**Exhibit 10.16**

 

**SUBLEASE AGREEMENT**

 

 

**BETWEEN**

** **

**INSURANCE COMPANY OF THE WEST, A CALIFORNIACORPORATION,**

** **

**AS SUBLESSOR**

 

 

**AND**

** **

**IVOW, INC.**

** **

**A DELAWARE CORPORATION**

** **

**AS SUBTENANT**

** **

**Reference date January 12, 2006**

 

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TABLE OF CONTENTS

 
| 1.     | Recitals                                        | 1                                         |
|--------|-------------------------------------------------|-------------------------------------------|
|   |                                            |                                      |
| 2.     | Principal  Sublease Provisions                  | 1                                         |
|   |                                            |                                      |
| 3.     | Establishment of  Subleasehold                  | 3                                         |
|   | 3.1.                                            | Agreement to Let                          | 3 |
|   | 3.2.                                            | Term                                      | 3 |
|   |                                            |                                      |
| 4.     | Delivery of  Possession                         | 3                                         |
|   |                                            |                                      |
| 5.     | Use of Premises  and Common Area                | 4                                         |
|   | 5.1.                                            | Permitted Use of  Premises                | 4 |
|   | 5.2.                                            | Laws                                      | 4 |
|   | 5.3.                                            | Condition During  Periods of Non-Use      | 4 |
|   | 5.4.                                            | Use of Common  Area                       | 4 |
|   | 5.5                                             | General  Covenants and Limitations on Use | 5 |
|   |                                            |                                      |   |
| 6.     | Security Deposit                                | 5                                         |
|   |                                            |                                      |
| 7.     | Rent                                            | 6                                         |
|   |                                            |                                      |
| 8.     | Sublease  Expenses                              | 6                                         |
|   | 8.1.                                            | Definition of  Sublease Expenses          | 6 |
|   | 8.2.                                            | Subtenant’s Pro  Rata Share          | 7 |
|   | 8.3.                                            | Base Year  Sublease Expenses              | 7 |
|   | 8.4.                                            | Payment of  Sublease Expenses             | 7 |
|   |                                            |                                      |   |
| 9.     | Utilities and  Services                         | 8                                         |
|   |                                            |                                      |
| 10.    | Taxes                                           | 8                                         |
|   | 10.1.                                           | Personal  Property Taxes                  | 8 |
|   | 10.2.                                           | Real Property  Taxes                      | 8 |
|   |                                            | 10.2.1.                                   | Definition of  Taxes | 8 |
|   |                                            | 10.2.2.                                   | Payment of Taxes | 9 |
|   |                                            |                                      |   |   |
| 11.    | Maintenance  Obligations                        | 9                                         |
|   | 11.1.                                           | Subtenant’s  Duties                  | 9 |
|   | 11.2.                                           | Sublessor’s  Duties                  | 9 |
|   |                                            |                                      |   |
| 12.    | Net Sublease                                    | 10                                        |
|   |                                            |                                      |
| 13.    | Parking                                         | 10                                        |
|   |                                            |                                      |
| 14.    | Signs                                           | 10                                        |
|   |                                            |                                      |
| 15.    | Rules,  Regulations, and Covenants              | 11                                        |
|   |                                            |                                      |
| 16.    | Early Access  Insurance                         | 11                                        |
|   |                                            |                                      |
| 17.    | Plate-Glass  Insurance                          | 11                                        |
|   |                                            |                                      |
| 18.    | Public Liability  and Property Damage Insurance | 11                                        |
|   |                                            |                                      |
| 19.    | Fire and  Extended Coverage Insurance           | 12                                        |
|   |                                            |                                      |
| 20.    | Business  Interruption Insurance                | 12                                        |
|   |                                            |                                      |
| 21.    | Insurance  Generally                            | 12                                        |
|   |                                            |                                      |
| 22.    | Waiver of  Subrogation                          | 12                                        |
|   |                                            |                                      |
| 23.    | Sublessor’s  Insurance                     | 13                                        |
|        |                                                 |                                           |  |  |  |

 

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| 24.                                 | Alterations                                          | 13                                                  |
|-------------------------------------|------------------------------------------------------|-----------------------------------------------------|
|                                |                                                 |                                                |
| 25.                                 | Surrender of Premises  and Holding Over              | 14                                                  |
|                                |                                                 |                                                |
| 26.                                 | Default                                              | 14                                                  |
|                                |                                                 |                                                |
| 27.                                 | Sublessor’s Remedies                            | 15                                                  |
|                                | 27.1.                                                | Continuation of  Sublease                           | 15 |
|                                | 27.2.                                                | Rent from Reletting                                 | 15 |
|                                | 27.3.                                                | Termination of Subtenant’s Right to Possession | 16 |
|                                | 27.4.                                                | Sublessor’s Right to Cure Default              | 16 |
|                                | 27.5.                                                | Enforcement Costs                                   | 16 |
|                                |                                                 |                                                |   |
| 28.                                 | Interest                                             | 16                                                  |
|                                |                                                 |                                                |
| 29.                                 | Quarterly Payments                                   | 17                                                  |
|                                |                                                 |                                                |
| 30.                                 | Destruction                                          | 17                                                  |
|                                |                                                 |                                                |
| 31.                                 | Condemnation                                         | 18                                                  |
|                                |                                                 |                                                |
| 32.                                 | Assignment and Other  Transfers                      | 18                                                  |
|                                |                                                 |                                                |
| 33.                                 | Common Areas                                         | 20                                                  |
|                                |                                                 |                                                |
| 34.                                 | Relocation                                           | 20                                                  |
|                                |                                                 |                                                |
| 35.                                 | Access by Sublessor                                  | 21                                                  |
|                                |                                                 |                                                |
| 36.                                 | Sublessor’s Reserved  Rights                    | 21                                                  |
|                                |                                                 |                                                |
| 37.                                 | Indemnity and Exemption  of Sublessor from Liability | 21                                                  |
|                                |                                                 |                                                |
| 38.                                 | Hazardous Substances                                 | 22                                                  |
|                                |                                                 |                                                |
| 39.                                 | Prohibition Against  Asbestos-Containing Materials   | 23                                                  |
|                                |                                                 |                                                |
| 40.                                 | Security Measures                                    | 23                                                  |
|                                |                                                 |                                                |
| 41.                                 | Subordination and  Attornment                        | 24                                                  |
|                                |                                                 |                                                |
| 42.                                 | Estoppel Certificates                                | 24                                                  |
|                                |                                                 |                                                |
| 43.                                 | Waiver                                               | 25                                                  |
|                                |                                                 |                                                |
| 44.                                 | Brokers                                              | 25                                                  |
|                                |                                                 |                                                |
| 45.                                 | Easements                                            | 25                                                  |
|                                |                                                 |                                                |
| 46.                                 | Limitations on  Sublessor’s Liability           | 26                                                  |
|                                |                                                 |                                                |
| 47.                                 | Sale or Transfer of  Premises                        | 26                                                  |
|                                |                                                 |                                                |
| 48.                                 | Quitclaim Deed                                       | 26                                                  |
|                                |                                                 |                                                |
| 49.                                 | No Merger                                            | 26                                                  |
|                                |                                                 |                                                |
| 50.                                 | Confidentiality                                      | 26                                                  |
|                                |                                                 |                                                |
| 51.                                 | Miscellaneous                                        | 27                                                  |
|                                |                                                 |                                                |
| Exhibit A — Master  Lease |                                                 |
|                                |                                                 |
| Exhibit B — The  Premises |                                                 |

 

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| Exhibit B-1 — Site  Plan                            |   |
|---------------------------------------------------------------|--------|
|                                                          |   |
| Exhibit C —  Subtenant Improvements to the Premises |   |
|                                                          |   |
| Exhibit D —  Building Rules and Regulations    |   |
|                                                          |   |
| Addendum                                                      |   |

 

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**SUBLEASE**

**FOR ICW PLAZA AT TORREY RESERVE**

 

This Sublease (“Sublease”) is dated for referencepurposes only as of January 12, 2006, between Insurance Company of theWest, a California corporation (“Sublessor”), and iVow, Inc., a Delawarecorporation (“Subtenant”), who agree as follows:

#  

1.             Recitals.This sublease is entered into pursuant to the following recitals of fact, whichrecitals constitute an integral part of this sublease:

 

1.1.          Sublessoris the tenant under that certain Second Amended and Restated Office LeaseAgreement dated January 22, 1997 (the “Master Lease”), with ICW Plaza,L.P., a California limited partnership (“Master Lessor”), as landlord, to whichthis Sublease is subordinate.

 

1.2.          Pursuant tothe Master Lease, Master Lessor has leased to Sublessor all of Lot 3 ofTorrey Reserve Unit No. 1 in the City of San Diego, County of San Diego,State of California, according to Map thereof No. 13082, filed for recordin the Office of the San Diego County Recorder on January 24, 1994, asDocument No. 1994-0049955 (“Lot 3”), along with the 3-plus storybuilding and other improvements, landscaping and other additions and structureslocated or to be constructed thereon (the “Building”) at 11455 El Camino Real, SanDiego, California 92130, and the non-exclusive right to use, in common withMaster Lessor and Master Lessor’s invitees and licensees, those easements andrights of use granted in favor of the owner of Lot 3 under that certainReciprocal Easement and Maintenance Agreement dated June 13, 1995, andrecorded as Document No. 1995-0249200 in the Office of the San DiegoCounty Recorder (the “REA”).

 

1.3.          By thisSublease, Sublessor intends to lease to Subtenant, and Subtenant intends tolease from Sublessor, that certain portion of the Building described inParagraph 2.2, below.

 

2.             PrincipalSublease Provisions. The following are the Principal Sublease Provisions ofthis Sublease. Other portions of this Sublease explain and define the PrincipalSublease Provisions in more detail and should be read in conjunction with thisParagraph. In the event of any conflict between the Principal SubleaseProvisions and the other portions of this Sublease, the Principal SubleaseProvisions shall control. (Terms shown in quotations are defined terms usedelsewhere in this Sublease)

 

2.1.          “Project”:  Torrey Reserve Unit No. 1, in San Diego,California. A site plan depicting the location of the Building and the Projectis attached hereto as Exhibit “B-1” and made a part hereof forall purposes.

 

2.2.          “Premises”:  That portion of the Building designated onthe floor plans attached as Exhibit “B”, consisting of commercialoffice space at 11455 El Camino Real, Suite 140, San Diego, CA 92130.

 

2.3.          LeasableArea of the Premises:  Approximately2,839 rentable square feet and 2,490 usable square feet of space (subject toadjustment, at Sublessor’s election, based upon field verification of thePremises following occupancy by Subtenant).

 

2.4.          “InitialSublease Term”:

 

2.4.1.       “CommencementDate”:  the date on which Sublessor’sWork set forth in Section 4 below are substantially completed, anticipatedto be February 1, 2006 (See Exhibit “C”).

 

2.4.2.       “InitialExpiration Date”:  Thirty six (36) monthsfrom the Commencement Date, anticipated to be January 31, 2009 (theInitial Expiration Date stated herein, even if adjusted pursuant to Exhibit “C”,must always be the last day of a calendar month).

 

2.4.3.       ExtensionRights:  Yes ýNo o (If yes, see Addendum to Sublease)

 

2.5.          “BasicMonthly Rent”:  See attached Addendum

 

2.6.          “SecurityDeposit”:  $8,282.71. Subtenant’sSecurity Deposit does not

 

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constitute last month’srent. Last month’s rent must be separately paid by Subtenant on or before thefirst day of the last month of the Sublease Term.

 

2.7.          This spaceintentionally left blank

 

2.8.          “Guarantor(s)”:  none

 

2.9.          “Subtenant’sPro Rata Share”:  1.82% (subject toadjustment as provided in Paragraph 8.2, below)

 

2.10.        ParticipatingBrokers:  CB Richard Ellis/Dick Balestriand Newmark Pacific/David Viani (“Participating Brokers”)

 

2.11.        Addressfor Sublessor:

 

Insurance Company of the West

c/o American Assets, Inc.

Attn:  JamesDurfey, V.P.

11455 El Camino Real, Suite 200

San Diego, CA 92130

 

2.12.        Addressesfor Subtenant:

 

(Prior to Occupancy)

2101 Faraday Avenue

Carlsbad, CA 92008-7205

 

(Following Occupancy)

The Premises

 

2.13.        PermittedUses By Subtenant:  Subtenant shall usethe Premises for general office purposes only (Permitted Use”).

 

2.14.        ExclusiveUse By Subtenant:  Yes oNo ý (If yes, see Addendum)

 

2.15.        PermittedTrade Name:  iVOW. Inc.

 

2.16.        AmountsPayable Upon Sublease Execution: $16,089.96 (first month’s rent of $7,807.25 plus Security Deposit of$8,282.71)

 

3.             Establishmentof Subleasehold.

 

3.1.          Agreementto Let. Sublessor hereby subleases the Premises to Subtenant, and Subtenanthereby subleases the Premises from Sublessor, for the below described Term, andupon the terms, provisions and conditions contained in this Sublease; alongwith the following additional rights:

 

3.1.1.       Subtenantis hereby granted the non-exclusive right to use, in common with Sublessor, theother tenants in the Building, and the Sublessor’s and such other tenants’invitees and licensees, the areas located within Lot 3 and within theBuilding which are set aside, for the common use of, among others, theoccupants of the Building (the “Common Area”) upon the terms, provisions, andconditions of this Sublease.

 

3.1.2.       Subtenantis hereby granted the non-exclusive right to use, in common with others,including Sublessor, Master Lessor, and those claiming any interest inLot 3 (or any portion thereof) by or through Master Lessor, and theirrespective invitees and licensees, those easements and rights of use granted infavor of the owner of Lot 3 under the REA; which REA provides for thecommon use and maintenance of Lot 1 in the Project (the “Project CommonArea”) upon the terms, provisions, and conditions of this Sublease.

 

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3.2.          Term.The term of this Sublease (the “Term”) will commence on the “Commencement Date,”as defined in Paragraph 2.4.1 above, and shall expire on the “InitialExpiration Date,” as defined in Paragraph 2.4.2 above, subject to (i) anymodifications to such dates resulting from construction work by Sublessor, asdescribed in Exhibit “C” to this Sublease, (ii) any extensionrights described in the Addendum to this Sublease, and (iii) earliertermination, as provided in this Sublease. The term “Expiration Date”, as usedin this Sublease will mean the Initial Expiration Date, any earlier date uponwhich this Sublease is terminated by Sublessor, as provided below, or, if theTerm is extended, then any extended Term expiration date. Sublessor andSubtenant shall execute a supplemental writing to this Sublease to reflect theexact Commencement Date; however, any failure to do so will not affect theCommencement Date. If the actual Commencement Date is different than theestimated Commencement Date set forth in Paragraph 2.4.1 of this Sublease, then(A) the Commencement Date provided for under this Section willcontrol, (B) the Initial Expiration Date will be automatically extended bythe same number of days by which the actual Commencement Date extended beyondthe estimated Commencement Date specified in Paragraph 2.4.1, above (exceptthat if such modified Initial Expiration Date would not, by reason of suchrecalculation, be the last day of a calendar month, then the Initial ExpirationDate will be further extended by the minimum number of days necessary to makethe Initial Expiration Date be the last day of a calendar month), and (C) Paragraphs2.4.1 and 2.4.2 of this Sublease will be deemed amended accordingly.

 

4.             Deliveryof Possession. On or before the Commencement Date, Sublessor, at its cost,shall have substantially completed the work, if any, required to be completedby Sublessor prior to the delivery of the Premises to Subtenant, as describedin Exhibit “C” to this Sublease (the “Sublessor’s Work”). Forpurposes of this Paragraph, the term “substantially complete” shall meancompleted to such an extent that Subtenant can commence its work, if any, to beundertaken by Subtenant, as described in Exhibit “C” to thisSublease (the “Subtenant’s Work”), without material delay or interference dueto the completion of Sublessor’s Work, or if no such Subtenant’s Work is to beundertaken, then such term shall mean completed to such an extent that theSublessor’s Work can be finally completed within 30 days and without materialinterference to Subtenant’s occupancy and use of the Premises. If possession ofthe Premises (including, without limitation, substantial completion ofSublessor’s Work, if any) is not delivered to Subtenant on or before theCommencement Date, then Sublessor shall not be liable for any damage caused bysuch delay, and such delay shall neither affect the validity of this Sublease,affect Subtenant’s obligations under this Sublease, nor extend the Term, exceptthat, unless Subtenant has caused or contributed to such delay, all rentalobligations of Subtenant (including the obligation to pay Basic Monthly Rent)shall be abated until possession of the Premises is delivered to Subtenant. Ifany such delay is caused or contributed to by Subtenant then, upon demand,Subtenant shall pay to Sublessor rent (at the rate of 1/30th of the BasicMonthly Rent per day) shall be abated until possession of the Premises isdelivered to Subtenant. Except for any items set forth on a “punch-list” ofexcepted items delivered to Sublessor upon the date possession of the Premisesare delivered to Subtenant, and except as otherwise provided to the contrary inthis Sublease, Subtenant shall, by acceptance of possession of the Premises, bedeemed to have (i) acknowledged that Sublessor’s Work has beensubstantially completed and that the Premises are in first-class conditionand repair (ii) accepted the Premises in its then as-is condition with noright to require Sublessor to perform any additional work therein, exceptas set forth on the punch list, (iii) acknowledged that the Premisescomply with all applicable laws and ordinances, and (iv) waived anyexpress or implied warranties regarding the condition of the Premises,including any implied warranties of fitness for a particular purpose ormerchantability.

 

5.             Useof Premises and Common Area.

 

5.1.          PermittedUse of Premises. Subtenant may use the Premises for the Permitted Usespecified in Paragraph 2.13 and for no other use. Any changes in the PermittedUse (or any change in Subtenant’s trade name from the Permitted Trade Nameidentified in Paragraph 2.15 above) shall require Sublessor’s prior writtenconsent, which consent may be granted or withheld in Sublessor’s solediscretion. Furthermore, Subtenant shall at all times faithfully observe and bein compliance with the rules and regulations set forth, on Exhibit “D”attached hereto as relating to the Premises, Building, Project and CommonAreas, which rules and regulations may be modified or amended fromtime to time in Sublessor’s sole, but reasonable, discretion, with notice ofsame being provided to Subtenant.

 

5.2.          Laws.Subtenant shall comply with all laws concerning the Premises including, withoutlimitation, the obligation at Subtenant’s sole cost to alter, maintain, andrestore the Premises in compliance with all applicable laws, even if such lawsare enacted after the date of this Sublease, even if compliance entails coststo Subtenant of a substantial nature, and even if compliance requires structural

 

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alterations. Such obligation to comply with laws shall include withoutlimitation compliance with any amendments arising after the Commencement Dateto Title III of the Americans With Disabilities Act of 1990 (42 U.S.C. 12181 *et seq*.) (the “ADA”). If Subtenant’s useof the Premises results in the need for modifications or alterations to anyportion of the Common Area or the Project in order to comply with the ADA, thenSubtenant shall additionally be responsible for the cost of such modificationsand alterations.

 

5.3.          ConditionDuring Periods of Non-Use. During any period of time in which Subtenant isnot continuously using and occupying the Premises, Subtenant shall take suchmeasures as may be necessary or desirable, in Sublessor’s reasonableopinion, to secure the Premises from break-ins and use by unauthorized persons,to minimize the appearance of non-use, and to otherwise maintain the interiorand exterior portions of Subtenant’s Premises, including all windows and doors,in first class condition and consistent with the manner in which thePremises were maintained during Subtenant’s occupancy.

 

5.4.          Use ofCommon Area. Subtenant’s use of the Common Area and the Project Common Areamust at all times comply with the applicable provisions of the REA and all rules andregulations regarding such use as Sublessor or the Manager named in the REA(the “Manager”) may from time to time reasonably adopt; provided, however,that the rules and regulations are not inconsistent with the terms andprovisions of this Sublease and shall be uniformly applicable to all tenantsand occupants of the Project and shall be enforced by Sublessor on anon-discriminatory basis. By its execution of this Sublease, Subtenantacknowledges receiving a copy of the REA and agrees to be bound by, and tocomply with, all of the provisions of the REA, as it may be amended fromtime to time.

 

5.5.          GeneralCovenants and Limitations on Use. Subtenant may not do, bring, or keepanything in or about the Premises that will cause a cancellation of anyinsurance covering the Premises, the Building, or the Project. If the rate ofany insurance carried by Sublessor or the Manager is increased as a result ofSubtenant’s use or occupancy of the Premises, Subtenant shall pay to Sublessor,within 10 days after Sublessor delivers to Subtenant a notice of such increase,the amount of such increase. Furthermore, Subtenant covenants and agrees thatno light will be emitted from the Premises by Subtenant which is unreasonablybright or causes unreasonable glare; no sounds will be emitted from thePremises by Subtenant which are unreasonably loud or annoying; and no odor willbe emitted from the Premises by Subtenant which is or might be unreasonablynoxious or offensive to others in the Building, on the Project, or on adjacentor near-by property. In addition, Subtenant covenants and agrees to usecommercially reasonable efforts so that no unsightliness will be permitted uponthe Premises by Subtenant. Without limiting the generality of the foregoing, norefuse, scraps, debris, garbage, trash, hazardous or toxic substances, bulkmaterials, or waste may be kept, stored, or accumulated within thePremises except as may be properly enclosed and which meets the other requirementsof this Sublease; the Premises may not be used for sleeping or washingclothes, nor may Subtenant use the Premises for cooking or thepreparation, manufacture, or mixing of anything that might emit any odor orobjectionable noises or lights onto the Project or nearby properties, except asotherwise provided to the contrary in this Sublease; and all pipes, wires,poles, antennas, and other facilities for utilities or the transmission orreception of audio or visual signals must be kept and maintained enclosedwithin the Premises. Subtenant will be solely responsible for the timelyremoval of all refuse, scraps, debris, garbage, trash, bulk materials, or wastefrom the Premises and the deposit thereof in the trash containers or dumpstersto be maintained by Sublessor on Lot 3. Further, Subtenant may notkeep or permit to be kept any animal (excluding seeing-eye dogs), bird,reptile, or other exotic creature on the Premises. Neither Subtenant norSubtenant’s guests, invitees, customers, and licensees (collectively, “Subtenant’sInvitees”) may do anything that will cause damage or waste to the Buildingor Project. Neither the floor nor any other portion of the Premises may beoverloaded. No machinery, apparatus, or other appliance may be used oroperated in or on the Premises that will in any manner injure, vibrate, orshake all or any part of the Building or the balance of the Project. Inthe event of any breach of this Paragraph 5.5 by Subtenant or Subtenant’sInvitees, Sublessor, at its election, may pay the cost of correcting suchbreach and Subtenant shall immediately, upon demand, pay (as Additional Rent)the cost thereof plus an administrative fee of ten percent (10%) of such cost.

 

6.             SecurityDeposit. Upon the execution of this Sublease, Subtenant shall deposit withSublessor cash or check in the amount of the Security Deposit, to secure theperformance by Subtenant of its obligations under this Sublease, includingwithout limitation Subtenant’s obligations (i) to pay Basic Monthly Rentand Additional Rent, (ii) to repair damages to the Premises and/or theProject caused by Subtenant or Subtenant’s agents, employees, contractors,licensees, and invitees (collectively, “Subtenant’s Invitees”), (iii) toclean the Premises upon the termination of this Sublease, and (iv) toremedy any other defaults by Subtenant in the performance of any of itsobligations under this Sublease. If Subtenant

 

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commits any default under this Sublease, Sublessor may, at its election,use the Security Deposit to cure such defaults, and to compensate Sublessor forall damage suffered by Sublessor from such defaults, including, withoutlimitation, attorneys’ fees and costs incurred by Sublessor. Upon demand bySublessor, Subtenant shall promptly pay to Sublessor a sum equal to any portionof the Security Deposit so used by Sublessor, in order to maintain the SecurityDeposit in the amount set forth in Paragraph 2.6 above. Within 45 daysfollowing the Expiration Date or earlier termination of this Sublease,Sublessor shall deliver to Subtenant, at Subtenant’s last known address, anyportion of the Security Deposit not used by Sublessor, as provided in thisParagraph. Sublessor may commingle the Security Deposit with Sublessor’sother funds and Sublessor shall not pay interest on such Security Deposit toSubtenant. Subtenant waives the provisions of California Civil Code Section 1950.7(or any successor statute), and any similar principals of law with respect toSublessor’s ability to apply the Security Deposit against future rent damages. Furthermore,upon lawful termination of the Sublease as a result of Subtenant’s default,Sublessor shall be entitled to immediately apply the Security Deposit againstdamages computed under California Civil Code Section 1951.2, without therequirement that Subtenant first be given notice and an opportunity to cure,and notwithstanding that the damages have not been finally adjudicated by acourt

 

7.             Rent.Subtenant shall pay to Sublessor as minimum monthly rent, the Basic MonthlyRent described in Paragraph 2.5, above (subject to adjustment as provided inthe attached Addendum), in advance, on the first day of each calendar monththroughout the Term. If the Commencement Date is other than the first day of acalendar month, then the Basic Monthly Rent payable by Subtenant for the firstcalendar month of the Term during which rent is payable (which shall be payableupon the Commencement Date) will be prorated on the basis of the actual numberof days during the Term occurring during the relevant calendar month. All “Rental”(which includes Basic Monthly Rent and any “Additional Rent” hereunder) must bepaid to Sublessor at the same address as notices are to be delivered toSublessor pursuant to Paragraph 2.11, above, or such other address as Sublessormay designate in writing to Subtenant.

 

8.             SubleaseExpenses.

 

8.1.          Definitionof Sublease Expenses. As used in this Sublease, the term “Sublease Expenses”shall mean and refer to all reasonable costs and expenses, of any kind ornature, which are paid or incurred by Sublessor relative to the REA or theoperation, repair, replacement, maintenance, and/or management of Lot 3including without limitation all costs and expenses relating to:  (i) all personnel directly andexclusively involved in the operation, repair, replacement, maintenance, andmanagement of the Project (other than Sublessor’s corporate officers) includingwages, fringe benefits, and other labor payments, (ii) water, sewagedisposal, drainage, refuse collection and disposal, gas (excludingelectricity), and other utility services, excluding therefrom submetered orallocated utility charges billed separately to any tenant, (iii) generalmaintenance and repair of Lot 3, including the structural components ofthe Building and other improvements located within Lot 3, repainting ofimprovements, and exterior window washing (excluding janitorial services), (iv) maintenanceof landscaping and, where and when reasonably necessary, replanting, (v) keepingthe parking area free from litter, dirt, debris, and other obstructions, (vi) anyexpenses payable by Sublessor relative to the REA pursuant to the provisions ofthe Master Lease, (vii) all real property or real estate taxes,assessments, and other impositions, whether general, special, ordinary, orextraordinary, and of every kind and nature, which may be levied, assessedor imposed upon or with respect to Lot 3, or any portion thereof, by anylocal, state, or federal entity (viii) any personal property taxes,assessments, or other impositions levied, assessed, or imposed upon anypersonal property of Sublessor used in connection with the Project, (ix) thecost of all casualty, liability, rental loss, and other insurance obtained bySublessor relative to Lot 3, including all premiums therefore and anydeductibles payable with respect to any loss insured thereby,(x) management fees and legal, accounting, inspection, and consultationfees (other than as related to new leases, enforcing Sublessor’s rights underexisting leases, or sales of the Building), (xi) the cost of capitalimprovements or structural modifications required by any change in laws,ordinances, rules, or regulations governing Lot 3, or other capitalimprovements or structural modifications deemed reasonably necessary ordesirable by Sublessor, including without limitation capital improvements orstructural modifications which reduce Sublease Expenses; provided, however, anycosts of such capital improvements or structural modifications shall beamortized over the useful life of such capital improvements or structuralmodifications, on a straight-line basis, including an interest factor.

 

8.2.          Subtenant’sPro Rata Share. For purposes of this Sublease, the term “Subtenant’s ProRata Share” will mean and refer to the share of Sublease Expenses and othercosts, to be borne by Subtenant under this Sublease. Subtenant’s Pro Rata Sharewill be computed utilizing a fraction,

 

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the numerator of which will be the total number of rentable square feetlocated within the Premises, and the denominator of which will be the totalaggregate number of rentable square feet of space in the Building thatparticipate in reimbursement of the expense item(s) or category(ies). Subjectto prior written notice to and approval by Subtenant, Subtenant’s Pro RataShare for one expense item or category may differ from Subtenant’s ProRata Share of another expense item or category, to the extent that otherleasable areas within the Building participate in full, partial, orextraordinary reimbursement of a particular expense item or category. No changein Subtenant’s Pro Rata Share resulting from an increase or decrease in theleasable area of the Building due to construction or demolition of improvementswill be effective until the first day of the first full calendar year followingsuch construction or demolition.

 

8.3.          BaseYear Sublease Expenses. As used in this Sublease, the term “Base YearSublease Expenses” shall mean and refer to the Sublease Expenses paid orincurred by Sublessor during the calendar year in which the Commencement Datetakes place, said year being 2006. Notwithstanding anything containedherein to the contrary, Base Year Sublease Expenses shall be calculated as ifthe Project were ninety-five percent (95%) occupied and adjusted for a onehundred percent (100%) tax assessment.

 

8.4.          Paymentof Sublease Expenses. Subtenant shall pay to Sublessor, on the first day ofeach calendar month during the Lease Term, commencing January 1, 2007, anamount (“Subtenant’s Monthly Payment”) equal to one-twelfth of Subtenant’s ProRata Share of the excess of Sublease Expenses over the Base Year SubleaseExpenses (“Increased Sublease Expenses), as estimated by Sublessor in the mostrecently delivered Estimated Statement (as defined below). Sublessor intends todeliver to Subtenant, prior to the commencement of each calendar year duringthe Term, a written statement (“Estimated Statements”) setting forth Sublessor’sestimate of Sublease Expenses and Increased Sublease Expenses allocable to theensuing calendar year, and Subtenant’s Pro Rata Share of such IncreasedSublease Expenses. Within approximately 90 days after the end of each calendaryear during the Term, Sublessor shall deliver to Subtenant a written statement(“Actual Statement”), setting forth the actual Sublease Expenses for thepreceding calendar year. Subtenant’s failure to object to Sublessor regardingthe contents of an Actual Statement, in writing, within 30 days after deliveryto Subtenant of such Actual Statement, shall constitute Subtenant’s absoluteand final acceptance and approval of the Actual Statement. If the sum ofSubtenant’s Monthly Payments actually paid by Subtenant during any calendaryear exceeds Subtenant’s Pro Rata Share of the excess of actual IncreasedSublease Expenses, then such excess will be credited against future Subtenant’sMonthly Payments, unless such calendar year was the calendar year during whichthe Expiration Date or earlier termination of this Sublease occurs (the “LastCalendar Year”), in which event Sublessor shall pay to Subtenant such excess. Ifthe sum of Subtenant’s Monthly Payments actually paid by Subtenant during anycalendar year is less than Subtenant’s Pro Rata Share of the excess of actualSublease Expenses for such calendar year over the Base Year Sublease Expenses,then Subtenant shall, within 30 days of delivery of the Actual Statement, payto Sublessor the amount of such deficiency. Sublessor’s delay in delivering anyEstimated Statement or Actual Statement will not release Subtenant of itsobligation to pay any Subtenant’s Monthly Payment or any such excess uponreceipt of the Estimated Statement or the Actual Statement, as the case may be.The references in this Paragraph to the actual Sublease Expenses allocable to acalendar year, shall include (i) if such calendar year is the calendaryear during which the Commencement Date occurs, the actual Sublease Expensesallocable to the portion of such calendar year following the Commencement Date,and (ii) if such calendar year is the Last Calendar Year, the actualSublease Expenses allocable to the portion of the Last Calendar Year prior tothe Expiration Date or earlier termination of this Sublease.

 

9.             Utilitiesand Services. Except as otherwise provided in the Addendum to thisSublease, Sublessor, at Sublessor’s expense, will provide ordinary andcustomary amounts and quantities of water, and janitorial services (5 days perweek), sewer, gas, trash collection, and interior window washing to thePremises. If Subtenant’s use of water, sewer and/or other utilities exceedsordinary and customary usage levels, then Subtenant shall pay Sublessor theactual reasonable cost of such excess (determined in Sublessor’s reasonablediscretion). Except for Sublessor’s obligations set forth above, Subtenantshall make all arrangements for and pay the cost of all utilities and servicesfurnished to the Premises or used by Subtenant. Sublessor shall not be liablefor failure to furnish any utilities or services to the Premises when suchfailure results from causes beyond Sublessor’s reasonable control, and suchfailure shall neither be deemed and actual or constructive eviction, norrelease Subtenant from its obligations under this Sublease, including withoutlimitation, Subtenant’s obligation to pay Rental. If Sublessor constructs newor additional utility facilities, including without limitation wiring,plumbing, conduits, and/or mains, resulting solely from Subtenant’s changed orincreased utility requirements, Subtenant shall on demand promptly pay toSublessor the total cost of such items. If any governmental authority havingjurisdiction over the Project imposes mandatory controls, or suggests voluntaryguidelines applicable to the Project, relating to

 

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the use or conservation of water, gas, electricity, power, or thereduction of automobile emissions, Sublessor, at its reasonable discretion, may complywith such mandatory controls or voluntary guidelines and, accordingly, requireSubtenant to so comply. Sublessor shall not be liable for damages to persons orproperty for any mandatory reduction, nor shall such mandatory reduction in anyway be construed as a partial eviction of Subtenant; cause an abatement ofrent, or operate to release Subtenant from any of Subtenant’s obligations underthis Sublease.

 

10.           Taxes.

 

10.1.        PersonalProperty Taxes. Subtenant shall pay before delinquency all taxes,assessments, license fees, and other charges that are levied or assessedagainst, or based upon the value of, Subtenant’s personal property installed orlocated in or on the Premises including without limitation trade fixtures,furnishings, equipment, and inventory (collectively, “Subtenant’s PersonalProperty”), subject to Subtenant’s right to diligently and reasonably contestsame. On demand by Sublessor, Subtenant shall furnish Sublessor withsatisfactory evidence of such payments. If any such taxes, assessments, licensefees, and/or other charges are levied against Sublessor or Sublessor’sproperty, or if the assessed value of the Premises or Lot 3 is increasedby the inclusion of a value placed on Subtenant’s Personal Property, and ifSublessor pays such taxes, assessments, license fees, and/or other charges orany taxes based on the increased assessments caused by Subtenant’s PersonalProperty, then Subtenant, on demand, shall immediately reimburse Sublessor forthe sum of such taxes, assessments, license fees, and/or other charges solevied against Sublessor, or the proportion of taxes resulting from suchincrease in Sublessor’s assessment. Sublessor may, at its election, pay suchtaxes, assessments, license fees, and/or other charges or such proportion, andreceive such reimbursement regardless of the validity of the levy.

 

10.2.        RealProperty Taxes.

 

10.2.1.     Definitionof Taxes. As used in this Sublease, the term “Taxes” shall mean and referto all real property or real estate taxes, assessments, and other impositions,whether general, special, ordinary, or extraordinary, and of every kind andnature, which may be levied, assessed, imposed upon or with respect to theProject, or any portion thereof, by any local, state, or federal entity fromtime to time.

 

10.2.2.     Paymentof Taxes. Subtenant shall pay to Sublessor, on the first day of eachcalendar month during the Term, commencing with the first day of the first January followingthe Commencement Date, as Additional Rent, an amount (“Subtenant’s Monthly TaxPayment”) equal to one-twelfth (1/12th) of Subtenant’s Pro Rata Share of theamount by which the Taxes for such calendar year exceed the Taxes which areassessed against the Project during the calendar year in which the CommencementDate takes place (the “Increased Taxes”), as estimated by Sublessor in the mostrecently delivered Estimated Tax Statement (as defined below). Sublessorintends to deliver to Subtenant, prior to the commencement of each calendaryear during the Term, a written statement (“Estimated Tax Statement”) settingforth Sublessor’s estimate of the Taxes and Increased Taxes allocable to theensuing calendar year, and Subtenant’s Pro Rata Share of such Increased Taxes. Sublessormay, at its option, during any calendar year, deliver to Subtenant a revisedEstimated Tax Statement, revising Sublessor’s estimate of the Taxes andIncreased Taxes, in accordance with Sublessor’s most current estimate. No laterthan 90 days after the end of each calendar year during the Term, Sublessorintends to deliver to Subtenant a written statement (“Actual Tax Statement”)setting forth the actual Taxes allocable to the preceding calendar year or, inthe case of the calendar year in which the Commencement Date occurs, suchActual Tax Statement will set forth the Taxes which are assessed against the Projectduring the calendar year in which the Commencement Date takes place. Subtenant’sfailure to object to Sublessor regarding the contents of an Actual TaxStatement, in writing, within 30 days after delivery to Subtenant of suchActual Tax Statement, shall constitute Subtenant’s absolute and finalacceptance and approval of the Actual Tax Statement. If the sum of Subtenant’sMonthly Tax Payments actually paid by Subtenant during any calendar yearexceeds Subtenant’s Pro Rata Share of the actual Increased Taxes allocable tosuch calendar year, then such excess will be credited against future Subtenant’sMonthly Tax Payments, unless such calendar year was the Last Calendar Year, inwhich event either (i) such excess shall be credited against any monetarydefault of Subtenant under this Sublease, or (ii) if Subtenant is not indefault under this Sublease, then Sublessor shall pay to Subtenant such excess.If the sum of Subtenant’s Monthly Tax Payments actually paid by Subtenantduring any calendar year is less than Subtenant’s Pro Rata Share of the actualIncreased Taxes allocable to such calendar year, then Subtenant shall, within10 days of delivery of the Actual Tax Statement, pay to Sublessor the amount ofsuch deficiency. Sublessor’s delay in delivering any Estimated Tax Statement orActual Tax Statement will not release Subtenant of its

 

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obligation to pay any Subtenant’s Monthly Tax Payment or any suchexcess upon receipt of the Estimated Tax Statement or the Actual Tax Statement,as the case may be. The references in this Paragraph to the actualIncreased Taxes allocable to a calendar year, shall include, if such calendaryear is the Last Calendar Year, the actual Increased Taxes allocable to theportion of the Last Calendar Year prior to the Expiration Date.

 

11.           MaintenanceObligations.

 

11.1.        Subtenant’sDuties. Subtenant shall at its sole cost maintain and keep, all in goodcondition, all portions of the Premises (except those portions of the Premises tobe maintained by Sublessor as expressly set forth below), ordinary wear andtear excepted. Subtenant is additionally liable for any damage to the Projectresulting from the grossly negligent acts or omissions of Subtenant, including,without limitation, any damage to the roof or damage relating to a roofpenetration caused by Subtenant. If Subtenant fails to maintain any portion ofthe Premises as provided above, or if Subtenant damage any portion of theProject, then Sublessor may (beyond the expiration of all applicablenotice and cure periods), at its election, maintain any such portion of thePremises or the Project and Subtenant shall promptly reimburse Sublessor forSublessor’s actual reasonable cost thereof.

 

11.2.        Sublessor’sDuties. Sublessor shall maintain, repair and replace the Premises (exceptas expressly set forth in Section 11.1 above), load-bearing columns, floorslabs and other structural components, the mechanical, electrical and plumbingsystems and equipment (pipes, fixtures, electrical wiring, breakers andswitches), plate glass windows, elevators, bathrooms, exterior lighting andlandscaping of the Project, trash receptacles, heating, air conditioning andventilation systems, pest and termite control services, telephone lines and wiringand all wiring, fixtures, lamps and tubes serving the Building and thePremises, in good working order. Sublessor’s failure to perform itsobligations set forth in the preceding sentence will not release Subtenant ofits obligations under this Sublease, including without limitation Subtenant’sobligation to pay Rental, except as otherwise provided to the contrary in thisSublease. Subtenant waives the provisions of California Civil Code Section 1942(or any successor statute), and any similar principals of law with respect toSublessor’s obligations for tenantability of the Premises and Subtenant’s rightto make repairs and deduct the expense of such repairs from rent.

 

12.           ModifiedGross Sublease. This Sublease is intended to be a “modified gross lease” withSubtenant’s liability for Building operating costs limited to any increasedSublease Expenses in excess of the Base Year Sublease Expenses.

 

13.           Parking.Subject to the remaining provisions of this Paragraph, as long as Subtenant isnot in default under this Sublease, Sublessor grants to Subtenant (for thebenefit of Subtenant and Subtenant’s Invitees) the right to the non-exclusiveuse of up to four (4) parking spaces per 1,000 useable square feet in thePremises within the parking area within the boundaries of and servingLot 3 along with the other parking areas within the Project relative towhich Sublessor has the right to grant parking rights pursuant to the REA (the “ParkingArea”). In addition and with respect to two (2) of the four (4) parkingspaces per 1,000 useable square feet in the Premises referenced above,Sublessor grants to Subtenant (for the benefit of Subtenant’s executives) theright to use the Project’s subterranean executive parking area at a rate of$75.00 per space per month (the non-exclusive parking spaces and subterraneanparking spaces shall be referred to herein as, the “Parking Allocation”). Theparking fee shall be subject to adjustment during the term of the Sublease. Notwithstandinganything to the contrary in this Sublease, Subtenant shall be required todeclare in writing to Sublessor (the “Parking Declaration”) the actual numberof reserved parking space that Subtenant will use and pay for during theSublease Term subject to the terms of this Sublease within the thirty (30) dayperiod prior to the Commencement Date. Upon making such Parking Declaration,Subtenant shall not be entitled to increase or decrease such number ofsubterranean reserved parking spaces that Subtenant will use and pay for duringthe entirety of the Sublease Term. The number of subterranean reserved parkingspots paid for by Subtenant during the first month after the Commencement Dateshall be deemed the Parking Declaration, unless otherwise indicated bySubtenant pursuant to this Paragraph.

 

Subtenant’s use of the Parking Area shall be subjectto such rules as Sublessor or the Manager (as the case may be) may,in its reasonable discretion, adopt from time to time with respect to theParking Area at all times during the term of this Sublease and any renewals orextensions thereof, and to the extent included within the foregoing; (i) rules providingfor the payment of charges or fees by users of the Parking Area in order toreimburse Sublessor or the Manager for the expense of a parking attendantand/or an automated parking system, (ii) rules limiting tenants ofthe Project (including, without limitation,

 

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Subtenant) to the use of, or excluding the use of, certain parkingspaces or certain portions of the Parking Area, in order to maintain theavailability of accessible parking spaces for clients, guests, and invitees oftenants of the Project, and (iii) rules limiting tenants of theProject (including without limitation Subtenant) to the use of a restrictednumber of parking spaces or a restricted area. Notwithstanding anything to thecontrary in this Paragraph, Sublessor (and the Manager) may, at its election,construct improvements upon or otherwise alter in any manner the Parking Areaprovided that Sublessor makes reasonable amounts of parking available (orreasonable amounts of parking will remain available) to Subtenant elsewhere onthe Project, or within a reasonable distance from the Project. Subject to theimmediately preceding sentence, Sublessor reserves the right to grant certaintenants in the Building the exclusive right to park in specified areas of theParking Area, to the exclusion of all other tenants. Subtenant acknowledgesthat the exercise of the rights reserved to Sublessor under this Paragraph may resultin a decrease in the number of parking spaces available to Subtenant andSubtenant’s Invitees, and no such decrease shall affect Subtenant’s obligationsunder this Paragraph or entitle Subtenant to any abatement of Rental.

 

14.           Signs.Except as otherwise provided to the contrary in this Sublease, Subtenant may notplace, construct, or maintain any sign, advertisement, awning, banner, or otherexterior decoration (collectively, “sign”) in the Premises which are visiblefrom the exterior of the Premises, or on the Building, without the priorwritten consent of Sublessor. Any sign that Subtenant is permitted by Sublessorto place, construct, or maintain in the Premises or on the Building shallcomply with Sublessor’s sign criteria applicable to the Project, including,without limitation, criteria relating to size, color, shape, graphics, andlocation (collectively, the “Sign Criteria”), and shall comply with allapplicable laws, ordinances, rules, or regulations, and Subtenant shall obtainany approval required by such laws, ordinances, rules, and regulations. Sublessormakes no representation with respect to Subtenant’s ability to obtain any suchapproval. Subtenant shall, at Subtenant’s sole cost, make any changes to anysign, in the Premises or on the Building as required by any new or revisedapplicable laws, ordinances, rules, or regulations, or any changes in the SignCriteria. Notwithstanding the foregoing, the Sublessor shall provide standardbuilding lobby directory and suite identification signage for the benefitof Subtenant at the Sublessor’s sole cost.

 

15.           Rules,Regulations, and Covenants. Subtenant shall observe faithfully and complystrictly with any reasonable rules and regulations which Sublessor or theManager may from time to time adopt for Lot 3 or the Project as wellas any recorded covenants, conditions, or restrictions affecting the Premisesor the Project, whether now existing or hereafter adopted or amended from timeto time so long as Sublessor provides Subtenant with reasonable notice of anyproposed changes or amendments to such rules and regulations (all of theforegoing, collectively, “rules”). Sublessor has no duty or obligation toenforce any rule against any other tenant, and Sublessor will not beliable to Subtenant for violation of any rule by any other tenant, or anyother tenant’s agents, employees, officers, independent contractors, customers,invitees, visitors, or licensees. Subtenant acknowledges that Sublessorreserves the right, from time to time, to enter into leases or other agreementsby which Sublessor agrees to restrict the use of all or any portion of thespace in the Building (including the Premises) from certain uses. All such userestrictions, whether now existing or entered into in the future, shall bebinding upon Subtenant and in no event shall Subtenant utilize the Premises forany use so prohibited

 

16.           EarlyAccess Insurance. At any time prior to the Commencement Date that Subtenantis making any Alterations (as defined below) to the Premises or performing anyof the Subtenant’s Work (as defined on Exhibit “C”), (i) Subtenantshall, at Subtenant’s sole cost, maintain (a) ”Builder’s Risk” insurancewith respect to Subtenant’s Work at the Premises, reasonably satisfactory toSublessor, and (b) all of the insurance to be maintained by Subtenantduring the Term, including without limitation public liability and propertydamage insurance, fire and extended coverage insurance, boiler and machineryinsurance, and workers compensation insurance, (ii) the provisions of theParagraph in this Sublease entitled “Indemnity and Exemption of Sublessor fromLiability” shall be operative, and (iii) the provisions of the Paragraphin this Sublease entitled “Utilities and Services” shall be operative. AnyAlterations pursuant to this Paragraph shall be subject to all the provisionsof the Paragraph in this Sublease entitled “Alterations”. Nothing in thisParagraph shall be construed as granting permission to Subtenant to enter thePremises, or to make any Alterations, prior to the Commencement Date, except asotherwise provided to the contrary in this Sublease.

 

17.           Plate-GlassInsurance. Sublessor shall at its sole cost maintain full coverageplate-glass insurance on the Premises, in which Subtenant and any lender holdinga security interest in Lot 3 (“Lender”) shall be named as an additionalinsured.

 

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18.           PublicLiability and Property Damage Insurance. Subtenant shall, at Subtenant’ssole cost, maintain public liability and property damage insurance (i) witha single combined liability limit and property damage limit of not less than$2,000,000.00, (ii) insuring (a) against all liability of Subtenantarising out of or in connection with Subtenant’s use or occupancy of thePremises, and (b) performance by Subtenant of the indemnity provisions setforth in this Sublease, (iii) naming Sublessor and any Lender asadditional named insureds, (iv) containing cross-liability endorsements,and (v) which includes products liability insurance (if Subtenant is tosell merchandise or other products derived from the Premises). Not morefrequently than once every year, if in the opinion of Sublessor the amount orscope of such insurance at that time is not adequate, Subtenant shall increasesuch insurance as reasonably required by Sublessor. Additionally, if Subtenantsells or serves alcoholic beverages from the Premises, Subtenant shall obtainand maintain “dram shop” coverage and such other insurance coverage asSublessor may designate from time to time and in such amounts as Sublessordeems reasonably appropriate.

 

19.           Fireand Extended Coverage Insurance. Subtenant shall, at Subtenant’s sole cost,maintain on Subtenant’s Alterations and Subtenant’s Personal Property (asdefined below) a policy of standard fire and extended coverage insurance, withvandalism and malicious mischief endorsements, coverage with respect toincreased costs due to building ordinances, demolition coverage, boiler andmachinery insurance, and sprinkler leakage coverage, in each case to the extentof at least one hundred percent (100%) of full replacement value, and (ifreasonably deemed appropriate by Sublessor) business interruption insurance,issued in the names of Sublessor, Subtenant, and Sublessor’s Lender, as theirinterests may appear. Such “full replacement value” shall be determined bythe company issuing such policy at the time the policy is initially obtained. Notmore frequently than once every two years, either Sublessor or Subtenant may,at its election, notify the other that it elects to have the replacement valueredetermined by an insurance company. Such redetermination shall be madepromptly and in accordance with the rules and practices of the Board ofFire Underwriters, or a like board recognized and generally accepted by theinsurance company, and Sublessor and Subtenant shall be promptly notified ofthe results by the company. Such policy shall be promptly adjusted according tosuch redetermination.

 

20.           BusinessInterruption Insurance. Subtenant shall obtain business interruptioninsurance in amounts sufficient to reimburse Subtenant for direct or indirectloss of earnings attributable to all perils commonly insured against by prudenttenants or attributable to prevention of access to the Premises or to theProject as a result of such perils.

 

21.           InsuranceGenerally. If Subtenant fails during the Term to maintain any insurancerequired to be maintained by Subtenant under this Sublease, then Sublessor may,at its election, arrange for any such insurance, and Subtenant shall reimburseSublessor for any premiums for any such insurance within five (5) daysafter Subtenant receives a copy of the premium notice. If any such premiums areallocable to a period, a portion of which occurs during the Term and theremainder of which occurs before or after the Term, then such premiums shall beapportioned between Sublessor and Subtenant based upon the number of daysduring such period that occur during the Term and the number of days that occurbefore or after the Term, such that Subtenant pays for the premiums that areallocable to the period during the Term. Insurance required to be maintained bySubtenant under this Sublease (i) shall be issued as a primary policy byinsurance companies authorized to do business in the state in which thePremises are located with a Best’s Rating of at least “A” and a Best’sFinancial Size Category rating of at least “X,” as set forth in the mostcurrent edition of “Best’s Insurance Reports” (unless otherwise reasonably approvedby Sublessor), (ii) shall name Sublessor and any Lender as additionalnamed insureds, (iii) shall consist of “occurrence” based coverage,without provision for subsequent conversion to “claims” based coverage, (iv) shallnot be cancelable or subject to reduction of coverage or other modificationexcept after 30-days’ prior written notice to Sublessor and any Lender, and (v) shallnot provide for a deductible or co-insurance provision in excess of $5,000.00. Subtenantshall, at least 30 days prior to the expiration of each such policy, furnishSublessor with a renewal of or “binder” extending such policy. Subtenant shallpromptly upon written request deliver to Sublessor copies of such policy orpolicies or certificates evidencing the existence and amounts of such insurancetogether with evidence of payment of premiums.

 

22.           Waiverof Subrogation. Sublessor and Subtenant release each other, from all claimsfor damage, loss, or injury to the Project, to Subtenant’s Personal Property,and to the fixtures and Alterations of either Sublessor or Subtenant in or onthe Project to the extent such damage, loss or injury is covered by anyinsurance policies carried by Sublessor and/or Subtenant and in force at thetime of such damage. Subject to the remaining provisions of this Paragraph,Sublessor and Subtenant shall each cause all insurance policies obtained by itpursuant to this Sublease to provide that the insurance company waives allright of recovery by way of subrogation against Sublessor and Subtenant inconnection with any damage,

 

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loss, or injury covered by such policy. If any such policy cannot beobtained with a waiver of subrogation, or is obtainable only by the payment ofan additional premium charge above that charged by insurance companies issuingpolicies without waiver of subrogation endorsements, the party undertaking toobtain such policy (the “Undertaking Party”) shall so notify the other party(the “Notified Party”). The Notified Party shall, within 10 days after thegiving of such notice, either obtain such policy from a company that isreasonably satisfactory to the Undertaking Party and that will issue suchpolicy with a waiver of subrogation endorsement, or agree to pay the additionalpremium if such policy is obtainable at additional cost. If such policy cannotbe obtained with a waiver of subrogation endorsement or the Notified Partyrefuses to pay such additional premium, then the Undertaking Party shall not berequired to obtain a waiver of subrogation endorsement with respect to suchpolicy.

 

23.           Sublessor’sInsurance. Sublessor may, at its election, maintain any of the followinginsurance, in such amounts and with such limits as Sublessor shall determine inits reasonable discretion:  (i) Publicliability and property damage insurance, and products liability insurance; (ii) Fireand extended coverage insurance, with vandalism and malicious mischiefendorsements, and coverage with respect to increased costs due to buildingordinances, demolition, and sprinkler leakage; (iii) boiler and machineryinsurance; (iv) fidelity insurance; (v) earthquake insurance; (vi) Plate-glassinsurance; and (vii) rental loss and/or business interruption insurance,with respect to the Building, the Premises, the Common Areas and the Project. Thepremiums, costs, expenses, and deductibles (or similar costs or charges) ofand/or with respect to any such insurance (all of the preceding, collectively, “InsuranceExpenses”) shall be included as part of the Sublease Expenses.

 

24.           Alterations.Subtenant shall not make any structural or material non-structural alterations,improvements, additions, installations, or changes of any nature in or to thePremises (any of the preceding, “Alterations”) unless (i) Subtenant firstobtains Sublessor’s written consent, (ii) Subtenant complies with allconditions which may be imposed by Sublessor, including without limitationSublessor’s selection of specific contractors or construction techniques, and (iii) Subtenantpays to Sublessor the reasonable costs and expenses of Sublessor forarchitectural, engineering, or other consultants which reasonably may beincurred by Sublessor in determining whether to approve any such Alterations. Atleast 30 days prior to making any Alterations, Subtenant shall submit toSublessor, in written form, proposed detailed plans for such Alterations. Subtenantshall, prior to the commencement of any Alterations, at Subtenant’s sole cost, (i) acquire(and deliver to Sublessor a copy of) all necessary permits from appropriategovernmental agencies to make such Alterations (any conditions of which permitsSubtenant shall comply with, at Subtenant’s sole cost, in a prompt andexpeditious manner), (ii) obtain and deliver to Sublessor (unless thiscondition is waived in writing by Sublessor) a lien and completion bond in anamount equal to one hundred fifty percent (150%) of the estimated cost of theproposed Alterations, to insure Sublessor against any liability for mechanics’liens and to insure completion of the work, (iii) provide Sublessor with10 days’ prior written notice of the date the installation of the Alterationsis to commence, so that Sublessor can post and record an appropriate notice ofnon-responsibility, and (iv) obtain (and deliver to Sublessor proof of)reasonably adequate workers compensation insurance with respect to any ofSubtenant’s employees installing or involved with such Alterations (whichinsurance Subtenant shall maintain in force until completion of theAlterations). All Alterations shall upon installation become the property ofSublessor and shall remain on and be surrendered with the Premises on theExpiration Date, except that Sublessor may, at its election, require Subtenantto remove any or all of the Alterations, by so notifying Subtenant in writingon or before the Expiration Date, in which event, Subtenant shall, at its solecost, on or before the Expiration Date or earlier termination of this Sublease,repair and restore the Premises to the condition of the Premises prior to theinstallation of the Alterations which are to be removed. Subtenant shall payall costs for Alterations and other construction done or caused to be done bySubtenant and Subtenant shall keep the Premises free and clear of all mechanics’and materialmen’s lien’s resulting from or relating to any Alterations or otherconstruction. Subtenant may, at its election, contest the correctness orvalidity of any such lien provided that (a) immediately on demand bySublessor, Subtenant procures and records a lien release bond, issued by acorporation reasonably satisfactory to Sublessor and authorized to issue suretybonds in the state in which the Premises are located, in an amount equal to onehundred fifty percent (150%) of the amount of the claim of lien, which bondmeets the requirements of California Civil Code Section 3143 or anysuccessor statute, and (b) Sublessor may, at its election, requireSubtenant to pay Sublessor’s reasonable attorneys’ fees and costs inparticipating in such an action.

 

25.           Surrenderof Premises and Holding Over. On the Expiration Date or earlier terminationof this Sublease, (i) Subtenant shall surrender to Sublessor the Premisesand all Alterations (except for Alterations that Subtenant is obligated toremove as expressly set forth above) in good condition, ordinary

 

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wear and tear, damage by casualty or condemnation and defects excepted,(ii) Subtenant shall remove all of Subtenant’s Personal Property and perform allrepairs and restoration required by the removal of any Alterations or Subtenant’sPersonal Property, and (iii) Subtenant shall surrender to Sublessor allkeys to the Premises (including without limitation any keys to any exterior orinterior doors). Sublessor may elect to retain or dispose of in any mannerany Alterations or Subtenant’s Personal Property that Subtenant does not removefrom the Premises on the Expiration Date or earlier termination of thisSublease as required by this Sublease by giving written notice to Subtenant. Anysuch Alterations or Subtenant’s Personal Property that Sublessor elects toretain or dispose of shall immediately upon notice to Subtenant vest inSublessor. Subtenant waives all claims against Sublessor for any damage toSubtenant resulting from Sublessor’s retention or disposition of any suchAlterations or Subtenant’s Personal Property. Subtenant shall be liable toSublessor for Sublessor’s reasonable costs for storing, removing or disposingof any such Alterations or Subtenant’s Personal Property. Subtenant waives allclaims against Sublessor for any damage to Subtenant resulting from Sublessor’sretention or disposition of any such Alterations or Subtenant’s PersonalProperty. If Subtenant fails to surrender the Premises to Sublessor on theExpiration Date or earlier termination of this Sublease, without Sublessor’sconsent, which consent shall not be unreasonably withheld or delayed, Subtenantshall indemnify Sublessor against all reasonable liabilities, damages, losses,costs, expenses, attorneys’ fees and claims resulting from such failure,including without limitation any claim for damages made by a succeeding tenant.If Subtenant, with Sublessor’s consent, remains in possession of the Premisesafter the Expiration Date or earlier termination of this Sublease, suchpossession by Subtenant shall be deemed to be a month-to-month tenancyterminable on 30-days’ written notice given at any time by Sublessor orSubtenant. During any such month-to-month tenancy, Subtenant shall pay, as BasicMonthly Rent, one hundred fifty percent (150%) of the Basic Monthly Rent ineffect immediately prior to the Expiration Date or earlier termination of thisSublease, as the case may be. All other provisions of this Sublease,except for those pertaining to the Term, shall apply to such month-to-monthtenancy.

 

26.           Default.The occurrence of any of the following shall constitute a material default andbreach of this Sublease by Subtenant:

 

26.1.        Thevacating or abandoning of the Premises by Subtenant.

 

26.2.        Subtenant’sfailure to make any payment of Rental as and when due. No grace period prior tothe imposition of a late charge pursuant to Paragraph 28 below, shall extendthe date when such Rental is due and payable, and Subtenant shall be in defaultunder this Sublease if such payment is not paid by such date.

 

26.3.        Subtenant’sfailure to observe or perform any of the provisions of this Sublease to beobserved or performed by Subtenant, other than those described in the precedingtwo Paragraphs, where such failure shall continue for a period of 10 days afterwritten notice of such failure from Sublessor to Subtenant; provided, however,that any such notice shall be in lieu of, and not in addition to, any noticerequired under applicable unlawful detainer statutes; and provided further,however, that if the nature of Subtenant’s default is such that more than 10days are required for its cure, then Subtenant shall not be deemed to be indefault if Subtenant commenced such cure within such ten-day period and thereafterdiligently prosecutes such cure to completion within 30 days after Sublessor’swritten notice.

 

26.4.        Subtenant’sfailure to pay its debts (other than under this Sublease) as they become due. Forpurposes of this Paragraph, a debt shall be deemed overdue when the earliest ofthe following occurs:  (i) 30 daysfrom the date a statement for such debt is rendered; (ii) the date onwhich any action or proceeding for such debt is commenced; or (iii) thedate on which a formal notice of default or demand is sent.

 

26.5.        Subtenant’sfailure to deliver to Sublessor, within 10 days after Sublessor’s writtenrequest, any financial statement of Subtenant (including without limitation acurrent annual balance sheet of Subtenant) reasonably requested by Sublessor,or if any financial statement given to Sublessor by Subtenant, or by anyassignee, subtenant, or guarantor of Subtenant, is materially false orevidences that Subtenant’s net worth is negative, and Subtenant fails tofurnish to Sublessor, within 10 days after written notice from Sublessor toSubtenant, with cash as an additional security deposit in an amount equal tothe aggregate Rental payable under this Sublease for the six full calendarmonths immediately following such notice.

 

26.6.        Themaking by Subtenant of any general arrangement or assignment for the benefit ofcreditors; Subtenant’s becoming bankrupt, insolvent or a “debtor” as defined in11 U.S.C.

 

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Section 101, or any successor statute (unless, in the case of apetition filed against Subtenant, such petition is dismissed within 30 daysafter its original filing); the institution of proceedings under the bankruptcyor similar laws in which Subtenant is the debtor or bankrupt (unless such proceedingis dismissed within 30 days after its original filing); the appointing of atrustee or receiver to take possession of substantially all of Subtenant’sassets located at the Premises or of Subtenant’s interest in this Sublease(unless possession is restored to Subtenant within 30 days after such taking);or the attachment, execution, or judicial seizure of substantially all ofSubtenant’s assets located at the Premises or Subtenant’s interest in thisSublease (unless such attachment, execution, or judicial seizure is dischargedwithin 30 days after such attachment, execution, or judicial seizure).

 

27.           Sublessor’sRemedies. Sublessor shall have the following remedies if Subtenant commitsa default or breach under this Sublease, these remedies are not exclusive, butare cumulative and in addition to any remedies provided elsewhere in thisSublease, or now or later allowed by law.

 

27.1.        Continuationof Sublease. No act by Sublessor (including without limitation the acts setforth in the succeeding sentence) shall terminate Subtenant’s right topossession unless Sublessor notifies Subtenant in writing that Sublessor electsto terminate Subtenant’s right to possession. As long as Sublessor does notterminate Subtenant’s right to possession, Sublessor may (i) continuethis Sublease in effect, (ii) continue to collect Rental when due andenforce all the other provisions of this Sublease, (iii) enter thePremises and relet them, or any part of them, to third parties forSubtenant’s account, for a period shorter or longer than the remaining term ofthis Sublease, and (iv) have a receiver appointed to collect Rental andconduct Subtenant’s business. Subtenant shall pay to Sublessor all costsSublessor incurs in such reletting, including, without limitation, brokers’commissions, attorneys’ fees, advertising costs, and expenses of remodeling thePremises for such reletting.

 

27.2.        Rentfrom Reletting. If Sublessor elects to relet all or any portion of thePremises as permitted above, rent that Sublessor receives from such relettingshall be applied to the payment of, in the following order and priority, (i) anyindebtedness from Subtenant to Sublessor other than Basic Monthly Rent due fromSubtenant, (ii) all costs incurred by Sublessor in such reletting, and (iii) BasicMonthly Rent due and unpaid under this Sublease. After applying such paymentsas referred to above, any sum remaining from the rent Sublessor receives fromsuch reletting shall be held by Sublessor and applied in payment of futureBasic Monthly Rent as it becomes due under this Sublease. In no event shallSubtenant be entitled to any excess rent received by Sublessor unless and untilall obligations of Subtenant under this Sublease, including all futureobligations, are satisfied in full.

 

27.3.        Terminationof Subtenant’s Right to Possession. Sublessor may terminate Subtenant’sright to possession of the Premises at any time, by notifying Subtenant inwriting that Sublessor elects to terminate Subtenant’s right to possession. Ontermination of this Sublease, Sublessor has the right to recover from Subtenant(i) the worth at the time of the award of the unpaid Basic Monthly Rentwhich had been earned at the time of such termination, (ii) the worth atthe time of the award of the amount by which the unpaid Basic Monthly Rentwhich would have been earned after such termination until the time of awardexceeds the amount of such loss of Basic Monthly Rent that Subtenant provescould have been reasonably avoided, (iii) the worth at the time of theaward of the amount by which the unpaid Basic Monthly Rent for the balance ofthe Term after the time of award (had there been no such termination) exceedsthe amount of such loss of Basic Monthly Rent that Subtenant proves could bereasonably avoided, and (iv) any other reasonable amount necessary tocompensate Sublessor for all detriment proximately caused by Subtenant’sfailure to perform Subtenant’s obligations under this Sublease or in theordinary course of things would be likely to result therefrom. The “worth at thetime of the award” of the amounts referred to in Clauses (i) and (ii) aboveis to be computed by allowing interest at the Default Rate, as set forth below,or if no Default Rate is set forth, then at the maximum rate permitted byapplicable law. The “worth at the time of the award” of the amount referred toin Clause (iii) above is to be computed by discounting such amount at thediscount rate of the Federal Reserve Bank of San Francisco at the time of awardplus one percent (1%).

 

27.4.        Sublessor’sRight to Cure Default. Sublessor, at any time after Subtenant commits adefault or breach under this Sublease, may cure such default or breach atSubtenant’s sole cost. If Sublessor at any time, by reason of Subtenant’sdefault or breach, pays any reasonable sum or does any act that requires thepayment of any reasonable sum, such sum shall be due immediately upon Sublessor’swritten demand to Sublessor, and shall be deemed Additional Rent under thisSublease. If Subtenant fails to timely pay any amount due under this Paragraph,then (without curing such default) interest at the rate of

 

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ten percent (10%) per annum shall accrue (and be immediately payable)on such overdue amount from and after the date of such notice until it is paid.

 

27.5.        EnforcementCosts. All costs and expenses incurred by Sublessor in connection withcollecting any amounts and damages owing by Subtenant pursuant to theprovisions of this Sublease, or to enforce any provision of this Sublease,including reasonable attorneys’ fees, whether or not any action is commenced bySublessor, shall be paid by Subtenant to Sublessor upon demand. If Subtenantfails to timely pay any amount due under this Paragraph, then (without curingsuch default) interest at the rate of ten percent (10%) per annum shall accrue(and be immediately payable) on such overdue amounts from and after the date ofsuch notice until it is paid.

 

28.           Interestand Late Charges. Late payment by Subtenant to Sublessor of Rental willcause Sublessor to incur costs not contemplated by this Sublease, the exactamount of which would be impracticable or extremely difficult to fix. Suchcosts include, without limitation, processing, collection and accountingcharges, and late charges that may be imposed on Sublessor by the terms ofany deed of trust covering the Premises. Therefore, if any Rental is notreceived by Sublessor within 10 days of its due date, then, without anyrequirement for notice to Subtenant, Subtenant shall pay to Sublessor anadditional sum of ten percent (10%) of such overdue amount as a late charge. Suchlate charge represents a fair and reasonable estimate of the costs thatSublessor will incur by reason of any late payment by Subtenant, and thereforethis Paragraph is reasonable under the circumstances existing at the time thisSublease is made. Acceptance of such late charge by Sublessor shall notconstitute a waiver of Subtenant’s default with respect to such overdue amount,nor prevent Sublessor from exercising any of the other rights and remediesavailable to Sublessor under this Sublease. In addition to the late chargepayable by Subtenant, as provided above, if any such Rental is not paid within30 days of the date such Rental was due, then Subtenant shall pay to Sublessorinterest on such overdue Rental at the rate of three percent (3%) above the “referencerate” announced from time to time by Bank of America, NT&SA (the “DefaultRate”). Such interest shall additionally accrue and be payable by Subtenantrelative to any other amounts payable by Subtenant to Sublessor under theprovisions of this Sublease which are not paid when due (if such reference rateceases to be announced, then a comparable “prime rate” shall be utilized,selected by Sublessor).

 

29.           QuarterlyPayments. If a late charge is payable under this Sublease, whether or notcollected, for two installments of Basic Monthly Rent or other Rental due underthis Sublease during any one calendar year during the Term, then Basic MonthlyRent, and Subtenant’s Monthly Payments, shall automatically become due andpayable quarterly in advance, rather than monthly. All monies paid to Sublessorunder this Paragraph may be commingled with other monies of Sublessor andshall not bear interest. If Subtenant breaches any provision of this Sublease,then any balance remaining from funds paid to Sublessor under the provisions ofthis Paragraph may, at Sublessor’s election, be applied to the payment of anymonetary default of Subtenant in lieu of being applied to the payment ofpersonal property taxes, real property taxes and insurance premiums.

 

30.           Destruction.If the Project, the Building, the Common Areas or the Premises is totally orpartially destroyed during the Term, rendering the Premises totally orpartially inaccessible, untenantable or unusable, then, subject to theremainder of this Paragraph, (i) Sublessor shall restore the Project tosubstantially the same condition as it was in immediately before suchdestruction, (ii) Sublessor shall not be required to restore Subtenant’sAlterations or Subtenant’s Personal Property, unless they are an integral part ofthe Premises and specifically covered by insurance proceeds received bySublessor, such excluded items being the sole responsibility of Subtenant torestore, (iii) such destruction shall not terminate this Sublease, and (iv) allobligations of Subtenant under this Sublease shall remain in effect, exceptthat the Basic Monthly Rent shall be abated or reduced, between the date ofsuch destruction and the date of completion of restoration, by the ratio of (a) thearea of the Premises rendered unusable, untenantable or inaccessible by thedestruction to (b) the area of the Premises prior to such destruction. Notwithstandinganything to the contrary in this Sublease, either Subtenant or Sublessor may,at its election, terminate this Sublease by so notifying the other in writingon or before the later of 120 days after such destruction or 60 days afterSublessor’s receipt of the proceeds from insurance maintained by Sublessor, if (A) then-existinglaws do not permit such restoration, (B) such destruction occurs duringthe last year of the Term, (C) such destruction exceeds twenty-fivepercent (25%) of the then-replacement value of the Premises or the Building, or(D) Sublessor determines that the cost of such restoration exceeds theamount of insurance proceeds relating to such destruction actually received bySublessor from insurance maintained by Sublessor. If Sublessor or Subtenant soterminates this Sublease, then (1) Sublessor shall have no obligation torestore the Project, (2) Sublessor shall retain all insurance proceedsrelating to such destruction, and (3) this Sublease shall terminate as of30 days after such notice of termination. Regardless

 

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of whether Sublessor restores the Premises as provided above, Subtenantwaives the provisions of California Civil Code Sections 1932(2) and 1933(4) orany successor statute with respect to any destruction of the Premises.

 

31.           Condemnation.If during the Term, or during the period of time between the execution of thisSublease and the Commencement Date, there is any taking of all or any part ofthe Project, the Building, the Common Areas, the Premises or any interest in thisSublease by the exercise of any governmental power, whether by legalproceedings or otherwise, by any public or quasi-public authority, or privatecorporation or individual, having the power of condemnation (any of thepreceding a “Condemnor”), or a voluntary sale or transfer by Sublessor to anyCondemnor, either under threat of condemnation or while legal proceedings forcondemnation are pending (any of the preceding, a “Condemnation”), the rightsand obligations of Sublessor and Subtenant shall be determined pursuant to thisParagraph. Sublessor shall immediately provide Subtenant written notice of anyproposed taking, whether or not Sublessor receives written notice of suchtaking. If such Condemnation is of a substantial portion of or the entire Project,Building, Common Areas or Premises, then this Sublease shall terminate on thedate the Condemnor takes possession of same (the “Date of Condemnation”). Atemporary Condemnation of the Premises, or any part of the Premises, forless than 180 days, shall not constitute a Condemnation under this Paragraph;but the Rental shall abate as to the portion of the Premises affected duringsuch temporary Condemnation. If such Condemnation is of any portion, but notall or a substantial portion, of the Project, the Building, the Common Areas,the Premises, then this Sublease shall remain in effect, except that, if theremaining portion of the Project, the Building, the Common Areas, the Premisesis rendered unsuitable for Subtenant’s continued use, inaccessible or untenantable,then Subtenant may elect to terminate this Sublease, by so notifyingSublessor in writing (the “Termination Notice”) within 30 days after the datethat the nature and extent of the Condemnation have been determined. Suchtermination shall be effective on the earlier of (i) the date that is 30days after the giving of the Termination Notice, and (ii) the Date ofCondemnation. If Subtenant does not give to Sublessor the Termination Noticewithin such 30-day period, then all obligations of Subtenant under thisSublease shall remain in effect, except that (unless the Premises are restoredas set forth below) Rental shall be reduced by the ratio of (a) the areaof the Premises taken, rendered unsuitable, inaccessible or untenantable to (b) thearea of the Premises immediately prior to the Date of Condemnation. Notwithstandinganything to the contrary in this Paragraph, if, within 20 days after Sublessor’sreceipt of the Termination Notice, Sublessor notifies Subtenant that Sublessorat its cost will add to the remaining Premises (or substitute for the Premisesother comparable space in the Project) so that the area of the Premises will besubstantially the same after the Condemnation as they were before theCondemnation, and Sublessor commences the restoration promptly and completes itwithin 150 days after Sublessor so notifies Subtenant, then all obligations ofSubtenant under this Sublease shall remain in effect, except that Rental shallbe abated or reduced during the period from the Date of Condemnation until thecompletion of such restoration by the ratio of (A) the area of thePremises taken, rendered, unsuitable, inaccessible or untenantable to (B) thearea of the Premises immediately prior to the Date of Condemnation. UnlessSublessor restores the Premises pursuant to the preceding sentence, or unlessSubtenant gives to Sublessor the Termination Notice within the relevant 30-dayperiod, Subtenant at its sole cost shall accomplish any restoration required bySubtenant to use the Premises. All compensation, sums, or anything of valueawarded, paid, or received on a total or partial Condemnation (the “Award”)shall belong to and be paid to Sublessor. Subtenant shall have no right to any part ofthe Award, and Subtenant hereby assigns to Sublessor all of Subtenant’s right,title, and interest in and to any part of the Award, except that Subtenantshall receive from the Award any sum paid expressly to Subtenant from theCondemnor for Subtenant’s loss of goodwill. Sublessor and Subtenant waive theprovisions of any statute (including without limitation California Code ofCivil Procedure Section 1265.130 or any successor statute) that allowsSublessor or Subtenant to petition the superior court (or any other localcourt) to terminate this Sublease in the event of a partial taking of thePremises.

 

32.           Assignmentand Other Transfers. Without Sublessor’s prior written consent, which shallnot be unreasonably withheld none of the following shall occur (nor bepermitted by Subtenant to occur), voluntarily, involuntarily, by operation oflaw, or otherwise (any of the following, a “Transfer”):  (i) any assignment, sublease,disposition, sale, concession, license, mortgage, encumbrance, hypothecation,pledge, collateral assignment, or other transfer, by Subtenant of thisSublease, any interest in this Sublease, or all or any portion of the Premises;or (ii) any assignment, disposition, sale, transfer, acquisition, orissuance of equitable interests (whether stock, partnership or otherwise) inSubtenant, to or by any person, entity, or group of related persons, whether ina single transaction or in a series of related or unrelated transactions,which results in such person, entity, or group holding (or assigning,transferring, disposing of, or selling) fifty percent (50%) or more of theaggregate issued and outstanding equitable interests in Subtenant. Sublessorshall not be liable in damages to Subtenant or to any proposed Subtenant,assignee or other

 

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transferee (any of the preceding a “Proposed Transferee”) if suchconsent is adjudicated to have been unreasonably withheld, and, in such event,Subtenant’s sole remedy shall be to have the proposed Transfer declared asvalid as if Sublessor’s consent had been given, although Subtenant shall beentitled to reasonable attorney’s fees and court costs if Subtenant is theprevailing party in such litigation. At least 30 days prior to entering intoany proposed Transfer, Subtenant shall submit to Sublessor the sum of $400.00(as payment toward Sublessor’s and Sublessor’s attorneys’ cost of reviewing,consenting to, rejecting and/or consummating any proposed Transfer), and awritten notice (“Subtenant’s Notice”) which includes or sets forth inreasonable detail (a) the form of the proposed Transfer, includingwithout limitation all related agreements, documents, instruments, exhibits,and escrow instructions, (b) the name and address of the ProposedTransferee, (c) the terms and conditions of the proposed Transfer,including without limitation the commencement or effective date of the proposedTransfer, which shall be at least 30 days after Subtenant’s Notice is given,and (d) the nature, character, and credit information and references withrespect to the Proposed Transferee and the business of the Proposed Transferee(including without limitation tax returns for the three most-recent years, abusiness plan with cash-flow projections and financial projections withassumptions and competitive market analysis), in reasonably sufficient detailto enable Sublessor to determine the Proposed Transferee’s financialresponsibility. Within 30 days after Sublessor’s receipt from Subtenant of suchsum and Subtenant’s Notice, Sublessor shall notify Subtenant whether Sublessorhas consented to the proposed Transfer. Any consent by Sublessor to anyproposed Transfer shall not constitute a consent with respect to any otherTransfer. If Sublessor consents to any proposed Transfer, and Subtenant failsto consummate such Transfer on or before the commencement or effective date ofthe proposed Transfer (as set forth in Subtenant’s Notice), then such consentshall be deemed withdrawn and Subtenant shall be required again to comply withthis Paragraph before making a Transfer. Sublessor shall not have unreasonablywithheld its consent with respect to any Transfer if (among other reasons)Sublessor shall not have received such sum or Subtenant’s Notice, if the natureor character of the Proposed Transferee, or the proposed use and occupancy ofthe Premises by the Proposed Transferee, is not in keeping with the dignity andcharacter of the Building, the Project, or the surrounding area, if theproposed Transfer will result in the diminution of the value or marketabilityof the Premises or the Project, if Sublessor is not reasonably satisfied thatthe Proposed Transferee is creditworthy, if the Master Lessor reasonablyobjects to the proposed Transfer, or if the proposed Transfer will conflictwith or result in a breach of any of the provisions of, or constitute a defaultunder, any agreement, instrument, or document to which Sublessor is a party, orby which the Project may be bound. No Transfer shall release or dischargeSubtenant from any liability, whether past, present, or future, under thisSublease and Subtenant shall continue to remain primarily liable under thisSublease. Subtenant irrevocably assigns to Sublessor, as security for Subtenant’sobligations under this Sublease, all rent and other amounts from any Transfer,and Sublessor, as assignee and as special attorney-in-fact for Subtenant, or areceiver for Subtenant appointed on Sublessor’s application, may collectall rent and other amounts from any Transfer and apply them toward Subtenant’sobligations under this Sublease; except that, unless Subtenant defaults underthis Sublease, Subtenant shall have the exclusive right to collect such rentand other amounts. Unless otherwise agreed to by all parties, the Subtenant’ssecurity deposit, if any, shall be retained by Sublessor and returned to the lawfultenant in possession at the time of the Sublease termination, subject to theterms and conditions of this Sublease relating to the return of such securitydeposit. Any Transfer must contain the following provisions, which provisionswhether contained in such Transfer or not, shall apply to such Transfer:  (A) Such Transfer shall be subject andsubordinate to all provisions of this Sublease and the Master Lease; (B) NoProposed Transferee shall be permitted to enter into any Transfer withoutSublessor’s prior written consent; and (C) At Sublessor’s option, in theevent of cancellation or termination of this Sublease for any reason or thesurrender of this Sublease, whether voluntarily, involuntarily, by operation oflaw or otherwise, prior to the expiration of such Transfer, the ProposedTransferee shall make full and complete attornment to Sublessor for the balanceof the term of such Transfer, unless such cancellation or termination is at theelection of Sublessor. Such attornment shall be evidenced by an agreement in form andsubstance reasonably satisfactory to Sublessor which the Proposed Transfereeshall execute and deliver to Sublessor within 5 days after request by Sublessor.Subtenant shall promptly reimburse Sublessor for Sublessor’s reasonable cost(less any payment made by Subtenant with Sublessor as set forth above) ofreviewing, consenting to, rejecting and/or consummating any proposed Transfer,including without limitation reasonable attorneys’ fees. Subtenant shallpromptly pay to Sublessor seventy-five percent (75%) of all rents and otherconsideration, of whatever nature, payable by the Proposed Transferee (orreceivable by Subtenant) pursuant to any Transfer, which exceed (1) if asub-sublease of a portion of the Premises, the portion of the Rental that isallocable to the portion of the Premises sub-subleased (such allocation basedon the area of the portion sub-subleased), or (2) if any other Transfer,the Basic Monthly Rental. Sublessor additionally has the right, at itselection, by giving written notice (the “Recapture Notice”) to Subtenant within15 days after receipt of Subtenant’s Notice, to recapture the Premises andterminate this Sublease. If Sublessor elects to exercise such right anddelivers a Recapture Notice to

 

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Subtenant, this Sublease shall automatically be deemed terminated as ofthe commencement or effective date stated in Subtenant’s Notice for theproposed Transfer, and Subtenant shall surrender possession of the Premises asof such date (and any failure to do so shall constitute a default hereunder). Sublessor’sgiving of a Recapture Notice shall not constitute Sublessor’s consent toSubtenant’s proposed Transfer.

 

33.           CommonAreas. Sublessor may, at its election, (i) temporarily close any ofthe Common Areas to the extent required in the reasonable opinion of Sublessor’slegal counsel to prevent a dedication of any of the Common Areas or the accrualof any rights to any person or to the public in and to any portion of theCommon Areas, (ii) close, temporarily, any of the Common Areas formaintenance purposes, (iii) designate other property outside theboundaries of the Project to become part of the Common Areas using soundbusiness judgment, (iv) temporarily close off or otherwise temporarilyutilize portions of the Common Area while constructing improvements or makingrepairs or alterations to any portion of the Project, and/or (v) make anychanges to the Common Areas, or any part of the Project, including withoutlimitation changes to buildings or other improvements, the addition of newbuildings or other improvements, and/or changes in the location of driveways,entrances, exits, vehicular parking spaces, or the direction of the flow oftraffic. Furthermore, except as otherwise provided to the contrary in thisSublease, Subtenant acknowledges that the Manager may exercise similarrights with respect to the Project Common Area, and the exercise of such rightsby the Sublessor or the Manager will not constitute constructive eviction norentitle Subtenant to any damages, abatement of rent, or right of offset.

 

34.           Relocation.Sublessor may, at its election, upon at least 30 days’ written notice toSubtenant, relocate Subtenant and substitute for the Premises other space in theProject containing at least as much useable area as the Premises. If Subtenantconfirms in writing to Sublessor within five days of receipt of such writtennotice from Sublessor that it will vacate the Premises and occupy the newlocation within the time frame set forth in the notice from Sublessor, thenSublessor shall, at its cost, improve such substitute space with improvementsat least equal in quantity and quality to those then existing in the Premisesand Sublessor shall reimburse Subtenant for Subtenant’s reasonable expensesincurred in connection with such relocation, including moving expenses, doorlettering, and telephone relocation. If Subtenant fails to send such writtenconfirmation notice to Sublessor within such five day period, such failureshall be deemed to constitute Subtenant’s election to continue to occupy thePremises for an additional 15 day period beyond the time frame set forth inSublessor’s notice, in which event Sublessor shall have no obligations toimprove such substitute space and pay Subtenant’s reasonable relocation costsas set forth in the preceding sentence. Failure by Subtenant to relocate asprovided in this Paragraph shall constitute a default under this Sublease andSubtenant acknowledges that it will, in addition, be liable for Sublessor’sadditional damages incurred as a result of any failure by Subtenant to timelyvacate the Premises (including damages resulting from lost opportunities). Sublessorshall not be held liable for any damages arising out of Subtenant’s relocation.Such substitute space shall become the “Premises” for purposes of this Subleasefollowing Subtenant’s taking possession of such substitute space.

 

35.           Accessby Sublessor. Sublessor and any of Sublessor’s Invitees shall have theright to enter the Premises at all reasonable times, during normal businesshours (except in the case of an emergency), and upon reasonable notice (exceptin the case of an emergency), (i) to determine whether the Premises are ingood condition and whether Subtenant is complying with its obligations underthis Sublease, (ii) to do any necessary maintenance or make anyrestoration to the Premises that Sublessor has the right or obligation toperform, (iii) to serve, post, or keep posted any notices required orallowed under this Sublease, (iv) to post “for sale” “for rent” or “forlease” signs, (v) to show the Premises to brokers, agents, prospectivebuyers, prospective tenants or other persons interested in a listing of,financing, purchasing, or occupying Lot 3, the Premises or any portion ofLot 3 or the Premises, and (vi) to shore the foundations, footings,and walls of the Project, and to erect scaffolding and protective barricadesaround and about the Premises, but not so as to prevent or obstruct entry tothe Premises, and to do any other act or thing necessary for the safety orpreservation of the Premises if any excavation or other construction isundertaken or is about to be undertaken on any adjacent property or nearbystreet. In the event of an emergency Sublessor shall have the right to enterthe Premises at any time, without prior notice to Subtenant. Sublessor’s rightsunder this Paragraph extend, with Sublessor’s consent, to the owner of adjacentproperty on which excavation or construction is to take place and the adjacentproperty owner’s agents, employees, officers, and contractors. Sublessor shallnot be liable for any inconvenience, disturbance, loss of business, nuisance,or other damage arising out of any entry on the Premises as provided in thisParagraph except damage resulting directly from the grossly negligent acts ofSublessor or Sublessor’s Invitees. Subtenant shall not be entitled to anyabatement or reduction of Basic Monthly Rent or other Rental because of theexercise by Sublessor of any rights under this Paragraph.

 

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36.           Sublessor’sReserved Rights. Subject to the terms of this Sublease, Sublessor, aslessee of Lot 3, reserves the right from time to time:  (i) to change the name of the Building; (ii) totemporarily utilize portions of the Common Areas for entertainment, outdoorshows, displays, automobile and other product shows, the leasing of kiosks, orsuch other uses which, in Sublessor’s reasonable judgment, tend to attract thepublic; and (iii) to utilize the lighting standards and other areas orimprovements in the Common Areas for advertising purposes.

 

37.           Indemnityand Exemption of Sublessor from Liability. Subtenant hereby indemnifiesSublessor against all Claims (as defined below) and all costs, expenses, andattorneys’ fees incurred in the defense or handling of any such Claims or anyaction or proceeding brought on any of such Claims. For purposes of thisSublease, “Claims” shall mean all liabilities, damages, losses, costs,expenses, attorneys’ fees, and claims (except to the extent they result fromSublessor’s grossly negligent acts or willful misconduct) arising from or whichseek to impose liability under or because of (i) Subtenant’s use of thePremises, (ii) the conduct of Subtenant’s business, (iii) anyactivity, work, or things done or suffered by Subtenant in or about thePremises or elsewhere, (iv) any breach or default in the performance ofany obligation to be performed by Subtenant under this Sublease, and/or (v) anynegligence of Subtenant or Subtenant’s Invitees. If any action or proceeding isbrought against Sublessor by reason of any such Claims, Subtenant upon noticefrom Sublessor shall defend such action or proceeding at Subtenant’s sole costby legal counsel satisfactory to Sublessor. Except to the extent caused bySublessor’s grossly negligent acts or willful misconduct, Subtenant assumes allrisk of, Subtenant waives all claims against Sublessor in respect of, andSublessor shall not be liable for, any of the matters set forth above in thisParagraph or any of the following: injury to Subtenant’s business, loss ofincome from such business, or damage or injury to the goods, wares,merchandise, or other property or the person of Subtenant, Subtenant’sInvitees, or any other persons in, upon, or about the Premises, whether suchdamage, loss, or injury is caused by or results from criminal acts, fire,steam, electricity, gas, water, rain, the breakage, leakage, obstruction orother defects of pipes, sprinklers, wires, appliances, plumbing,air-conditioning or lighting fixtures, or any other cause, conditions arisingupon the Premises, or other sources or places, and regardless of whether thecause of such damage, loss, or injury or the means of repairing such damage, loss,or injury is inaccessible to Subtenant. Thus Sublease shall not be affected orimpaired by any change to any part of the Project or any sidewalks,streets or improvements nearby the Project.

 

38.           HazardousSubstances. Sublessor hereby notifies Subtenant, and Subtenant herebyacknowledges that, prior to the leasing of the Premises pursuant to thisSublease, Subtenant has been notified, pursuant to California Health and SafetyCode Section 25359.7 (or any successor statute), that Sublessor knows, orhas reasonable cause to believe, that certain hazardous substances (as suchterm is used in such Section 25359.7), including without limitation commoncleaning supplies, office supplies, spillage of petroleum products from motorvehicles, and other consumer products, may have come to be located on orbeneath the Premises and/or the Project. Subtenant hereby indemnifies Sublessoragainst all Environmental Claims (as defined below) and all costs, expenses,and attorneys’ fees incurred in the defense of any such Environmental Claims orany action or proceeding brought on any of such Environmental Claims. Forpurposes of this Paragraph, “Environmental Claims” shall mean all liabilities,damages, losses, costs, expenses, attorneys’ fees, and claims (except to theextent they arise as a result of Sublessor’s grossly negligent acts or willfulmisconduct), arising from or which seek to impose liability (i) because ofor relating to any discharges, releases, or threatened releases of noise,pollutants, contaminants, herbicides, pesticides, insecticides, or hazardous ortoxic wastes, substances, or materials (any of the preceding a “HazardousMaterial”) into ambient air, water, or land from, on, under, or above thePremises, (ii) relating to the manufacture, processing, distribution, use,treatment, storage, disposal, transport, or handling of pollutants,contaminants, or hazardous or toxic wastes, substances, or materials from, on,or under, the Premises, or (iii) under any environmental law (which shallmean any federal, state or local law, statute, regulation, ordinance,guideline, or common law principle relating to public health or safety or theuse or control of the environment, including without limitation the FederalComprehensive Environmental Response, Compensation and Liability Act of 1980,the Carpenter-Presley-Tanner Hazardous Substance Account Act, the CaliforniaHazardous Waste Control Law, the Federal Clean Air Act, the California AirResources Act, the Federal Clean Water Act, the California Porter-Cologne WaterQuality Control Act, the Federal Resource Conservation and Recovery Act, theCalifornia Nejedly-Z’berg-Dills Solid Waste Management and Recovery Act, andCalifornia Health and Safety Code Section 25359.7) and relating to thePremises, from the beginning of the Term to the end of the Term. Subtenantagrees to promptly reimburse Sublessor for all of Sublessor’s costs arisingfrom periodic monitoring of Subtenant’s use, handling, or storage of HazardousSubstances at or surrounding the Premises. Neither Subtenant nor any ofSubtenant’s Invitees shall use, manufacture, store, or dispose of any HazardousMaterials anywhere within the Premises or the Project which are or could (a) bedetrimental to the Project, human health, or the

 

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environment, except in accordance with all applicable laws, or (b) adverselyaffect the value of the Premises or the Project. If the Premises arecontaminated (or, due to the acts or omissions of Subtenant or Subtenant’sInvitees, the Project is contaminated) by any Hazardous Material during theTerm, then (1) Subtenant shall promptly notify Sublessor in writing ofsuch contamination, and (2) Sublessor may elect to either (A) demandthat Subtenant perform all remediation required by Sublessor (to Sublessor’ssatisfaction and at Subtenant’s sole cost, necessary to return the Premises(and/or the Project) to at least as good a condition as the Premises (or theProject) are in as of the date of this Sublease, which Subtenant shallimmediately do upon receipt of notice from Sublessor, or (B) proceed tocause such investigation, clean-up, and remediation work which Sublessor deemsnecessary or desirable to be undertaken, whereupon the entire cost thereof(plus a supervisory fee equal to ten percent (10%) of such cost) will bepayable by Subtenant to Sublessor upon demand as Additional Rent. If Subtenantdoes not promptly commence and diligently pursue such remediation, thenSublessor may, at Sublessor’s election, perform or cause to be performedsuch remediation and Subtenant shall immediately, upon demand, pay the costthereof, plus a supervisory fee in the amount of ten percent (10%) of suchcost.

 

39.           ProhibitionAgainst Asbestos-Containing Materials. Subtenant shall not cause anymaterials which contain asbestos in any form or concentration (“Asbestos-ContainingMaterials”) to be used or stored in the Premises or used in the construction ofany improvements or alterations to the Premises, including, without limitation,building or construction materials and supplies in violation of anyenvironmental laws. Such prohibition against Asbestos-Containing Materialsshall apply regardless of whether the Asbestos-Containing Materials may beconsidered safe or approved for use by a manufacturer, supplier, orgovernmental authority, or by common use or practice. Sublessor shall have theright, upon reasonable notice, to enter upon and conduct inspections of thePremises to determine Subtenant’s compliance with this Paragraph. If Subtenantcauses Asbestos-Containing Materials to be used or stored in the Premises orused in the construction of any improvements or alterations to the Premises inviolation of any environmental laws, (a) Subtenant shall, upon notice fromSublessor, immediately remove such Asbestos-Containing Materials at Subtenant’ssole cost, (b) such removal shall comply with all applicable laws,regulations, and requirements concerning asbestos and the removal and disposalof Asbestos-Containing Materials, (c) Subtenant shall reimburse Sublessorfor all reasonable expenses incurred in connection with any inspection of thePremises conducted by Sublessor, and (d) unless Subtenant completes suchremoval within 30 days after notice from Sublessor, Sublessor may, at itselection, do either or both of the following: (i) declare Subtenant in breach of this Sublease and (ii) removeand dispose of the Asbestos-Containing Materials and obtain reimbursement fromSubtenant for the reasonable cost of such removal and disposal. Except asotherwise provided to the contrary in this Sublease, Subtenant shall indemnifySublessor and Sublessor’s directors, officers, employees, and agents againstall reasonable costs, liability, expenses, penalties, and claims for damages,including, without limitation, litigation costs and attorneys” fees, arisingfrom (A) the presence of Asbestos-Containing Materials upon the Premisesin violation of any environmental laws arising after the effective date of thisSublease, but only to the extent that such Asbestos-Containing Materials areused or stored in the Premises or used in the construction of any improvementsor alterations to the Premises by Subtenant or Subtenant’s agents, employees,representatives, or independent contractors, (b) any lawsuit, settlement,governmental order, or decree relating to the presence, handling, removal, ordisposal of Asbestos-Containing Materials upon or from the Premises inviolation of any environmental laws arising after the effective date of thisSublease, but only to the extent that such Asbestos-Containing Materials areused or stored in the Premises or used in the construction of any improvementsor alternations to the Premises by Subtenant or Subtenant’s agents, employees,representatives or independent contractors, or (C) Subtenant’s failure toperform its obligations to remove such Asbestos-Containing Materials underthis Paragraph.

 

40.           SecurityMeasures. Subtenant acknowledges (i) that the Basic Monthly Rent doesnot include the cost of any security measures for any portion of the Project (ii) thatneither Sublessor nor the Manager shall have any obligation to provide any suchsecurity measures, (iii) that neither Sublessor nor the Manager has madeany representation to Subtenant regarding the safety or security of theProject, and (iv) that Subtenant will be solely responsible for providingany security it deems necessary to protect itself, its property, and Subtenant’sInvitees in, on, or about the Building, Lot 3, and the Project. IfSublessor or the Manager provides any security measures at any time, thenneither Sublessor not the Manager shall be obligated to continue providing suchsecurity measures and Sublessor and the Manager shall not be obligated toprovide such security measures with any particular standard of care. Subtenantassumes all responsibility for the security and safety of Subtenant andSubtenant’s property. Except as otherwise provided to the contrary in thisSublease, Subtenant releases Sublessor, Master Lessor, and the Manager from allclaims for damage, loss, or injury to Subtenant, Subtenant’s Invitees, and/orto the personal property of Subtenant and/or of Subtenant’s Invitees, even ifsuch damage, loss, or injury is caused by or

 

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results from the criminal or negligent acts of third parties. Sublessorand the Manager shall have no duty to warn Subtenant of any criminal acts ordangerous conduct that has occurred in or near the Project, regardless of theirknowledge of such crimes or conduct, and Subtenant is hereby instructed toconduct its own investigation through local police agencies regarding anycriminal acts or dangerous conduct that has occurred in or near the Project.

 

41.           Subordinationand Attornment. This Sublease and Subtenant’s rights under this Subleaseare subject and subordinate to any mortgage, deed of trust, ground lease, orunderlying lease, including the Master Lease (and to all renewals,modifications, consolidations, replacements, or extensions thereof), now orhereafter affecting the Premises, provided any lender, beneficiary or groundlessor under any such instrument shall agree that in the event of a foreclosureor termination of ground lease or Master Lease, Subtenant’s possession of thePremises shall not be disturbed so long as Subtenant is not in default underthis Sublease. The provisions of this Paragraph shall be self-operative, and nofurther instrument of subordination shall be required. In confirmation of suchsubordination, however, Subtenant shall promptly execute and deliver anyinstruments that Sublessor, any Lender, or the lessor under any ground orunderlying lease, may reasonably request to evidence such subordination,so long as such instruments are reasonably acceptable to Subtenant. Subtenanthereby irrevocably constitutes and appoints Sublessor as Subtenant’s specialattorney-in-fact to execute and deliver such instruments. Notwithstanding thepreceding provisions of this Paragraph, if any ground lessor or Lender electsto have this Sublease prior to the lien of its ground lease, deed of trust, ormortgage, and gives written notice thereof to Subtenant that this Subleaseshall be deemed prior to such ground lease, deed of trust, or mortgage, whetherthis Sublease is dated prior or subsequent to the date of such ground lease,deed of trust, or mortgage, then this Sublease shall be deemed to be prior tothe lien of such ground lease or mortgage and such ground lease, deed of trust,or mortgage shall be deemed to be subordinate to this Sublease. If any Lender,or the lessor of any ground or underlying lease affecting the Premises, shallhereafter succeed to the rights of Sublessor under this Sublease, whether byforeclosure, deed in lieu of foreclosure or otherwise, then (i) suchsuccessor landlord shall not be subject to any offsets or defenses whichSubtenant might have against Sublessor, (ii) such successor landlord shallnot be bound by any prepayment by Subtenant of more than one month’sinstallment of Basic Monthly Rent or any other Rental, (iii) suchsuccessor landlord shall not be subject to any liability or obligation ofSublessor except those arising after such succession, (iv) Subtenant shallattorn to and recognize such successor landlord as Subtenant’s landlord underthis Sublease, (v) Subtenant shall promptly execute and deliver anyinstruments that may be necessary to evidence such attornment, (vi) Subtenanthereby irrevocably appoints Sublessor (and such successor landlord) asSubtenant’s special attorney-in-fact to execute and deliver such instruments onbehalf of Subtenant, and (vii) upon such attornment, this Sublease shallcontinue in effect as a direct lease between such successor landlord andSubtenant upon and subject to all of the provisions of this Sublease.

 

42.           EstoppelCertificates. Within 10 days after notice from Sublessor, Subtenant shallexecute and deliver to Sublessor, in recordable form, a certificate stating, (i) thatthis Sublease is unmodified and in full force and effect, or in full force andeffect as modified, and stating all modifications, (ii) the then-currentBasic Monthly Rent, (iii) the dates to which Basic Monthly Rent has beenpaid in advance, if any, (iv) the amount of any Security Deposit, orprepaid rent or other payment constituting Rental which has been paid, if any, (v) whetheror not Subtenant or Sublessor is in default under this Sublease and whetherthere currently exist any defenses or rights of offset under the Sublease, and (vi) suchother factual matters as Sublessor shall reasonably request. Subtenant’sfailure to deliver such certificate within such 10-day period shall beconclusive upon Subtenant for the benefit of Sublessor, and any successor ininterest to Sublessor, any lender or proposed lender, and any purchaser of theProject that, except as may be represented by Sublessor, this Sublease isunmodified and in full force and effect, no Rental has been paid more than 30days in advance, and neither Subtenant nor Sublessor is in default under thisSublease. Subtenant irrevocably constitutes and appoints Sublessor as its specialattorney-in-fact to execute and deliver such certificate to any third party ifSubtenant fails to deliver such certificate within such 10-day period.

 

43.           Waiver.No delay or omission in the exercise of any right or remedy of Sublessor orSubtenant in the event of any default by the other shall impair such right orremedy or be construed as a waiver. The receipt and acceptance by Sublessor ofdelinquent Rental shall not constitute a waiver of any default other than theparticular Rental payment accepted. Sublessor’s receipt and acceptance fromSubtenant, on any date (the “Receipt Date”), of an amount less than Rental dueon such Receipt Date, or to become due at a later date but applicable to aperiod prior to such Receipt

 

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Date, shall not release Subtenant of its obligation (i) to pay thefull amount of such Rental due on such Receipt Date or (ii) to pay whendue the full amount of such Rental to become due at a later date but applicableto a period prior to such Receipt Date. No act or conduct of Sublessor,including without limitation, the acceptance of the keys to the Premises, shallconstitute an acceptance by Sublessor of the surrender of the Premises bySubtenant before the Expiration Date. Only a written notice from Sublessor toSubtenant stating Sublessor’s election to terminate Subtenant’s right topossession of the Premises shall constitute acceptance of the surrender of thePremises and accomplish a termination of this Sublease. Sublessor’s consent toor approval of any act by Subtenant requiring Sublessor’s consent or approvalshall not be deemed to waive or render unnecessary Sublessor’s consent to orapproval of any other or subsequent act by Subtenant. Any waiver by Sublessoror Subtenant of any default must be in writing and shall not be a waiver of anyother default concerning the same or any other provision of this Sublease. Subtenanthereby waives any rights granted to Subtenant under California Code of CivilProcedure Section 1179, California Civil Code Section 3275, and/orany successor statute(s). Subtenant represents and warrants that if Subtenantbreaches this Sublease (beyond the expiration of all applicable notice and cureperiods) and, as a result, this Sublease is terminated, Subtenant will notsuffer any undue hardship as a result of such termination and, during the Term,will make such alternative or other contingency plans to provide for itsvacation of the Premises and relocation in the event of such termination. Subtenantacknowledges that Subtenant’s waivers set forth in this Paragraph are amaterial part of the consideration for Sublessor’s entering into thisSublease and that Sublessor would not have entered into this Sublease in theabsence of such waivers.

 

44.           Brokers.Subtenant represents that, except as to the Participating Brokers, if any, noreal estate broker, agent, finder, or other person is responsible for bringingabout or negotiating this Sublease and Subtenant has not dealt with any realestate broker, agent, finder, or other person, relative to this Sublease in anymanner. Subtenant hereby indemnifies Sublessor against all liabilities,damages, losses, costs, expenses, attorneys’ fees and claims arising from anyclaims that may be made against Sublessor by any real estate broker,agent, finder, or other person (other than as set forth above), alleging tohave acted on behalf of or to have dealt with Subtenant.

 

45.           Easements.Subtenant acknowledges that each of Master Lessor and Sublessor may, at itselection, from time to time, grant such easements, rights and dedications, andcause the recordation of parcel maps and restrictions affecting the Premisesand the Project. Subtenant shall promptly sign any documents or instruments toaccomplish the foregoing upon request by Sublessor. Subtenant irrevocablyappoints Sublessor as Subtenant’s special attorney-in-fact to execute anddeliver such documents or instruments on behalf of Subtenant if Subtenantrefuses or fails to do so.

 

46.           Limitationson Sublessor’s Liability. If Sublessor is in default of this Sublease, andas a consequence Subtenant recovers a money judgment against Sublessor, suchjudgment shall be satisfied only out of the proceeds of sale received uponexecution of such judgment and levy against the right, title, and interest ofSublessor in the Project, and out of rent or other income from the Projectreceivable by Sublessor or out of the consideration received by Sublessor fromthe sale or other disposition of all or any part of Sublessor’s right, title,and interest in the Project. Neither Sublessor nor Sublessor’s shareholders,officers, directors, or the partners comprising Sublessor (if any) shall bepersonally liable for any deficiency.

 

47.           Sale orTransfer of Premises. If Sublessor sells or transfers the Premises, theBuilding or the Project, Sublessor, on consummation of the sale or transfer,shall be released from any liability thereafter accruing under this Sublease. Ifany security deposit or prepaid rent has been paid by Subtenant, Sublessor may transferthe security deposit and/or prepaid rent to Sublessor’s successor-in-interestand on such transfer Sublessor shall be discharged from any further liabilityarising from the security deposit or prepaid rent.

 

48.           QuitclaimDeed. Subtenant shall execute and deliver to Sublessor on the ExpirationDate of this Sublease, promptly on Sublessor’s request, a quitclaim deed to thePremises, in recordable form, designating Sublessor as transferee.

 

49.           NoMerger. The voluntary or other surrender of this Sublease by Subtenant, ora mutual cancellation of this Sublease, or a termination by Sublessor, shallnot work a merger, and shall, at the option of Sublessor, terminate anyexisting subleases or may, at the option of Sublessor, operate as an assignmentto Sublessor of any such subleases.

 

50.           Confidentiality.Except as essential to the consummation of the transaction contemplated by thisSublease (together with all amendments and addendums hereto):

 

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50.1.        Subtenantshall keep and maintain the terms of this Sublease and the transactionscontemplated by this Sublease or any aspect of this Sublease in strictconfidence; and

 

50.2.        Subtenantmay not make or allow any notices, statements, disclosures, communication,or news releases concerning this Sublease, the terms of this Sublease and thetransactions contemplated by this Sublease or any aspect of this Sublease.

 

Nothing provided herein, however, shall prevent Subtenant fromdisclosing to its legal counsel and/or certified public accountants,prospective purchasers, or lenders the existence and terms of this Sublease orany transaction under this Sublease, or any aspect of this lease, or fromcomplying with any governmental or court order or similar legal requirementwhich requires such party to disclose this Sublease, the terms of thisSublease, the transaction contemplated by this Sublease and/or any aspect ofthis Sublease; provided that such party uses reasonable and diligent good faithefforts to disclose no more than is absolutely required to be disclosed by suchlegal requirement. If Subtenant violates this confidentiality provision, inaddition to all other remedies to which Sublessor may be entitled underlaw or in equity, Sublessor shall be entitled to receive immediately the entirevalue of any rent relief, rent abatement, free rent, reimbursement, or otherconcession which Sublessor has previously granted to Subtenant.

 

51.           Miscellaneous.

 

51.1.        Subtenantcovenants and agrees not to protest or in any way oppose any application for alicense to serve or sell liquor filed by tenants or other users of space withinthe Project.

 

51.2.        UponSublessor’s written request, Subtenant shall promptly furnish to Sublessor,from time to time, with financial statements certified by Subtenant to be trueand correct, reflecting Subtenant’s then current financial condition. Suchfinancial statements shall include a current balance sheet and a profit andloss statement covering the most recent 12-month period available. In addition,upon Sublessor’s written request, Subtenant shall allow Sublessor, or acertified public accountant of Sublessor’s choosing, to determine Subtenant’scurrent financial condition by reviewing Subtenant’s current financial books,records, and accounts.

 

51.3.        Notwithstandingany other provision in this Sublease to the contrary, Subtenant shall refrainfrom selling or otherwise distributing any alcoholic beverages unless such saleis specifically included as a Permitted Use, and in any event, such sales shallbe expressly forbidden under this Sublease unless and until Subtenant holds theappropriate license as issued and/or approved by the California AlcoholicBeverage Control Agency.

 

51.4.        ThisSublease shall be governed by and construed in accordance with the laws of theState of California.

 

51.5.        Forpurposes of venue and jurisdiction, this Sublease shall be deemed made and tobe performed in the City of San Diego, California and Sublessor and Subtenanthereby consent to the jurisdiction of the Courts of the County of San Diego. Thesole and exclusive venue for adjudication of disputes or controversies relatingto this Sublease shall be the City of San Diego, California.

 

51.6.        ThisSublease may be executed in counterparts, each of which shall be deemed anoriginal and all of which together shall constitute one document.

 

51.7.        Wheneverthe context so requires, all words used in the singular shall be construed tohave been used in the plural (and vice versa), each gender shall be construedto include any other genders, and the word “person” shall be construed toinclude a natural person, a corporation, a firm, a partnership, a jointventure, a trust, an estate or any other entity.

 

51.8.        Eachprovision of this Sublease shall be valid and enforceable to the fullest extentpermitted by law. If any provision of this Sublease or the application of suchprovision to any person or circumstance shall, to any extent, be invalid orunenforceable, the remainder of this Sublease, or the application of such provisionto persons or circumstances other than those as to which it is held invalid orunenforceable, shall not be affected by such invalidity or unenforceability,unless such provision or such application of such provision is essential tothis Sublease.

 

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51.9.        Inthe event any litigation, arbitration, mediation, or other proceeding (“Proceeding”)is initiated by any party against any other party to enforce, interpret orotherwise obtain judicial or quasi-judicial relief in connection with thisSublease the prevailing party in such Proceeding shall be entitled to recoverfrom the unsuccessful party all reasonable costs, expenses, and actual attorney’sfees and expert witness fees relating to or arising out of such Proceeding(whether or not such Proceeding proceeds to judgment), and any post-judgment orpost-award proceeding including without limitation one to enforce any judgmentor award resulting from any such Proceeding. Any such judgment or award shallcontain a specific provision for the recovery of all such subsequently incurredcosts, expenses, and actual attorney’s fees and expert witness fees.

 

51.10.      ThisSublease shall become effective when it has been executed by each of Sublessorand Subtenant.

 

51.11.      Subjectto any restriction on transferability contained in this Sublease, this Subleaseshall be binding upon and shall inure to the benefit of thesuccessors-in-interest and assigns of each party to this Sublease. Nothing inthis Paragraph shall create any rights enforceable by any person not a party tothis Sublease, except for the rights of the successors-in-interest and assignsof each party to this Sublease, unless such rights are expressly granted inthis Sublease to other specifically identified persons.

 

51.12.      Theheadings of the Paragraphs of this Sublease have been included only forconvenience, and shall not be deemed in any manner to modify or limit any ofthe provisions of this Sublease, or be used in any manner in the interpretationof this Sublease.

 

51.13.      Timeand strict and punctual performance are of the essence with respect to eachprovision of this Sublease.

 

51.14.      ThisSublease contains the entire agreement between Sublessor and Subtenant withrespect to the subject matter of this Sublease, is a complete and exclusivestatement of the terms of such agreement, and supersedes all priorunderstandings, agreements, representations and warranties, if any, withrespect to such subject matter.

 

51.15.      Eachparty to this Sublease and its legal counsel have had an opportunity to reviewand revise this Sublease. The rule of construction that any ambiguitiesare to be resolved against the drafting party shall not be employed in theinterpretation of this Sublease or any Addendum or Exhibit to thisSublease, and such rule of construction is hereby waived by Subtenant.

 

51.16.      Allnotices or other communications required or permitted to be given to Subtenantor Sublessor shall be in writing and shall be personally delivered, sent bycertified mail, postage prepaid, return receipt requested, or sent for next daydelivery by a reputable overnight express courier service that provides writtenconfirmation of delivery, to Subtenant at the address set forth in Paragraph2.11 of this Sublease and to Sublessor at the address set forth in Paragraph2.10 of this Sublease. Each such notice or other communication shall be deemedgiven, delivered and received upon its actual receipt except that if it is sentby mail in accordance with this Paragraph, then it shall be deemed given,delivered and received three days after the date such notice or othercommunication is deposited with the United States Postal Service in accordancewith this Paragraph. Sublessor or Subtenant may give a notice of a changeof its address to the other.

 

51.17.      Neitherthis Sublease not any memorandum hereof shall be recorded in any public recordswithout the prior written consent of Sublessor; provided, however, upon thewritten request of Subtenant or Sublessor, the parties hereto shall execute andacknowledge a short form lease in a mutually acceptable form toSublessor and Subtenant, which either party, at its option, may record.

 

51.18.      Ifmore than one person is Subtenant, then the obligations of Subtenant under thisSublease shall be the joint and several obligations of each of such persons;provided, however, that any act or signature of one or more of any of suchpersons and any notice or refund given to or served on any one of such personsshall be fully binding on each of such persons.

 

51.19.      Allprovisions, whether covenants or conditions, to be performed or observed bySubtenant shall be deemed to be both covenants and conditions.

 

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51.20.      Allpayments to be made by Subtenant to Sublessor under this Sublease shall be inUnited States currency.

 

51.21.      TheExhibits and Addendum attached to this Sublease are incorporated herein by thisreference.

 

51.22.      UponSublessor’s request, Subtenant shall provide Sublessor with a statementreflecting the dollar amount of all sales and business transacted at or throughthe Premises, for an interval period to be determined by Sublessor, but in noevent more frequently than monthly. Subtenant shall provide such informationwithin 15 days of Sublessor’s request. Sublessor shall be entitled to use suchinformation as it deems appropriate, including providing such information toprospective lenders and purchasers.

 

**51.23.****     The parties hereto waive trial by jury inconnection with proceedings or counterclaims brought by either of the partieshereto against the other.**

 

51.24.      ThisSublease and the Exhibits A, B, C and Addendum(s) 1 attached hereto and forminga part hereof, as set forth herein, constitute all of the covenants,promises, assurances, representations, warranties, statements, agreements,conditions and understandings between Sublessor and Subtenant concerning thePremises and the Project and there are no covenants, promises, assurances,representations, warranties, statements, conditions, or understandings, eitheroral or written, between them, other than as herein set forth. Except as hereinotherwise provided, no subsequent alteration, change, or addition to thisSublease shall be binding upon Sublessor or Subtenant unless reduced to writingand signed by each of them.

 

51.25.      ThisSublease supersedes and revokes any and all previous negotiations,arrangements, letters of intents, offers to lease, lease proposals or drafts,brochures, representations, and information conveyed, whether oral or written,between parties hereto or their respective representations or any other personpurported to represent Sublessor or Subtenant. The Subtenant acknowledges ithas not been induced to enter into this Sublease by any representations not setforth in the Sublease, nor has it relied on any such representations. No suchrepresentations should be used in the interpretation or construction of thisSublease and the Sublessor shall have no liability for any consequences arisingas a result of any such representations.

 

51.26.      Tothe extent that the terms and provisions of this Sublease are inconsistent withthe terms and provisions of the Master Lease, the terms and provisions of theMaster Lease shall be paramount and controlling. Subtenant shall not do orpermit any act, condition or thing to occur that would or may constitute adefault under the Master Lease.

 

***[Signature Page to Follow]***

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** **
| ** ** | **SUBLESSOR:   Insurance Company of the West, a  California corporation** |
|------------|--------------------------------------------------------------------------------|
| ** ** | ** **                                                                     |
|       | By:                                                                            | American Assets, Inc., as Agent |
|       |                                                                           |
|       |                                                                           |
|       | By:                                                                            | /s/ James Durfey |
|       |                                                                           | James Durfey |
|       |                                                                           | Vice President — Office Leasing and Management |
|       |                                                                           |
|       | Date:                                                                          | 1/16/06 |
|       |                                                                           |   |
|       |                                                                           |   |
|       | **SUBTENANT:  iVow, Inc.,**  **a Delaware corporation**         |
|       |                                                                           |   |
|       |                                                                           |   |
|       | By                                                                             |     /s/ Michael H. Owens |
|       |                                                                           |   |
|       | Date:                                                                          | 01/12/06 |

 
| **CONSENT TO SUBLEASE AND ACKNOWLEDGEMENT  OF SUBTENANT’S RIGHTS UNDER SECTION 41 ONLY:** | ** **                                           |
|-----------------------------------------------------------------------------------------------------|------------------------------------------------------|
| ** **                                                                                          | ** **                                           |
| **MASTER LESSOR:**                                                                                  | ** **                                           |
| ** **                                                                                          | ** **                                           |
| **ICW Plaza, L.P.,**                                                                                |                                                 |
| **a California limited partnership**                                                                |                                                 |
|                                                                                                |                                                 |
| **By:**                                                                                             | **ICW Plaza, Inc., a California  corporation,** |   |
|                                                                                                | **Its General Partner**                              |   |
|                                                                                                |                                                 |
|                                                                                                |                                                 |
| By:                                                                                                 | /s/ Illegible                                        |   |
|                                                                                                |                                                 |
| Date:                                                                                               | 1/16/06                                              |   |

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**25**

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**EXHIBIT “B”**

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**TO STANDARD OFFICE LEASE**

DEMISED PREMISES

 

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**EXHIBIT “B-1”**

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**SITE PLAN OF THE PROJECT**

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**EXHIBIT“C”**

 

**SUBTENANT”IMPROVEMENTS TO THE PREMISES**

 

General recital:  Subtenant accepts the Premises in “As-Is”condition, and Sublessor shall provide certain tenant improvements for thePremises, subject to the terms and conditions as more completely describedherein. Subtenant shall construct any and an future improvements subject to theterms and conditions as more completely described herein.

 

# Section 1.               Sublessor’sWork. Following execution of this Lease by Sublessor and Subtenant,Sublessor sole responsibility with respect to improving the Premises shall beto cause the carpet in the Premises to be cleaned and the walls within thePremises re-painted using building standard paint (“Sublessor’s Work”).Sublessor shall be responsible for bearing all costs and expenses relating toSublessor’s Work.

#  

Sections 2 through 5.          Intentionally Deleted.

 

# Section 6.               FutureImprovements by Subtenant to the Premises; Plan Approval. In the event thatSubtenant shall desire to perform improvements to the Premises during the term.of the Sublease or any extension thereof, Subtenant shall cause detailed plansand specifications (the ”Plans”) to be prepared and delivered toSublessor; which Plans shall reflect the work to be performed within thePremises by Subtenant in order to suitably prepare the Premises for Subtenant’suse (“Subtenant’s Work”). Sublessor shall, within a reasonable period of timefollowing its receipt of the Plans, either approve such Plans or provideSubtenant with the reasons that Sublessor is withholding such consent.Performance of the Subtenant’s Work shall strictly conform to the approvedPlans and any deviation will require Sublessor’s prior approval. All costsarising from said future Subtenant’s Work shall be the sole and exclusiveresponsibility of Subtenant to pay, in a prompt and timely fashion as saidcosts become due.

#  

## Section 6.1             Constructionof Subtenant Improvements by Subtenant’s Contractor. After the Plans forthe Subtenant’s Work have been approved by Sublessor, Subtenant, and the localgoverning agencies, Subtenant shall submit to Sublessor the name, address,license number, evidence of insurance, and any other information required bySublessor of Subtenant’s proposed contractor(s) (“Contractor”) for Sublessor’sreview and approval. If Sublessor deems, in Sublessor’s reasonable discretion,that Subtenant’s proposed Contractor is unacceptable, Subtenant shall resubmitinformation on a replacement contractor until a mutually approved Contractor isselected. Upon said selection, Subtenant shall enter into a constructioncontract with the Contractor which shall include a provision for compliancewith Sublessor’s rules and regulations as defined herein, and Subtenant shallprovide Sublessor with a copy of said contract. In no event shall Subtenant bepermitted to perform Subtenant’s Work prior to providing all informationrequested by Sublessor relating to Subtenant’s Work. Failure by Subtenant toprovide any information requested by Sublessor, including but not limited toevidence of Subtenant’s and Subtenant’s Contractor’s compliance with all of theinsurance requirements hereof, shall constitute a default of the Sublease inthe event Subtenant proceeds with Subtenant’s Work. Violations of Sublessor’srules, regulations, and requirements as set forth herein or as otherwiseestablished by Sublessor shall constitute a default of this Sublease if notcorrected by Subtenant and/or Subtenant’s Contractor within twenty four (24)hours notice,

 

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## either written ororal, by Sublessor to Subtenant. Sublessor shall have the right to post anotice of non-responsibility at a prominent location within Subtenant’sPremises.

##  

It shall be theresponsibility of Subtenant to enforce the following requirements ofSubtenant’s Contractor, and all subcontractors of Subtenant’s Contractor, atevery level:

 

### 6.1.1        Subtenant’sContractor shall perform Subtenant’s Work in a manner and at times which do notimpede or delay Sublessor’s contractor in the Project. Any delays in thecompletion work by the Sublessor or Sublessor’s contractor on the Project, orthe commencement of the annual rental and any damage to any work caused bySubtenant’s Contractor shall be at me sole cost and expense of Subtenant.

###  

### 6.1.2        Subtenant’sContractor shall be responsible for the repair, replacement, or clean-up of anydamage by him to other contractors’ work which specifically includes accessways to the Premises which may be concurrently used by others. Fire, lanes,sidewalks, hallways, and access to other Subtenant’s suites may not be blockedor obstructed at any time.

###  

### 6.1.3        Subtenant’sContractor shall accept the Premises prior to starting any trenchingoperations. Any rework of sub-base or compaction required after Subtenant’sContractor’s initial acceptance of the Premises shall be done by Subtenant’sContractor, which shall include the removal from the Premises of anyexcess soil or debris. All work shall be done in accordance with soundconstruction practices and, as required, in compliance with specifications of asoils engineer or consultant as approved by Sublessor.

###  

### 6.1.4        Subtenant’sContractor shall contain his storage of materials and his operations within thePremises and such other space as he may be assigned by Sublessor.Should he be assigned space outside of the Premises, he shall move to suchother space as Sublessor shall direct from time to time to avoid interferenceor delays with other work. Subtenant’s Contractor shall park constructionvehicles in areas designated by Sublessor.

###  

### 6.1.5        Alltrash and surplus construction materials shall be stored within the Premisesand shall be promptly removed from the Premises. Subtenant’s Contractor shallnot use common area trash enclosures or waste bins for disposal of trash orsurplus construction material.

###  

### 6.1.6        Subtenant’sContractor shall provide temporary utilities, portable toilet facilities andportable drinking water as required for his work within the Premises.

###  

### 6.1.7        Noiseshall be kept to a minimum at all times, and shall not be permitted tointerfere with the conduct of other Subtenant’s business, or the generaloperation of the Project. Subtenant’s Contractor shall notify Sublessor’sproject manager of any planned work to be done on weekends or other than normaljob hours.

###  

### 6.1.8        Subtenantand Subtenant’s Contractor are responsible for compliance with all applicablecodes and regulations of duly constituted authorities having jurisdiction asfar as the performance of the Subtenant’s Work is concerned and for allapplicable safety regulations established by the Sublessor, OSHA, or otherregulatory agencies, and Subtenant further agrees to save and hold Sublessorharmless for Subtenant’s actions arising from Subtenant’s Work Prior

 

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### to commencement ofconstruction, Subtenant shall submit to Sublessor evidence of insurance asrequired by this Sublease and evidence of insurance for Subtenant’s Contractor.

###  

### 6.1.9        Subtenant’sContractor shall not post signs on any part of the Project or on the Premises,without Sublessor’s prior written approval.

###  

### 6.1.10      Subtenantshall be responsible for and shall obtain and record a Notice of Completionpromptly following completion of Subtenant’s work.

###  

### 6.1.11      Sublessormay require that, prior to the commencement of construction, Subtenant shallobtain or cause its contractor to obtain payment and performance bonds coveringthe faithful performance of the contract for the construction of theSubtenant’s Work and the payment of all obligations arising thereunder. Suchbonds shall be for the mutual benefit of both Sublessor and Subtenant.

###  

### 6.1.12      Subtenantshall provide to Sublessor a copy of the fully executed construction contract,including all addendum and a line item breakdown by trade thereto, betweenSubtenant and its Contractor for the Subtenant’s Work.

###  

### 6.1.13      Allrequired permits and approvals, including but not limited to Planning,Building, Fire, and Health department permits, must be obtained and allnecessary calculations, including, but not limited to, those required underTitle 24, must be submitted to the local governing agencies for all work to beperformed by Subtenant or Subtenant’s Contractor in the Premises.

###  

### 6.1.14      Anymodifications to the building exterior shall be subject to Sublessor’s priorapproval. No romex wiring shall be allowed, nor shall water lines be placed inslabs, unless approved by Sublessor prior to installation. All equipment placedupon the roof as a result of the Subtenant’s Work, and all roof penetrations,shall be approved by Sublessor prior to the commencement of work.

###  

### 6.1.15      Sublessor,at Sublessor’s reasonable discretion, may from time to time establish suchother rules and regulations for protection of property and the general safetyof occupants and invitees of the Project. Such rules and regulations shallapply to Subtenant and Subtenant’s Contractor as though established upon theexecution of this Exhibit “C”.

###  

## Section 6.2             Coordinationof Construction. Subtenant covenants and agrees that Subtenant andSubtenant’s Contractor shall not destroy or in any way damage any portion ofthe Project. Further, Subtenant covenants and agrees that Subtenant andSubtenant’s Contractor shall coordinate the Subtenant’s Work with anyconstruction schedule for any work being performed by or on behalf of Sublessoror any other Subtenant, and that the performance of the Subtenant’s Work shallnot interfere with Sublessor’s or any other Subtenant’s constructionactivities. If there be such interference or conflict, notice thereof shall begiven to Subtenant, and immediately after receipt of such notice theSubtenant agrees to cease or cause to be terminated such interference orconflict. Further, should Subtenant delay Sublessor’s work due to acts ofSubtenant or Subtenant’s Contractor, Construction Change Orders, subsequentreview and approvals required or other matters that materially affectSublessor’s construction progress, Subtenant shall be responsible to Sublessorfor any lost rents due to the delay of the

 

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commencement of the Sublease Term. Subtenant further covenants andagrees that Subtenant and Subtenant’s Contractor shall comply with all rulesand regulations promulgated by Sublessor, or its agent, and all directives ofSublessor governing construction or installation activities, including but notlimited to, permissible hours for construction or installation activities,storage of equipment and responsibility for cleaning of work areas. IfSubtenant or Subtenant’s Contractor shall fail to comply with the provisions ofthis Section any costs incurred by Sublessor as a result of such failure shallbe at Subtenant’s sole and exclusive expense.

##  

## Section 6.3             NoSublessor Liability. Sublessor shall not be liable for any loss, cost,damage, or expense incurred or claimed by Subtenant or any other person orparty on account of the construction or installation of the Subtenant’s Work orany other person or party on account of the construction or installation of theSubtenant’s Work or any other improvements to the Premises made by Subtenant.Subtenant hereby acknowledges and agrees that the compliance of the Subtenant’sWork, or other Alterations made to the Premises by the Subtenant and any planstherefore, with all applicable governmental laws, codes, and regulations shallbe solely Subtenant’s responsibility. Sublessor assumes no liability orresponsibility resulting from the failure of the Subtenant to comply with allapplicable governmental laws, codes and regulations or for any defect in any ofthe Subtenant’s Work or other Alteration to the Premises made by Subtenant. Subtenantfurther agrees to indemnify, defend, and hold harmless Sublessor from any loss,cost, damage or expense incurred, claimed, asserted, or arising’ in connectionwith any of the foregoing.

##  

# Section 8. Subtenant Representative. Subtenantdesignates the following individual(s) as its authorized signatures and/ordecision makers with respect to matters contained in this Exhibit C. Sublessorshall be entitled to rely on such persons decisions as being absolute andbinding on Subtenant.

#  

Sublessor _______Subtenant _______

 

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**EXHIBITDICW BUILDING**

 

**BUILDINGRULES AND, REGULATIONS**

 

Subtenant shall complywith the following Rules and Regulations. Sublessor shall not be responsible toSubtenant for the nonperformance of any of these rules and Regulations.

 

#### 1.             Locks; Keys. Subtenant shall not alter any lock orinstall any new or additional locks or bolts on any doors or windows of thePremises without obtaining Sublessor’s prior written consent. Subtenant shall bearthe cost of any lock changes or repairs required by Subtenant. Sublessor forthe Premises shall furnish two keys, and any additional keys required bySubtenant must be obtained from Sublessor at a reasonable cost to beestablished by Sublessor.

####  

#### 2.             Doors Opening to Public Corridors. All doors opening to public corridorsmust be kept closed at all times except for normal ingress to and egress fromthe Premises.

####  

#### 3.             Securing Doors; Admission to Building. Sublessor reserves the right to closeand keep locked all entrance and exit doors of the Building during the hourswhen Comparable Building are customarily dosed and locked. When departing afterthe Building’s normal Business Hours, Subtenant and Subtenant’s employees andagents must be sure that the doors to the Building are securely dosed andlocked. Any person, including Subtenant and Subtenant’s employees and agents,who enters or leaves the Building at any time when it is locked or at anytime considered to be after the Building’s normal Business Hours, may berequired to sign the Building register. Access to the Building may be refusedunless the person seeking access has proper identification or has previouslyarranged a pass for access to the Building. Sublessor and its agents shall notbe able for damages for any error concerning the admission to, or exclusionfrom, the Building of any person. Sublessor reserves the right, in the event ofinvasion, mob, riot, public excitement, or any other commotion, to preventaccess to the Building or Project during the continuance of that event by anymeans it considers appropriate for the safety and protection of life andproperty.

####  

#### 4.             Furniture, Freight, and Equipment;Service Deliveries.No furniture, freight, or equipment of any kind may be brought into the Buildingwithout prior notice to Sublessor. All moving activity into or out of theBuilding must be scheduled with Sublessor and done only at a time and in themanner designated by Sublessor. No service deliveries (other thanMessenger services) shall be allowed between the hours of 4:00 PM and 6:00 PM,Monday through Friday. Sublessor may at any time restrict the elevators andareas of the Building into which messengers may enter and may require thatSubtenant leave deliveries at the lobby security desk for pickup. Sublessor mayprescribe the weight, size, and position of all safes and other heavy propertybrought into the Building and the times and manner of moving those items withinand on of the Building. Subtenant shall not

 

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#### overload the floorof the Premises. If considered necessary by Sublessor, safes and otherheavy objects must stand on supports that are adequate to distribute the weightproperly. Sublessor shall not be responsible for loss of or damage to any safeor property. Any damage to any part of the Building or to its contents,occupants, or visitors caused by moving or maintaining any safe or otherproperty referred to in this clause shall be the sole responsibility andexpense of Subtenant.

####  

#### 5.             Receipt of Deliveries; Use of Elevators. No furniture, packages, supplies,equipment, or merchandise may be received in. the Building or carried up ordown the elevators, except between those hours and in that specific elevatorthat Sublessor shall designate.

####  

#### 6.             No Disturbance of Other Occupants. Subtenant shall not disturb, solicit,or canvass any occupant of the Project and shall cooperate with Sublessor andSublessor’s agents to prevent these actions.

####  

#### 7.             Use of Restrooms; Responsibility forDamage. Therestrooms, urinals, wash bowls, and other apparatus shall not be used for anyother purpose other than that for which they were constructed, and no foreignsubstance of any kind shall be thrown into them. The expense of any breakage,stoppage, or damage resulting from the violation of this rule shall be borne bythe Subtenant who caused, or whose employees or agents caused, thebreakage, stoppage, or damage.

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#### 8.             Heating and Air-Conditioning. Subtenant shall not use any method ofheating or air-conditioning, other than that supplied by Sublessor, withoutSublessor’s prior written consent.

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#### 9.             Foul or Noxious Gases or SubstancesNoninterference With Others. Subtenant shall not use or keep, or allow to be usedor kept, any foul or noxious gas or substance in or on the Premises. Subtenantshall not allow the Premises to be occupied or used in a manner causing noise,odors, or vibrations that are offensive or objectionable to Sublessor or otheroccupants of Project.

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#### 10.           Animals, Birds, and Vehicles. Subtenant shall not bring into, or keepwithin, the Premise, Building or Project any animals, birds, or vehicles(e.g., bicycles).

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#### 11.           Cooking, No use of the Premises forImproper Purposes.No cooking shall be done or permitted on the Premises, except thatUnderwriter’s Laboratory (UL)-approved equipment and microwave ovens may beused in the Premises for heating food and brewing coffee, tea, hot chocolate,and similar beverages for employees and visitors. This must be in accordancewith all applicable federal, state, and city laws, codes, ordinances, rules, andregulations.

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#### 12.           Telephone and Other Wires. Subtenant may not introduce telephonewires or other wires into the Premises without first obtaining Sublessor’sapproval of the method and location of such introduction. No boring or cuttingfor telephone wires or other wires shall be allowed without Sublessor’sconsent. The location

 

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#### of telephones,call boxes, and other office equipment affixed to the Premises shall be subjectto Sublessor’s approval.

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#### 13.           Exclusion or Expulsion. Sublessor reserves the right to excludeor expel from the Project any person who, in Sublessor’s judgment, is under theinfluence of alcohol or drugs or commits and act in violation of theses Rulesand Regulations.

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#### 14.           Loitering Prohibited. Subtenant and Subtenant’s employees andagents shall not loiter in or on the entrances, corridors, sidewalks, lobbies,halls, stairways, elevators, or common areas for the purpose of smoking tobaccoproducts or for any other purpose. Subtenant and Subtenant’s employees andagents shall not obstruct these areas but use them only as a means of ingressto and egress from the Premises.

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#### 15.           Operation of Electricity, Water, and AirConditioning.Subtenant shall not waste electricity, water, or air-conditioning and shallcooperate fully with Sublessor to ensure the most effective operation of theBuilding’s heating and air-conditioning system. Subtenant shall not adjust anycontrols of that heating and air-conditioning system.

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#### 16.           Disposal of Trash and Garbage. Subtenant shall store all trash andgarbage within the interior of the Premises. Subtenant shall not place or haveplaced in the trash boxes or receptacles any material that may not or cannot bedisposed of in the ordinary and customary manner of removing and disposing; oftrash in the vicinity of the Building. In disposing of trash and garbage,Subtenant shall comply fully with any law or ordinance governing that disposal.All trash, garbage, and refuse disposal shall be made only through entry-waysand elevators provided for that purpose and shall be made only at timesdesignated by Sublessor.

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#### 17.           Compliance With Safety Regulations. Subtenant shall comply with all safety,fire protection and evacuation procedures and regulations established bySublessor or by any government agency.

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#### 18.           Protection of Premises. Subtenant shall assume allresponsibility, including keeping doors locked and other means of entry to thePremises dosed, for protecting the Premises from theft, robbery, andpilferage.

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#### 19.           Awnings, Curtains, and Electrical CeilingFixtures. Noawnings or other projection shall be attached to the outside walls of theBuilding without Sublessor’s prior written consent. No curtains, blinds,shades, or screens, shall be attached to, hung in, or used in connection withany window or door of the Premises without Sublessor’s prior written consent.All electrical ceiling fixtures hung in offices or spaces along the perimeterof the Building must be fluorescent or of a quality, type, design, and bulbcolor approved by Sublessor. Subtenant shall abide by Sublessor’s regulationsconcerning the opening and closing of

 

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window coverings attached to those windows, if any, inthe Premises that have a view of any interior portion of the Building orBuilding Common Area.

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#### 20.           Non-obstruction of Light. Subtenant shall not cover or obstructthe sashes, sash doors, skylights, windows, and doors that reflect or admitlight and air into halls, passageways, or other public places in the Building.Subtenant shall not place any bottles, parcels, or other articles on thewindowsills.

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#### 21.           Provision of Information to Subtenant’sEmployees.Subtenant shall comply with requests by Sublessor that Subtenant informsSubtenant’s employees of items of importance to Sublessor.

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#### 22.           Hand Trucks and Similar Equipment. Without Sublessor’s prior consent,Subtenant shall not use, in any space or in the public halls of the Building,any hand trucks unless they are equipped with rubber ties and side guardsor similar equipment. Subtenant shall not bring any other vehicles of any kindinto the Building.

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#### 23.           Use of Building’s Name or Likeness. Without Sublessor’s prior writtenconsent, Subtenant shall not use me Building’s name or any photograph or otherlikeness of the Building in connection with, or in promoting or advertising,Subtenant’s business, except that Subtenant may include the Building’s name inthe Subtenant’s address.

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#### 24.           Parking Rules and Regulations. Without Sublessor’s prior writtenconsent, no automobile detailing or washing shall be permitted in theparking areas of the Building or Project.

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#### 25.           Rules Changes; Waivers. Sublessor reserves the right at anytime to change or rescind any one or more of these Rules and Regulations or tomake any additional reasonable Rules and Regulations that, in Sublessor’sjudgment, may be necessary for:  (a) Themanagement, safety, care, and cleanliness of the Premises, Building, andProject; (b) The preservation of good order, and (c) The convenience of otheroccupants and tenants in the Premises, Building, and Project.

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#### 26.           Flames. Subtenant shall not have any open flames in thePremises, Building or Project at anytime whatsoever, including, but not limitedto, lit candles, lighters, matches or as it relates to cooking.

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Sublessor may waive anyone or more of these Rules and Regulations for the benefit of any particulartenants. No waiver by Sublessor shall be constructed as a waiver of those Rulesand Regulations in favor of any other Subtenant, and no waiver shall preventSublessor from enforcing those Rules and Regulations against any otherSubtenant of the Project. Subtenant shall be considered to have read theseRules and Regulations and to have agreed to abide by them as a condition ofSubtenant’s occupancy of the Premises.

 

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** **

**ADDENDUM NO. 1**

**TO STANDARD SUBLEASE**

** **

**1.****             RENTCOMMENCEMENT DATE**

 

The payment of Basic Monthly Rent shall commence uponthe Commencement Date.

 

2.             **BASIC MONTHLY RENT**

 

Basic Monthly Rent for each Sublease Year, (as definedbelow), during the Sublease Term shall be as follows:

 
| **ANNUAL**      | ** ** | **MONTHLY** | ** ** |
|-----------------|------------|-------------|------------|
| ** **      | ** ** | ** **  | ** ** | ** ** | ** ** | ** ** | ** ** |
| Sublease Year 1 |       | $           | 93,697.00  |   | Basic Monthly Rent |   | $ | 7,807.25 |   |
| Sublease Year 2 |       | $           | 96,497.64  |   | Basic Monthly Rent |   | $ | 8,041.47 |   |
| Sublease Year 3 |       | $           | 99,392.52  |   | Basic Monthly Rent |   | $ | 8,282.71 |   |

 

In addition, Subtenant shall pay for all individuallyand separately metered utilities for the Premises.

 

The term “Sublease Year” shall mean (i) as to thefirst Sublease Year, that period commencing on the Sublease Commencement Dateand ending 12 months following the Rent Commencement Date (provided; however,if the Rent Commencement Date falls on a day other than the first day of acalendar month, then the first Sublease Year will be extended through the finalday of the calendar month in which the first annual anniversary of the RentCommencement Date occurs), (ii) as to every subsequent Sublease Year otherthan the final Sublease Year of the Term, the 12 month period following theprior Sublease Year, and (iii) as to the final Sublease Year of the Term,the period commencing on that day immediately following the final day of thepenultimate Sublease Year of the Term and ending on the Expiration Date.”

 

(As an example of the foregoing, a SubleaseCommencement Date of April 20, 1951 followed by a Rent Commencement Dateof June 15, 1951 would yield a first Sublease Year of April 20, 1951through June 30, 1952. The following Sublease Year would be July 1,1952 through June 30, 1953. A “three year” Term would end on June 30,1954.)

 

4.             **OPTION TO EXTEND**

 

Subtenant shall have the option to extend the Term ofthis Sublease (the “Option”) for one (1) period of three (3) years(such period an “extension term”) provided Subtenant gives Sublessor andSublessor is in receipt thereof a written notice delivered by U.S. PostalService, certified mail return receipt requested, of Subtenant’s election toexercise the Option a minimum of 270 days prior to the Expiration Date of theTerm of this Sublease and a maximum of 365 days prior to the Expiration Date ofthe Term of this Sublease (or the then applicable extension term, to the extentthe Term has been previously extended by the terms of this Article). The termsand conditions governing each such extension terra will be the same as thosefor the Initial Sublease Term, except and to the extent modified by the termsof Paragraphs E and F, below. Time is of the essence with respect to each andevery term of this article.

 

A.            TheOption is personal to the Subtenant originally named in this Sublease and may notbe exercised by or be assigned to, voluntarily or involuntarily, any otherperson or entity. The Option herein granted to Subtenant may not beassigned with any permitted assignment of this Sublease or subSublease of thePremises (or any portion thereof).

 

B.            Subtenantshall not have the right to exercise the Option, notwithstanding anything setforth above to the contrary:

 

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1.             Duringany period of time commencing from the date Sublessor gives to Subtenant awritten notice that Subtenant is in default under any provision of thisSublease, and continuing until the default alleged in said notice is cured;

 

2.             Duringthe period of time commencing on the day after a monetary obligation to Sublessoris due from Subtenant and unpaid (without any necessity for notice thereof toSubtenant) and continuing until the obligation is paid;

 

3.             Atany time after the occurrence of any default described in Paragraph 26 of theSublease other than those described in the preceding paragraphs (without anynecessity of Sublessor to give notice of such default to Subtenant); or

 

4.             Inthe event that Sublessor has given to Subtenant two or more notices of defaultor a late charge has become payable under the Sublease during the twelve-monthperiod prior to the time that Subtenant intends to exercise the Option.

 

C.            Theperiod of time within which the Option may be exercised shall not beextended or enlarged by reason of Subtenant’s inability to exercise the Optionbecause of the foregoing provisions of Paragraph B, even if the effect thereofis to eliminate Subtenant’s right to exercise the Option.

 

D.            Allrights with respect to the Option shall terminate and be of no further force oreffect even after Subtenant’s due and timely exercise of the Option, if, aftersuch exercise, but prior to the commencement of the applicable extension term, (1) Subtenantfails to pay to Sublessor a monetary obligation of Subtenant for a period often days after such obligation become due (without any necessity of Sublessorto give notice thereof to Subtenant); (2) Subtenant fails to cure anon-monetary default within 30 days after the date the Sublessor gives noticeto Subtenant of such default; or (3) Sublessor gives to Subtenant two or morenotices of default or a late charge becomes payable for any such default,whether or not such defaults are cured.

 

E.             TheBasic Monthly Rent shall be increased on the first day of each extension term(the “Rental Adjustment Date”) to the “fair rental value” of the Premises,determined in the following manner.

 

1.             Notlater than 120 days prior to the applicable Rental Adjustment Date, Sublessorand Subtenant shall meet in an effort to negotiate, in good faith, the fairrental value of the Premises as of such applicable Rental Adjustment Date. IfSublessor and Subtenant have not agreed upon the fair rental value of thePremises at least 90 days prior to the applicable Rental Adjustment Date, thefair rental value shall be determined by appraisal as described below.

 

2.             IfSublessor and Subtenant are not able to agree upon the fair rental value of thePremises within the time period prescribed in Paragraph 1, then Sublessor andSubtenant shall attempt to agree in good faith upon a single appraiser notlater than 75 days prior to the applicable Rental Adjustment Date. If Sublessorand Subtenant are unable to agree upon a single appraiser within such timeperiod, then Sublessor and Subtenant shall each appoint an appraiser not laterthan 65 days prior to the applicable Rental Adjustment Date. Within five daysthereafter, the two appointed appraisers shall appoint a third appraiser. IfSublessor and Subtenant agree upon an appraiser, or if either Sublessor orSubtenant fails to appoint its appraiser within the prescribed time period, thesingle appraiser appointed shall determine the fair rental value of thePremises. If both parties fail to appoint appraisers within the prescribed timeperiods, then the first appraiser thereafter selected by a party shall determinethe fair rental value of the Premises. Each party shall bear the cost of itsown appraiser and the parties shall share equally the cost of the single orthird appraiser if applicable. Each such appraiser must have at least fiveyears experience in the appraisal of commercial/industrial real property in thearea in which the Project is located and shall be members of a professionalorganization such as MAI or equivalent.

 

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3.             Forthe purposes of such appraisal, the term “fair rental value” shall mean theprice that a ready and willing Subtenant would pay, as of the applicable RentalAdjustment Date, as monthly rent to a ready and willing Sublessor of propertycomparable to the Premises if such property were exposed for Sublease on theopen market for a reasonable period of time and taking into account all of thepurposes for which such property may be used. If a single appraiser ischosen, then such appraiser shall determine the fair rental value of thePremises. Otherwise, the fair rental value of the Premises shall be thearithmetic average of the two of the three appraisals which are closest inamount, and the third appraisal shall be disregarded. In no event, however,shall the Basic Monthly Rent for the first year of the extension term be lessthan the Basic Monthly Rent payable by Subtenant during the last year of thepreceding Sublease term.

 

Sublessor and Subtenant shall instruct theappraiser(s) to complete their determination of the fair rental value no laterthan 30 days prior to the applicable Rental Adjustment Date. If,notwithstanding such instruction, the fair rental value is not determinedbefore the first day of an extension term, then Subtenant shall continue to payto Sublessor the Basic Monthly Rent applicable to the Premises immediately priorto such extension term, until the fair rental value of the Premises isdetermined. When the fair rental value of the Premises is determined, Sublessorshall deliver notice thereof to Subtenant, and Subtenant shall pay toSublessor, within ten days after receipt of such notice, the difference betweenthe Basic Monthly Rent actually paid by Subtenant to Sublessor and the newBasic Monthly Rent determined hereunder.

 

F.             Oneach annual anniversary date of the commencement of an extension term the BasicMonthly Rent will increase by a fixed amount of five percent, unless otherterms of adjustment are otherwise agreed to in writing by a mutually executeddocument between Sublessor and Subtenant.

 

5.             **PROJECT EXPANSION/MODIFICATION**

 

A.            FurtherConstruction. Subtenant acknowledges that Sublessor may, from time to time,at its sole election, construct, reconstruct, modify, expand, or otherwisealter the Project (collectively, “Construction Work”), or portions thereof (inno event however will Sublessor have any obligation to do so). Subtenantacknowledges that any such Construction Work will necessarily involve, amongother things, the generation of noise, dust, and vibrations, barricadingportions of the Project and the placement of scaffolding within the Project,demolition, structural alterations, storage of materials and equipment withinthe Project, and the presence of workmen within the Project, all of which may requirethe rearrangement of parking areas, common areas, roadways, lightingfacilities, and the re-direction of vehicular and pedestrian traffic. Except asprovided below, Subtenant waives any and all claims, defenses, rights ofoffset, or deductions based upon any inconvenience suffered by Subtenant or anyinterruption of or interference with Subtenant’s business including, withoutlimitation, any loss of business, decreased sales, or inconvenience toSubtenant or Subtenant’s Invitees as a result of or relating to suchConstruction Work. Sublessor hereby reserves for itself and its agents,employees, licensees and contractors, the right to enter the Premises to theextent reasonably necessary to pursue such Construction Work upon 24 hours’prior notice to Subtenant. The exercise of any of Sublessor’s rights pursuantto this paragraph will not entitle Subtenant to any abatement of Rent or otherclaim, right of offset, or defense against Sublessor, except that Subtenantshall have the right to bring an action against Sublessor (as Subtenant’s soleremedy) in the event Subtenant suffers any damages as a result of Sublessor’sgross negligence or intentional misconduct in pursuing such Construction Work. Subtenantfurther acknowledges that expansion of the Project may affect the amountof the Sublease Expenses and the portion thereof payable by Subtenant.

 

B.            ReservedRights. Sublessor hereby reserves such licenses and easements in, on, aboveor below the Premises as may be reasonably required (i) for theinstallation, inspection, surveying, maintenance, or construction of mains,conduits, shafts, columns, footings, piers, pipes or other

 

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facilities to serve any building within the Project,or (ii) for any Construction Work; provided, however, Sublessor will useits best efforts to minimize any unreasonable interference with Subtenant’suse, occupancy, or enjoyment of the Premises as contemplated by this Sublease.

 

C.            Rightof Abatement. Notwithstanding anything to the contrary contained inParagraph A, above, in the event any Construction Work undertaken by Sublessorprevents Subtenant from conducting its business within the Premises, Subtenant’sBase Monthly Rent will be abated during the period during which Subtenant isunable to conduct it business at the Premises as a result thereof. Theforegoing right of abatement will constitute Subtenant’s sole and absoluteright against Sublessor or otherwise in connection with any such ConstructionWork and Subtenant reSubleases and waives any other claims, defenses, or rightsin connection therewith.

 

D.            Remodel.Sublessor may in the future remodel, renovate or refurbish (“remodel”) allor any portion of the storefronts or other portions of the Project, whichremodel may include the Premises. The remodeling will be done inaccordance with design specifications prepared by the project architect andreviewed and approved by Sublessor. Subtenant agrees that Subtenant will not,through any act or omission on the part of Subtenant, in any way impede,delay or prevent the completion of such remodeling in a timely manner. If a newstorefront is required as part of the remodeling, Subtenant shall pay thecost of said storefront but not to exceed $____ per Linear foot. As part ofthe design specifications, a new exterior Subtenant sign criteria may bedeveloped, in which case Subtenant shall comply with Paragraph 14 with respectto the removal and replacement of its signs at Subtenant’s sole cost.

 

6.             **CONDITION OF THE PREMISES**

 

By taking possession hereunder, Subtenant is acceptingthe Premises in “As-Is” condition. Subtenant acknowledges and agrees thatSublessor has no obligation to improve the Premises other than as set forthspecifically in this Sublease, if at all. In particular, Subtenant acknowledgesthat any additional improvements or alterations needed to accommodate Subtenant’sintended use shall be made solely at Subtenant’s sole cost and expense, andstrictly in accordance with the requirements of this Sublease (including therequirement to obtain Sublessor’s consent thereto), unless such improvementsand alterations are specifically required of Sublessor and expressly set forthin this Sublease and in Exhibit “C”. Should Subtenant improvements be madeto the Premises in the future, the Premises shall be constructed in accordancewith the procedures outlined in Exhibit “C” of this Sublease. Sublessorshall have no responsibility to do any work required under any building codesor other governmental requirements not in effect or applicable at the time thePremises were constructed, including without limitation any requirementsrelated to sprinkler retrofitting, seismic structural requirements,accommodation of disabled persons, or hazardous materials.

 

7.             **FIELD VERIFICATION OF THE PREMISES**

 

Sublessor may elect to measure the leasableportion of the Premises at any time following the Sublease Commencement Date,for the purpose of verifying the actual floor area thereof. Sublessor shall usea licensed architect for the purpose of such measurement, and shall use theprevailing standards for measurement of similar types of buildings in thevicinity. In the event that the architect’s measurements differ from the areastated in Section 2.3 of this Sublease, Sublessor, at Sublessor’selection, may adjust the monthly rental for the Premises accordingly.

 

8.             **BUILDING HOURS OF OPERATION**

 

The Building standard operating hours are from 7:00AMto 6:00PM Monday through Friday and 9:00AM to 1:00PM on Saturdays. Sundays andmajor holidays are excluded. After hours HVAC usage shall be at $25.00 per hourfor the Premises. Subtenant shall pay for such additional use of the Buildingbeyond the aforementioned hours at the actual cost to Sublessor.

 

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9.             **UTILITIES**

 

Notwithstanding the terms of Paragraph 9 of theSublease, the Premises are separately sub-metered for electricity and Subtenantshall reimburse Sublessor or Sublessor’s designee directly, payable asAdditional Rent, for all such costs, fees and consumption charges arising fromsaid sub-meter.

 
|   | **SUBLESSOR:  Insurance Company of the West, a California corporation** |
|--------|-------------------------------------------------------------------------|
|   |                                                                    |
|   | By:                                                                     | American Assets, Inc., as Agent |
|   |                                                                    |
|   |                                                                    |
|   | By:                                                                     | /s/ James Durfey |   |
|   |                                                                    | James Durfey — V.P., Office Leasing and Management |
|   |                                                                    |
|   | Date:                                                                   | 1/16/06 |   |
|   |                                                                    |
|   |                                                                    |
|   | **SUBTENANT: iVOW, Inc. a  Delaware corporation**                  |
|   |                                                                    |
|   | By:                                                                     | /s/ Michael H. Owens |   |
|   |                                                                    |
|   | Date:                                                                   | 01/12/06 |   |
|        |                                                                         |  |  |  |  |

 

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