 Allowances; Credits; Disbursement. Tenant shall be entitled to a tenant
improvement allowance (the “Allowance”) in the amount of $957,255.00 (i.e.,
$15.00 per rentable square foot of the Premises). In no event will Landlord be
obligated to make disbursements pursuant to this Work Agreement in a total
amount that exceeds the Allowance.

1.6.1 Allowance Items. Except as otherwise set forth in this Work Agreement, the
Allowance shall be disbursed by Landlord in accordance with the terms of this
Work Agreement for the following items and costs (collectively, the “Allowance
Items”): (i) the cost of all materials and labor to complete the Tenant
Improvements, (ii) payment of the fees and charges of the Architect and the
Engineers, (iii) payment for the preparation of the Final Space Plan and
Approved Working Drawings, (iv) the cost of obtaining any and all permits for
the construction of the Tenant Improvements; (v) the cost of any changes to the
Approved Working Drawings or Tenant Improvements required by applicable building
codes (collectively, the “Code”), (vi) the fees of Tenant’s project manager, if
any, (vii) the cost of signage, (viii) Landlord’s construction management fee
described in Section 1.7.1 below and (ix) any other costs associated with the
design, construction and occupancy of the Premises. Additionally, Tenant may
allocate any unused portion of the Allowance, not to exceed $191,451.00 (i.e.,
$3.00 per rentable square foot of the Premises) towards Base Rent first payable
under the Lease.

 

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1.6.2 Disbursement of Allowance. Landlord shall make monthly (or more frequently
if Tenant’s Contracts require Tenant to pay costs and expenses more frequently
than monthly) disbursements of the Allowance and shall authorize the release of
monies as follows:

(a) Periodically, but not less than each calendar month, Tenant may deliver to
Landlord: (i) a request for payment from Contractor, approved by Tenant, in a
customary form to be provided or approved by Landlord, showing the schedule, by
trade, of percentage of completion of the Tenant Improvements detailing the
portion of the work completed and the portion not completed, and/or one or more
invoices, approved by Tenant, for Allowance Items other than costs of the Tenant
Improvements; (ii) invoices from all of Tenant’s Agents for labor rendered and
materials delivered to the Premises; (iii) executed unconditional mechanic’s
lien releases from all of Tenant’s Agents which shall substantially comply with
the appropriate provisions, as reasonably determined by Landlord, of California
Civil Code Section 3262(d), or conditional releases if appropriate; and (iv) all
other information reasonably requested in good faith by Landlord. Landlord will
have no obligation to process any payment request if all of the above conditions
are not fully met. Within thirty (30) days thereafter, Landlord shall deliver a
check to Tenant made payable to Tenant, or a check or checks made payable to
another party or parties as requested by Tenant, in payment of the lesser of:
(A) the amounts so requested by Tenant, less a ten percent (10%) retention as to
payments to Contractor (the aggregate amount of such retentions to be known as
the “Final Retention”), and (B) the balance of any remaining available portion
of the Allowance (not including the Final Retention), provided that, if Landlord
disputes any item in a request for payment based on non-compliance of any work
with the Approved Working Drawings or due to any substandard work, Landlord may
deduct the amount of such disputed item from the payment. Landlord and Tenant
shall, in good faith, endeavor to resolve any such dispute with diligence and
dispatch. Landlord’s payment of such amounts shall not be deemed Landlord’s
approval or acceptance of the work furnished or materials supplied as set forth
in Tenant’s payment request.

(b) Upon Substantial Completion of the Tenant Improvements, Landlord shall
deliver to Tenant a check to Tenant made payable to Tenant, or a check or checks
made payable to another party or parties as requested by Tenant, in the amount
of the Final Retention, less an amount equal to one hundred fifty percent
(150%) of the estimated cost of the punch list items remaining to be completed
as determined by Landlord and Tenant (the “Punch List Retention”). The Punch
List Retention shall be paid by Landlord to Tenant promptly following the
completion of construction of the Tenant Improvements and Landlord’s receipt of
the Close-Out Package. The term “Substantial Completion” shall mean that the
Tenant Improvements have been completed substantially in accordance with the
Approved Working Drawings, as evidenced by a certificate of the Architect
delivered to Landlord and Tenant.

1.7 Construction Management Fee; Other Expense paid to Landlord.

1.7.1 Supervisory Fees. To insure the quality and integrity of the construction
process, Landlord shall have the right to deduct from the Allowance costs
incurred by Landlord for third party oversight and supervisory fees in an amount
equal to $47,862.75, and except as described in Section 1.1.1 above, Landlord
shall not be entitled to any fees, costs or expenses in connection with the
Tenant Improvements.

 

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1.8 Miscellaneous.

1.8.1 Indemnity. Tenant’s shall indemnify, defend and hold Landlord harmless
from and with respect to any and all costs, losses, damages, injuries and
liabilities related in any way to any act or omission of Tenant or Tenant’s
Agents, or anyone directly or indirectly employed by any of them, or in
connection with Tenant’s non-payment of any amount arising out of the Tenant
Improvements and/or Tenant’s disapproval of all or any portion of any request
for payment, except to the extent caused by the negligence or willful misconduct
of Landlord or Landlord’s employees, agents, property managers or consultants,
contractors, subcontractors, laborers, materialmen, and suppliers.

1.8.2 Tenant’s Lease Default. Notwithstanding any provision to the contrary
contained in the Lease, if a Default has occurred at any time on or before the
Substantial Completion of the Tenant Improvements, then (i) in addition to all
other rights and remedies granted to Landlord pursuant to the Lease, Landlord
shall have the right to withhold payment of all or any portion of the Allowance,
and (ii) all other obligations of Landlord under the terms of this Work
Agreement shall be forgiven until such time as such Default is cured pursuant to
the terms of the Lease (in which case, Tenant shall be responsible for any delay
in the substantial completion of the Tenant Improvements caused by such inaction
by Landlord).

1.8.3 Tenant’s Representative. Tenant has designated Ann Mead as its sole
representative with respect to the matters set forth in this Work Agreement,
who, until further notice to Landlord, shall have full authority and
responsibility to act on behalf of the Tenant as required in this Work
Agreement.

1.8.4 Landlord’s Representative. Landlord has designated Hal Brownstone as its
sole representative with respect to the matters set forth in this Work
Agreement, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Work
Agreement.

1.8.5 Time of the Essence. Time is of the essence in all matters under this Work
Agreement in which time is a factor. Unless otherwise indicated, all references
herein to a “number of days” shall mean and refer to calendar days.

1.8.6 Freight Elevators and Utilities. Landlord shall, consistent with its
obligations to other tenants of the Building, make the freight elevator, loading
docks (for loading and unloading only, no parking of vehicles) and bathrooms (in
the basement level) in the Building reasonably available to Tenant in connection
with initial decorating, furnishing and moving into the Premises at no charge to
Tenant. Landlord shall provide access to Tenant for water, electricity, HVAC and
other utilities reasonably required in connection with constructing, decorating,
furnishing and moving into the Premises at no charge to Tenant.

1.8.7 Landlord Delays. Landlord’s (a) failure to comply with any time
requirements expressly set forth in this Work Agreement for Landlord’s
performance of its responsibilities or (b) where no time period is specified in
this Work Agreement, failure to perform its responsibilities under this Work
Agreement within a reasonable period, as set forth in Tenant’s notice, after
notice from Tenant are referred to collectively herein as “Landlord

 

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Delays”. Tenant will promptly notify Landlord in writing of any event which
Tenant contends constitutes a Landlord Delay and in any event will use
commercially reasonable efforts to mitigate its damages and/or construction
delays in the event of an alleged Landlord Delay. Notwithstanding the foregoing,
if and to the extent that the completion of the Tenant Improvements is delayed
beyond the scheduled completion date therefore by Landlord Delay, Tenant will
receive one (1) days’ additional abatement of Base Rent for each day beyond the
scheduled completion date that completion of the Tenant Improvements is delayed
due to Landlord Delay (provided, that if and to the extent that Landlord
satisfied any timing requirement set forth in this Work Agreement by acting or
responding, as the case may be, one (1) or more days’ prior to the scheduled
date set forth herein for such action or response and as a result achieved a
reduction in Tenant’s construction schedule (each, a “Schedule Saving Day”),
then any aggregate Landlord Delay described in clause (a) above shall first be
offset against and reduced on a day-for-day basis by the aggregate number of
Schedule Saving Days).

 

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EXHIBIT “C”

[INTENTIONALLY OMITTED]

 

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EXHIBIT “D”

RULES AND REGULATIONS

1. The sidewalks, entry passages, corridors, halls, elevators and stairways
shall not be obstructed by Tenant or used for any purpose other than that of
ingress and egress. The floors, skylights and windows that reflect or admit
light into any place in the Building shall not be covered or obstructed by
Tenant. The toilets, drains and other water apparatus shall not be used for any
other purpose than those for which they were constructed and no rubbish or other
obstructing substances shall be thrown therein.

2. No advertisement, signs, pictures, placards or other notice shall be
inscribed, painted or affixed on any part of the outside or inside of the
Building, except upon the doors, and of such order, size and style, and at such
places, as shall be approved and designated by Landlord. Interior signs on doors
will be ordered for Tenant by Landlord, the cost thereof to be charged to and
paid for by Tenant.

3. Tenant shall not do or permit to be done in the Premises, or bring or keep
anything therein, which shall in any way increase the rate of insurance carried
by Landlord on the Building, or on the Property, or obstruct or interfere with
the rights of other tenants or in any way injure or annoy them, or violate any
applicable laws, codes or regulations. Tenant, its agents, employees or invitees
shall maintain order in the Premises and the Building, shall not make or permit
any improper noise in the Premises or the Building or interfere in any way with
other tenants, or those having business with them. Nothing shall be thrown by
Tenant, its clerks or servants, out of the windows or doors, or down the
passages or skylights of the Building. No rooms shall be occupied or used as
sleeping or lodging apartments at any time. No part of the Building shall be
used or in any way appropriated for gambling, immoral or other unlawful
practices, and no intoxicating liquor or liquors shall be sold in the Building.

4. Tenant shall not employ any persons other than the janitors of Landlord (who
will be provided with pass-keys into the offices) for the purpose of cleaning or
taking charge of the Premises, except as may be specifically provided otherwise
in the Lease.

5. No animals, birds, bicycles or other vehicles shall be allowed in the
offices, halls, corridors, elevators or elsewhere in the Building, without the
approval of Landlord.

6. No painting shall be done, nor shall any alterations be made to any part of
the Building or the Premises by putting up or changing any partitions, doors or
windows, nor shall there be any nailing, boring or screwing into the woodwork or
plastering, nor shall any connection be made in the electric wires or gas or
electric fixtures, without the consent in writing on each occasion of Landlord.
All glass, locks and trimmings in or upon the doors and windows of the Building
shall be kept whole and, when any part thereof shall be broken by Tenant or
Tenant’s agent, the same shall be immediately replaced or repaired by Tenant
(subject to Tenant’s compliance with Section 23 of the Lease) and put in order
under the direction and to the satisfaction of Landlord, or its agents, and
shall be kept whole and in good repair. Tenant shall

 

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not injure, overload, or deface the Building, the woodwork or the walls of the
Premises, nor carry on upon the Premises any noxious, noisy or offensive
business.

7. Two (2) keys will be furnished Tenant without charge. No additional locks or
latches shall be put upon any door and no locks shall be changed without the
written consent of Landlord. Tenant, at the termination of their Lease, shall
return to Landlord all keys to doors in the Building. Tenant shall not alter
locks or install new locks without approval from Landlord.

8. Landlord in all cases retains the power to prescribe the weight and position
of iron safes or other heavy articles. Tenant shall make arrangements with the
superintendent of the Building when the elevator is required for the purpose of
the carrying of any kind of freight.

9. The use of burning fluid, camphene, benzine, kerosene or anything except gas
or electricity, for lighting the Premises, is prohibited. No offensive gases or
liquids will be permitted.

10. If Tenant desires blinds, coverings or drapes over the windows, they must be
of such shape, color and material as may be prescribed by Landlord, and shall be
erected only with Landlord’s consent and at the expense of Tenant. No awnings
shall be placed on the Building. Window coverings shall be closed when the
effect of sunlight would impose unnecessary loads on the air conditioning
system.

11. All wiring and cabling work shall be done only by contractors approved in
advance by Landlord and Landlord shall have the right to have all such work
supervised by Building engineering/maintenance personnel. No antenna or cabling
shall be installed on the roof or exterior walls of the Building.

12. At Landlord’s discretion, Landlord may hire security personnel for the
Building, and every person entering or leaving the Building may be questioned by
such personnel as to the visitor’s business in the Building and shall sign his
or her name on a form provided by the Building for so registering such persons.
Landlord shall have no liability with respect to breaches of the Building
security, if any.

13. Landlord shall have the right, exercisable without notice and without
liability to Tenant, to change the name or street address of the Building or the
room or suite number of the Premises.

14. The freight elevator shall be available for use by all tenants in the
Building subject to such reasonable scheduling as Landlord in its discretion
shall deem appropriate. The persons employed to move such equipment in or out of
the Building must be acceptable to Landlord and any costs incurred by Landlord
shall be reimbursed by Tenant. Tenant shall not be charged for its use of the
freight elevator, before, during or after Business Service Hours.

15. Canvassing, peddling, soliciting and distribution of handbills or any other
written materials in the Building are prohibited and each tenant shall cooperate
to prevent the same.

 

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16. Each tenant shall ensure that all doors to its premises are locked and all
water faucets or apparatus and office equipment are shut off before the tenant
or its employees leave such premises at night. On multiple tenancy floors, all
tenants shall keep the doors to the Building corridors closed at all times
except for ingress and egress.

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

18. Each tenant shall store its refuse within its Premises. No material shall be
placed in the refuse boxes or receptacles if such material is of such a nature
that it may not be disposed of in the ordinary and customary manner of removal
without being in violation of any law or ordinance governing such disposal.

19. Each tenant shall take reasonable measures (including reasonable medical
measures) to comply with any disaster and/or pandemic preparedness program(s)
adopted from time to time by Landlord.

20. Each tenant shall take reasonable measures to cooperate with any efforts
undertaken by Landlord to obtain LEED certifications with respect to the
Building and/or Property and with Landlord’s reasonable sustainability practices
with respect to the Building and/or Property.

21. Landlord reserves the right to make such other and reasonable rules and
regulations, not inconsistent with the terms of the Lease, as in its judgment
may from time to time be needed for the safety, care and cleanliness of the
Building and for the preservation of good order therein.

22. Notwithstanding anything to the contrary contained in these Rules and
Regulations, Tenant shall not be charged for its use of the Building services,
personnel or elevators during its move into or move out of the Premises.

 

D-3

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EXHIBIT “E”

PARKING AGREEMENT

THIS PARKING AGREEMENT (“Parking Agreement”) is attached to and made a part of
the Lease (“Lease”) by and between PPF OFF 345 SPEAR STREET, LP, a Delaware
limited partnership (“Landlord”), and MEDIVATION, INC., a Delaware corporation
(“Tenant”), for space in the Building located at 345 Spear Street in San
Francisco, California. Capitalized terms used but not defined herein shall have
the respective meanings given them in the Lease.

1. During the Term, Tenant shall license from Landlord and Landlord agrees to
license to Tenant, for use by Tenant and its employees, up to twenty-six
(26) parking spaces (the “Spaces”) in the Project’s parking garage (the
“Garage”). Up to ten (10) of such Spaces may, at Tenant’s written request, be
“reserved” Spaces. Tenant shall have the right, upon at least forty-five
(45) days’ advance written notice to Landlord, to adjust the number of Spaces
licensed by Tenant from time-to-time; provided, however, that if and to the
extent Tenant either (i) fails to initially license all twenty-six (26) Spaces,
or, (ii) thereafter, reduces the number of Spaces Tenant licenses, and
subsequently desires to increase the number of Spaces licensed by Tenant, any
such increased quantity of Spaces shall be provided on a “as available” basis,
and Landlord shall have no liability to Tenant if such Spaces are no longer
available for license by Tenant. The charge for such Spaces will initially be
$325.00 per month for non-reserved Spaces, and $375.00 per month for each
reserved Space; said rate is subject to adjustment from time to time. Such
charges shall be payable as Rent under the Lease in advance to Landlord or such
other entity as designated by Landlord, and shall be sent concurrent with
Tenant’s payment of monthly Base Rent to the address Landlord designates from
time to time. No deductions from such charges shall be made for days on which
the Garage is not used by Tenant or if Tenant uses less than the total number of
the Spaces.

2. Tenant shall at all times comply with all applicable ordinances, rules,
regulations, codes, laws, statutes and requirements of all federal, state,
county and municipal governmental bodies or their subdivisions respecting the
use of the Garage. Landlord reserves the right to adopt, modify and enforce
reasonable rules (“Rules”) governing the use of the Garage from time to time
including any key-card, sticker or other identification or entrance system and
hours of operation. Landlord may elect to provide parking cards or keys to
control access to the Garage. In such event, Landlord shall provide Tenant with
one card or key for each Space that Tenant is leasing hereunder in the Garage,
provided that Landlord shall have the right to require Tenant or its employees
to place a deposit on such access cards or keys and to pay a fee for any lost or
damaged cards or keys. Landlord may refuse to permit any person who violates
such Rules to park in the Garage, and any violation of the Rules shall subject
the car to removal from the Garage. Tenant shall comply with and shall inform
its employees that they are obligated to comply with all the Rules as well as
all reasonable additions and amendments thereto.

3. Unless specified to the contrary above, the parking spaces hereunder shall be
provided on a non-designated “first-come, first-served” basis. Subject to
Tenant’s rights to the reserved spaces set forth above, if any, Landlord
reserves the right to assign other specific parking spaces, and to reserve other
parking spaces for visitors, small cars, handicapped persons

 

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and for other tenants, guests of tenants or other parties, which assignment and
reservation or spaces may be relocated as determined by Landlord from time to
time, and Tenant and persons designated by Tenant hereunder shall not park in
any such location designated for such assigned or reserved parking spaces.

4. Tenant shall not store or permit its employees to store any automobiles in
the Garage without the prior written consent of the operator. Except for
emergency repairs, Tenant and its employees shall not perform any work on any
automobiles while located in the Garage. If it is necessary for Tenant or its
employees to leave an automobile in the Garage overnight, Tenant shall use
reasonable efforts to provide the operator with prior notice thereof designating
the license plate number and model of such automobile.

5. Landlord shall have the right to temporarily close the Garage, or certain
areas therein, in order to perform necessary repairs, maintenance and
improvements to the Garage, and in such events, Landlord shall refund any
prepaid parking fee hereunder for any Space(s) affected by such closure,
prorated on a per diem basis.

6. LANDLORD SHALL NOT BE LIABLE FOR ANY LOSS, INJURY OR DAMAGE TO PERSONS USING
THE GARAGE OR AUTOMOBILES OR OTHER PROPERTY THEREIN, IT BEING AGREED THAT, TO
THE FULLEST EXTENT PERMITTED BY LAW, THE USE OF THE SPACES SHALL BE AT THE SOLE
RISK OF TENANT AND ITS EMPLOYEES. WITHOUT LIMITING THE FOREGOING, TENANT HEREBY
VOLUNTARILY RELEASES, DISCHARGES, WAIVES AND RELINQUISHES ANY AND ALL ACTIONS OR
CAUSES OF ACTION FOR PERSONAL INJURY OR PROPERTY DAMAGE OCCURRING TO TENANT
ARISING AS A RESULT OF PARKING IN THE GARAGE, OR ANY ACTIVITIES INCIDENTAL
THERETO, WHEREVER OR HOWEVER THE SAME MAY OCCUR, AND FURTHER AGREES THAT TENANT
WILL NOT PROSECUTE ANY CLAIM FOR PERSONAL INJURY OR PROPERTY DAMAGE AGAINST
LANDLORD OR ANY OF THE LANDLORD RELATED PARTIES FOR ANY SAID CAUSES OF ACTION.
IN ALL EVENTS, TENANT AGREES TO LOOK FIRST TO ITS INSURANCE CARRIER AND TO
REQUIRE THAT TENANT’S EMPLOYEES LOOK FIRST TO THEIR RESPECTIVE INSURANCE
CARRIERS FOR PAYMENT OF ANY LOSSES SUSTAINED IN CONNECTION WITH ANY USE OF THE
GARAGE. TENANT HEREBY WAIVES ON BEHALF OF ITS INSURANCE CARRIERS ALL RIGHTS OF
SUBROGATION AGAINST LANDLORD OR LANDLORD RELATED PARTIES.

7. Tenant shall not assign its rights under this Parking Agreement or sublease
any of the Spaces without the consent of Landlord, except that no consent shall
be required in connection with a Permitted Transfer of the Lease, and Landlord
shall not withhold its consent to a transfer of this Agreement if it has
consented to the Transfer of the Lease.

8. Landlord hereby reserves the right to enter into a management agreement or
lease with another entity for the operation of the Garage (“Operator”). In such
event, Tenant, upon request of Landlord, shall enter into a parking agreement
upon substantially the same terms hereunder with the Operator and pay the
Operator the monthly charge established hereunder, and

 

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Landlord shall have no liability for claims arising through acts or omissions of
the Operator. It is understood and agreed that the identity of the Operator may
change from time to time during the Term. In connection therewith, any parking
lease or agreement entered into between Tenant and any Operator shall be freely
assignable by such Operator or any successors thereto.

 

E-3

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EXHIBIT “F”

FORM LETTER OF CREDIT

 

BANK OF AMERICA - CONFIDENTIAL

   PAGE: 1

 

DATE: OCTOBER     , 2009

 

IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER: xxxxxxx

 

           ISSUING BANK    BANK OF AMERICA, N.A.    1000 W. TEMPLE STREET    7TH
FLOOR, CA9-705-07-05    LOS ANGELES, CA 90012-1514     BENEFICIARY   
        APPLICANT PPF OFF 345 SPEAR STREET, LP    MEDIVATION, INC. C/O MORGAN
STANLEY US REAL ESTATE    201 SPEAR STREET INVESTING DIVISION    3RD FLOOR 555
CALIFORNIA STREET, SUITE 2200,    SAN FRANCISCO, CA 94105

FLOOR 21

SAN FRANCISCO, CA 94104

ATTN: KEITH A. FINK, EXECUTIVE

DIRECTOR

    AMOUNT

NOT EXCEEDING USD 1,500,000.00

NOT EXCEEDING ONE MILLION FIVE HUNDRED THOUSAND AND 00/100’S US DOLLARS

    EXPIRATION

OCTOBER 31, 2010 AT OUR COUNTERS

WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. xxxxxxx IN YOUR
FAVOR FOR THE ACCOUNT OF MEDIVATION, INC. UP TO THE AGGREGATE AMOUNT OF ONE
MILLION FIVE HUNDRED THOUSAND AND ZERO USD ($1,500,000.00) EFFECTIVE IMMEDIATELY
AND EXPIRING AT OUR COUNTERS AT OUR CLOSE OF BUSINESS ON OCTOBER 31,2010.

FUNDS ARE AVAILABLE UNDER THIS LETTER OF CREDIT, FROM TIME TO TIME, AGAINST
PRESENTATION OF ONE OR MORE OF YOUR SIGHT DRAFT(S) IN THE FORM ATTACHED HERETO
AS EXHIBIT A, ACCOMPANIED BY BENEFICIARY’S SIGNED STATEMENT STATING AS FOLLOWS:

“THIS DRAW IN THE AMOUNT OF                      U.S. DOLLARS ($         ) UNDER
BANK OF AMERICA, NA. IRREVOCABLE STANDBY LETTER OF CREDIT NO.
                     REPRESENTS FUNDS DRAWN PURSUANT TO THE TERMS OF THAT
CERTAIN LEASE BY AND BETWEEN                     , AS LANDLORD, AND
                    , AS TENANT, AND/OR ANY AMENDMENT TO THE LEASE OR ANY OTHER
AGREEMENT BETWEEN SUCH PARTIES RELATED TO THE LEASE.”

PARTIAL DRAWINGS ARE PERMITTED UNDER THIS LETTER OF CREDIT.

 

F-1

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BANK OF AMERICA - CONFIDENTIAL

   PAGE: 2

THIS IS AN INTEGRAL PART OF LETTER OF CREDIT NUMBER: 3101158

IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL BE DEEMED AUTOMATICALLY
EXTENDED WITHOUT AMENDMENT FOR A PERIOD OF ONE (1) YEAR FROM THE PRESENT OR ANY
FUTURE EXPIRATION DATE, BUT IN ANY EVENT NOT BEYOND MAY 15, 2017, UNLESS AT
LEAST THIRTY (30) DAYS PRIOR TO ANY EXPIRATION DATE, WE NOTIFY YOU BY CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, OR BY OVERNIGHT COURIER SERVICE, AT THE ABOVE
ADDRESS THAT WE ELECT NOT TO EXTEND THIS LETTER OF CREDIT FOR ANY SUCH
ADDITIONAL PERIOD. UPON RECEIPT OF SUCH NOTICE, YOU MAY DRAW THE AVAILABLE
AMOUNT HEREUNDER BY MEANS OF YOUR DRAFT AT SIGHT IN THE FORM ATTACHED HERETO AS
EXHIBIT A, ACCOMPANIED BY YOUR SIGNED STATEMENT STATING THAT YOU HAVE RECEIVED A
NON EXTENSION NOTICE AND HAVE NOT RECEIVED A SUBSTITUTE LETTER OF CREDIT OR
OTHER INSTRUMENT ACCEPTABLE TO YOU.

FACSIMILE DRAWINGS ARE ACCEPTABLE. DRAWINGS MUST BE SENT TO FACSIMILE NO.
(213)457-8841 CONFIRMED BY A TELEPHONE CALL TO (213)240-6986, PROVIDED THAT THE
GIVING OF SUCH TELEPHONIC CONFIRMATION SHALL NOT BE A CONDITION TO OUR
OBLIGATION TO MAKE PAYMENT HEREUNDER.

THIS LETTER OF CREDIT IS TRANSFERABLE IN FULL AND NOT IN PART. ANY TRANSFER MADE
HEREUNDER MUST CONFORM STRICTLY TO THE TERMS HEREOF AND TO THE CONDITIONS OF
RULE 8 OF THE INTERNATIONAL STANDBY PRACTICES (ISP98) FIXED BY THE INTERNATIONAL
CHAMBER OF COMMERCE, PUBLICATION NO. 590. SHOULD YOU WISH TO EFFECT A TRANSFER
UNDER THIS CREDIT, SUCH TRANSFER WILL BE SUBJECT TO THE RETURN TO US OF THE
ORIGINAL CREDIT INSTRUMENT, ACCOMPANIED BY OUR FORM OF TRANSFER, PROPERLY
COMPLETED AND SIGNED BY AN AUTHORIZED SIGNATORY OF YOUR FIRM, BEARING YOUR
BANKERS STAMP AND SIGNATURE AUTHENTICATION, AND SUBJECT TO YOUR PAYMENT OF OUR
CUSTOMARY TRANSFER CHARGES OF $500.00. SUCH TRANSFER FORM IS AVAILABLE UPON
REQUEST.

WE HEREBY AGREE WITH YOU THAT DOCUMENTS PRESENTED IN COMPLIANCE WITH THE TERMS
OF THIS LETTER OF CREDIT WILL BE DULY HONORED UPON PRESENTATION TO US AT BANK OF
AMERICA, N.A., 1000 W. TEMPLE STREET, 7TH FLOOR, LOS ANGELES, CA 90012, ATTN:
STANDBY LETTERS OF CREDIT DEPARTMENT, MAIL CODE: CA9-705-07-05, ON OR BEFORE THE
EXPIRY DATE AS SPECIFIED HEREIN.

THIS LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES (ISP98),
INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 590 AND ENGAGES US PURSUANT
TO THE TERMS THEREIN.

IF YOU REQUIRE ANY ASSISTANCE OR HAVE ANY QUESTIONS REGARDING THIS TRANSACTION,
PLEASE CALL 1-800-541-6096 OPT 1.

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EXHIBIT A

SIGHT DRAFT

Date                     

At sight pay to the order of                      [beneficiary name]
                     $         [amount in figures]

                     [amount in words]                                      U.S.
Dollars

Drawn under Bank of America, N.A. Letter of Credit              dated
                    .

 

TO:    [beneficiary name]   Bank of America, N.A.      1000 West Temple Street
   By:   7th Floor, CA9-705-07-05      Los Angeles, CA 90012-1514     

 

F-2