exv10w5






Exhibit 10.5









EXECUTION ORIGINAL




BISHOP RANCH BUSINESS PARK



BUILDING LEASE



Sunset Development Company

 

One Annabel Lane, Suite 201, San Ramon, CA 94583


Tel: 925
866 0100 Fax: 925 866 1330





 









 






REPLY! INC.




BISHOP RANCH BUSINESS PARK — BUILDING LEASE



TABLE OF CONTENTS



	 	 	 	 	 
	 	 	Page	 
	1. PREMISES
	 	 	1	 
	 
	 	 	 	 
	2. TERM
	 	 	1	 
	2.1 Term
	 	 	1	 
	2.2 Delay in Commencement
	 	 	1	 
	2.3 Prior Occupancy
	 	 	1	 
	2.4 Acknowledgment of Commencement Date
	 	 	2	 
	 
	 	 	 	 
	3. RENT
	 	 	2	 
	3.1 Base Rent
	 	 	2	 
	3.2 Adjustments to Base Rent
	 	 	2	 
	3.3 Amounts Constituting Rent
	 	 	2	 
	 
	 	 	 	 
	4. SECURITY DEPOSIT
	 	 	3	 
	 
	 	 	 	 
	5. TAX AND OPERATING COST INCREASES
	 	 	3	 
	5.1 Definitions
	 	 	3	 
	5.2 Tenant’s Share
	 	 	5	 
	5.3 Notice and Payment
	 	 	6	 
	5.4 Additional Taxes
	 	 	7	 
	5.5 Tenant’s Taxes
	 	 	7	 
	 
	 	 	 	 
	6. USE
	 	 	7	 
	6.1 Use
	 	 	7	 
	6.2 Suitability
	 	 	7	 
	6.3 Uses Prohibited
	 	 	7	 
	 
	 	 	 	 
	7. SERVICE AND UTILITIES
	 	 	8	 
	7.1 Landlord’s Obligations
	 	 	8	 
	7.2 Tenant’s Obligation
	 	 	8	 
	7.3 Tenant’s Additional Requirements
	 	 	9	 
	7.4 Nonliability
	 	 	9	 
	 
	 	 	 	 
	8. MAINTENANCE AND REPAIRS; ALTERATIONS
AND ADDITIONS
	 	 	10	 
	8.1 Maintenance and Repairs
	 	 	10	 
	8.2 Alterations and Additions
	 	 	10	 
	 
	 	 	 	 
	9. ENTRY BY LANDLORD
	 	 	11	 






 









 






	 	 	 	 	 
	 	 	Page	 
	10. LIENS
	 	 	11	 
	 
	 	 	 	 
	11. INDEMNITY
	 	 	12	 
	11.1 Indemnity
	 	 	12	 
	11.2 Exemption of Landlord from Liability
	 	 	12	 
	 
	 	 	 	 
	12. INSURANCE
	 	 	13	 
	12.1 Coverage
	 	 	13	 
	12.2 Insurance Policies
	 	 	13	 
	12.3 Landlord’s Insurance
	 	 	13	 
	12.4 Waiver of Subrogation
	 	 	13	 
	 
	 	 	 	 
	13. DAMAGE OR DESTRUCTION
	 	 	14	 
	13.1 Landlord’s Duty to Repair
	 	 	14	 
	13.2 Landlord’s Right to Terminate
	 	 	14	 
	13.3 Tenant’s Right to Terminate
	 	 	15	 
	13.4 Exclusive Rights
	 	 	15	 
	 
	 	 	 	 
	14. CONDEMNATION
	 	 	15	 
	 
	 	 	 	 
	15. ASSIGNMENT AND SUBLETTING
	 	 	16	 
	15.1 Landlord’s Consent Required
	 	 	16	 
	15.2 Reasonable Consent
	 	 	16	 
	15.3 Excess Consideration
	 	 	16	 
	15.4 No Release of Tenant
	 	 	17	 
	15.5 Attorneys’ Fees
	 	 	17	 
	15.6 Transfer of Ownership Interest
	 	 	17	 
	15.7 Effectiveness of Transfer
	 	 	17	 
	15.8 Landlord’s Right to Space
	 	 	17	 
	15.9 Permitted Assignment or Sublease
	 	 	17	 
	15.10 No Net Profits Leases
	 	 	18	 
	 
	 	 	 	 
	16. SUBORDINATION
	 	 	18	 
	16.1 Subordination
	 	 	18	 
	16.2 Junior Liens
	 	 	18	 
	16.3 Subordination Agreements
	 	 	18	 
	16.4 Attornment
	 	 	18	 
	 
	 	 	 	 
	17. QUIET ENJOYMENT
	 	 	19	 
	 
	 	 	 	 
	18. DEFAULT; REMEDIES
	 	 	19	 
	18.1 Default
	 	 	19	 
	18.2 Remedies
	 	 	20	 
	18.3 Late Charges
	 	 	22	 
	18.4 Interest
	 	 	22	 
	18.5 Default by Landlord
	 	 	22	 
	 
	 	 	 	 
	19. PARKING
	 	 	22	 






 









 






	 	 	 	 	 
	 	 	Page	 
	20. RELOCATION OF PREMISES
	 	 	22	 
	20.1 Conditions
	 	 	22	 
	20.2 Notice
	 	 	23	 
	 
	 	 	 	 
	21. MORTGAGEE PROTECTION
	 	 	23	 
	 
	 	 	 	 
	22. ESTOPPEL CERTIFICATES
	 	 	23	 
	 
	 	 	 	 
	23.
SURRENDER, HOLDING OVER
	 	 	24	 
	23.1 Surrender
	 	 	24	 
	23.2 Holding Over
	 	 	24	 
	 
	 	 	 	 
	24. HAZARDOUS MATERIALS
	 	 	25	 
	 
	 	 	 	 
	25. MISCELLANEOUS
	 	 	25	 
	25.1  Attornment
	 	 	25	 
	25.2  Captions; Attachments; Defined Terms
	 	 	25	 
	25.3  Entire Agreement
	 	 	26	 
	25.4  Severability
	 	 	26	 
	25.5  Costs of Suit
	 	 	26	 
	25.6  Time; Joint and Several Liability
	 	 	26	 
	25.7  Binding Effect; Choice Of Law
	 	 	27	 
	25.8  Waiver
	 	 	27	 
	25.9  Force Majeure
	 	 	27	 
	25.10 Landlord’s Liability
	 	 	27	 
	25.11 Consents and Approvals
	 	 	27	 
	25.12 Signs
	 	 	28	 
	25.13 Rules And Regulations
	 	 	28	 
	25.14 Notices
	 	 	28	 
	25.15 Authority
	 	 	29	 
	25.16 Lease Guaranty
	 	 	29	 
	25.17 Brokers
	 	 	29	 
	25.18 Reserved Rights
	 	 	29	 
	25.19 Option to Extend
	 	 	29	 






EXHIBIT A — SITE AND FLOOR PLANS

EXHIBIT B — WORK LETTER (INTENTIONALLY DELETED)

EXHIBIT C — SPACE PLAN

EXHIBIT D — RULES AND REGULATIONS

EXHIBIT E — JANITORIAL SPECIFICATIONS

EXHIBIT F — DOOR SIGN, DIRECTORY STRIP AND MAIL BOX REQUEST

EXHIBIT G — COMMENCEMENT OF LEASE




 









 





BISHOP
RANCH BUSINESS PARK



BUILDING LEASE




     This Lease is made and entered into this 25 day of July, 2006, by and between SDC 7, a California
partnership, (hereinafter “Landlord”) and Reply! Inc., a California corporation (hereinafter
“Tenant”). For and in consideration of the rental and of the covenants and agreements hereinafter
set forth to be kept and performed by Tenant, Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the premises herein described for the term, at the rental and subject to and
upon all of the terms, covenants and agreements hereinafter set forth.



     1. PREMISES



          Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the premises (the
“Premises”) crosshatched on Exhibit A containing 39,413 rentable square feet known as Suite 200,
located on the Second floor of 12667 Alcosta Boulevard, Building BB (including all tenant
improvements thereto, the “Building”), located at San Ramon, California 94583. The Building is part
of a Complex containing the Building and Three (3) other buildings (the “Complex”). The Complex,
which contains 786,864 rentable square feet, the land on which the Complex is situated (the
“Land”), the common areas of the Complex, any other improvements in the Complex and the personal
property used by Landlord in the operation of the Complex (the “Personal Property”) are herein
collectively called the “Project.” Tenant has inspected the Premises and is leasing the Premises in
as-is condition as shown on the attached Exhibit C.




          (a) Suite Improvement Allowance. Landlord shall provide Tenant with a Suite Improvement Allowance
(the “Allowance”) equal to $7.50 per rentable square foot or
TWO HUNDRED NINETY-FIVE THOUSAND FIVE HUNDRED NINETY-SEVEN AND 50/100 DOLLARS ($295,597.50). The
Allowance may be used at any time during the Term of
this Lease for the installation of permanent improvement to the Premises, hereinafter
“Alterations.”




     2. TERM



          2.1 Term. The term of this Lease shall commence on January 1, 2007 (the “Commencement Date”) and
shall end Five (5) years and Three (3) months thereafter (the “Expiration Date”), unless sooner
terminated pursuant to this Lease.




          2.2 Delay
in Commencement. (Intentionally Deleted)




          2.3 Prior
Occupancy. Landlord hereby agrees to grant Tenant possession of the Premises upon full
execution of the Lease, hereinafter “Prior Occupancy.” Any Prior Occupancy shall be at Tenant’s
sole risk and shall be subject to all the terms and conditions of this Lease. The Prior Occupancy
period shall be Rent free. If at any time during Prior Occupancy Tenant commences operation of its
business in the Premises, Tenant shall be





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responsible for the payment of operating costs and such payment shall be due on the first day of
each calendar month during Prior Occupancy.




          2.4
Acknowledgment of Commencement Date. Upon determination of the Commencement Date, Landlord and
Tenant shall execute a written acknowledgment of the Commencement Date and Expiration Date in the
form attached hereto as Exhibit G.




     3. RENT



          3.1 Base
Rent. Tenant shall pay to Landlord monthly as base rent (“Base Rent”) for the Premises in
advance on the Commencement Date and on the first day of each calendar month thereafter during the
term of this Lease without deduction, offset, prior notice or demand, in lawful money of the United
States of America, the sum of SEVENTY-EIGHT THOUSAND EIGHT HUNDRED TWENTY-SIX AND NO/100 DOLLARS
($78,826.00). For any prorations of Base Rent due to changes in the Premises on a day other than
the first or last day of the month, the portion of Base Rent associated with the change in the
Premises shall be calculated by multiplying the number of days that the space was part of the
Premises by the daily Base Rent defined to be the monthly Base Rent for said space divided by
30. Notwithstanding the foregoing, Base Rent will be abated for the first three (3) full calendar
months of this Lease.




               Concurrently with Tenant’s execution of this Lease, Tenant shall pay to Landlord the sum of
SEVENTY-EIGHT THOUSAND EIGHT HUNDRED TWENTY-SIX AND NO/100 DOLLARS ($78,826.00) to be applied
against Base Rent when it becomes due.



     3.2
Adjustments to Base Rent.



               (a) Effective
on the first day of the 19th month of the Term of this Lease, the monthly Base Rent
shall be adjusted from SEVENTY-EIGHT THOUSAND EIGHT HUNDRED
TWENTY-SIX AND NO/100 DOLLARS
($78,826.00) to EIGHTY-TWO THOUSAND ONE HUNDRED TEN AND 42/100 DOLLARS ($82,110.42) ($25.00
per rentable square foot per month).



               (b) Effective
on the first day of the 34th month of the Term of this Lease, the monthly Base Rent
shall be adjusted from EIGHTY-TWO THOUSAND ONE HUNDRED TEN AND 42/100 DOLLARS ($82,110.42) to
NINETY-ONE THOUSAND NINE HUNDRED SIXTY-THREE AND 67/100 DOLLARS ($91,963.67) ($28.00 per
rentable square foot per month).



          3.3
Amounts Constituting Rent. All amounts payable or reimbursable by Tenant under this Lease,
including late charges and interest, “Operating Cost Payments” (as defined in Paragraph 5), and
amounts payable or reimbursable under the Work Letter and the other Exhibits hereto, shall
constitute “Rent” and be payable and recoverable as such. Base Rent is due and payable as provided
in Paragraph 3.1 - “Base Rent”, Operating Cost Payments are due and payable as provided in
Paragraph 5.3 - “Notice and Payment”, and all other Rent payable to Landlord on demand under the
terms of this Lease, unless otherwise set forth herein, shall be payable within thirty (30) days
after written notice from Landlord of the amounts due. All Rent shall be paid to Landlord without
deduction or offset in lawful money of the United States of








2










 




America at the address for notices or at such other place as Landlord may from time to time
designate in writing.




     4. SECURITY DEPOSIT



          Concurrently with Tenant’s execution of this Lease, Tenant shall deposit with Landlord the sum of
ONE HUNDRED EIGHTY-THREE THOUSAND NINE HUNDRED TWENTY-SEVEN AND 34/100 DOLLARS ($183,927.34). (the
“Security Deposit”). The Security Deposit shall be held by Landlord as security for the faithful
performance by Tenant of all of the terms, covenants and conditions of this Lease to be performed
by Tenant during the term hereof. If Tenant defaults with respect to any provision of this Lease,
including the provisions relating to the payment of any Rent, Landlord may (but shall not be
required to) use, apply or retain all or any part of the Security Deposit to cure such default or
to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s
default. If any portion of said deposit is so used or applied, Tenant shall, within ten (10) days
after written demand therefor, deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its original amount; Tenant’s failure to do so shall be a material breach of
this Lease. Landlord shall not be required to keep the Security Deposit separate from its general
funds, and Tenant shall not be entitled to interest on such deposit. If Tenant shall fully and
faithfully perform every provision of this Lease to be performed by it, the Security Deposit or any
balance thereof shall be returned to Tenant (or, at Landlord’s option, to the last assignee of
Tenant’s interest hereunder) upon the expiration of the Lease term and Tenant’s vacating the
Premises; provided, however, that Landlord may elect, in its discretion, to retain a portion of the
Security Deposit in an amount to be determined by Landlord in its reasonable judgment and based
upon actual historical Operating Costs and Landlord shall, promptly upon determining the increases
in Operating Costs for the calendar year in which this Lease terminates, pursuant to Paragraph 5.3
- “Notice and Payment,” apply from such retained portion of the Security Deposit any sums underpaid
by Tenant with respect to Operating Costs for the final year of the Lease term, and return the
balance, if any, to Tenant or its assignee. In the event of termination of Landlord’s interest in
this Lease, Landlord shall transfer the Security Deposit to Landlord’s successor in interest
whereupon Landlord shall be released from liability for the return of the Security Deposit or the
accounting therefor. Tenant hereby waives the provisions of Section 1950.7 of the California Civil
Code, and all other provisions of any Regulations, now or hereafter in force, which restricts the
amount or types of claim that a landlord may make upon a security deposit or imposes upon a
landlord (or its successors) any obligation with respect to the handling or return of security
deposits.




     5. TAX AND OPERATING COST INCREASES



          5.1
Definitions. For purposes of this paragraph, the following terms are herein defined:




               (a) Base Year: The calendar year in which this Lease commences.



               (b) Operating Costs: Operating Costs shall include all costs and expenses of ownership, operation,
repair and maintenance of the Project (excluding depreciation of the improvements in the Project
and all amounts paid on loans of Landlord) computed in accordance with Tax Basis accounting
principles adopted by Landlord consistently




3









 







applied, including by way of illustration but not limited to: real property taxes, taxes assessed
on the Personal Property, any other governmental impositions imposed on or by reason of the
ownership, operation or use of the Project, and any tax in addition to or in lieu thereof, other
than taxes covered by Paragraph 5.4, whether assessed against Landlord or Tenant or collected by
Landlord or both; parts; equipment; supplies; insurance premiums; license, permit and inspection
fees; cost of services and materials (including property management fees); cost of compensation
(including employment taxes and fringe benefits) of all persons who perform duties connected with
the operation, maintenance and repair of the Project; costs of providing utilities and services,
including water, gas, electricity, sewage disposal, rubbish removal, janitorial, gardening,
security, parking, window washing, supplies and materials, and signing (but excluding services not
uniformly available to substantially all of the Project tenants); costs of capital improvements (i)
required to cause the Project to comply with all laws, statutes, ordinances, regulations, rules and
requirements of any governmental or public authority, including, without limitation, the Americans
with Disabilities Act of 1990 (the “ADA”) (collectively, “Legal Requirements”), except for costs,
if any, of correcting any failure of the Project to comply, as of the Commencement Date, with any
Legal Requirement as enacted as of the Commencement Date, or (ii) which reduce Operating Costs,
such costs, together with interest on the unamortized balance at the rate of nine percent (9%) per
annum, to be amortized over the useful life or payback period whichever is shorter; costs of
maintenance and replacement of landscaping; legal, accounting and other professional services
incurred in connection with the operation of the Project and the calculation of Operating Costs;
and rental expense or a reasonable allowance for depreciation of personal property used in the
maintenance, operation and repair of the Project. Notwithstanding the foregoing, should Landlord
pay for such capital improvements in cash, then Landlord shall not include the nine percent (9%)
interest rate in amortizing such costs. If the Project is not fully occupied for any calendar year
during the term of this Lease, Operating Costs shall be adjusted to the amount which would have
been incurred if the Project had been fully occupied for the year. Tax basis accounting is defined
to be the Internal Revenue Code and related rules, regulations, rulings, and applicable case law
applied by Landlord on a consistent basis in reporting income and expense, including the
capitalization of costs and related depreciation, to the Internal Revenue Service.




               Notwithstanding the foregoing, Operating Costs shall not include the following:



                    (1) Depreciation and amortization, except as provided for above.



                    (2) Costs of capital repairs, replacements or improvements, except as provided for above.



                    (3) Costs to acquire sculpture, paintings or other objects of art.



                    (4) Costs incurred in connection with upgrading the Building to comply with disability, life, fire,
safety codes, ordinances, statutes, or other laws in effect prior to the Commencement Date
including, without limitation, the ADA, and penalties or damages incurred due to such
non-compliance.



                    (5) Advertising and promotional expenses.






4









 








                    (6) Real estate broker’s or other leasing commissions, attorneys’ fees, architects’ fees and other
costs incurred in connection with negotiations or disputes with tenants or prospective tenants of
the Building or Project, other than disputes as to the common areas.



                    (7) Costs incurred in renovating or otherwise improving or decorating or redecorating space for
tenants or other occupants in the Project or vacant space in the Project.



                    (8) Repairs or other work occasioned by fire, windstorm, or other casualty and public liability
claims, to the extent such are covered by insurance proceeds, the cost of which is included in
Operating Costs, and costs incurred by Landlord in connection with or made necessary by the actual
or threatened exercise by governmental authorities (or other entities with power of eminent domain)
of the power of eminent domain.



                    (9) Costs, other than Operating Costs, specially billed to Tenant or any other specific tenants,
such as (but not limited to) above Building Standard janitor service, or electrical usage or other
services or benefits above Building Standard.



                    (10) Costs incurred to remedy or monitor any Hazardous Materials condition except if caused by
Tenant.



                    (11) Interest or penalties resulting from (a) late payment of any operating expense by Landlord due
to Landlord’s negligence or willful misconduct (unless Landlord in good faith disputes a charge and
subsequently loses or settles that dispute); or (b) any amount payable by Landlord to any tenant
resulting solely from Landlord’s default in its obligations to that tenant.



                    (12) Costs incurred in installing, operating and maintaining any specialty service that is not
necessary for Landlord’s provision, management, maintenance and repair of the Project. The
following are examples of these specialty services:
observatory; broadcasting facilities (other than the life-support and security system for the
Project); luncheon club, cafeteria, or other dining facility; newsstand; flower services; shoeshine
service; carwash; and athletic or recreational club.



                    (13) Any compensation paid to clerks, attendants, or other persons in commercial concessions in the
Project that are operated by Landlord.



                    (14) Debt service, interest or other financing.



                    (15) Rental payments to any ground Lessor.



          5.2 Tenant’s Share. If Operating Costs during any calendar year following the Base Year exceed the
rentable square footage of the Complex multiplied by $9.65 (the “Expense Stop”), Tenant shall pay
to Landlord “Tenant’s Share” multiplied by such excess (“Operating Cost Payments”). “Tenant’s
Share” means 5.01%, which is calculated by dividing






5









 







the rentable square footage of the Premises by the rentable square footage of the Complex as such
rentable square footages are set forth in Paragraph 1, and multiplying such number by 100.




          5.3 Notice and Payment. As soon as reasonably practical after the end of each calendar year
following the Base Year, Landlord shall furnish Tenant a written statement showing in reasonable
detail the Operating Costs for the preceding calendar year, but no later than one hundred twenty
(120) days and the amount of any payment due from Tenant to Landlord or from Landlord to Tenant,
taking into account prior Operating Cost Payments made by Tenant for such preceding calendar year.
Tenant shall have one hundred eighty (180) days after receipt of Landlord’s statement to notify
Landlord of any objections they have to such statement, or of their intention to review supporting
documentation for such statement. If Tenant does not so notify Landlord, such statement shall
conclusively be deemed correct and Tenant shall have no right thereafter to dispute or review
support for such statement, any item therein, or the computation of Operating Costs. If Tenant does
so notify the Landlord within the one hundred eighty (180) day period, Tenant shall have six (6)
months from the date of notification to Landlord to complete their review of the supporting
documentation and notify Landlord of all objections, if any, to such statement. Landlord and Tenant
hereby agree that Tenant will submit in writing to Landlord on or before the end of said six (6)
month period, all objections to Landlord’s statement, and Tenant’s only rights after said six (6)
month period shall be nonreversible removals or reductions of the said objections submitted to
Landlord. Landlord and Tenant hereby agree that after said six (6) month period, Tenant has no
further rights to review any supporting documentation unrelated to the objections submitted. Any
notifications to Landlord will be done in accordance with Paragraph 25.14.




          Coincidentally with the monthly Base Rent next due following Tenant’s receipt of such statement (or
after Tenant’s six (6) month review period described above), Tenant shall pay to Landlord (in the
case of an underpayment) or Landlord shall credit against the next Base Rent due from Tenant (in
the case of an overpayment) the difference between (i) Tenant’s Share of any excess of Operating
Costs for the preceding calendar year over the Expense Stop (the “Prior Year’s Increase”), and (ii)
the Operating Cost Payments made by Tenant for such preceding calendar year. In addition, Tenant
shall pay to Landlord coincidentally with such next due Base Rent an amount equal to (A)
one-twelfth (1/12) of the Prior Year’s Increase, if any, multiplied by (B) the number of months or
partial months (including the then current month) then elapsed in the current calendar year, less
(C) the aggregate of any Operating Cost Payments made by Tenant for such current calendar year.
Monthly thereafter until adjustment is made the following year pursuant to this paragraph, Tenant
shall pay together with the monthly Base Rent one-twelfth (1/12) of any such Prior Year’s Increase.
In no event will Tenant be entitled to receive the benefit of a reduction in Operating Costs below
the Expense Stop.




          For any partial calendar year at the termination of this Lease, Tenant’s Share of any increases in
Operating Costs for such year over the Expense Stop shall be prorated on the basis of a 365-day
year by computing Tenant’s Share of the increases in Operating Costs for the entire year and then
prorating such amount for the number of days this Lease was in effect during such year.
Notwithstanding the termination of this Lease, and within ten (10) days after Tenant’s receipt of
Landlord’s statement regarding the determination of increases in Operating Costs for the calendar
year in which this Lease terminates, Tenant shall pay to Landlord or Landlord shall pay to Tenant,
as the case may be, an amount equal to the difference between Tenant’s Share of the increases in
Operating Costs for such year (as prorated) and the amount previously paid by Tenant toward such
increases.






6











 





          5.4 Additional Taxes. Tenant shall reimburse to Landlord, within thirty (30) days after
receipt of a demand therefor, Tenant’s Share of any and all taxes payable by Landlord (other than
net income taxes or any taxes included within Operating Costs), whether or not now customary or
within the contemplation of the parties hereto (i) upon, allocable to or measured by the area of
the Building, (ii) upon all or any portion of the Rent payable hereunder and under other leases of
space in the Building, including any gross receipts tax or excise tax levied with respect to the
receipt of such Rent, or (iii) upon or with respect to the possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy of the Building or any portion
thereof. Tenant shall not be required to reimburse Landlord for taxes under this Paragraph 5.4 to
the extent Tenant has paid Tenant’s Share of such taxes through Operating Cost Payments under
Paragraph 5.2.




          5.5 Tenant’s Taxes. Tenant shall pay before delinquency (whether levied on Landlord or Tenant), any
and all taxes assessed upon or measured by (i) Tenant’s equipment, furniture, fixtures and other
personal property located in the Premises, (ii) any improvements or alterations made to the
Premises prior to or during the term of this Lease paid for by Tenant (“Above-Standard
Improvements”), or (iii) this transaction or any document to which Tenant is a party creating or
transferring an interest or an estate in the Premises. For the purpose of determining said amounts,
figures supplied by the County Assessor as to the amount so assessed shall be conclusive. Tenant
shall comply with the provisions of any law, ordinance or rule of the taxing authorities which
require Tenant to file a report of Tenant’s property located in the Premises.




     6. USE



          6.1 Use. The Premises shall be used and occupied by Tenant for general office purposes and for no
other purpose without the prior written consent of Landlord which shall not be unreasonably
withheld.




          6.2 Suitability. Tenant acknowledges that neither Landlord nor any agent of Landlord has made any
representation or warranty with respect to the Premises or the Building or with respect to the
suitability of either for the conduct of Tenant’s business, nor has Landlord agreed to undertake
any modification, alteration or improvement to the Premises except as provided in the Work Letter.
The taking of possession of the Premises by Tenant shall conclusively establish that the Premises
and the Building were at such time in satisfactory condition unless within ten (10) days after such
date Tenant shall give Landlord written notice specifying in reasonable detail the respects in
which the Premises or the Building were not in satisfactory condition. Not withstanding the
foregoing, Landlord shall warrant the Premises against any patent defects for the first six (6)
months of the Term and against any latent defects for the first year.




          6.3 Uses Prohibited.




               (a) Tenant shall not do nor permit anything to be done in or about the Premises nor bring or keep
anything therein which will in any way increase the existing rate or affect any fire
or other insurance upon the Building or any of its contents, or cause a cancellation of any
insurance policy covering said Building or any part thereof or any of






7









 







its contents, nor shall Tenant sell or permit to be kept, used or sold in or about said Premises
any articles which may be prohibited by a standard form policy of fire insurance.




               (b) Tenant shall not do or permit anything to be done in or about the Premises which will in any
way obstruct or interfere with the rights of other tenants or occupants of the Building, or injure
or annoy them, or use or allow the Premises to be used for any unlawful or objectionable purpose,
nor shall Tenant cause, maintain or permit any nuisance in or about the Premises. Tenant shall not
commit or suffer to be committed any waste in or upon the Premises. Tenant shall not bring onto the
Premises any apparatus, equipment or supplies that may overload the Premises or the Building or any
utility or elevator systems or jeopardize the structural integrity of the Building or any part
thereof.



               (c) Tenant shall not use the Premises or permit anything to be done in or about the Premises which
will in any way conflict with, and at its sole cost and expense shall promptly comply with, any
Legal Requirement now in force or which may hereafter be enacted or promulgated relating to the
condition, use or occupancy of the Premises, excluding structural changes not relating to or
affecting the condition, use or occupancy of the Premises or Tenant’s improvements or acts. The
judgment of any court of competent jurisdiction or the admission of Tenant in any action against
Tenant, whether Landlord be a party thereto or not, that Tenant has violated any Legal Requirement,
shall be conclusive of the fact as between Landlord and Tenant.



     7. SERVICE AND UTILITIES



          7.1 Landlord’s Obligations. Provided Tenant is not in default hereunder, Landlord shall furnish to
the Premises during reasonable hours of generally recognized business days, to be determined by
Landlord, and subject to the rules and regulations of the Building, water, gas and electricity
suitable for the intended use of the Premises, heat and air conditioning required in Landlord’s
judgment for the comfortable use and occupancy of the Premises, scavenger, janitorial services as
described in Exhibit E attached hereto, window washing service and elevator service customary in
similar buildings in the competing geographical areas. Landlord shall also maintain and keep
lighted the common lobbies, hallways, stairs and toilet rooms in the Building.




               (a) Landlord’s current hours of operation in Bishop Ranch (hereinafter “Hours of Operation”) are 7
a.m. to 7 p.m., Monday through Friday, excepting holidays (New
Year’s Day, President’s Day, Memorial Day, July 4th (Independence Day), Labor Day, Thanksgiving,
and Christmas Day). In the event the holiday falls on a weekend, the business day closest to the
holiday will be considered to be the holiday. The building and its services are available to Tenant
24 hours a day, seven (7) days a week, 365 days a year. The after hours rate for air conditioning
and heating service after Landlord’s Hours of Operation is currently $75.00 per hour, per floor.
This rate is subject to adjustment based upon the decrease or increase in utilities as charged by
Landlord’s utility provider.



          7.2 Tenant’s Obligation. Tenant shall pay for, prior to delinquency, all telephone and all other
materials and services, not expressly required to be paid by Landlord, which may be furnished to or
used in, on or about the Premises during the term of this Lease.






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          7.3 Tenant’s Additional Requirements




               (a) Tenant shall pay for heat and air-conditioning furnished at Tenant’s request during
non-business hours and/or on non-business days on an hourly basis at a reasonable rate established
by Landlord. Tenant shall not use in excess of Building Standard amounts (as determined by
Landlord) of electricity, water or any other utility without Landlord’s prior written consent,
which consent Landlord may refuse. Landlord, after providing no less than thirty (30) days’ written
notice to Tenant, may cause a water meter or electric current meter to be installed in the Premises
so as to measure the amount of water and electric current consumed for any such excess use. The
cost of such meters and of installation, maintenance and repair thereof shall be paid by Tenant and
Tenant agrees to pay Landlord within thirty (30) days for all such water and electric current
consumed as shown by said meters, at the rates charged for such services by the city in which the
Building is located or by the local public utility furnishing the same, plus any additional expense
incurred in keeping account of the water and electric current so consumed. If a separate meter is
not installed to measure any such excess use, Landlord shall have the right to estimate the amount
of such use through qualified personnel. In addition, Landlord, after providing no less than thirty
(30) days’ written notice to Tenant, may impose a reasonable charge for the use of any additional
or unusual janitorial services required by Tenant because of any Suite Improvements different from
or above Building Standard, carelessness of Tenant or the nature of Tenant’s business (including
hours of operation).



               (b) If any lights other than Building Standard or equipment are used in the Premises which affect
the temperature otherwise maintained by the air conditioning system, Landlord may install
supplementary air conditioning units in the Premises and the cost thereof, including the cost of
installation, operation and maintenance thereof, shall be
paid by Tenant to Landlord upon demand by Landlord. In addition, if any lights other than Building
Standard are used in the Premises, Tenant shall pay the cost to replace any worn or dead bulbs or
tubes.



               (c) In no event shall Tenant (i) connect any apparatus, machine or device through electrical
outlets except in the manner for which such outlets are designed and without the use of any device
intended to increase the plug capacity of any electrical outlet or (ii) maintain at any time an
electrical demand load in excess of four (4) watts per square foot of usable area of the Premises.



          7.4 Nonliability. Landlord shall not be liable for, and Tenant shall not be entitled to any
abatement or reduction of Rent, by reason of Landlord’s failure to furnish any of the foregoing
when due to “Force Majeure Events” (as defined in Paragraph 25.9). If failure to furnish the
foregoing is within Landlord’s reasonable control and Tenant is unable to occupy the Premises due
to such failure, Tenant shall be entitled to an abatement of Base Rent commencing with the fifth
consecutive day of such failure unless prior thereto Landlord commences to cure such failure and
thereafter diligently proceeds with such cure. Any failure to furnish any of the foregoing shall
not constitute an eviction of Tenant, constructive or otherwise and, notwithstanding any law to the
contrary that may now or hereafter exist, Tenant shall not be entitled to terminate this Lease on
account of such failure. Landlord shall not be liable under any circumstances for loss of or injury
to property or business or consequential damages, however occurring, through or in connection with
failure to furnish any of the foregoing.







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     8. MAINTENANCE AND REPAIRS; ALTERATIONS AND ADDITIONS



          8.1 Maintenance and Repairs




               (a) Landlord’s Obligations. Landlord shall maintain in good order, condition and repair the
structural and common areas of the Building, and the basic heating, ventilating, air conditioning,
electrical, plumbing, fire protection, life safety, security and mechanical systems of the Building
(the “Building Systems”), and shall cause the common areas of the Building to comply with all Legal
Requirements (including, without limitation, the ADA), provided that any maintenance and repair
caused by the acts or omissions of Tenant or Tenant’s agents, employees, invitees, visitors
(collectively “Tenant’s Representatives”) shall be paid for by Tenant. Notwithstanding any law to
the contrary that may now or hereafter exist, Tenant shall not have the right to make repairs at
Landlord’s expense or to terminate this Lease because of Landlord’s failure to keep the foregoing
in good order, condition and repair, nor shall Landlord be liable under any
circumstances for any consequential damages or loss of business, however occurring, through or in
connection with any such failure.



               (b) Tenant’s Obligations



                    (1) Tenant, at Tenant’s sole cost and expense, except for services furnished by Landlord pursuant
to Paragraph 7 hereof, shall maintain the non-structural of the portion of the Premises in good
sanitary, condition and repair including nonbuilding standard lights, and equipment installed for
the use of the Premises, and shall cause the Premises to comply with all Legal Requirements
(including, without limitation, the ADA). Notwithstanding any law to the contrary that may now or
hereafter exist, Tenant shall not have the right to make repairs at Landlord’s expense or to
terminate this Lease because of Landlord’s failure to keep the Premises in good order, condition
and repair.



                    (2) In the event Tenant fails to maintain the Premises in good order, condition and repair,
Landlord shall give Tenant notice to do such acts as are reasonably required to so maintain the
Premises. In the event Tenant fails to commence such work within a reasonable time and diligently
prosecute it to completion, Landlord shall have the right to do such acts and expend such funds at
the expense of Tenant as are reasonably required to perform such work. Any amount so expended by
Landlord shall be paid by Tenant within thirty (30) days after demand with interest from the date
expended by Landlord until paid by Tenant at the “Default Rate,” as defined below. Landlord shall
have no liability to Tenant for any damage, inconvenience or interference with the use of the
Premises by Tenant as a result of performing any such work. As used in this Lease, “Default Rate”
shall mean the lesser of twelve percent per annum (12%) or the maximum rate permitted by law.



               (c) Compliance with Law. Landlord and Tenant shall each do all acts required to comply with all
applicable Legal Requirements relating to their respective maintenance and repair obligations as
set forth herein.



          8.2 Alterations and Additions




               (a) Tenant shall make no alterations, additions or improvements to the Premises or any part thereof
without obtaining the prior written consent of Landlord, which shall not be unreasonably withheld.





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               (b) Landlord may impose as a condition to the aforesaid consent such requirements as Landlord may
deem necessary in its sole discretion, including without limitation thereto, performing the work
itself, specifying the manner in which the work is done, and selecting the contractor by whom the
work is to be performed and the times during which it is to be accomplished. Tenant shall pay to
Landlord within ten (10) days of request an amount equal to the reasonable costs and expenses for
time spent by Landlord’s employees or contractors in supervising, approving and administering such
alterations.



               (c) All such alterations, additions or improvements, all other Above-Standard Improvements, and all
work performed under the Work Letter shall be the property of Landlord and shall remain upon and be
surrendered with the Premises, unless Landlord upon granting its consent to such alteration or
addition requests in writing that Tenant remove all or any part of same.



               (d) All articles of personal property and all business and trade fixtures, machinery and equipment,
cabinetwork, furniture and movable partitions owned by Tenant or installed by Tenant at its expense
in the Premises shall be and remain the property of Tenant and may be removed by Tenant at any time
during the Lease term when Tenant is not in default hereunder.



     9. ENTRY BY LANDLORD



          Landlord and Landlord’s agents shall at any and all times with reasonable prior notice (except in
the case of an emergency, in which case no notice shall be required) have the right to enter the
Premises to inspect the same, to supply janitorial service and any other service to be provided by
Landlord to Tenant hereunder, to show the Premises to prospective purchasers or tenants, to post
notices of non-responsibility and “for lease” signs, and to alter, improve or repair the Premises
and any portion of the Building, and may for that purpose erect scaffolding and other necessary
structures where reasonably required by the character of the work to be performed, always providing
the entrance to the Premises shall not be blocked thereby. Landlord shall conduct its activities
under this Paragraph 9 in a manner that will minimize inconvenience to Tenant without incurring
additional expense to Landlord. For each of the aforesaid purposes, Landlord shall at all times
have and retain a key with which to unlock all of the doors in, upon and about the Premises,
excluding Tenant’s vaults and safes, and Landlord and Landlord’s agents shall have the right to use
any and all means which Landlord may deem proper to open said doors in an emergency, in order to
obtain entry to the Premises, and any entry to the Premises obtained by Landlord or Landlord’s
agents by any of said means, or otherwise, shall not under any circumstances be construed or deemed
to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant
from the Premises or any portion thereof. Tenant shall not be released from its obligations under
this Lease nor be entitled to any abatement of Rent on account of Landlord’s entry under this
Paragraph, and Tenant hereby waives any claim for damages for any injury or inconvenience to or
interference with Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises, and
any other loss occasioned thereby.




     10. LIENS



          Tenant shall keep the Premises and the Building free from any liens arising out of work performed,
materials furnished, or obligations incurred by Tenant and shall indemnify,





11









 







hold harmless and defend Landlord from any liens and encumbrances arising out of any work
performed, materials furnished or obligations incurred by or at the direction of Tenant. In the
event that Tenant shall not, within twenty (20) days following the imposition of any such lien,
cause such lien to be released of record by payment or posting of a proper bond, Landlord shall
have, in addition to all other remedies provided herein and by law, the right, but no obligation,
to cause the same to be released by such means as it shall deem proper, including payment of the
claim giving rise to such lien. All such sums paid by Landlord and all expenses incurred by it in
connection therewith, including attorneys’ fees and costs, shall be payable to Landlord by Tenant
within thirty (30) days with interest at the Default Rate until paid. Landlord shall have the right
at all times to post and keep posted on the Premises any notices permitted or required by law, or
which Landlord shall deem proper, for the protection of Landlord and the Premises, and any other
party having an interest therein, from mechanics’ and materialmen’s liens, and Tenant shall give to
Landlord at least three (3) business days prior written notice of the expected date of commencement
of any work relating to alterations or additions to the Premises.




     11. INDEMNITY



          11.1 Indemnity.




               (a) Tenant shall protect, indemnify, defend and hold Landlord, its partners, members, officers,
shareholders, directors, employees, agents and property managers harmless from and against any and
all losses, damages, costs, claims, attorneys’ fees, expenses, liability, fines, and penalties
arising from (i) any default or breach by Tenant in the observance or performance of any of the
terms, covenants or conditions of this Lease by Tenant or (ii) any negligence or willful misconduct
of Tenant or Tenant Representative in, on, or about the Premises, or any part of the Project,
either during or prior to occupancy or during the Term of this Lease. Notwithstanding the
foregoing, in no event shall Tenant be liable for indirect or consequential damages of Landlord
(including lost profits) however occurring.



               (b) Landlord agrees to indemnify Tenant against and save Tenant harmless from any and all loss,
cost liability, damage, and expense, including without limitation penalties, fines
and reasonable attorneys’ fees and disbursements, incurred in connection with or arising from any
gross negligence or willful misconduct of Landlord in, on, or about the Premises, or any part of
the Project, either during occupancy prior to the Term or during the Term of this Lease.
Notwithstanding the foregoing, in no event shall Landlord be liable for indirect or consequential
damages of Tenant (including lost profits) however occurring.



          11.2 Exemption of Landlord from Liability. Landlord shall not be liable for injury or damage which
may be sustained by the person or property of Tenant, its employees, invitees or customers, or any
other person in or about the Premises caused by or resulting from fire, steam, electricity, gas,
water or rain, which may leak or flow from or into any part of the Premises, or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, telephone cabling or wiring, or lighting fixtures of the same, whether the damage or
injury results from conditions arising upon the Premises or upon other portions of the Building of
which the Premises are a part, or from other sources. Landlord shall not be liable for any damages
arising from any act or neglect of any other tenant of the Building.





12











 





     12. INSURANCE



          12.1 Coverage. Tenant shall, at all times during the term of this Lease, and at its own cost and
expense, procure and continue in force the following insurance coverage:




               (a) Commercial General Liability Insurance with a combined single limit for personal or bodily
injury and property damage of not less than $3,000,000 or such other level of coverage that
Landlord may require in its reasonable judgment.



               (b) Fire and Extended Coverage Insurance, including vandalism and malicious mischief coverage,
covering and in an amount equal to the full replacement value of all fixtures, furniture and
improvements installed in the Premises by or at the expense of Tenant.



          12.2 Insurance Policies. The aforementioned minimum limits of policies shall in no event limit the
liability of Tenant hereunder. The aforesaid insurance shall name Landlord and its partners,
property manager, and mortgagees as an additional insured. Said insurance shall be with companies
having a rating of not less than A, XI in “Best’s Insurance Guide”. Tenant shall furnish from the
insurance companies or cause the insurance companies to furnish certificates of coverage. Except in
the event of a cancellation for non-payment of premium in which event the notice of cancellation
will be ten (10) days, no such policy shall be cancelable or subject to reduction of coverage or
other modification or cancellation except after thirty (30) days prior written notice to Landlord
by the insurer, except in the event of non-payment by Tenant, in which case Landlord will be
provided with a ten (10) day written notice from the insurer of the cancellation. All such policies
shall be written as primary policies, not contributing with and not in excess of the coverage which
Landlord may carry. Tenant shall, at least twenty (20) days prior to the expiration of such
policies, furnish Landlord with evidence of renewals or binders. Tenant agrees that if Tenant does
not take out and maintain such insurance, Landlord may (but shall not be required to) procure said
insurance on Tenant’s behalf and charge Tenant the premiums together with a reasonable handling
charge and Default Interest from the date paid by Landlord, payable within thirty (30) days of
receipt of written notice. Tenant shall have the right to provide such insurance coverage pursuant
to blanket policies obtained by Tenant, provided such blanket policies expressly afford coverage to
the Premises and to Tenant as required by this Lease.




          12.3 Landlord’s Insurance. During the term of this Lease Landlord shall maintain in effect
insurance on the Building against fire, extended coverage perils and vandalism and malicious
mischief (to the extent such coverages are available), with responsible insurers licensed to do
business in California, insuring the Building in an amount equal to at least ninety-five percent
(95%) of the replacement cost thereof excluding foundations, footings and underground
installations. Landlord may, but shall not be obligated to, carry insurance against additional
perils and/or in greater amounts.




          12.4
Waiver of Subrogation. Tenant and Landlord hereby waive and release any and all right of
recovery, whether arising in contract or tort, against the other, including employees and agents,
arising during the Term for any and all loss or damage to any property located within or
constituting a part of the Building or Complex, which loss or damage arises from the perils that
could be insured against under the ISO Causes of Loss-Special Form Coverage including any
deductible thereunder (whether or not the party suffering the loss or





13









 







damage actually carries such insurance, recovers under such insurance or self insures the loss or
damage) or which right of recovery arises from loss of earnings or rents resulting from loss or
damage caused by such a peril. This mutual waiver is in addition to any other waiver or release
contained in this Lease. Landlord and Tenant shall each have their insurance policies issued in
such form as to waive any right of subrogation which might otherwise exist.




     13.
DAMAGE OR DESTRUCTION.



          13.1
Landlord’s Duty to Repair. If all or a substantial part of the Premises are rendered
untenantable or inaccessible by damage to all or any part of the Project from fire or other
casualty then, unless either party elects to terminate this Lease pursuant to Paragraphs 13.2 or
13.3, Landlord shall, at its expense, use its commercially reasonable efforts to repair and restore
the Premises and/or access thereto, as the case may be, to substantially their former condition to
the extent permitted by the then applicable codes, laws and regulations; provided, however, that
Tenant rather than Landlord shall be obligated at Tenant’s expense to repair or replace Tenant’s
personal property, trade fixtures and any items or improvements that are required to be covered by
Tenant’s insurance under Paragraph 12.1(b).




                 If Landlord is required or elects to repair damage to the Premises and/or access thereto, this
Lease shall continue in effect but Tenant’s Base Rent and Operating Cost Payments from the date of
the casualty through the date of substantial completion of the repair shall be abated by a
proportionate amount based on the portion of the Premises that Tenant is prevented from using by
reason of such damage or its repair; provided, however, that if the casualty is the result of the
willful misconduct or negligence of Tenant or Tenant’s Representatives, there will be no such
rental abatement. In no event shall Landlord be liable to Tenant by reason of any injury to or
interference with Tenant’s business or property arising from fire or other casualty or by reason of
any repairs to any part of the Project made necessary by such casualty.



          13.2
Landlord’s Right to Terminate. Landlord may elect to terminate this Lease, effective as of the
last day of the calendar month in which such election is made, under the following circumstances:




               (a) Where, in the reasonable judgment of Landlord, the damage cannot be substantially repaired and
restored under applicable laws and governmental regulations within one (1) year after the date of
the casualty;



               (b) Where, in the reasonable judgment of Landlord, adequate proceeds are not, for any reason, made
available to Landlord from Landlord’s insurance policies to make the required repairs;



               (c) Where the Project is damaged or destroyed to the extent that the cost to repair and restore the
Project exceeds twenty-five percent (25%) of the full replacement cost of the Project, whether or
not the Premises are damaged or destroyed; or



               (d) Where the damage occurs within the last twelve (12) months of the term of the Lease.





14









 










                    If any of the circumstances described in this Paragraph 13.2 arise, Landlord must notify Tenant in
writing of that fact within one hundred and twenty (120) days after such circumstances arise and in
such notice Landlord must also advise Tenant whether Landlord has elected to terminate the Lease.
If Landlord so elects to terminate the Lease, Landlord shall provide Tenant ninety (90) days to
vacate the Premises.



          13.3
Tenant’s Right to Terminate. Tenant shall have the right to terminate this Lease if all or a
substantial part of the Premises are rendered untenantable or inaccessible by damage to all or any
part of the Project from fire or other casualty, provided that such casualty is not the result of
the willful misconduct or negligence of Tenant or Tenant’s Representatives, but only under the
following circumstances:




               (a) Tenant may elect to terminate this Lease if Landlord had the right under Paragraph 13.2 to
terminate this Lease but did not elect to so terminate and Landlord failed to commence the required
repair within ninety (90) days after the date it received proceeds to commence such repair. In such
event, Tenant may terminate this Lease as of the date of the casualty by notice to Landlord given
before the earlier of the date on which Landlord commences such repair or ten (10) days after the
expiration of such ninety (90)-day period; or



               (b) Tenant may elect to terminate this Lease in the circumstance described in Subparagraph 13.2(a).
In such event, Tenant may terminate this Lease as of the date of the casualty by notice to Landlord
given within thirty (30) days after Landlord’s notice to Tenant pursuant to Paragraph 13.2.



          13.4
Exclusive Rights. Landlord and Tenant each hereby agree that, notwithstanding any law to the
contrary that may now or hereafter exist, neither party shall have any right to terminate this
Lease in the event of any damage or destruction under any circumstances other than as provided in
Paragraphs 13.2 and 13.3.




     14. CONDEMNATION



           If all or a material portion of the Premises shall be taken or appropriated for public or
quasi-public use by right of eminent domain with or without litigation or transferred by agreement
in connection with such public or quasi-public use, either party hereto shall have the right at its
option, exercisable within thirty (30) days of receipt of notice of such taking, to terminate this
Lease as of the date possession is taken by the condemning authority, provided, however, that
before Tenant may terminate this Lease by reason of taking or appropriation as provided
hereinabove, such taking or appropriation shall be of such an extent and nature as to substantially
handicap, impede or impair Tenant’s use of the Premises. If any part of the Building other than the
Premises shall be so taken or appropriated, Landlord shall have the right at its option to
terminate this Lease. No award for any partial or entire taking shall be apportioned, and Tenant
hereby assigns to Landlord any award which may be made in such taking or condemnation, together
with any and all rights of Tenant now or hereafter arising in or to the same or any part thereof;
provided, however, that nothing contained herein shall be deemed to give Landlord any interest in
or to require Tenant to assign to Landlord any award made to Tenant for the taking of personal
property and fixtures belonging to Tenant and/or for Tenant’s
unamortized cost of leasehold improvements, so long as such award to Tenant does not decrease the
value of the award that would otherwise be made to Landlord in such taking or condemnation. In the
event of a partial taking which does not result in a termination of this





15









 







Lease, rent shall be abated in the proportion which the part of Premises so made unusable bears to
the rented area of the Premises immediately prior to the taking, and Landlord, at Landlord’s cost,
shall restore the Premises remaining to an architectural whole with the Base Rent reduced in
proportion to what the area taken bears to the Premises prior to the taking. No temporary taking of
the Premises and/or of Tenant’s rights therein or under this
Lease shall give Tenant the right to
terminate this Lease or to any abatement of Rent thereunder. Any award made to Tenant by reason of
any such temporary taking where Landlord does not terminate this Lease shall belong entirely to
Tenant so long as said award does not diminish Landlord’s award.




     15. ASSIGNMENT
AND SUBLETTING



          15.1
Landlord’s Consent Required. Tenant shall not assign, transfer, mortgage, pledge, hypothecate
or encumber this Lease or any interest therein (each a “Transfer”), and shall not sublet the
Premises or any part thereof, without the prior written consent of Landlord and any attempt to do
so without such consent being first had and obtained shall be wholly void and shall constitute a
breach of this Lease.




          15.2
Reasonable Consent.




               (a) If Tenant complies with the following conditions, Landlord shall not unreasonably withhold its
consent to the subletting of the Premises or any portion thereof or the assignment of this Lease.
Tenant shall submit in writing to Landlord (i) the name and legal composition of the proposed
subtenant or assignee; (ii) the nature of the business proposed to be carried on in the Premises;
(iii) the terms and provisions of the proposed sublease; (iv) such reasonable financial information
as Landlord may request concerning the proposed subtenant or assignee; and (v) the form of the
proposed sublease or assignment. Within ten (10) business days after Landlord receives all such
information it shall notify Tenant whether it approves such assignment or subletting or if it
elects to proceed under Paragraph 15.8 below. If within ten (10) business days after receipt of a
second notice Landlord does not respond, Landlord will be deemed to have consented.



               (b) The parties hereto agree and acknowledge that, among other circumstances for which Landlord
could reasonably withhold its consent to a sublease or assignment, it shall be reasonable for
Landlord to withhold its consent where (i) the assignee or subtenant (a “Transferee”) does not
itself occupy the entire portion of the Premises assigned or sublet, (ii) Landlord reasonably
disapproves of the Transferee’s creditworthiness or the character of the business to be conducted
by the Transferee at the Premises, (iii) the assignment or subletting would increase the burden on
the Building services or the number of people occupying the Premises, or (iv) Landlord otherwise
determines that the assignment or
sublease would have the effect of decreasing the value of the Project or increasing the expenses
associated with operating the Project.



          15.3
Excess Consideration. If Landlord consents to the assignment or sublease, Landlord shall be
entitled to receive as additional Rent hereunder fifty percent (50%) of any consideration paid by
the Transferee for the assignment or sublease and, in the case of a sublease, fifty percent (50%)
of the excess of the rent and other consideration payable by the subtenant over the amount of Base
Rent and Operating Cost Payments payable hereunder applicable to the subleased space. Prior to the
calculation of any excess rent, Tenant may deduct,






16









 







after providing Landlord with paid receipts, the reasonable and actual costs incurred for the
payment of brokerage fees, Tenant improvements, and attorney’s fees not to exceed $1,500.00.




          15.4
No Release of Tenant. No consent by Landlord to any assignment or subletting by Tenant shall
relieve Tenant of any obligation to be performed by Tenant under this Lease, whether occurring
before or after such consent, assignment or subletting, and the Transferee shall be jointly and
severally liable with Tenant for the payment of Rent (or that portion applicable to the subleased
space in the case of a sublease) and for the performance of all other terms and provisions of the
Lease. The consent by Landlord to any assignment or subletting shall not relieve Tenant and any
such Transferee from the obligation to obtain Landlord’s express written consent to any subsequent
assignment or subletting. The acceptance of rent by Landlord from any other person shall not be
deemed to be a waiver by Landlord of any provision of this Lease or to be a consent to any
assignment, subletting or other transfer. Consent to one assignment, subletting or other transfer
shall not be deemed to constitute consent to any subsequent assignment, subletting or other
transfer.




          15.5
Attorneys’ Fees. Tenant shall pay Landlord’s
reasonable attorneys’ fees not to exceed $1,500.00 incurred in connection with reviewing any proposed assignment or sublease.




          15.6
Transfer of Ownership Interest. If Tenant is a business entity, any direct or indirect
transfer of 50 percent or more of the ownership interest of the entity (whether all at one time or
over the term of the Lease) shall be deemed a Transfer.




          15.7
Effectiveness of Transfer. No permitted assignment by Tenant shall be effective until Landlord
has received a counterpart of the assignment and an instrument in which the assignee assumes all of
Tenant’s obligations under this Lease arising on or after the date of assignment. The voluntary,
involuntary or other surrender of this Lease by Tenant, or a mutual cancellation by Landlord and
Tenant, shall not work a merger, and any such surrender or cancellation shall, at the option of
Landlord, either terminate all or any existing subleases or operate as an assignment to Landlord of
any or all of such subleases.




          15.8 Landlord’s Right to Space. Notwithstanding any of the above provisions of this Paragraph 15 to
the contrary, if Tenant notifies Landlord that it desires to assign this Lease or sublet all or any
part of the Premises, Landlord, in lieu of consenting to such assignment or sublease, may elect by
providing written notice to Tenant within ten (10)
days of Tenant’s notification of its intent to sublease to terminate this Lease (in the case of an
assignment or a sublease of the entire Premises), or to terminate this Lease as it relates to the
space proposed to be subleased by Tenant (in the case of a sublease of less than the entire
Premises). In such event, this Lease (or portion thereof) will terminate on the date the assignment
or sublease was to be effective, and Landlord may lease such space to any party, including the
prospective Transferee identified by Tenant.




          15.9 Permitted Assignment or Sublease. Notwithstanding any provision to the contrary in Section 15, Tenant, so long as Tenant notifies Landlord in writing at least thirty (30) days prior to any
such sublease or assignment and so long as Tenant provides Landlord with a fully executed copy of
any such sublease or assignment, shall not be required to obtain Landlord’s consent to an
assignment or sublease of the Premises to an entity which controls, is controlled by or is under
common control with Tenant or which succeeds to substantially all of






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Tenant’s assets and business by merger, reorganization or purchase. All other such subsections
of Section 15 shall apply to this Paragraph 15.9 and shall remain in effect.



          15.10 No Net Profits Leases. Anything contained in the foregoing provisions of this Paragraph 15 to
the contrary notwithstanding, neither Tenant, nor any other person having an interest in the
possession, use, occupancy or utilization of the Premises, shall enter into any lease, sublease,
license, concession or other agreement for the use, occupancy or utilization of space in the
Premises which provides for rental or other payment for such use, occupancy or utilization based in
whole or in part on the net income or profits derived by any person from the premises leased, used,
occupied or utilized (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
void and ineffective as a conveyance of any right or interest in the possession, use, occupancy or
utilization of any part of the Premises.




     16. SUBORDINATION



          16.1 Subordination. Except as provided in the next sentence, or as the Tenant and the mortgagee or
trustee of any “First Mortgage” (as defined below) may otherwise agree, this Lease, at Landlord’s
option, shall be subject and subordinate to all ground or underlying leases which now exist or may
hereafter be executed affecting all or any part of the Project, and to the lien of any first
mortgages or first deeds of trust (each a “First Mortgage”) in any amount or amounts whatsoever now
or hereafter placed on or against the Land or Building, Landlord’s interest or estate therein, or
any ground or underlying lease, without the necessity of the execution and delivery of any further
instruments on the part of Tenant to effectuate such subordination. If any mortgagee or trustee of
a First Mortgage or ground lessor shall elect to have this Lease prior to the lien of its First
Mortgage or ground lease, and shall give written notice thereof to Tenant, this Lease shall be
deemed prior to such First Mortgage or ground lease, whether this Lease is dated prior to or
subsequent to the date of said First Mortgage or ground lease or the date of the recording thereof.



          16.2 Junior Liens. Tenant hereby agrees that this Lease shall be superior to the lien of any
present or future mortgages or deeds of trust that are junior to any First Mortgage.



          16.3 Subordination Agreements. Tenant will execute and deliver upon demand without charge therefor,
such further instruments evidencing the subordination of this Lease to any First Mortgage or ground
lease, or the subordination of any First Mortgage or ground lease to such Lease, pursuant to
Section 16.1, as the case may be, as may be required by Landlord. Tenant’s failure to comply with
its obligations under this Paragraph 16.3 within fifteen (15) days of demand shall constitute an
Event of Default and Landlord shall have the right, in such event, to impose upon Tenant a monetary
penalty of $1,000.00 for such non-compliance, in addition to all other remedies available to
Landlord under this Lease and by law.



          16.4 Attornment. If this Project is transferred to any purchaser pursuant to or in lieu of
proceedings to enforce any mortgage, deed of trust or ground lease (collectively, “Encumbrance”),
and this Lease is either prior to such Encumbrance or the mortgagee or trustee
of a First Mortgage or ground lessor of the Project elects to have this Lease survive such
transfer, Tenant shall attorn to such purchaser and recognize such purchaser as the
landlord under this Lease, and this Lease shall continue as a direct lease between such purchaser
and Tenant.






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     17. QUIET ENJOYMENT



          Landlord covenants and agrees with Tenant that upon Tenant paying the Rent and performing its other
covenants and conditions under this Lease, Tenant shall have the quiet possession of the Premises
for the term of this Lease as against any persons or entities lawfully claiming by, through or
under Landlord, subject, however, to the terms of this Lease and of any Encumbrance.



     18. DEFAULT; REMEDIES



          18.1 Default. The occurrence of any of the following shall constitute an “Event of Default” by
Tenant:



               (a) Tenant fails to pay Rent when due and such failure continues for five (5) days after Landlord
provides written notice to Tenant that Rent was not received;



               (b) Tenant fails to deliver any subordination agreement requested by Landlord within the period
described in Paragraph 16;



               (c) Tenant fails to deliver any estoppel certificate requested by Landlord within the period
described in Paragraph 22;



               (d) Tenant Transfers or attempts to Transfer this Lease without complying with the provisions of
Paragraph 15;



               (e) Tenant fails to observe and perform any other provision of this Lease to be observed or
performed by Tenant, where such failure continues for twenty (20) days after written notice thereof
by Landlord to Tenant; provided, however, that if the nature of the default is such that the same
cannot reasonably be cured within said twenty (20) day period, Tenant shall not be deemed to be in
default if Tenant shall within such period commence such cure and thereafter diligently prosecute
the same to completion;



               (f) Tenant abandons the Premises without continuing to pay Rent when due; or



               (g) The making by Tenant of any general assignment or general arrangement for the benefit of
creditors; the filing by or against Tenant of a petition seeking relief under any law relating to
bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within
sixty (60) days); the appointment of a trustee or receiver to take possession of substantially all
of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease, where possession
is not restored to Tenant within thirty (30) days; or the attachment, execution or other judicial
seizure of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in
this Lease, where such seizure is not discharged within thirty (30) days.




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          18.2 Remedies. Upon the occurrence of an Event of Default, Landlord may, at any time thereafter
exercise the following remedies, which shall be in addition to any other rights or remedies now or
hereafter available to Landlord at law or in equity:



               (a) Maintain this Lease in full force and effect and recover Rent as it becomes due, without
terminating Tenant’s right to possession irrespective of whether Tenant shall have abandoned the
Premises. In the event Landlord elects not to terminate the Lease, Landlord shall have the right to
attempt to relet the Premises at such rent and upon such conditions and for such a term, and to do
all acts necessary to maintain or preserve the Premises as Landlord deems reasonable and necessary
without being deemed to have elected to terminate the Lease, including removal of all persons and
property from the Premises; such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Tenant. In the event any such reletting occurs,
rents received by Landlord from such subletting shall be applied (i) first, to the payment of the
costs of maintaining, preserving, altering and preparing the Premises for subletting and other
costs of subletting, including but not limited to brokers’ commissions, attorneys’ fees and
expenses of removal of Tenant’s personal property, trade fixtures, alterations and leasehold
improvements; (ii) second, to the payment of Rent then due and payable; (iii) third, to the payment
of future Rent as the same may become due and payable hereunder; and (iv) fourth, the balance, if
any, shall be paid to Tenant upon (but not before) expiration of the term of this Lease. If the
rents received by Landlord from such subletting, after application as provided above, are
insufficient in any month to pay the Rent due and payable hereunder for such month, Tenant shall
pay such deficiency to Landlord monthly upon demand. Notwithstanding any such subletting for
Tenant’s account without termination, Landlord may at any time thereafter, by written notice to
Tenant, elect to terminate this Lease by virtue of a previous Event of Default. During the
continuance of an Event of Default, for so long as Landlord does not terminate Tenant’s right to
possession of the Premises, Landlord shall not unreasonably withhold its consent to an assignment
of this Lease or a sublease of the Premises as set forth in Paragraph 15.2 — “Reasonable Consent”.



               (b) Terminate Tenant’s right to possession of the Premises at any time by written notice to Tenant,
in which case Tenant shall immediately surrender possession of the Premises to Landlord. Tenant
expressly acknowledges that in the absence of such written notice from Landlord, no other act of
Landlord, including, but not limited to, its re-entry into the Premises, its efforts to relet the
Premises, its reletting of the Premises for Tenant’s account, its storage of Tenant’s personal
property and trade fixtures, its acceptance of keys to the Premises from Tenant or its exercise of
any other rights and remedies under this Paragraph 18.2, shall constitute an acceptance of Tenant’s
surrender of the Premises or constitute a termination of this Lease or of Tenant’s right to
possession of the Premises. If Landlord terminates Tenant’s right to possession in writing,
Landlord shall be entitled to recover from Tenant all damages as provided in California Civil Code
Section 1951.2 or any other applicable existing or future law, ordinance or regulation
providing for recovery of damages for such breach, including but not limited to the following:



                    (1) The reasonable cost of recovering the Premises; plus



                    (2) The reasonable cost of removing Tenant’s alterations, trade fixtures and Above-Standard
Improvements; plus







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                    (3) All
unpaid Rent due or earned hereunder prior to the date of termination, less the proceeds of
any reletting or any rental received from subtenants prior to the date of termination applied as
provided in subsection (a) above, together with interest at the Default Rate, on such sums from the
date such Rent is due and payable until the date of the award of damages; plus



                    (4) The amount by which the Rent which would be payable by Tenant hereunder, including Operating
Cost Payments as reasonably estimated by Landlord, from the date of termination until the date of
the award of damages exceeds the amount of such rental loss Tenant proves could have been
reasonably avoided, together with interest at the Default Rate on such sums from the date such Rent
is due and payable until the date of the award of damages; plus



                    (5) The amount by which the Rent which would be payable by Tenant hereunder, including Operating
Cost Payments, as reasonably estimated by Landlord, for the remainder of the then term, after the
date of the award of damages exceeds the amount of such rental loss as Tenant proves could have
been reasonably avoided, discounted at the discount rate published by the Federal Reserve Bank of
San Francisco for member banks at the time of the award plus one percent (1%); plus



                    (6) Such other amounts in addition to or in lieu of the foregoing as may be permitted from time to
time by applicable law.



               (c) During the continuance of an Event of Default, Landlord may enter the Premises without
terminating this Lease and remove all Tenant’s personal property, and trade fixtures from the
Premises. If Landlord removes such property from the Premises and stores it at Tenant’s risk and
expense, and if Tenant fails to pay the cost of such removal and storage after written demand
therefor and/or to pay any Rent then due, after the property has been stored for a period of thirty
(30) days or more Landlord may sell such property at public or private sale, in the manner and at
such times and places as Landlord in its sole discretion deems commercially reasonable following
reasonable notice to Tenant of the time and place of such sale. The proceeds of any such sale shall
be applied first to the payment of the expenses for removal and storage of the property,
preparation for and conducting such sale, and attorneys’ fees and other legal expenses incurred by
Landlord in connection therewith, and the balance shall be applied as provided in subsection (a)
above.



                    Tenant hereby waives all claims for damages that may be caused by Landlord’s reentering and taking
possession of the Premises or removing and storing Tenant’s personal property pursuant to this
Paragraph, and Tenant shall hold Landlord harmless from and against any loss, cost or damage
resulting from any such act. No reentry by Landlord shall constitute or be construed as a forcible
entry by Landlord.



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







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          18.3 Late Charges. Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent will
cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to, processing and
accounting charges. Accordingly, if any installment of Base Rent or Operating Costs Payments is not
received by Landlord or Landlord’s designee within five (5) days of the date such amount shall be
due, or if any installment of other Rent is not received by Landlord or Landlord’s designee on or
before the date such amount shall be due, Tenant shall pay to Landlord a late charge equal to ten
percent (10%) of such overdue amount. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant.
Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant’s
default with respect to such overdue amount nor prevent Landlord from exercising any of the other
rights and remedies granted hereunder.



          18.4 Interest. In addition to the late charges referred to above which are intended to defray
Landlord’s costs resulting from late payments, any late payment of Rent shall, at Landlord’s
option, bear interest from the due date of any such payment to the date the same is paid at the
Default Rate, provided, however, that if Landlord imposes a late charge on any overdue payment,
such overdue payment shall not begin to bear interest under this Paragraph 18.4 until thirty (30)
days after the due date thereof.



          18.5 Default by Landlord. Landlord shall not be in default unless Landlord fails to perform
obligations required of Landlord within a reasonable time, but in no event later than thirty (30)
days after written notice by Tenant to Landlord and to any mortgagee, trustee or ground lessor of
the Project (each a “Holder”) whose name and address shall have theretofore been furnished to
Tenant in writing, specifying that Landlord has failed to perform such obligations; provided,
however, that if the nature of Landlord’s
obligation is such that more than thirty (30) days are required for performance, then Landlord
shall not be in default if Landlord commences performance within such thirty (30) day period and
thereafter diligently prosecutes the same to completion.



     19. PARKING



          Tenant and Tenant’s employees, invitees and customers shall have the right to use the parking areas
of the Building free of any charge subject to such regulations and charges as Landlord shall adopt
from time to time, and subject to the right of Landlord to restrict the use by Tenant and Tenant’s
Representatives when in the sole judgment of Landlord such use is excessive for the parking area in
relationship to the reasonable use required by other Tenants. If Landlord becomes obligated under
applicable laws or regulations or any other directive of any governmental or quasi-governmental
authority to pay or assess fees or charges for parking in the Building’s parking area, Tenant shall
pay such amounts to Landlord as additional Rent.



     20. RELOCATION OF PREMISES



          20.1 Conditions. For the purpose of maintaining an economical and proper distribution of Tenants
throughout Bishop Ranch acceptable to Landlord, Landlord shall have
the one (1) time right after
the
36th month of the term of this Lease to relocate Tenant within Bishop Ranch, subject to the
following terms and conditions:









22









 








               (a) The rentable and usable areas of the new Premises must be of substantially equal size to the
existing Premises (a variation of up to ten percent (10%) is permitted provided the Base Rent
payable under this Lease is not increased);



               (b) Landlord shall pay the cost of providing tenant improvements in the new Premises comparable to
the tenant improvements in the existing Premises;



               (c) Landlord shall pay the expenses reasonably incurred by Tenant to move to the new Premises, plus
Tenant’s costs of door lettering, telephone relocation and reasonable quantities of new stationery;



          20.2 Notice. Landlord shall deliver to Tenant written notice of Landlord’s election to relocate
Tenant, specifying the new location and the amount of Base Rent payable for the new Premises at
least six (6) months prior to the date the relocation is to be effective. If the location of the
new Premises is not reasonably acceptable to Tenant, Tenant for a period of fifteen (15) days after
receipt of Landlord’s relocation notice, shall have the right (by delivering written notice to
Landlord) to terminate this Lease. If Tenant so notifies Landlord, Landlord, at its option, may
withdraw its relocation notice, in which event this Lease shall continue and Tenant shall not be
relocated, or accept Tenant’s
termination notice, in which event this Lease shall terminate effective as of the date the
relocation was to be effective.



     21. MORTGAGEE PROTECTION.



          Tenant agrees to give any Holder, by registered mail, a copy of any notice of default served upon
the Landlord, provided that prior to such notice Tenant has been notified in writing (by way of
notice of assignment of rents and leases, or otherwise) of the address of such Holder. If Landlord
shall have failed to cure such default within the time period set forth in Paragraph 18.5 the
Holder shall have an additional thirty (30) days within which to cure such default or if such
default cannot be cured within that time, then such additional time as may be necessary to cure
such default (including the time necessary to foreclose or otherwise terminate its Encumbrance, if
necessary to effect such cure), and this Lease shall not be terminated so long as such remedies are
being diligently pursued.



     22. ESTOPPEL CERTIFICATES.



          (a) Upon ten (10) days’ notice from Landlord, Tenant shall execute and deliver to Landlord, in form
provided by or satisfactory to Landlord, a certificate stating that this Lease is in full force and
effect, describing any amendments or modifications hereto, acknowledging that this Lease is
subordinate or prior, as the case may be, to any Encumbrance and stating any other information
Landlord may reasonably request, including the term of this Lease, the monthly Base Rent, the
estimated Operating Cost Payments, the date to which Rent has been paid, the amount of any security
deposit or prepaid Rent, whether either party hereto is in default under the terms of the Lease,
whether Landlord has completed its construction obligations hereunder and any other information
reasonably requested by Landlord. Any person or entity purchasing, acquiring an interest in or
extending financing with respect to the Project shall be entitled to rely upon any such
certificate.





23












 





          (b) Tenant’s failure to deliver such statement within such time shall be conclusive upon
Tenant:



               (1) That this Lease is in full force and effect, without modification except as may be
represented by Landlord;



               (2) That there are no uncured defaults in Landlord’s performance; and



               (3) That not more than one month’s Rent has been paid in advance; and



               (4) That Landlord has completed its construction obligations.



          (c) If Landlord desires to finance or refinance the Building, or any part thereof, Tenant
hereby agrees to deliver to any lender designated by Landlord such financial statements of Tenant
as may be reasonably required by such lender. Such statements shall include the past three years’
financial statements of Tenant. All such financial statements shall be received by Landlord in
confidence and shall be used only for the purposes herein set forth.



     23. SURRENDER, HOLDING OVER



          23.1 Surrender. Upon the expiration or termination of this Lease, Tenant shall surrender the
Premises to Landlord in its original condition, except for reasonable wear and tear and damage from
casualty or condemnation; provided, however, that prior to the expiration or termination of this
Lease Tenant shall remove from the Premises all Tenant’s personal property, trade fixtures,
alterations and other Above-Standard Improvements that Tenant has the right or is required by
Landlord to remove under the provisions of this Lease. Tenant shall also be responsible for removal
of all telephone cables and wires that did not exist upon possession of the Premises, CRT, data and
telephone equipment, and any other form of cabling that exists in
Tenant’s space that did not exist
upon possession of the Premises. If any of such removal is not completed at the expiration or
termination of this Lease, Landlord may remove the same at Tenant’s expense. Any damage to the
Premises or the Building caused by such removal shall be repaired promptly by Tenant or, if Tenant
fails to do so, Landlord may do so at Tenant’s expense, in which event Tenant shall immediately
reimburse Landlord for such expenses together with interest at the Default rate until so paid.
Tenant’s obligations under this Paragraph shall survive the expiration or termination of this
Lease. Upon expiration or termination of this Lease or of Tenant’s possession, Tenant shall
surrender all keys to the Premises or any other part of the Building and shall make known to
Landlord the combination of locks on all safes, cabinets and vaults that may be located in the
Premises.



          23.2
Holding Over. If Tenant remains in possession of the Premises after the
expiration or termination of this Lease, Tenant’s continued possession shall be on the basis of a
tenancy at the sufferance of Landlord, and Tenant shall continue to comply with or perform all the
terms and obligations of the Tenant under this Lease, except that the Base Rent during Tenant’s
holding over shall be one hundred fifty percent (150%) of the monthly Base Rent payable in the last month prior to the termination or expiration hereof.
Tenant shall indemnify and hold Landlord harmless from and against all claims, liability, damages,
costs or expenses, including reasonable attorneys fees and costs of defending the same, incurred by
Landlord and







24









 








arising directly or indirectly from Tenant’s failure to timely surrender the Premises, including
(i) any loss, cost, penalties, or damages, including lost profits, claimed by any prospective
tenant of the Premises, and (ii) Landlord’s damages as a result of such prospective tenant
rescinding or refusing to enter into the prospective lease of the Premises by reason of such
failure to timely surrender the Premises.




     24. HAZARDOUS MATERIALS



               Tenant shall not (either with or without negligence) cause or permit the escape, disposal or
release of any biologically or chemically active or other hazardous substances or materials. Tenant
shall not allow the storage or use of such substances or materials in any manner not sanctioned by
law or by the highest standards prevailing in the industry for the storage and use of such
substances or materials, nor allow to be brought into the Project any such materials or substances
except to use in the ordinary course of Tenant’s business, and then only after written notice is
given to Landlord of the identity of such substances or materials. Without limitation, hazardous
substances and materials shall include those described in the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq., any applicable
state or local laws and the regulations adopted under these acts. If any lender or governmental
agency shall ever require testing to ascertain whether or not there has been any release of
hazardous materials, then Tenant shall promptly notify Landlord of the same, and the reasonable
costs thereof shall be reimbursed by Tenant to Landlord upon demand as additional charges if such
requirement applies to the Premises. Landlord shall have the right, but not the obligation, to
enter the Premises at any reasonable time to perform any required testing, to confirm Tenant’s
compliance with the provisions of this Paragraph, and to perform Tenant’s obligations under this
Paragraph if Tenant has failed to do so. In addition, Tenant shall execute affidavits,
representations and the like from time to time at Landlord’s request concerning Tenant’s best
knowledge and belief regarding the presence of hazardous substances or materials on the Premises.
In all events, Tenant shall indemnify Landlord in the manner elsewhere provided in this Lease from
any release of hazardous materials on the Premises occurring while Tenant is in possession, or
elsewhere if caused by Tenant or persons acting under Tenant. The within covenants shall survive
the expiration or earlier termination of the lease term.



     25. MISCELLANEOUS



          25.1
Attornment. Upon any transfer by Landlord of Landlord’s interest in the Premises
or the Building (other than a transfer for security purposes only), Tenant agrees to attorn to any
transferee or assignee of Landlord.



          25.2 Captions; Attachments; Defined Terms



               (a) The captions of the paragraphs of this Lease are for convenience only and shall not be
deemed to be relevant in resolving any question of interpretation or construction of any paragraph
of this Lease. The provisions of this Lease shall be construed in accordance with the fair meaning
of the language used and shall not be strictly construed against either party. When required by the
contents of this Lease, the singular includes the plural. Wherever the term “including” is used in
this Lease, it shall be interpreted as meaning “including, but not limited to,” the matter or
matters thereafter enumerated.








25









 








               (b) Exhibits attached hereto, and addenda and schedules initialed by the parties, are deemed
to constitute part of this Lease and are incorporated herein.



               (c) The words “Landlord” and “Tenant” as used herein, shall include the plural as well as the
singular. Words used in neuter gender include the masculine and feminine and words in the masculine
or feminine gender include the neuter. The obligations of this Lease as to a Tenant which consists
of husband and wife shall extend individually to their sole and separate property as well as
community property.



          25.3 Entire Agreement. This Lease along with any exhibits and attachments hereto
constitutes the entire agreement between Landlord and Tenant relative to the Premises, and this
Lease and the exhibits and attachments may be altered, amended or revoked only by instrument in
writing signed by both Landlord and Tenant. Landlord and Tenant agree hereby that all prior or
contemporaneous oral agreements between and among themselves and their agents or representatives
relative to the leasing of the Premises are merged in or revoked by this Lease.



          25.4 Severability. lf any term or provision of this Lease shall, to any extent, be
determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Lease shall not be affected thereby, and each term and provision of this Lease shall be valid
and be enforceable to the fullest extent permitted by law.



          25.5 Costs of Suit



               (a) If Tenant or Landlord brings any action for the enforcement or interpretation of this
Lease, including any suit by Landlord for the recovery of Rent or possession of the Premises, the
losing party shall pay to the prevailing party a reasonable sum for attorneys’ fees. The
“prevailing party” will be determined by the court before whom the action was brought based upon an
assessment of which party’s major arguments or positions taken in the suit or proceeding could
fairly be said to have prevailed over the other party’s major arguments or positions on major
disputed issues in the court’s decision.



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



          25.6 Time; Joint and Several Liability. Time is of the essence of this Lease and each
and every provision hereof, except as to the conditions relating to the delivery of possession of
the Premises to Tenant. All the terms, covenants and conditions contained in this Lease to be
performed by either party, if such party shall consist of more than one person or organization,
shall be deemed to be joint and several, and all rights and remedies of the parties shall be
cumulative and nonexclusive of any other remedy at law or in equity.





26









 








               25.7 Binding Effect; Choice of Law. The parties hereto agree that all provisions
hereof are to be construed as both covenants and conditions as though the words imparting such
covenants and conditions were used in each separate paragraph hereof. Subject to any provisions
hereof restricting assignment or subletting by Tenant, all of the provisions hereof shall bind and
inure to the benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns. This Lease shall be governed by the laws of the State of California.



               25.8 Waiver. No covenant, term or condition or the breach thereof shall be deemed
waived, except by written consent of the party against whom the waiver is claimed, and any waiver
or breach of any covenant, term or condition shall not be deemed to be a waiver of any preceding or
succeeding breach of the same or any other covenant, term or condition. Acceptance by Landlord of
any performance by Tenant after the time the same shall have become due shall not constitute a
waiver by Landlord of the breach or default of any covenant, term or condition unless otherwise
expressly agreed to by Landlord in writing.



               25.9 Force Majeure. In the event Landlord is delayed, interrupted or prevented from
performing any of its obligations under this Lease, including its obligations under the Work
Letter, and such delay, interruption or prevention is due to fire, act of God, governmental act,
strike, labor dispute, unavailability of materials or any other cause outside the reasonable
control of Landlord, then the time for performance of the affected obligations of Landlord shall be
extended for a period equivalent to the period of such delay, interruption or prevention. Each day
of delay under this Subsection shall result in one (1) Scheduled Commencement Adjustment Day.



               25.10 Landlord’s Liability. The term “Landlord”, as used in this Lease, shall mean
only the owner or owners of the Project at the time in question. Notwithstanding
any other term or provision of this Lease, the liability of Landlord for its obligations under
this Lease is limited solely to Landlord’s interest in the Project as the same may from time to
time be encumbered, and no personal liability shall at any time be asserted or enforceable against
any other assets of Landlord or against Landlord’s stockholders, directors, officers or partners on
account of any of Landlord’s obligations or actions under this Lease. In addition, in the event of
any conveyance of title to the Building or the Project, then from and after the date of such
conveyance, Landlord shall be relieved of all liability with respect to Landlord’s obligations to
be performed under this Lease after the date of such conveyance. Upon any conveyance of title to
the Building or the Project, the grantee or transferee, by accepting such conveyance, shall be
deemed to have assumed Landlord’s obligations to be performed under this Lease from and after the
date of transfer, subject to the limitations on liability set forth above in this Paragraph 25.10.
In no event will Landlord be liable under this Lease for consequential or indirect damages or loss
of profits.



               25.11 Consents and Approvals. Wherever the consent, approval, judgment or
determination of Landlord is required or permitted under this Lease, Landlord may exercise its good
faith business judgment in granting or withholding such consent or approval or in making such
judgment or determination without reference to any extrinsic standard of reasonableness, unless the
provision providing for such consent, approval, judgment or determination specifies that Landlord’s
consent or approval is not to be unreasonably withheld, or that such judgment or determination is
to be reasonable, or otherwise specifies the standards under which Landlord may withhold its
consent. If it is determined that Landlord failed to give its consent where it was





27









 







required to do so under this Lease, Tenant shall be entitled to specific performance but not to monetary damages
for such failure, unless Landlord withheld its consent maliciously and in bad faith.




               The review and/or approval by Landlord of any item to be reviewed or approved by Landlord
under the terms of this Lease or any Exhibits hereto shall not impose upon Landlord any liability
for accuracy or sufficiency of any such item or the quality or suitability of such item for its
intended use. Any such review or approval is for the sole purpose of protecting Landlord’s interest
in the Project under this Lease, and no third parties, including Tenant or Tenant’s Representatives
or any person or entity claiming by, through or under Tenant, shall have any rights hereunder.



          25.12 Signs. Tenant shall not place or permit to be placed in or upon the Premises
where visible from outside the Premises or any part of the Building, any signs, notices, drapes,
shutters, blinds or displays of any type without the prior consent of Landlord. Landlord at
Landlord’s sole cost and expense shall include Tenant in the Building directories located in the
Building. Landlord reserves the right in Landlord’s sole discretion to place and locate on the
roof, exterior of the Building, and in any area of the Building not leased to Tenant such signs,
notices, displays and similar items as Landlord deems appropriate in the proper operation of the
Building. Tenant shall have the right to Landlord’s standard monument signage, signage on the
Building directories and on their entry doors. The cost of all signage is to be paid for by Tenant.



          25.13 Rules and Regulations. Tenant and Tenant’s Representatives shall observe and
comply fully and faithfully with all reasonable and nondiscriminatory rules and regulations adopted
by Landlord for the care, protection, cleanliness and operation of the Building and its tenants
including those annexed to this Lease as Exhibit D and any modification or addition thereto adopted
by Landlord, provided Landlord shall give written notice thereof to Tenant. Landlord shall not be
responsible to Tenant for the nonperformance by any other tenant or occupant of the Building of any
of said rules and regulations.



          25.14 Notices. All notices or demands of any kind required or desired to be given by
Landlord or Tenant hereunder shall be in writing and shall be personally delivered to an officer of
the Tenant, sent in the United States mail, certified or registered, postage prepaid, or sent by
private messenger with return receipt, addressed to the Landlord or Tenant respectively at the
addresses set forth below:



	 	 	 
	Landlord:

	 	Tenant:
	 
	 	 
	SDC 7

One Annabel Lane

Suite 201

San Ramon, CA 94583

	 	Attn: John Truchard

Reply! Inc.

12667 Alcosta Blvd., Suite 200

San Ramon, CA 94583





or such other address as shall be established by notice to the other pursuant to this paragraph.
Notices personally delivered or delivered by private messenger shall be deemed delivered when
received at the address for such party designated pursuant to this paragraph. Notices sent by mail
shall be deemed delivered on the earlier of the third business day following deposit thereof with
the United States Postal Service or the delivery date shown on the return receipt prepared in





28












 




connection therewith. Notwithstanding the foregoing, Landlord shall have the right, upon
notice to Tenant thereof, to eliminate personal delivery as an effective means of notice hereunder.




          25.15 Authority. If Tenant is a corporation or a partnership, each individual
executing this Lease on behalf of Tenant represents and warrants that Tenant is a duly organized
and validly existing entity, the persons signing on behalf of Tenant, are duly authorized to
execute and deliver this Lease on behalf of Tenant and this Lease is binding upon Tenant in
accordance with its terms. If Tenant is a corporation, Tenant shall, within thirty (30) days after
execution of this Lease, deliver to Landlord a certified copy of a resolution of the board of
directors of said corporation authorizing or ratifying the execution of this Lease.




          25.16 Lease Guaranty. Intentionally Deleted.




          25.17 Brokers. Tenant warrants and represents to Landlord that in the
negotiating or making of this Lease neither Tenant nor anyone acting on its behalf has dealt with
any real estate broker or finder who might be entitled to a fee or commission for this Lease other
than Mohr Partners, whose commission is to be paid by Landlord. Tenant agrees to indemnify and hold
Landlord harmless from any claim or claims, including costs, expenses and attorney’s fees incurred
by Landlord asserted by any other broker or finder for a fee or commission based upon any dealings
with or statements made by Tenant or its agents, employees or representatives.




          25.18 Reserved Rights. Landlord retains and shall have the rights set forth below,
exercisable without notice and without liability to Tenant for damage or injury to property, person
or business and without effecting an eviction, constructive or actual, or disturbance of Tenant’s
use or possession of the Premises or giving rise to any claim for set-off or abatement of Rent, to
reduce, increase, enclose or otherwise change at any time and from time to time the size, number,
location, layout and nature of the common areas and facilities and other tenancies and premises in
the Project and to create additional rentable areas through use or enclosure of common areas.




          25.19 Option to Extend. Subject to the provisions of this Subsection 25.18, Landlord
hereby grants Tenant one (1) Option to Extend the Term of this Lease for a period of five (5)
years. Tenant’s notice of its election to exercise the Option to Extend must be given to Landlord
in writing no sooner than twelve (12) months and no later than nine (9) months prior to the
expiration date of the Term.




               (a) Rent. Base Rent for the Option period shall be set at Fair Market Value as
described in (b) below.



               (b) Fair Market Value. The Term “Fair Market Value” used in this Lease shall mean the
annual rental rate being charged in the general area of the buildings in San Ramon, Pleasanton and
Dublin for space in like size buildings and comparable to the space for which Fair Market Value is
to be determined, taking into consideration use, location and floor level within the applicable
building, the location, size of tenancy, quality and age of the building, the definition of
rentable area or net rentable area, as the case may be, rental concessions for renewal tenants, the
date the particular rate under consideration became effective, the term of the lease under
consideration, the extent of services provided thereunder, applicable distinctions between “gross”
leases and “net” leases, expense stop figures for escalation purposes, and other





29









 







adjustments to base rental, with respect to which such rental rates are computed for renewal
tenants.




               (c) Within thirty (30) days following Tenant’s notice to Landlord to extend the term of this
Lease, Landlord shall notify Tenant of the proposed Fair Market Value. Tenant shall have thirty
(30) days following receipt of Landlord’s notice in which to:



                    (1) accept such determination; or



                    (2) elect to have such determination made by arbitration as described below; or



                    (3) withdraw its notice of exercise of Option to Extend.



                    If Tenant fails to notify Landlord of its election within said thirty (30) day period, Tenant
shall be deemed conclusively to have withdrawn its notice of exercise of Option to Extend the Lease
and the Lease shall terminate on the Term Expiration Date as if such notice was never given. If
Tenant elects to have such determination made by arbitration, then:



                    (i) within ten (10) days after Landlord receives Tenant’s notice of its election to have such
determination made by arbitration, Landlord and Tenant shall each appoint and employ, at its cost,
a real estate appraiser (who shall be licensed in the state where the Premises are located and be a
member of the American Institute of Real Estate Appraisers (MAI) with at least ten (10) years of
full time commercial appraisal and real estate marketing experience in the immediate area where the
Premises are located) to appraise and establish the Fair Market Value.



                    (ii) The two appraisers, thus appointed, shall meet promptly and attempt to agree upon and
designate a third appraiser meeting the qualifications set forth above within ten (10) days after
the date of appointment of the last of the two appraisers.



                    (iii) If the two appraisers are unable to agree on the third appraiser, either of the parties,
after giving five (5) days’ notice to the other, shall request the American Arbitration Association
in the county in which the Premises are located to appoint such independent third appraiser who
shall be of similar affiliation or background of the appraisers aforementioned. Each of the parties
shall bear one-half of the cost of the appointment of the third appraiser and of the third
appraiser’s fee.



                    (iv) Within thirty (30) days after the selection of the third appraiser, a majority of the
appraisers shall agree upon the Fair Market Value. If a majority of the appraisers are unable to
agree within the stipulated time, then each appraiser shall render his/her separate appraisal
within such time, and the three appraisals shall be averaged in order to establish such rate;
provided, however, if the low appraisal and/or the high appraisal are more than ten (10%) percent
lower and/or higher than the middle appraisal, the low appraisal and/or high appraisal shall be
disregarded. If only one appraisal is disregarded, the remaining two appraisals shall be averaged
in order to establish such Fair Market Value. If both the low appraisal and the high appraisal are
disregarded, the middle appraisal shall establish the Fair Market Value. After the Fair Market
Value has been established, the appraisers shall immediately notify the parties in writing.




30









 








                    (d) Notice. In the event Tenant does not provide Landlord with written notice of its
intent to exercise this Option to Extend within the aforementioned time frame, Tenant shall be
deemed to have waived its Option to Extend.



                    (e) Option is Personal. Except as permitted in Section 15 of this Lease, the Option
to Extend is Personal to the Tenant executing this Lease and is otherwise not assignable or
transferable, except to an affiliate of Tenant.





31









 







Landlord and Tenant have executed this Lease on the date and year set forth at the beginning of
this Lease.




	 	 	 	 	 	 	 	 	 	 	 
	Landlord:	 	Tenant:
	 
	 	 	 	 	 	 	 	 	 	 
	SDC 7,	 	Reply! Inc.,
	a California partnership	 	a California corporation
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/
	 	 	 	By:
	 	/s/ Frank Siskowski	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Title:

	 	CONTROLLER
	 	 	 	Title:
	 	July 25, 2006	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/
	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Title:

	 	V P-FINANCE
	 	 	 	Title:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 





32









 





EXHIBIT A 









	 	 	 
	39,413 RSF

	 	 
	Bishop Ranch 15, Building BB
	 	 
	12667 Alcosta Blvd., Suite 200

	 	 
	San Ramon, CA 94583

	 	 






 









 






EXHIBIT B




WORK LETTER 



INTENTIONALLY DELETED







 









 








EXHIBIT C




AS BUILT DRAWINGS 



TO BE PROVIDED






 











 





EXHIBIT D




RULES AND REGULATIONS



     1. No sign, placard, picture, advertisement, name or notice shall be inscribed, displayed, printed,
affixed or otherwise displayed by Tenant on or to any part of the outside or inside of the Building
or the Premises without the prior written consent of Landlord and Landlord shall have the right to
remove any such sign, placard, picture, advertisement, name or notice without notice to and at the
expense of Tenant. All approved signs or lettering on doors shall be printed, painted, affixed or
inscribed at the expense of Tenant by a person approved by Landlord. Tenant shall not place
anything or allow anything to be placed near the glass of any window, door, partition or wall which
may appear unsightly from outside the Premises; provided, however that Tenant may request Landlord
to furnish and install a building standard window covering at all exterior windows at Tenant’s
cost. Tenant shall not install any radio or television antenna, loud speaker, or other device on or
about the roof area or exterior walls of the Building.



     2. The sidewalks, halls, passages, exits, entrances, elevators and stairways shall not be
obstructed by Tenant or used by it for any purpose other than for ingress to and egress from the
Premises. The halls, passages, exits, entrances, elevators, stairways, balconies and roof are not
for the use of the general public and Landlord shall in all cases retain the right to control and
prevent access thereto by all persons whose presence in the judgment of the Landlord shall be
prejudicial to the safety, character, reputation and interests of the Building and its tenants,
provided that nothing herein contained shall be construed to prevent such access to the common
areas by persons with whom Tenant normally deals in the ordinary course of its business unless such
persons are engaged in illegal activities. In no event may Tenant go upon the roof of the Building.



     3. Landlord will furnish Tenant with 200 keys to the Premises, free of charge. Additional keys
shall be obtained only from Landlord and Landlord may make a reasonable charge for such additional
keys. No additional locking devices shall be installed in the Premises by Tenant, nor shall any
locking devices be changed or altered in any respect without the prior written consent of Landlord.
All locks installed in the Premises excluding Tenant’s vaults and safes, or special security areas
(which shall be designated by Tenant in a written notice to Landlord), shall be keyed to the
Building master key system. Landlord may make reasonable charge for any additional lock or any bolt
(including labor) installed on any door of the Premises. Tenant, upon the termination of its
tenancy, shall deliver to Landlord all keys to doors in the Premises.



     4. The toilet rooms, urinals, wash bowls and other apparatus shall not be used for any purpose
other than that for which they were constructed and no foreign substance of any kind whatsoever
shall be deposited therein and Tenant shall bear the expense of any breakage, stoppage or damage
resulting from its violation of this rule.



1









 








     5. Tenant shall not overload the floor of the Premises or mark, drive nails, screw or drill into
the partitions, woodwork or plaster or in any way deface the Premises or any part thereof. No
boring, cutting or stringing of wires or laying of linoleum or other similar floor coverings or
installation of wallpaper or paint shall be permitted except with the prior written consent of the
Landlord and as the Landlord may direct.



     6. Tenant may use the freight elevators in accordance with such reasonable scheduling as Landlord
shall deem appropriate. Tenant shall schedule with Landlord, by written notice given no less than
forty-eight (48) hours in advance, its move into or out of the Building which moving shall occur
after 5:30 p.m. or on weekend days if required by Landlord; and Tenant shall reimburse Landlord
within thirty (30) days of receipt of written notice for any additional security or other charges
incurred by Landlord as a consequence of such moving. The persons employed by Tenant to move
equipment or other items in or out of the Building must be acceptable to Landlord. The floors,
corners and walls of elevators and corridors used for moving of equipment or other items in or out
of the Project must be adequately covered, padded and protected and, Landlord may provide such
padding and protection at Tenant’s expense if Landlord determines that such measures undertaken by
Tenant or Tenant’s movers are inadequate. Landlord shall have the right to prescribe the weight,
size and position of all safes and other heavy equipment or furnishings brought into the Building
and also the times and manner of moving the same in or out of the Building. Safes or other heavy
objects shall, if considered necessary by Landlord, stand on wood strips of such thickness as is
necessary to properly distribute the weight. Landlord will not be responsible for loss of or damage
to any such safe or property from any cause and all damage done to the Building by moving or
maintaining any such safe or other property shall be repaired at the expense of Tenant. There shall
not be used in any space, or in the public halls of the Building, either by any Tenant or others,
any hand trucks except those equipped with rubber tires and side guards.



     7. Tenant shall not employ any person or persons other than the janitor of Landlord for the purpose
of cleaning the Premises unless otherwise agreed to by Landlord in writing. Except with the written
consent of Landlord, no person or persons other than those approved by Landlord shall be permitted
to enter the Building for the purpose of cleaning the same. Tenant shall not cause any unnecessary
labor by reason of Tenant’s carelessness or indifference in the preservation of good order and
cleanliness. Landlord shall in no way be responsible to any Tenant for any loss of property on the
Premises, however occurring, or for any damage done to the effects of Tenant by the janitor or any
other employee or any other person. Janitor service will not be furnished on nights when rooms are
occupied after 9:30 p.m. Window cleaning shall be done only by Landlord.



     8. Tenant shall not use or keep in the Premises or the Building any kerosene, gasoline or
flammable, combustible or noxious fluid or material, or use any method of heating or air
conditioning other than that supplied by Landlord. Tenant shall not use, keep or permit or suffer
the Premises to be occupied or used in a manner offensive or objectionable to the
Landlord or other occupants of the Building by reason of noise, odors and/or vibrations, or
interfere in any way with other tenants or those having business therein, nor shall any animals or
birds be brought in or kept in or about the Premises or the Building. Tenant shall not make or
permit to




2









 







be made any unseemly or disturbing noises or disturb or interfere with occupants of this or
neighboring Buildings or premises or those having business with them whether by the use of any
musical instrument, radio, phonograph, unusual noise, or in any other way.




     9. The Premises shall not be used for the storage of merchandise except as such storage may be
incidental to the use of the Premises for general office purposes. Tenant shall not occupy or
permit any portion of the Premises to be occupied for the manufacture or sale of liquor, narcotics,
or tobacco in any form. The Premises shall not be used for lodging or sleeping or for any illegal
purposes. No cooking shall be done or permitted by Tenant on the Premises, except that use by
Tenant of Underwriters’ Laboratory approved portable equipment for brewing coffee, tea and similar
beverages and of microwave ovens approved by Landlord shall be permitted provided that such use is
in accordance with all applicable federal, state and local laws, codes, ordinances, rules and
regulations.



     10. Landlord will direct electricians as to where and how telephone wires and any other cables or
wires are to be installed. No boring or cutting for cables or wires will be allowed without the
consent of Landlord. The location of telephones, call boxes and other office equipment affixed to
the Premises shall be subject to the approval of Landlord.



     11. Tenant shall not lay linoleum, tile, carpet or other similar floor covering so that the same
shall be affixed to the floor of the Premises in any manner except as approved by the Landlord.
Tenant shall bear the expense of repairing any damage resulting from a violation of this rule or
removal of any floor covering.



     12. No furniture, packages, supplies, equipment or merchandise will be received in the Building or
carried up or down in the elevators, except between such hours and in such elevators as shall be
designated by Landlord. In its use of such, Tenant shall not obstruct or permit the obstruction of
walkways, ingress and egress to the Building and tenant spaces and at no time shall Tenant park
vehicles which will create traffic and safety hazards or create other obstructions.



     13. On Saturdays, Sundays and legal holidays all day, and on other days between the hours of 7:00
p.m. and 7:00 a.m. the following day, access to the Building or to the halls, corridors, elevators,
or stairways in the Building, or to the Premises may be refused
unless the person seeking access is known to the person or employee of the Building in charge and
has a pass or is properly identified. Landlord shall in no case be liable for damages for any error
with regard to the admission to or exclusion from the Building of any person. Tenant assumes all
responsibility for protecting its Premises from theft, robbery and pilferage. In case of invasion,
mob, riot, public excitement, or other commotion, the Landlord reserves the right to prevent access
to the Building during the continuance of the same by closing the doors or otherwise, for the
safety of the Tenants and protection of property in the Building and the Building. Landlord
reserves the right to close and keep locked all entrance and exit doors of the Building on
Saturdays, Sundays and legal holidays all day, and on other days between the hours of 7:00 p.m. and
7:00 a.m. and during such further hours as Landlord may deem advisable for the adequate




3









 







protection of said Building and the property of its tenants, and to implement such additional
security measures as Landlord deems appropriate for such purposes. The cost of such additional
security measures, as reasonably allocated by Landlord to Tenant, shall be reimbursed by Tenant
within thirty (30) days after receipt of Landlord’s demand therefor.




     14. Tenant shall see that the doors of the Premises are closed and securely locked before leaving
the Building and must observe strict care and caution that all water faucets, water apparatus and
utilities are entirely shut off before Tenant or Tenant’s employees leave the Building, and that
all electricity shall likewise be carefully shut off, so as to prevent waste or damage and for any
default or carelessness Tenant shall make good all injuries sustained by other tenants or occupants
of the Building or Landlord. On multiple-tenancy floors, all tenants shall keep the doors to the
Building corridors closed at all times except for ingress and egress, and all tenants shall at all
times comply with any rules and orders of the fire department with respect to ingress and egress.



     15. Landlord reserves the right to exclude or expel from the Building any person who, in the
judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall in any
manner do any act in violation of any of the rules and regulations of the Building.



     16. Landlord shall attend to the requests of Tenant after notice thereof from Tenant by telephone,
in writing or in person at the Office of the Landlord. Employees of Landlord shall not perform any
work or do anything outside of their regular duties unless under special instructions from the
Landlord.



     17. No vending machine or machines of any description shall be installed, maintained or operated
upon the Premises without the written consent of the Landlord.



     18. Tenant agrees that it shall comply with all fire and security regulations that may be issued
from time-to-time by Landlord and Tenant also shall provide Landlord with the name of a designated
responsible employee to represent Tenant in all matters pertaining to such fire or security
regulations.



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



     20. Canvassing, soliciting, peddling or distribution of handbills or other written material in the
Building and Project is prohibited and Tenant shall cooperate to prevent same.



     21. Landlord reserves the right to (i) select the name of the Project and Building and to make such
change or changes of name, street address or suite numbers as it may deem appropriate from time to
time, (ii) grant to anyone the exclusive right to conduct any business or render any service in or
to the Building and its tenants, provided such exclusive right shall not




4









 







operate to require Tenant to use or patronize such business or service or to exclude Tenant from
its use of the Premises expressly permitted in the Lease, and (iii) reduce, increase, enclose or
otherwise change at any time and from time to time the size, number, location, layout and nature of
the common areas and facilities and other tenancies and premises in the Project and to create
additional rentable areas through use or enclosure of common areas. Tenant shall not refer to the
Project by any name other than the name as selected by Landlord (as same may be changed from time
to time), or the postal address, approved by the United States Post Office. Without the written
consent of Landlord, Tenant shall not use the name of the Building or Bishop Ranch Business Park in
connection with or in promoting or advertising the business of Tenant or in any respect except as
Tenant’s address. In the event Landlord changes the street address, Landlord shall provide Tenant
with ninety (90) days’ prior written notice and Landlord shall reimburse Tenant the actual cost for
the reprinting of a reasonable amount of Tenant’s stationery.




     22. Tenant shall store all its trash and garbage within the Premises until removal of same to such
location in the Project as may be designated from time to time by Landlord. No
material shall be placed in the Project trash boxes or receptacle if such material is of such
nature that it may not be disposed of in the ordinary and customary manner of removing and
disposing of trash and garbage in the City of San Ramon without being in violation of any law or
ordinance governing such disposal.



     23. Landlord shall furnish heating and air conditioning during the hours of 7:00 a.m. and 7:00
p.m., Monday through Friday, except for holidays. In the event Tenant requires heating and air
conditioning during off hours, Saturdays, Sundays or holidays, Landlord shall on notice provide
such services at the rate established by Landlord from time-to-time. Landlord shall have the right
to control and operate the public portions of the Building and the public facilities, and heating
and air conditioning, as well as facilities furnished for the common use of the Tenants, in such
manner as it deems best for the benefit of the Tenants generally.



     24. The directory of the Building will be provided for the display of the name and location of
tenants and Landlord reserves the right to exclude any other names therefrom. Any additional name
that Tenant shall desire to place upon the directory must first be approved by Landlord and, if so
approved, a charge will be made for each such name.



     25. Except with the prior written consent of Landlord, Tenant shall not sell, or permit the sale
from the Premises of, or use or permit the use of any sidewalk or common area adjacent to the
Premises for the sale of newspapers, magazines, periodicals, theater tickets or any other goods,
merchandise or service, nor shall Tenant carry on, or permit or allow any employee or other person
to carry on, business in or from the Premises for the service or accommodation of occupants of any
other portion of the Building, nor shall the Premises be used for manufacturing of any kind, or for
any business or activity other than that specifically provided for in Tenant’s lease.




5









 








     26. The word “Tenant” occurring in these Rules and Regulations shall mean Tenant and Tenant’s
Representatives. The word “Landlord” occurring in these Rules and Regulations shall mean Landlord’s
assigns, agents, clerks, employees and visitors.



ACKNOWLEDGED AND ACCEPTED:




	 	 	 	 	 	 	 	 	 
	Landlord:

	 	 	 	Tenant:
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/	 	 	 	By:
	 	/s/ Frank Siskowski
	 

	 	 
	 	 	 	 	 	 
	Date:

	 	7-26-2006
	 	 	 	Date:
	 	7/25/06







6












 





EXHIBIT E




JANITORIAL SPECIFICATIONS


The following specific janitorial services will be provided in accordance with provisions of
Paragraph 7.1, Landlord’s Obligations:



OFFICE AREAS (DAILY)





	1.	 	Empty all waste baskets and disposal cans, if liners used, replace as necessary.
	 
	2.	 	Spot dust desks, chairs, file cabinets, counters and furniture.
	 
	3.	 	Spot vacuum all carpets and walk-off mats; spot as necessary.
	 
	4.	 	Sweep all hard surface floors with treated dust mop.




OFFICE AREAS (WEEKLY)





	1.	 	Vacuum carpets completely, including around base boards, etc.
	 
	2.	 	Perform low dusting of furniture.
	 
	3.	 	Dust window sills and ledges.




OFFICE AREAS (QUARTERLY)





	1.	 	Perform all high dusting of doors, sashes, moldings, etc.
	 
	2.	 	Dust mini blinds as needed.




OFFICE AREA CORRIDORS AND LOBBIES (DAILY SERVICE)





	1.	 	Vacuum carpets and dust mop any hard floors.
	 
	2.	 	Spot clean carpets of all spillage.
	 
	3.	 	Clean all thresholds.




OFFICE AREA CORRIDORS AND LOBBIES (WEEKLY)





	1.	 	Perform all high dusting of doors, sashes, moldings, etc.
	 
	2.	 	Vacuum and clean all ceiling vents.
	 
	3.	 	Polish any metal railings, placards, etc.








1









 







STAIRWAYS (DAILY)





	1.	 	Sweep all hard surface steps.
	 
	2.	 	Dust banisters.




STAIRWAYS (WEEKLY)





	1.	 	Sweep all hard surfaces.
	 
	2.	 	Spot mop all spills as needed.




RESTROOMS COMMON AREA (DAILY SERVICE)





	1.	 	Empty all waste containers and replace liners as needed.
	 
	2.	 	Clean all metal, mirrors, and fixtures.
	 
	3.	 	Sinks, toilet bowls and urinals are to be kept free of scale.
	 
	4.	 	Clean all lavatory fixtures using disinfectant cleaners.
	 
	5.	 	Wash and disinfect underside and tops of toilet seats.
	 
	6.	 	Wipe down walls around urinals.
	 
	7.	 	Refill soap, towel, and tissue dispensers.
	 
	8.	 	Wet mop tile floors with disinfectant solution.
	 
	9.	 	Refill sanitary napkin machines as necessary.




RESTROOMS COMMON AREA (WEEKLY)





	1.	 	Perform high dusting and vacuum vents.
	 
	2.	 	Use germicidal solution in urinal traps, lavatory traps, and floor drains.




RESTROOMS COMMON AREA (MONTHLY)





	1.	 	Scrub floors with power machine.
	 
	2.	 	Wash down all ceramic tile and toilet compartments.




ELEVATORS (DAILY)





	1.	 	Vacuum floors.
	 
	2.	 	Clean thresholds.
	 
	3.	 	Spot walls and polish surfaces.




GENERAL



All glass entry doors to offices, corridors, or lunch rooms are to be cleaned as necessary.




2









 








EXHIBIT F




DOOR SIGN, DIRECTORY STRIP AND MAIL BOX REQUEST




	1.	 	I, the undersigned hereby authorize Landlord to order one chrome door sign. The business name on it
shall read: (All lettering must be left justified, no logos.)
	 
	 	 	_________________

(17 characters max)
	 
	 	 	_________________

(17 characters max)
	 
	 	 	_________________

(17 characters max)
	 
	2.	 	The lobby directory strip shall read:
	 
	 	 	_______________________


(23 characters max)
	 
	3.	 	The floor directory strip shall read:
	 
	 	 	_______________________


(23 characters max)
	 
	 	 	→      ↑     ←      Arrow Direction? (Circle one)
	 
	4.	 	The mail box strip shall read:
	 
	5.	 	Daily Contact Name:                                                         
                                                             
   

	 
	 	 	Phone:                                         
Fax:                                             
                                                   
	 
	 	 	Email:                                                                             
                                                             
   
	 
	 	 	Signed:
/s/
Frank Siskowski       Date:
7/25/06





	 	 	 	 
	Street Address:
	 	12667 Alcosta Boulevard
	 
	 	 
	Suite No:
	 	200
	 
	 	 
	Building:
	 	BB
	 
	 	 
	Complex:
	 	Bishop Ranch 15






 









 






EXHIBIT G




COMMENCEMENT OF LEASE


It is hereby agreed to that pursuant to the terms and conditions of that certain Lease dated
____________, 2006 and between SDC 7 as Landlord and Reply! Inc. as Tenant, covering Premises
located at 12667 Alcosta Boulevard, Suite 200, that





	(a)	 	the “Commencement Date” is ____________, 200______
	 
	(b)	 	the “Expiration Date” thereof is 5:00 P.M. on ____________, 200______
	 
	(c)	 	Landlord shall hereby grant Tenant a Prior Occupancy Period from ______, 200____ through ______,
200___ and except for Section 3, all of the terms and conditions of the Lease shall be in full force
and effect,
	 
	(d)	 	Rent shall commence on _________, 200___,
	 
	(e)	 	Landlord has delivered Substantial Completion of the Suite Improvements, and
	 
	(f)	 	except for punch list items, Landlord has completed its construction obligations.




ACKNOWLEDGED AND ACCEPTED:




	 	 	 	 	 	 	 
	Landlord:

	 	Tenant:
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	/s/ Frank Siskowski 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Date:

	 	 	 	Date:	 	7/26/06
	 

	 	 
	 	 	 	 






 











 





SDC 7




One Annabel Lane 

Suite 201 

San Ramon, California 94583 

Tel 925/866-0100 

Fax 925/866-1330



EXHIBIT G



COMMENCEMENT OF LEASE


It is hereby agreed to that pursuant to the terms and conditions of that certain Lease dated July
25, 2006 and between SDC 7 as Landlord and Reply! Inc. as Tenant, covering Premises located at
12667 Alcosta Boulevard, Suite 200, that





	(a)	 	the “Commencement Date” is January 1, 2007,
	 
	(b)	 	the “Expiration Date” thereof is 5:00 P.M. on March 31, 2012,
	 
	(c)	 	Landlord, as of November 3, 2006, has granted Tenant Prior Occupancy of the Premises, and all
of the terms and conditions of the Lease are in full force and effect,
	 
	(d)	 	Landlord has delivered Substantial Completion of the Suite Improvements, and except for punch
list items, Landlord has completed its construction obligations.





	 	 	 	 	 	 	 
	ACKNOWLEDGED AND ACCEPTED:

	 	 	 
	 
	 	 	 	 	 	 
	Landlord:

	 	Tenant:
	 
	 	 	 	 	 	 
	By:

	 	/s/
	 	By:
	 	/s/ 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Date:

	 	Nov 8, 2006
	 	Date:
	 	11/8/06 
	 

	 	 
	 	 	 	 








Developing A Better Way Of Life Since Nineteen Fifty-One.





 









 








FIRST LEASE ADDENDUM




     THIS
FIRST LEASE ADDENDUM IS MADE AND ENTERED INTO THIS 2nd DAY OF OCTOBER, 2006, BY AND
BETWEEN SDC 7, A CALIFORNIA PARTNERSHIP (HEREINAFTER REFERRED TO AS “LANDLORD”) AND REPLY! INC., A CALIFORNIA CORPORATION (HEREINAFTER
REFERRED TO AS “TENANT”).



     IT IS AGREED BETWEEN LANDLORD AND TENANT TO MODIFY THE LEASE DATED JULY 25, 2006 (HEREINAFTER
REFERRED TO AS “LEASE”) IN THE FOLLOWING MANNER:


Section 3. RENT




     Subsection
3.1 Rent. The last sentence in the first paragraph of this Subsection is hereby
amended to read as follows:



     Notwithstanding the foregoing, Base Rent will abated for the first three (3) full calendar months
of this Lease, or Tenant, prior to occupancy of the Premises, may use up to two (2) months of the
Rent abatement, ONE HUNDRED FIFTY-SEVEN THOUSAND SIX HUNDRED FIFTY-TWO AND 00/100 DOLLARS
($157,652.00), as an additional Suite Improvement Allowance. In the event Tenant elects to use any
part of said two (2) months of Rent abatement as an additional Suite Improvement Allowance, said
three (3) full calendar months of Rent abatement will be replaced by a Rent Credit equal to three
(3) months of Base Rent less the amount Tenant has converted to an additional Suite Improvement
Allowance, and said Rental Credit will be applied against Base Rent when it becomes due.



     With the exception of the modifications set out above, all other terms, covenants and agreements of
the Lease shall remain in full force and effect.



	 	 	 	 	 	 	 
	Landlord:	 	Tenant:
	 
	 	 	 	 	 	 
	SDC 7,	 	Reply! Inc.,
	a California partnership	 	a California corporation
	 
	 	 	 	 	 	 
	By:

	 	/s/
	 	By:
	 	/s/ 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	CFO
	 	Title:
	 	CEO
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	CONTROLLER	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Date: 

	 	10/2/06
	 	Date:
	 	9/27/06
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	Regarding:
	 	 	 	 	Bishop Ranch 15, Building BB
	 	 	 	 	12667 Alcosta Boulevard, Suite 200
	 	 	 	 	San Ramon, CA 94583






 









 






SECOND LEASE ADDENDUM




     THIS SECOND LEASE ADDENDUM IS MADE AND ENTERED INTO THIS 11th DAY OF
APRIL, 2008, BY AND BETWEEN SDC 7, A CALIFORNIA PARTNERSHIP (HEREINAFTER REFERRED TO AS
“LANDLORD”) AND REPLY! INC., A CALIFORNIA CORPORATION (HEREINAFTER REFERRED TO AS
“TENANT”).



     IT IS AGREED BETWEEN LANDLORD AND TENANT TO MODIFY THE LEASE DATED JULY 25, 2006,
AND FIRST LEASE ADDENDUM DATED OCTOBER 2, 2006 (HEREINAFTER COLLECTIVELY REFERRED TO
AS “LEASE”) IN THE FOLLOWING MANNER:


Section 2. TERM




     Subsection
2.1 Term. The expiration date of the term of this Lease is
hereby extended from March 31, 2012 to May 31, 2012.



     Section 4. SECURITY DEPOSIT



     This section is hereby amended to include the following:



     Tenant and Landlord hereby agree that effective April 1, 2008 that Landlord shall
draw down ONE HUNDRED FIFTY-SEVEN THOUSAND SIX HUNDRED FIFTY-TWO AND 00/100 DOLLARS
($157,652.00) from the above referenced Security Deposit of ONE HUNDRED EIGHTY-THREE
THOUSAND NINE HUNDRED SEVENTY-TWO AND 34/100 DOLLARS ($183,972.34).



     The draw down shall be in two equal installments of SEVENTY-EIGHT THOUSAND EIGHT
HUNDRED TWENTY-SIX AND 00/100 DOLLARS ($78,826.00) with the draw downs to be applied
to Tenant’s Base Rent for the months of April and May 2008. Tenant hereby agrees to
replenish the Security Deposit in two installments of SEVENTY-EIGHT THOUSAND EIGHT
HUNDRED TWENTY-SIX AND 00/100 DOLLARS ($78,826.00) which shall be due and payable on
July 20, 2008 and August 20, 2008.





1









 





     With the exception of the modifications set out above, all other terms, covenants
and agreements of the Lease shall remain in full force and effect.



	 	 	 	 	 	 	 
	Landlord:	 	Tenant:
	 
	 	 	 	 	 	 
	SDC 7,	 	Reply! Inc.,
	a California partnership	 	a California corporation
	 
	 	 	 	 	 	 
	By:

	 	/s/
	 	By:
	 	/s/ 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	CFO
	 	Title:
	 	 CEO
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	CONTROLLER	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Date: 

	 	4/11/08
	 	Date:
	 	4/8/08
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	Regarding:
	 
	 	 	 	 	 	 
	 	 	 	 	Bishop Ranch 15, Building BB
	 	 	 	 	12667 Alcosta Boulevard, Suite 200
	 	 	 	 	San Ramon, CA 94583






2









 






THIRD LEASE ADDENDUM




     THIS THIRD LEASE ADDENDUM IS MADE AND ENTERED INTO THIS 10th DAY OF NOVEMBER, 2008, BY
AND BETWEEN SDC 7, A CALIFORNIA PARTNERSHIP (HEREINAFTER REFERRED TO AS “LANDLORD”) AND REPLY!
INC., A CALIFORNIA CORPORATION (HEREINAFTER REFERRED TO AS “TENANT”).



     IT IS AGREED BETWEEN LANDLORD AND TENANT TO MODIFY THE LEASE DATED JULY 25, 2006, AND SECOND
LEASE ADDENDUM DATED APRIL 11, 2008 (HEREINAFTER COLLECTIVELY REFERRED TO AS “LEASE”) IN THE
FOLLOWING MANNER:



     Section 3. RENT



     Subsection 3.1 Rent. Effective November 1, 2008, the Base Rent shall hereby decrease
from EIGHTY TWO THOUSAND ONE HUNDRED TEN AND 42/100 DOLLARS ($82,110.42) per month to FIFTY
THOUSAND AND 00/100 DOLLARS ($50,000.00) per month.



     Subsection 3.2 Adjustments to Base Rent. Subsection (b) is hereby amended to read as follows:



          (b) Effective May 1, 2009 the Base Rent shall be adjusted to EIGHTY SEVEN THOUSAND THREE HUNDRED
SEVENTEEN AND 52/100 DOLLARS $87,317.52 per month and effective October 1, 2009, the first day of
the thirty fourth (34th) month of the Term of this Lease the Base Rent shall be adjusted from
EIGHTY SEVEN THOUSAND THREE HUNDRED SEVENTEEN AND 52/100 DOLLARS ($87,317.52) per month to NINETY
SEVEN THOUSAND ONE HUNDRED SEVENTY AND 77/100 DOLLARS ($97,170.77) per month.




     With the exception of the modifications set out above, all other terms, covenants and agreements
of the Lease shall remain in full force and effect.



	 	 	 	 	 	 	 
	Landlord:	 	Tenant:
	 
	 	 	 	 	 	 
	SDC 7,	 	REPLY!, INC.
	a California Partnership	 	a California Corporation
	 
	 	 	 	 	 	 
	By:

	 	/s/
	 	By:
	 	/s/  W. Samuel Veazey
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	CFO
	 	Title: 	 	CFO 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	CONTROLLER	 	 	 	 
	 
	 	 	 	 	 	 
	Date:

	 	11/10/08
	 	Date:
	 	11/3/08
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	Regarding:
	 
	 	 	 	 	 	 
	 	 	 	 	Bishop Ranch 15, Building BB
	 	 	 	 	12667 Alcosta Boulevard, Suite 200
	 	 	 	 	San Ramon, CA 94583







 











 





FOURTH LEASE ADDENDUM




     THIS FOURTH LEASE ADDENDUM IS MADE AND ENTERED INTO THIS 24
DAY OF JUNE, 2009, BY AND BETWEEN SDC 7, A CALIFORNIA PARTNERSHIP (HEREINAFTER REFERRED TO AS
“LANDLORD”) AND REPLY! INC., A CALIFORNIA CORPORATION (HEREINAFTER REFERRED TO AS “TENANT”).



     IT IS AGREED BETWEEN LANDLORD AND TENANT TO MODIFY THE LEASE DATED JULY 25, 2006, INCLUDING ALL
ADDENDA TO THE LEASE UP TO AND INCLUDING THE THIRD LEASE ADDENDUM DATED NOVEMBER 10, 2008,
(HEREINAFTER COLLECTIVELY REFERRED TO AS “LEASE”) IN THE FOLLOWING MANNER:



     Landlord and Tenant hereby agree that the Third Addendum to Lease dated November 10, 2008 shall
hereinafter be rescinded and agree that the changes to Subsections 3.1 and 3.2 provided for in the
Third Addendum to the Lease never took effect.


Section 3. RENT




     Subsection
3.4 Promissory Note. Tenant hereby acknowledges that it has past due
amounts owed to Landlord plus accrued interest at the Default Rate of Ten Percent (10%) that as of
July 31, 2009, have a total principal sum of $289,225.37. In consideration for the rescission of
the Third Addendum to Lease referenced above and Subsections 3.1 and 3.2 never taking effect,
Tenant agrees to execute the Promissory Note attached hereto as Exhibit A and Tenant further agrees
to fulfill their obligations under said Promissory Note and that any failure to pay any installment
when due as provided for in the Note will constitute an “Event of Default” under Subsection 18.1 of
the Lease.





1









 







With the exception of the modifications set out above, all other terms, covenants and agreements of
the Lease shall remain in full force and effect.




	 	 	 	 	 	 	 
	Landlord:	 	Tenant:
	 
	 	 	 	 	 	 
	SDC 7,	 	REPLY! INC.,
	a California partnership	 	a California corporation
	 
	 	 	 	 	 	 
	By:

	 	/s/
	 	By:
	 	/s/ W. Samuel Veazey 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	CFO
	 	Title:
	 	CFO
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	CONTROLLER	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Date:

	 	6/24/09
	 	Date:
	 	June 24, 2009
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	Regarding:
	 
	 	 	 	 	 	 
	 	 	 	 	Bishop Ranch 15, Building BB
	 	 	 	 	12667 Alcosta Boulevard, Suite 200
	 	 	 	 	San Ramon, CA 94583






2









 






PROMISSORY NOTE




			
	$289,225.37
	 	San Ramon, California

July 31, 2009





FOR VALUE RECEIVED, the undersigned REPLY!, INC. (“Borrower”), promises to pay to the order of SDC
7 (“Lender”), at One Annabel Lane, San Ramon, California 94583, or at such other place as may be
designated in writing by Lender, the principal sum of TWO HUNDRED
EIGHTY-NINE THOUSAND TWO HUNDRED
TWENTY-FIVE AND 37/100 ($289,225.37) with interest thereon at an annual interest rate of ten
percent (10%) compounded monthly. All sums owing hereunder are payable in lawful money of the
United States of America, in immediately available funds.



The outstanding principal balance of this Note, including interest, shall be due in installments
payable as follows:




	 	 	 	 	 
	•	 	August 1, 2009
	 	$  22,889.58
	 	 	 
	 	 
	•	 	September 1, 2009
	 	22,889.58
	 	 	 
	 	 
	•	 	October 1, 2009
	 	13,036.33
	 	 	 
	 	 
	•	 	November 1, 2009
	 	13,036.33
	 	 	 
	 	 
	•	 	December 1, 2009
	 	13,036.33
	 	 	 
	 	 
	•	 	January 1, 2010
	 	34,036.33
	 	 	 
	 	 
	•	 	February 1, 2010
	 	34,036.33
	 	 	 
	 	 
	•	 	March 1, 2010
	 	34,036.33
	 	 	 
	 	 
	•	 	April 1, 2010
	 	34,036.33
	 	 	 
	 	 
	•	 	May 1, 2010
	 	34,036.33
	 	 	 
	 	 
	•	 	June 1, 2010
	 	34,036.33
	 	 	 
	 	 
	•	 	July l, 20l0
	 	14,870.53
	 	 	 
	 
	 	 	Total
	 	$303,976.66





Borrower may from time to time during the term of this Note partially or wholly repay its
outstanding borrowings.



Notwithstanding anything above, Lender upon the occurrence of any failure to pay any installment
when due may, at its sole option, declare all sums owing under this Note immediately due and
payable. Notwithstanding the above, an installment payment will not be considered in default if
paid no later than the fifth day of the month due concurrent with their regular monthly lease
payment for said month for the lease described below.



Lender and Borrower currently are parties to a lease dated July 25, 2006, including addendums, for
office space located at 12667 Alcosta Blvd., Suite 200, San Ramon, CA 94583 (hereinafter
collectively referred to as “Lease”) as Landlord and Tenant, respectively. Notwithstanding anything
above, Lender upon the occurrence of any Event of Default as set forth in Section 18 of the Lease
by Borrower (as Tenant) may, at its sole option, declare all sums owing under this Note immediately
due and payable.





Page 1 of 2



 









 





			
	PROMISSORY NOTE
	 	San Ramon, California
	$289,225.37
	 	July 31, 2009





If any attorney is engaged by Lender to enforce or defend any provision of this Note, or as a
consequence of any Default, with or without the filing of any legal action or proceeding, then
Borrower shall pay to Lender immediately upon demand all attorneys’ fees and all costs incurred by
Lender in connection therewith, together with interest thereon from the date of such demand until
paid at the rate of interest applicable to the principal balance owing hereunder as if such unpaid
attorneys’ fees and costs had been added to the principal.



No previous waiver and no failure or delay by Lender in acting with respect to the terms of this
Note shall constitute a waiver of any breach, default, or failure of condition under this Note.



Borrower waives: presentment; demand; notice of dishonor; notice of default or delinquency; notice
of acceleration; notice of protest and nonpayment; notice of costs, expenses or losses and interest
thereon; notice of later charges; and diligence in taking any action to collect any sums owing
under this Note.



All agreements between Borrower and the Lender of this Note are expressly limited, so that in no
event or contingency whatsoever, whether by reason of the advancement of the proceeds of this Note,
acceleration of maturity of the unpaid principal balance, or otherwise, shall the amount paid or
agreed to be paid to the Lender for the use, forbearance, or detention of the money to be advanced
under this Note exceed the highest lawful rate permissible under applicable usury laws. If, under
any circumstances whatsoever, fulfillment of any provision of this Note or any other agreement
pertaining to it, after timely performance of such provision is due, shall involve transcending the
limit of validity prescribed by law which a court of competent deems applicable, then, ipso facto,
the obligations to be fulfilled shall be reduced to the limit of such validity, and if, under any
circumstances whatsoever, the Holder shall ever receive as interest an amount that exceeds the
highest lawful rate, the amount that would be excessive interest shall be applied to the reduction
of the unpaid principal balance under this Note and not to the payment of interest, or, if such
excessive interest exceeds the unpaid balance of principal under this Note, such excess shall be
refunded to Borrower. This provision shall control every other provision of all agreements between
Borrower and the Lender.



Time is of the essence with respect to every provision hereof. This Note shall be construed and
enforced in accordance with the laws of the State of California, except to the extent that Federal
laws preempt the laws of the State of California, and all persons and entities in any manner
obligated under this Note consent to the jurisdiction of any Federal or State Court within the State of California having proper venue and also consent to
service of process by any means authorized by California or Federal law.




	 	 	 	 	 
	 	“BORROWER”



REPLY!, INC.

 	 
	 	By:  	 /s/
 	 
	 	 	 	 
	 	 	 	 
	 




 











 









SDC 7

Reply!



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Cumulative	 	 	 	 
	 	 	Per	 	Per Orig.	 	Pass-Though	 	 	 	 	 	 	 	 	 	Paid	 	 	 	 	 	before	 	Interest	 	Cumulative
	Month	 	Addendum	 	Lease	 	2008	 	2009	 	Total Due	 	Monthly	 	Other	 	Less Note	 	Difference	 	Interest	 	10%	 	Total
	Nov-2008

	 	 	50,000.00	 	 	 	82,110.42	 	 	 	 	 	 	 	 	 	 	 	82,110.42	 	 	 	50,000.00	 	 	 	 	 	 	 	 	 	 	 	32,110.42	 	 	 	32,110.42	 	 	 	267.59	 	 	 	32,378.01	 
	Dec-2008

	 	 	50,000.00	 	 	 	82,110.42	 	 	 	 	 	 	 	 	 	 	 	82,110.42	 	 	 	50,000.00	 	 	 	 	 	 	 	 	 	 	 	32,110.42	 	 	 	64,488.43	 	 	 	537.40	 	 	 	65,025.83	 
	Jan-2009

	 	 	50,000.00	 	 	 	82,110.42	 	 	 	 	 	 	 	 	 	 	 	82,110.42	 	 	 	50,000.00	 	 	 	 	 	 	 	 	 	 	 	32,110.42	 	 	 	97,136.25	 	 	 	809.47	 	 	 	97,945.72	 
	Feb-2009

	 	 	50,000.00	 	 	 	82,110.42	 	 	 	 	 	 	 	 	 	 	 	82,110.42	 	 	 	50,000.00	 	 	 	 	 	 	 	 	 	 	 	32,110.42	 	 	 	130,056.14	 	 	 	1,083.80	 	 	 	131,139.94	 
	Mar-2009

	 	 	50,000.00	 	 	 	82,110.42	 	 	 	 	 	 	 	 	 	 	 	82,110.42	 	 	 	50,000.00	 	 	 	 	 	 	 	 	 	 	 	32,110.42	 	 	 	163,250.36	 	 	 	1,360.42	 	 	 	164,610.78	 
	Apr-2009

	 	 	50,000.00	 	 	 	82,110.42	 	 	 	 	 	 	 	3,572.71	 	 	 	85,683.13	 	 	 	53,572.10	 	 	 	 	 	 	 	 	 	 	 	32,111.03	 	 	 	196,721.81	 	 	 	1,639.35	 	 	 	198,361.16	 
	May-2009

	 	 	50,000.00	 	 	 	82,110.42	 	 	 	44,147.90	 	 	 	3,572.71	 	 	 	129,831.03	 	 	 	70,000.00	 	 	 	 	 	 	 	 	 	 	 	59,831.03	 	 	 	258,192.19	 	 	 	2,151.60	 	 	 	260,343.79	 
	Jun-2009

	 	 	73,572.71	 	 	 	82,110.42	 	 	 	 	 	 	 	3,572.71	 	 	 	85,683.13	 	 	 	73,572.71	 	 	 	 	 	 	 	 	 	 	 	12,110.42	 	 	 	272,454.21	 	 	 	2,270.45	 	 	 	274,724.66	 
	Jul-2009

	 	 	73,572.71	 	 	 	82,110.42	 	 	 	 	 	 	 	3,572.71	 	 	 	85,683.13	 	 	 	73,572.71	 	 	 	 	 	 	 	 	 	 	 	12,110.42	 	 	 	286,835.08	 	 	 	2,390.29	 	 	 	289,225.37	 
	 
	Aug-2009

	 	 	73,572.71	 	 	 	82,110.42	 	 	 	 	 	 	 	3,572.71	 	 	 	85,683.13	 	 	 	73,572.71	 	 	 	35,000.00	 	 	 	(22,889.58	)	 	 	0.00	 	 	 	266,335.79	 	 	 	2,219.46	 	 	 	268,555.25	 
	Sep-2009

	 	 	73,572.71	 	 	 	82,110.42	 	 	 	 	 	 	 	3,572.71	 	 	 	85,683.13	 	 	 	73,572.71	 	 	 	35,000.00	 	 	 	(22,889.58	)	 	 	0.00	 	 	 	245,665.67	 	 	 	2,047.21	 	 	 	247,712.88	 
	Oct-2009

	 	 	73,572.71	 	 	 	91,963.67	 	 	 	 	 	 	 	3,572.71	 	 	 	95,536.38	 	 	 	73,572.71	 	 	 	35,000.00	 	 	 	(13,036.33	)	 	 	0.00	 	 	 	234,676.55	 	 	 	1,955.64	 	 	 	236,632.19	 
	Nov-2009

	 	 	73,572.71	 	 	 	91,963.67	 	 	 	 	 	 	 	3,572.71	 	 	 	95,536.38	 	 	 	73,572.71	 	 	 	35,000.00	 	 	 	(13,036.33	)	 	 	0.00	 	 	 	223,595.86	 	 	 	1,863.30	 	 	 	225,459.16	 
	Dec-2009

	 	 	73,572.71	 	 	 	91,963.67	 	 	 	 	 	 	 	3,572.71	 	 	 	95,536.38	 	 	 	73,572.71	 	 	 	35,000.00	 	 	 	(13,036.33	)	 	 	0.00	 	 	 	212,422.83	 	 	 	1,770.19	 	 	 	214,193.02	 
	Jan-2010

	 	 	83,572.71	 	 	 	91,963.67	 	 	 	 	 	 	 	3,572.71	 	 	 	95,536.38	 	 	 	83,572.71	 	 	 	46,000.00	 	 	 	(34,036.33	)	 	 	0.00	 	 	 	180,156.69	 	 	 	1,501.31	 	 	 	181,658.00	 
	Feb-2010

	 	 	83,572.71	 	 	 	91,963.67	 	 	 	 	 	 	 	3,572.71	 	 	 	95,536.38	 	 	 	83,572.71	 	 	 	46,000.00	 	 	 	(34,036.33	)	 	 	0.00	 	 	 	147,621.67	 	 	 	1,230.18	 	 	 	148,851.85	 
	Mar-2010

	 	 	83,572.71	 	 	 	91,963.67	 	 	 	 	 	 	 	3,572.71	 	 	 	95,536.38	 	 	 	83,572.71	 	 	 	46,000.00	 	 	 	(34,036.33	)	 	 	0.00	 	 	 	114,815.52	 	 	 	956.80	 	 	 	115,772.32	 
	Apr-2010

	 	 	83,572.71	 	 	 	91,963.67	 	 	 	 	 	 	 	3,572.71	 	 	 	95,536.38	 	 	 	83,572.71	 	 	 	46,000.00	 	 	 	(34,036.33	)	 	 	0.00	 	 	 	81,735.99	 	 	 	681.13	 	 	 	82,417.12	 
	May-2010

	 	 	83,572.71	 	 	 	91,963.67	 	 	 	 	 	 	 	3,572.71	 	 	 	95,536.38	 	 	 	83,572.71	 	 	 	46,000.00	 	 	 	(34,036.33	)	 	 	0.00	 	 	 	48,380.79	 	 	 	403.17	 	 	 	48,783.96	 
	Jun-2010

	 	 	83,572.71	 	 	 	91,963.67	 	 	 	 	 	 	 	3,572.71	 	 	 	95,536.38	 	 	 	83,572.71	 	 	 	46,000.00	 	 	 	(34,036.33	)	 	 	0.00	 	 	 	14,747.63	 	 	 	122.90	 	 	 	14,870.53	 
	Jul-2010

	 	 	91,963.67	 	 	 	91,963.67	 	 	 	 	 	 	 	3,572.71	 	 	 	95,536.38	 	 	 	95,536.38	 	 	 	14,870.53	 	 	 	(14,870.53	)	 	 	0.00	 	 	 	0.00	 	 	 	0.00	 	 	 	0.00	 
	Aug-2010

	 	 	91,963.67	 	 	 	91,963.67	 	 	 	 	 	 	 	3,572.71	 	 	 	95,536.38	 	 	 	95,536.38	 	 	 	 	 	 	 	 	 	 	 	0.00	 	 	 	0.00	 	 	 	0.00	 	 	 	0.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1,550,372.57	 	 	 	1,914,814.99	 	 	 	44,147.90	 	 	 	60,736.07	 	 	 	2,019,698.96	 	 	 	1,581,090.09	 	 	 	465,870.53	 	 	 	(303,976.66	)	 	 	276,715.00	 	 	 	 	 	 	 	27,261.66