Document:

exv10w32

 

EXHIBIT 10.32

SUBLEASE

by and between

ELECTRONIC ARTS INC.,

a Delaware corporation

as Sublandlord,

and

PLAYA CAPITAL COMPANY, LLC,

a Delaware limited liability company

as Subtenant,

at

5510 Lincoln Boulevard, Los Angeles, California

 

 

SUBLEASE

     THIS SUBLEASE (“Sublease”) is made as of this 31st day of July, 2003, by
and between ELECTRONIC ARTS INC., a Delaware corporation (the “Sublandlord”),
and PLAYA CAPITAL COMPANY, LLC, a Delaware limited liability company (the
“Subtenant”) with regard to the following facts:

R E C I T A L S

     A.     Sublandlord is the tenant under that certain Water’s Edge Los Angeles,
California Office Lease dated July 31, 2003 (the “Lease”) with PLAYA VISTA –
WATER’S EDGE, LLC, a Delaware limited liability company (“Landlord”), pursuant
to which Sublandlord leased from Landlord all of the space located at 5510 and
5570 Lincoln Boulevard, Los Angeles, California, consisting of Building 1 and
Building 2 (collectively, “Buildings”) in the project commonly known as
“Water’s Edge,” as more particularly described on Exhibit “A” attached to the
Lease (the “Premises”).

     B.     Sublandlord desires to sublease to Subtenant, and Subtenant desires to
sublease from Sublandlord, a portion of the Premises consisting of
approximately 17,705 rentable square feet located on the first (1st) floor of
Building 2 (5510 Lincoln Boulevard, Los Angeles, California (“Building”)) to be
known as Suite 100, all as more particularly depicted on Exhibit “A” attached
hereto and incorporated herein by this reference (the “Sublease Premises”),
upon the terms, covenants and conditions set forth in this Sublease.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

1.     Capitalized Terms. All capitalized terms when used herein shall have the
same meaning as is given such terms in the Lease, unless expressly superseded
by the terms of this Sublease.

2.     Sublease.

     a.     Grant of Sublease. Pursuant to the express terms, covenants and
conditions set forth in this Sublease, Sublandlord hereby subleases to
Subtenant and Subtenant hereby subleases from Sublandlord, the Sublease
Premises on an “as-is,” “where-is” basis, subject only to Sublandlord’s due and
timely completion of the Access Improvements and other improvements more
particularly described in Section 1 of Exhibit “B” attached hereto.

     b.     Condition of Premises. Except as expressly set forth herein, no
representations or warranties of any kind have been made by Sublandlord to
Subtenant concerning the condition of the Sublease Premises, nor have any
promises to alter or improve the Sublease Premises been made by Sublandlord or
any party on behalf of Sublandlord; provided, however, that to the extent the
Lease includes covenants of Landlord relating to the condition of the Building
and/or the Sublease Premises, Sublandlord hereby agrees that Subtenant shall
have the rights and benefits thereto under this Sublease to the extent it
affects Subtenant’s improvement, use and occupancy of the Sublease Premises and
Sublandlord agrees to use commercially reasonable efforts to enforce the same.
Subject to the foregoing, Subtenant is subleasing the Sublease Premises from
Sublandlord after having had an opportunity to fully inspect the Sublease
Premises and the right not to execute this Sublease if the results of said
inspection

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were unacceptable. Subtenant hereby agrees that the term “as is”, as used
in the previous subsection means, upon Subtenant’s approval of said inspection
and upon Sublandlord’s completion of the Access Improvements as required by
this Sublease, Subtenant is agreeing to sublease the Sublease Premises, without
warranty or representation other than those representations and warranties, if
any, made by Landlord under the Lease, as to the physical condition of the
Sublease Premises and/or the compliance of same with building, fire, health and
zoning codes and other applicable laws, ordinances and regulations.
Sublandlord hereby expressly disclaims any and all warranties or
representations made to Subtenant, whether the same were made by any partner,
officer, director or employee of Sublandlord or any other agent, such as a
broker, whether oral or written, express or implied.

     c.     Initial Improvements. Notwithstanding anything to the contrary herein
or in the Lease, Subtenant shall be permitted to make initial improvements to
the Sublease Premises in accordance with the terms of that certain Work Letter
attached hereto as Exhibit “B” (the “Initial Improvements”).

3.     Term.

     a.     Initial
Term. The term (“Term”) of this Sublease shall commence on the
later of (i) the date the Lease commences, (ii) the date on which the Sublease
Premises are delivered to Subtenant by Sublandlord, and (iii) the date on which
the Consent (as defined in Section 13, below) is received from Landlord (the
“Commencement Date”) and shall expire as of 11:59 p.m. on the “Lease Expiration
Date,” as that term is defined in the Lease, with respect to the initial “Lease
Term,” as that term is defined in the Lease, unless this Sublease is sooner
terminated pursuant to any provision of this Sublease or the Lease (the
“Expiration Date”). Notwithstanding anything herein or in the Lease to the
contrary, Subtenant shall have no rights to extend the term of this Sublease
beyond the Expiration Date. At the request of either party, promptly following
the Commencement Date, the parties shall enter into a written agreement fixing
the exact date on which the Commencement Date and other dates are to occur
during the Term in the form attached hereto as Exhibit “C.” Upon the later to
occur of (a) the date on which this Sublease is fully executed and delivered or
(b) the date on which the Consent is received from Landlord (the “Delivery
Date”), Sublandlord shall deliver possession of the Sublease Premises to
Subtenant, free from the actual possession or any claims of possession of any
third party. From and after the Delivery Date, Subtenant shall be allowed to
enter the Sublease Premises for purposes of design, construction and
installation of its furniture, fixture and equipment and for Subtenant’s
occupancy, without advancing the Commencement Date, provided that (i) except
for the obligation to pay Basic Rent (as such term is defined below), Subtenant
shall comply with all provisions of this Sublease and all of the provisions of
this Sublease (other than the obligation to pay Basic Rent) shall be binding
upon Subtenant; and (ii) Subtenant shall first provide Sublandlord with copies
of the insurance policies (or certificates thereof) for all insurance required
to be maintained by Subtenant pursuant to the terms hereof, and such insurance
shall comply with all of the terms set forth herein. Notwithstanding anything
to the contrary contained herein, in the event the Commencement Date does not
occur on or prior to October 1, 2003 (subject to a day delay for each day of
“Force Majeure,” as that term is defined in the Lease, and/or Subtenant
delays), Subtenant shall have the right to terminate this Sublease at any time
prior to the occurrence of the Commencement Date upon written notice to
Sublandlord.

     b.     Subtenant Early Termination Option.

          (1) Subtenant’s Rights. Subtenant shall have the right to accelerate the
Expiration Date (“STET Option”) with respect to the entire Sublease Premises
only from the Expiration Date to the date immediately preceding the fifth (5th)
anniversary of the Commencement Date (the “STET Date”), if, and only if: (i)
Subtenant is not in default under the Sublease on the date Subtenant provides
Sublandlord with the STET Notice (hereinafter defined); (ii) no part of the
Sublease Premises is sublet for a term extending past the STET Date; (iii) the
Sublease has not been assigned; (iv) Sublandlord receives notice

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of early termination from Subtenant (“STET Notice”) not more than twelve
(12) full calendar months nor less than nine (9) full calendar months prior to
the STET Date; and (v) Subtenant timely pays the STET Fee (as defined below) to
Sublandlord.

          (2) Early
Termination Fee. If Subtenant exercises its STET Option,
Subtenant shall pay to Sublandlord on the STET Date the sum of (a) $735,453.53
(the “STET Fee”), as a fee in connection with the acceleration of the
Expiration Date and not as a penalty, and (b) an amount equal to the
unamortized portion as of the STET Date of the “Excess Improvement Allowance,”
as that term is defined in the Subtenant Work Letter, which amount shall be
amortized over the Term together with interest thereon at the rate of nine
percent (9%) per annum (“Excess Allowance Payment”). Subtenant shall remain
liable for all Basic Rent (as defined herein) and Additional Rent (as defined
herein) and other sums due under the Sublease up to and including the STET Date
even though billings for such may occur subsequent to the STET Date.

     c.     First Sublandlord Early Termination Option. Sublandlord shall have the
right to accelerate the Expiration Date (“First SLET Option”) with respect to
the entire Sublease Premises only from the Expiration Date to the date (the
“First SLET Date”) immediately preceding the fourth (4th) anniversary of the
Commencement Date upon notice to Subtenant (the “First SLET Notice”) delivered
not less than twelve (12) months prior to the First SLET Date. In connection
with the foregoing, (i) Subtenant shall cause any sublease or other occupancy
agreement entered into by Subtenant with respect to all or any portion of the
Sublease Premises to terminate (or be cancelable by Subtenant) prior to the
First SLET Date, (ii) Subtenant shall remain liable for the payment of all
Basic Rent, Additional Rent and other sums due under the Sublease up to and
including the First SLET Date even though billings for such may occur
subsequent to the First SLET Date, (iii) as of the date Sublandlord provides
Subtenant with a First SLET Notice, any outstanding tenant improvement
allowance not claimed and properly utilized by Subtenant in accordance with the
Sublease as of such date, shall immediately be deemed terminated and no longer
available or of any further force or effect, and (iv) Subtenant shall pay to
Landlord an amount equal to the Excess Allowance Payment as of the First SLET
Date. Notwithstanding anything to the contrary contained in this Sublease, if
the Sublandlord exercises its First SLET Option, Subtenant shall thereafter not
be obligated to pay Basic Rent for months 40-48 of the Term.

     d.     Second Sublandlord Early Termination Option. Sublandlord shall have
the right to accelerate the Expiration Date (“Second SLET Option”) with respect
to the entire Sublease Premises only from the Expiration Date to the date (the
“Second SLET Date”) immediately preceding the fifth (5th) anniversary of the
Commencement Date upon notice to Subtenant (the “Second SLET Notice”) delivered
not less than thirteen (13) months prior to the Second SLET Date. In
connection with the foregoing, (i) Subtenant shall cause any sublease or other
occupancy agreement entered into by Subtenant with respect to all or any
portion of the Sublease Premises to terminate (or be cancelable by Subtenant)
prior to the Second SLET Date, (ii) Subtenant shall remain liable for the
payment of all Basic Rent, Additional Rent and other sums due under the
Sublease up to and including the Second SLET Date even though billings for such
may occur subsequent to the Second SLET Date, (iii) as of the date Sublandlord
provides Subtenant with a Second SLET Notice, any outstanding tenant
improvement allowance not claimed and properly utilized by Subtenant in
accordance with the Sublease as of such date, shall immediately be deemed
terminated and no longer available or of any further force or effect, and (iv)
Subtenant shall pay to Landlord an amount equal to the Excess Allowance Payment
as of the Second SLET Date. Notwithstanding anything to the contrary contained
in this Sublease, if the Sublandlord exercises its Second SLET Option,
Subtenant shall thereafter not be obligated to pay Basic Rent for months 48-60
of the Term.

     e.     Holdover. Notwithstanding anything to the contrary contained in the
Lease, if Subtenant fails to surrender the Sublease Premises upon the
termination or expiration of this Sublease, with or

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without the express or implied consent
of Sublandlord, Subtenant shall pay
rent during such tenancy at a monthly rate equal to the greater of (i) the
amount which Landlord requires Sublandlord to pay with respect to the Premises
during such tenancy pursuant to the Lease, or (ii) one hundred fifty percent
(150%) of the Basic Rent and Additional Rent applicable under this Sublease
during the last period of the Term and, in addition to any and all other
liabilities of Subtenant to Sublandlord accruing therefrom and any and all
other rights and remedies of Sublandlord provided herein, at law, or in equity,
Subtenant shall protect, defend, indemnify and hold Sublandlord harmless from
all loss, cost (including reasonable attorneys’ fees) and liability resulting
from such failure to surrender the Premises within thirty (30) days following
the Expiration Date (except for any liability of Sublandlord to Landlord for
which there will be no thirty (30) day grace period), including, without
limiting the generality of the foregoing, any claims made by any succeeding
tenant, or Sublandlord itself, founded upon such failure to surrender, and any
losses suffered by Sublandlord (where Subtenant caused Sublandlord to default
under any of the Sublandlord’s obligations) or Landlord, including loss
profits. Notwithstanding the foregoing or anything to the contrary herein,
Subtenant acknowledges that it is responsible for removing all alterations to
the Sublease Premises made by Subtenant and required, pursuant to the terms of
the Lease, to be removed at the end of the Term.

4.     Rent.

     a.     Basic Rent. Effective as of the Commencement Date and except as
expressly set forth herein, Subtenant shall pay to Sublandlord, or its
designee, rent for the Sublease Premises in the monthly payments as set forth
below (“Basic Rent”), in advance, on or before the first day of each month
during the Term of this Sublease.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Annual Rate Per	 	 	 	 	 	 	 	 
	Month of Term	 	Square Foot	 	Annual Base Rent	 	Monthly Base Rent
	
	 	
	 	
	 	

	  1-30	 	$	30.60	 	 	$	541,773.00	 	 	$	45,147.55	 
	31-60	 	$	32.16	 	 	$	569,392.80	 	 	$	47,449.40	 
	61-90	 	$	33.72	 	 	$	597,012.60	 	 	$	49,751.05	 
	91-Expiration Date	 	$	35.40	 	 	$	626,757.00	 	 	$	52,229.75	 

Basic Rent and all other payments of rent and other sums under this Sublease
shall be payable by Subtenant without notice, demand, reduction or set-off in
lawful money of the United States of America to Sublandlord or its agent at the
address set forth in this Sublease, or to such other person or such other
places as Sublandlord may from time to time designate in writing.

	 	 	 	Until further notice, all payments should be made payable to
Electronic Arts Inc. and sent to Electronic Arts Inc., 640 North
Sepulveda Boulevard, Los Angeles, California 90049, Attention:
Jon Lutz.

If the Term begins or ends on a day other than the first or last day of a
month, the Basic Rent or Additional Rent for the partial month shall be
prorated on the basis of a thirty (30) day month. If Subtenant fails to pay
any item or installment of Rent (as defined below) within five (5) business
days

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following the date due, Subtenant shall pay Sublandlord an administrative late
fee equal to three percent (3%) of the past due Rent.

     b.     Basic Rent Credit. Notwithstanding any provision of this Section 4 to
the contrary, so long as Subtenant is not in default under this Sublease beyond
the expiration of any applicable cure period, Subtenant shall be entitled to a
credit for Basic Rent in the amount of (i) $45,147.75 per month (prorated for
any partial months) to be applied against the Basic Rent due for each month
during the period from the Commencement Date to December 31, 2003, (ii)
$12,000.00 per month to be applied against the Basic Rent due for each month
during the period from January 1, 2004 to June 30, 2004, (iii) $45,147.75 per
month to be applied against the Basic Rent due for the 12th and 24th full
calendar months of the Term, and (iv) $49,751.05 to be applied to the Basic
Rent due for the 61st full calendar month of the Term (each period of time in
which Basic Rent is abated to be referred to herein as a “Basic Rent Credit
Period”). If, during the Term, a default by Subtenant results in the
termination of this Sublease prior to the Expiration Date, a proportion of the
aggregate Basic Rent credits described above (the “Basic Rent Credits”), which
proportion shall be determined by multiplying the total Basic Rent Credits by a
fraction, the numerator of which shall be the number of months remaining in the
Term at the time the subject Subtenant default first occurs and the denominator
of which shall be the total number of months in the Term, shall immediately
become due and payable to Sublandlord. The payment obligation of Subtenant
following termination of this Sublease upon default shall be in addition to all
other obligations of Subtenant and shall not limit or affect any of
Sublandlord’s other rights, pursuant to this Sublease or at law or in equity.
During each Basic Rent Credit Period, only Basic Rent shall be abated (and only
to the extent of the Basic Rent Credits), and all non-abated Basic Rent and
Additional Rent (as defined below) and other costs and charges specified in
this Sublease shall remain as due and payable pursuant to the provisions of
this Sublease.

     c.     Additional Rent. Notwithstanding anything to the contrary in this
Sublease, Subtenant shall not be required to pay any portion of Operating
Expenses or Taxes payable by Sublandlord under the Lease; provided, however, in
lieu thereof, Subtenant agrees to pay to Sublandlord the amounts set forth
below as “Additional Rent,” in advance, on or before the first day of each
month during the term of this Sublease.

	 	 	 	 	 	 	 
	Month Of Term	 	Amount
	
	 	

	      1 –12	 	$	0.00	 
	   13 – 24	 	$	531.15	 
	   25 – 36	 	$	1,078.23	 
	   37 – 48	 	$	1,641.73	 
	   49 – 60	 	$	2,222.13	 
	   61 – 72	 	$	2,819.95	 
	   73 – 84	 	$	3,435.69	 
	   85 – 96	 	$	4,069.92	 
	 97 – 108	 	$	4,723.16	 
	109 – 120	 	$	5,396.00	 

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     d.     Subtenant
Surcharges. During the Term, Subtenant shall pay to
Sublandlord, as additional rent, the amount payable to Landlord or Sublandlord
for Subtenant Surcharges (as defined below). The term “Subtenant Surcharges”
shall mean (i) any and all amounts other than Basic Rent which become due and
payable by Subtenant to Sublandlord hereunder, and (ii) any and all amounts
which become due and payable by Sublandlord to Landlord under the Lease (which
are Subtenant’s responsibility hereunder) or are incurred by Sublandlord as
additional charges which would not have become due and payable and/or would not
have been incurred but for the acts and/or failures to act of Subtenant under
this Sublease but specifically excluding any services which are being provided
hereunder to Subtenant free of charge. Subtenant shall pay the Subtenant
Surcharges set forth above within ten (10) days after the presentation of
statements therefor by Landlord or Sublandlord to Subtenant. As used in this
Sublease: (1) “Additional Rent” shall mean all amounts due from Subtenant to
Sublandlord hereunder other than Basic Rent; and (2) “Rent” shall mean all
Basic Rent and Additional Rent.

     e.     Taxes and Other Charges for Which Subtenant Is Directly Responsible.
Subtenant shall be liable for and shall pay before delinquency, taxes levied
against Subtenant’s equipment, furniture, fixtures and any other personal
property located in or about the Sublease Premises. If any such taxes on
Subtenant’s equipment, furniture, fixtures and any other personal property are
levied against Sublandlord or Sublandlord’s property or if the assessed value
of Sublandlord’s property is increased by the inclusion therein of a value
placed upon such equipment, furniture, fixtures or any other personal property
and if Sublandlord pays the taxes based upon such increased assessment, which
Sublandlord shall have the right to do regardless of the validity thereof but
only under proper protest if requested by Subtenant, Subtenant shall upon
demand repay to Sublandlord the taxes so levied against Sublandlord or the
proportion of such taxes resulting from such increase in the assessment, as the
case may be. If the tenant improvements in the Sublease Premises, whether
installed and/or paid for by Sublandlord or Subtenant and whether or not
affixed to the real property so as to become a part thereof, are assessed for
real property tax purposes at a valuation higher than the valuation at which
tenant improvements conforming to “building standard” (which shall be deemed to
equal $45.00 per rentable square foot of the Sublease Premises for purpose of
this subsection) in other space in the Premises are assessed, then the Taxes
levied against Sublandlord or the Premises by reason of such excess assessed
valuation shall be deemed to be taxes levied against personal property of
Subtenant.

5.     Intentionally Deleted.

6.     Use.

     a.     General. The Sublease Premises shall be used for general office use
and shall not be used or permitted to be used for any other purpose without the
prior written consent of Sublandlord and Landlord, which consent may be
withheld in Sublandlord’s or Landlord’s sole discretion, as the case may be.
All provisions of the Lease further restricting (but not expanding) the use of
the Premises (including, without limitation, Article 5 of the Lease) shall
apply to the Subtenant.

     b.     Common Areas. Notwithstanding anything to the contrary in this
Sublease, Subtenant acknowledges and agrees that a majority of the Common Areas
has been reserved for the exclusive use of Sublandlord and Subtenant shall have
no rights to use any portions of the Commons Areas located within the project
of which the Buildings are a part except for the right to use the common
hallway and restrooms on the floor containing the Sublease Premises, the
exterior entry way and stairs to the

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Subtenant Premises, a shower room to be provided by Sublandlord, the
freight elevator of the Building together with the freight elevator lobby and
the designated Subtenant Parking Area as initially depicted on Exhibit “E”
attached hereto and made a part hereof. Subject to the foregoing and
Sublandlord’s reasonable rules and regulations and security requirements and
applicable laws, Subtenant shall have access to the Sublease Premises 24 hours
a day, 7 days a week.

     c.     Parking.

          (1) Subtenant Parking Area and Charges. During the entire Term of this
Sublease, subject to Subtenant’s compliance with the terms and conditions set
forth in Article 28 of the Lease, Subtenant shall rent from Sublandlord on an
exclusive basis a portion of the parking facilities serving the Building (the
“Existing Parking Facilities”) as designated by Sublandlord and reasonably
approved by Subtenant provided that the parking area designated by Sublandlord
must have no less than 53 designated spaces, Subtenant may re-stripe such
spaces and Subtenant may use aisles of such designated area to stack vehicles,
provided, however, if Sublandlord and Subtenant are unable to agree on such a
parking area, the area designated on Exhibit “E” attached hereto and made a
part hereof shall be deemed to be such area (the “Subtenant Parking Area”) and
Subtenant shall have the obligation to pay for the Subtenant Parking Area
regardless of whether all spaces contained therein are actually used by
Subtenant; provide, however, Sublandlord hereby reserves the right, at
Sublandlord’s request from time to time during the Term, to alter and/or
segregate the Subtenant Parking Area from the remainder of the Existing Parking
Facilities (it being agreed that Sublandlord shall be entitled to secure and/or
partition the Subtenant Parking Area from the areas in the Existing Parking
Facilities being utilized by Sublandlord) subject to the reasonable approval of
Subtenant and so long as the Subtenant Parking Area contains at least 53
designated spaces; provided, further, however, during any construction of
“Building 3” as that term is defined in the Lease, including without
limitation, any surface parking lot on the Building 3 pad at the commencement
of the Term, Subtenant acknowledges that Sublandlord and/or Landlord shall have
the right to park Playa Vista Visitor Center and visitors in the Subtenant
Parking Area. During the first year of this Sublease, commencing on the
Commencement Date, Subtenant shall pay, as consideration for the Subtenant
Parking Area, $2,805 per month (the “Parking Charge”) together with all
applicable parking taxes, which amounts shall be payable in advance with
Subtenant’s payment of monthly Basic Rent. The Parking Charge shall include
access to valet assist attendant services during Business Hours. Commencing on
the first (1st) anniversary of the Commencement Date and on each anniversary
thereafter, the Parking Charge shall increase by three percent (3%) from the
Parking Charge previously in effect. No deductions from the Parking Charge
shall be given for days on which Subtenant does not utilize any of its parking
spaces. Subtenant may, from time to time request additional space for parking,
and if Sublandlord shall provide the same, at Sublandlord’s sole discretion,
such parking spaces shall be provided and used on a month-to-month basis, and
otherwise on the foregoing terms and provisions, and at such prevailing monthly
parking charges as shall be established by Sublandlord from time to time.

          (2) Restriping and Neighborhood Electric Vehicles. Subtenant shall have
the right, at its sole cost and expense, to restripe and/or number spaces of
the Subtenant Parking Area to (a) assign specific spaces to its employees
and/or label spaces as visitor parking, (b) provide for additional or different
handicap parking within the Subtenant Parking Area, (c) designate parking
spaces for Subtenant’s fleet of neighborhood electric vehicles (the “GEM
Fleet”), and (d) otherwise maximize the utility of the Subtenant Parking Area;
provided, however, that any such restriping activities shall not interfere with
the balance of Sublandlord’s parking facility, including ingress thereto or
egress therefrom, or result in a net reduction of parking spaces for purposes
of complying with any laws, ordinances or regulations pertaining to the
Buildings or any net reduction in handicap parking spaces. Sublandlord shall
permit Subtenant to connect up to fifteen (15) GEM Fleet vehicles into Building
power supply outlets

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located in the Subtenant Parking Area for purposes of recharging those
vehicles, the power costs for which shall be deemed included in the Parking
Charge.

          (3) Parking Rules and Regulations. Subtenant shall at all times comply
with all applicable ordinances, rules, regulations, codes, laws, statutes and
requirements of all federal, state, county and municipal governmental bodies or
their subdivisions respecting the use of the Existing Parking Facilities.
Sublandlord (and Landlord, as the case may be) reserves the right to adopt,
modify and enforce reasonable rules (“Parking Rules”) governing the use of the
Existing Parking Facilities from time to time including any key-card, sticker
or other identification or entrance system and hours of operation. Sublandlord
(or Landlord, as the case may be) may refuse to permit any person who violates
such rules to park in the Existing Parking Facilities, and any violation of the
Parking Rules shall subject the car to removal from the Existing Parking
Facilities. Except with respect to the Subtenant Parking Area, any additional
parking spaces outside of the Subtenant Parking Area shall be provided on a
non-designated “first-come, first-served” basis. Subtenant acknowledges that
Sublandlord (and Landlord, as the case may be) has no liability for claims
arising through acts or omissions of any parking operator of the Existing
Parking Facilities, if any. Sublandlord (and Landlord, as the case may be)
shall have no liability whatsoever for any damage to items located in the
Existing Parking Facilities, nor for any personal injuries or death arising out
of any matter relating to the Existing Parking Facilities, and in all events,
Subtenant agrees to look first to its insurance carrier and to require that
Subtenant’s employees look first to their respective insurance carriers for
payment of any losses sustained in connection with any use of the Existing
Parking Facilities. For portions of the Existing Parking Facilities located
outside of the Subtenant Parking Area, Sublandlord reserves the right to assign
specific parking spaces, and to reserve parking spaces for visitors, small
cars, handicapped persons and for other subtenants, guests of subtenants or
other parties, which assignment and reservation or spaces may be relocated as
determined by Sublandlord from time to time, and Subtenant and persons
designated by Subtenant hereunder shall not park in any location designated for
such assigned or reserved parking spaces. Subtenant acknowledges that the
Existing Parking Facilities may be closed entirely or in part in order to make
repairs or perform maintenance services, or to alter, modify, re-stripe or
renovate the Existing Parking Facilities, or if required by casualty, strike,
condemnation, act of God, governmental law or requirement or other reason
beyond the reasonable control of Sublandlord (or Landlord, as the case may be)
or any parking operator.

          (4) Additional Remedies for Default. In addition to any rights and
remedies that Sublandlord may have for a default under this Sublease, if
Subtenant shall be in default under this Section, Sublandlord (or Landlord or
the parking operator, as the case may be) shall have the right to remove from
the Existing Parking Facilities any vehicles hereunder which shall have been
involved or shall have been owned or driven by parties involved in causing such
default, without liability therefor whatsoever.

     d.     Signage. Subtenant shall be permitted to have identity signage at each
entrance to the Sublease Premises and reasonable amounts of directional signage
as reasonably approved by Sublandlord; provided, however, Subtenant shall be
responsible for all costs and expenses incurred in having such signage
installed and/or changed. Subtenant’s identifying signage on such floor shall
be located at the exterior entrance to the Sublease Premises and the Sublease
Premises’ interior entry doors, at Subtenant’s sole cost and expense; such
signage shall comply with and shall be subject to Sublandlord’s prior approval.
Except as expressly provided in this Section 6(d), Subtenant may not install
any signs, notices, logos, pictures, names or advertisements on the exterior or
roof of the Building or the Common Areas of the Buildings or the real property
or anywhere which can be seen from outside the Sublease Premises. Any signs,
window coverings, or blinds (even if the same are located behind the
Sublandlord approved window coverings for the Building), or other items visible
from the exterior of the Sublease Premises or Buildings are subject to the
prior approval of Sublandlord, in its sole discretion. Any such signs,
notices,

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logos, pictures, names, advertisements, window coverings, blinds or other
items visible from the exterior of the Sublease Premises or Building which are
installed and that have not been individually approved by Sublandlord pursuant
to this Section 6(d) or otherwise may be removed without notice by Landlord at
the sole expense of Subtenant.

     e.     Rules and Regulations. In addition to the Rules and Regulations
attached to the Lease as Exhibit “B,” Subtenant shall comply with the rules and
regulations attached hereto as Exhibit “G” and such other reasonable rules and
regulations adopted by Sublandlord (or Landlord, as the case may be) from time
to time. Subtenant shall also cause its agents, contractors, subcontractors,
employees, customers and subtenants to comply with all rules and regulations.

     f.     Leasehold Improvements. With the exception of Subtenant’s trade
fixtures, which shall remain the property of Subtenant solely and exclusively,
all improvements affixed to the Sublease Premises (collectively, “Leasehold
Improvements”) shall be owned by Landlord and shall remain upon the Sublease
Premises without compensation to Subtenant. However, Landlord and/or
Sublandlord, by written notice to Subtenant within thirty (30) days prior to
the Expiration Date, may require Subtenant to remove, at Subtenant’s expense:
(1) Cable (defined in Section 6(g)(1)) installed by or for the exclusive
benefit of Subtenant and located in the Sublease Premises or other portions of
the Building; and (2) any Leasehold Improvements that are performed by or for
the benefit of Subtenant and, in Landlord’s and/or Sublandlord’s reasonable
judgment, are of a nature that would require removal and repair costs that are
materially in excess of the removal and repair costs associated with standard
office improvements (collectively referred to as “Required Removables”).
Without limitation, it is agreed that Required Removables include internal
stairways, raised floors, personal baths and showers, vaults, rolling file
systems and structural alterations and modifications of any type. The Required
Removables designated by Landlord and/or Sublandlord shall be removed by
Subtenant before the Expiration Date. Subtenant shall repair damage caused by
the installation or removal of Required Removables. If Subtenant fails to
remove any Required Removables or perform related repairs in a timely manner,
Sublandlord, at Subtenant’s expense, may remove and dispose of the Required
Removables and perform the required repairs. Subtenant, within thirty (30)
days after receipt of an invoice, shall reimburse Sublandlord for the
reasonable costs incurred by Sublandlord. Notwithstanding the foregoing,
Subtenant, at the time it requests approval for a proposed Alteration (defined
in Section 6(g)(2)), may request in writing that Sublandlord advise Subtenant
whether the Alteration or any portion of the Alteration will be designated as a
Required Removable. Within fifteen (15) days after receipt of Subtenant’s
request, Sublandlord shall advise Subtenant in writing as to which portions of
the Alteration, if any, will be considered to be Required Removables.

     g.     Repairs and Alterations.

          (1) Subtenant’s Repair Obligations. Subtenant shall, at its sole cost and
expense, promptly perform all maintenance and repairs to the Sublease Premises
that are not Sublandlord’s express responsibility under this Sublease, and
shall keep the Sublease Premises in good condition and repair, reasonable wear
and tear excepted. Subtenant’s repair obligations include, without limitation,
repairs to: (i) floor covering; (ii) interior partitions; (iii) interior doors
within, and entry doors to, the Sublease Premises; (iv) the interior side of
demising walls; (v) electronic, phone and data cabling and related equipment
(collectively, “Cable”) that is installed by or for the exclusive benefit of
Subtenant and located in the Sublease Premises or other portions of the
Building; (vi) supplemental air conditioning units, private showers and
kitchens, including hot water heaters, plumbing, and similar facilities serving
Subtenant exclusively; and (vii) Alterations performed by contractors retained
by Subtenant, including related HVAC balancing. All work shall be performed in
accordance with the rules and procedures described in Section 6(g)(2) below.
Because of the location of the Sublease Premises in the Building and the
importance to Sublandlord of maintaining the appearance of the Building in a
first class condition, in

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no event shall Subtenant permit personal property in the Sublease Premises
or any improvements, alterations, additions or changes to the Sublease Premises
which are visible from the exterior of the Sublease Premises to create a
condition or appearance which is inconsistent with the nature of the Building
as a first class office building. If Subtenant fails to make any repairs to or
to otherwise maintain the Sublease Premises for more than fifteen (15) days
after notice from Sublandlord or Landlord, as the case may be (although notice
shall not be required if there is an emergency), Sublandlord may make the
repairs, and Subtenant shall pay the reasonable cost of the repairs to
Sublandlord within thirty (30) days after receipt of an invoice, together with
an administrative charge in an amount equal to 10% of the cost of the repairs.

          (2) Alterations. Subtenant shall not make alterations, additions or
improvements to the Sublease Premises or install any Cable in the Sublease
Premises or other portions of the Building (collectively referred to as
“Alterations”) without first obtaining the written consent of Sublandlord in
each instance, which consent shall not be unreasonably withheld or delayed, and
Landlord’s consent when and as required under the Lease. However, Sublandlord’s
consent shall not be required for any Alteration that satisfies all of the
following criteria (a “Cosmetic Alteration”): (i) is of a cosmetic nature such
as painting, wallpapering, hanging pictures and installing carpeting; (ii) is
not visible from the exterior of the Sublease Premises or Building; (iii) will
not affect the systems or structure of the Building; and (iv) does not require
work to be performed inside the walls or above the ceiling of the Sublease
Premises. However, even though consent is not required, the performance of
Cosmetic Alterations shall be subject to all the other provisions of this
Section 6(g)(2). Prior to starting work, Subtenant shall furnish Sublandlord
and Landlord with plans and specifications reasonably acceptable to Landlord
and Sublandlord; names of contractors reasonably acceptable to Landlord and
Sublandlord (provided that Landlord or Sublandlord may designate specific
contractors with respect to Building systems); copies of contracts; necessary
permits and approvals; evidence of contractor’s and subcontractor’s insurance
in amounts reasonably required by Landlord and Sublandlord; and any security
for performance that is reasonably required by Landlord or Sublandlord.
Changes to the plans and specifications must also be submitted to Landlord and
Sublandlord for their approval. Alterations shall be constructed in a good and
workmanlike manner using materials of a quality that is at least equal to the
quality designated by Landlord or Sublandlord as the minimum standard for the
Building. Landlord and Sublandlord may designate reasonable rules, regulations
and procedures for the performance of work in the Building and, to the extent
reasonably necessary to avoid disruption to the occupants of the Building,
shall have the right to designate the time when Alterations may be performed.
Subtenant shall reimburse Sublandlord within thirty (30) days after receipt of
an invoice for sums paid by Sublandlord or Landlord for third party examination
of Subtenant’s plans for non-Cosmetic Alterations. In addition, within thirty
(30) days after receipt of an invoice from Sublandlord, Subtenant shall pay
Sublandlord a fee for Sublandlord’s and/or Landlord’s oversight and
coordination of any non-Cosmetic Alterations equal to 3% of the cost of the
non-Cosmetic Alterations. Upon completion, Subtenant shall furnish “as-built”
plans (except for Cosmetic Alterations), completion affidavits, full and final
waivers of lien in recordable form, and receipted bills covering all labor and
materials. Subtenant shall assure that the Alterations comply with all
insurance requirements and Laws. Landlord’s and Sublandlord’s approval of an
Alteration shall not be a representation by Landlord and/or Sublandlord that
the Alteration complies with applicable Laws or will be adequate for
Subtenant’s use. In connection with any Alterations, Subtenant shall
indemnify, protect, defend and hold harmless Sublandlord and Landlord (and
their respective directors, officers, agents, representatives, employees and
occupants) from and against all claims, including any action or proceedings
brought thereon, and all costs, losses, expenses and liabilities (including
reasonable attorneys’ fees and costs of suit) arising from or as a result of
the performance of such work on or about the Sublease Premises. As noted
above
, the Initial Improvements shall be completed in accordance with the terms
of the Work Letter attached hereto as Exhibit “B” rather than the terms of this
Section 6(g).

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     h.     Renovations. Subtenant hereby acknowledges that Sublandlord and/or
Landlord may during the Term substantially renovate, improve, alter, or modify
the real property underlying and adjacent to Building (“Property”), the Common
Areas and/or Buildings, and/or portions thereof, and/or that Landlord and/or
Sublandlord may construct a new building on portions of the Property adjacent
to the Buildings (in any such events, the “Renovations”), which Renovations may
include, without limitation, certain alterations, improvements, modifications
and/or renovations to the parking structure and Common Areas. In connection
with any Renovations, Landlord and/or Sublandlord may (or may permit), among
other things, scaffolding or other necessary structures to be erected on or
about the Property, or portions thereof, limit or eliminate access to portions
of the Property, including portions of the Common Areas (including, without
limitation, the “field”), and/or perform work on or about the Property, or any
portion thereof, which work may create noise, dust or leave debris in, on or
about the Property, or certain portions thereof. Subtenant hereby agrees that
such Renovations and Landlord’s and/or Sublandlord’s actions in connection with
such Renovations shall in no way constitute a constructive eviction of
Subtenant nor entitle Subtenant to any abatement of Rent. Landlord and
Sublandlord shall have no responsibility or for any reason be liable to
Subtenant for any direct or indirect injury to or interference with Subtenant’s
business arising from the Renovations, nor shall Subtenant be entitled to any
compensation or damages from Landlord or Sublandlord resulting from the
Renovations or Landlord’s and/or Sublandlord’s actions in connection with such
Renovations, or for any inconvenience or annoyance occasioned by such
Renovations.

     i.     Excepted
Rights. This Sublease does not grant any rights to light or
air over or about the Buildings. Sublandlord excepts and reserves exclusively
to itself the use of: (1) roofs, (2) telephone, electrical and janitorial
closets, (3) equipment rooms, Building risers or similar areas that are used by
Sublandlord for the provision of Building services, (4) rights to the land and
improvements below the floor of the Sublease Premises, (5) the improvements and
air rights above the Sublease Premises, (6) the improvements and air rights
outside the demising walls of the Sublease Premises, and (7) the areas within
the Sublease Premises used for the installation of utility lines and other
installations serving occupants of the Buildings. Sublandlord has the right to
change the Building’s or Property’s name or address. Landlord and/or
Sublandlord also has the right to make such other changes to the Property and
Buildings as Landlord and/or Sublandlord deems appropriate, provided the
changes do not materially affect Subtenant’s ability to use the Sublease
Premises for the Permitted Use. Landlord and/or Sublandlord shall also have
the right (but not the obligation) to temporarily close the Building if
Landlord and/or Sublandlord reasonably determine that there is an imminent
danger of significant damage to the Building or of personal injury to
Landlord’s and/or Sublandlord’s employees or the occupants of the Building.
The circumstances under which Landlord and/or Sublandlord may temporarily close
the Building shall include, without limitation, electrical interruptions,
hurricanes and civil disturbances. A closure of the Building under such
circumstances shall not constitute a constructive eviction nor entitle
Subtenant to an abatement or reduction of Rent. Any diminution or shutting off
of light, air or view by any structure which may be erected on lands adjacent
to the Building or any other portion of the Property shall in no manner affect
this Sublease or impose any liability whatsoever on Sublandlord. Subtenant
acknowledges that construction activities may continue to occur at or near the
Property and that occupants of the Building may encounter certain
inconveniences related to such activities, such as noise, vibration and dust.
Such activities shall in no manner affect this Sublease or impose any liability
whatsoever on Sublandlord.

     j.     Surrender
of Sublease Premises. At the expiration or earlier
termination of this Sublease or Subtenant’s right of possession, Subtenant
shall remove Subtenant’s Property (defined in Section 19(b)) from the Sublease
Premises, and quit and surrender the Sublease Premises to Sublandlord, broom
clean, and in good order, condition and repair, ordinary wear and tear
excepted. Subtenant shall also be required to remove the Required Removables
in accordance with Section 6(f) above. If Subtenant fails to remove any of
Subtenant’s Property on or before the termination of this Sublease or of
Subtenant’s right to

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possession, Sublandlord, at Subtenant’s sole cost and expense, shall be
entitled (but not obligated) to remove and store Subtenant’s Property.
Sublandlord shall not be responsible for the value, preservation or safekeeping
of Subtenant’s Property. Subtenant shall pay Sublandlord, upon demand, the
expenses and storage charges incurred for Subtenant’s Property. In addition,
if Subtenant fails to remove Subtenant’s Property from the Sublease Premises or
storage, as the case may be, within thirty (30) days after written notice,
Sublandlord may deem all or any part of Subtenant’s Property to be abandoned,
and title to Subtenant’s Property shall be deemed to be immediately vested in
Sublandlord.

     k.     Development of the Property.

          (1) Subdivision. Landlord and/or Sublandlord reserve the right to
subdivide all or a portion of the Buildings and Common Areas. Subtenant agrees
to execute and deliver, upon demand by Landlord and/or Sublandlord and in the
form requested by Landlord and/or Sublandlord, any additional documents needed
to conform this Sublease to the circumstances resulting from a subdivision and
any all maps in connection therewith.

          (2) The Other Improvements. If portions of the Property or property
adjacent to the Property (collectively, the “Other
Improvements”) are owned by
an entity other than Landlord and/or Sublandlord, Landlord and/or Sublandlord,
at its option, may enter into an agreement with the owner or owners of any of
the Other Improvements to provide (i) for reciprocal rights of access, use
and/or enjoyment of the Property and the Other Improvements, (ii) for the
common management, operation, maintenance, improvement and/or repair of all or
any portion of the Property and all or any portion of the Other Improvements,
(iii) for the use or improvement of the Other Improvements and/or the Property
in connection with the improvement, construction, and/or excavation of the
Other Improvements and/or the Property, and (iv) for any other matter which
Landlord and/or Sublandlord deems necessary. Nothing contained herein shall be
deemed or construed to limit or otherwise affect Landlord’s and/or
Sublandlord’s right to sell all or any portion of the Property or any other of
Landlord’s and/or Sublandlord’s rights described in this Sublease.

          (3) Construction of Property and Other Improvements. Subtenant
acknowledges that portions of the Property and/or the Other Improvements may be
under construction following Subtenant’s occupancy of the Sublease Premises,
and that such construction may result in levels of noise and dust which are in
excess of that present in a fully constructed project. Sublandlord agrees not
to interfere with Subtenant’s access to the Sublease Premises and to use
commercially reasonable efforts to minimize interference with Subtenant’s use
of the Sublease Premises in connection with Sublandlord’s build out of its
premises. Subtenant hereby waives any and all rent offsets or claims of
constructive eviction which may arise in connection with such construction,
except as provided in the Lease as incorporated herein.

7.     Services.

     a.     Services Furnished. Sublandlord agrees to furnish Subtenant with the
following services: (i) water service for use in the lavatories on the floor
on which the Sublease Premises are located and for use in a typical office
kitchen and/or typical office lounges within the Sublease Premises; (ii) heat
and air conditioning during Business Hours, at such temperatures and in such
amounts as are standard for comparable buildings or as required by governmental
authority. Subtenant, upon such advance notice as is reasonably required by
Sublandlord, shall have the right to receive HVAC service during non-Business
Hours; provided, however, Subtenant shall pay Sublandlord, within ten (10) days
after receipt of an invoice therefor, the standard charge for the additional
service as reasonably determined by Sublandlord from time to time; (iii)
maintenance and repair of the Sublease Premises as described in Section 7.1 of
the Lease; (iv) janitor service on non-Holidays; provided, however, if
Subtenant’s use, floor covering or other improvements require special services
in excess of the standard services provided in comparable

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buildings, Subtenant shall pay to Landlord, within ten (10) days after
receipt of an invoice therefor, the additional cost attributable to the special
services; (v) elevator service at all times (subject to temporary interruptions
in connection with repairs, maintenance and/or other improvements) and freight
elevator service during Business Hours; provided, however, Subtenant, upon such
advance notice as is reasonably required by Sublandlord, shall have the right
to receive freight elevator service during non-Business Hours and Subtenant
shall pay Landlord, within ten (10) days after receipt of an invoice therefor,
the standard charge for the additional service as reasonably determined by
Sublandlord from time to time; (vi) subject to the terms and conditions in
Section 6.1.2 of the Lease and the terms and limitations set forth in Section
7(b) below, electricity to the Sublease Premises for general office use; (vii)
access control services for the Building seven (7) days per week, twenty-four
(24) hours per day, in a manner consistent with comparable first-class low-rise
office buildings in Santa Monica; provided, however, notwithstanding the
foregoing, Sublandlord shall in no case be liable for personal injury or
property damage for any error with regard to the admission to or exclusion from
the Building of any person; provided, further, however, in no event shall
Sublandlord be liable to Subtenant for any loss or damage, including the theft
of Subtenant’s Property (as defined below), arising out of or in connection
with the failure of any security services, personnel or equipment; and (viii)
such other services as Sublandlord reasonably determines are necessary or
appropriate for the Building or Premises.

     b.     Electrical Usage.

          (1) Electrical service to the Sublease Premises may be furnished by one or
more companies providing electrical generation, transmission and distribution
services, and the cost of electricity may consist of several different
components or separate charges for such services, such as generation,
distribution and stranded cost charges. Sublandlord shall have the exclusive
right to select any company providing electrical service to the Sublease
Premises, to aggregate the electrical service for the Sublease Premises with
the Premises, to purchase electricity through a broker and/or buyers group and
to change the providers and manner of purchasing electricity.

          (2) Subtenant’s electrical usage shall comply with the following: the
connected electrical load of Subtenant’s lighting and incidental use equipment
shall not exceed an average of four (4) watts per rentable square foot of the
Sublease Premises during the Business Hours (“Base Line
Electrical”), calculated on a monthly basis, and the electricity so furnished will be at a
nominal one hundred twenty (120) volts and no electrical circuit for the supply
of such incidental use equipment will require a current capacity exceeding
twenty (20) amperes. Sublandlord shall furnish electrical service to the
Sublease Premises and Subtenant acknowledges that the capacity of the Building
electrical system is set forth in Section 6.1.2 of the Lease. The Base Line
Electrical being furnished to Subtenant shall be provided at Sublandlord’s sole
cost and expense. If Subtenant requires electrical service in excess of the
foregoing, Sublandlord may condition consent upon conditions that Sublandlord
reasonably elects (including, without limitation, the installation of utility
service upgrades, meters, submeters, air handlers or cooling units), and the
additional usage (to the extent permitted by Law), installation and maintenance
costs shall be paid by Subtenant. Sublandlord shall have the right to
separately meter electrical usage for the Sublease Premises and to measure
electrical usage by survey or other commonly accepted methods.

8.     Lease. As applied to this Sublease, the words “Landlord” and “Tenant” as
used in the Lease shall be deemed to refer to Sublandlord and Subtenant
hereunder, respectively. Subtenant and this Sublease shall be subject in all
respects to the terms of, and the rights of Landlord under the Lease. A copy
of the Lease is attached hereto as Exhibit “F”. Subtenant confirms that it has
read the Lease and is familiar with the terms and provisions thereof. Except
as otherwise expressly provided herein, the covenants, agreements, terms,
provisions and conditions of the Lease insofar as they relate to the Sublease
Premises and insofar

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as they are not inconsistent with the terms of this Sublease are made a part of
and incorporated into this Sublease as if recited herein in full, and the
rights and obligations of Landlord and the Tenant under the Lease shall be
deemed the rights and obligations of Sublandlord and Subtenant respectively
hereunder and shall be binding upon and inure to the benefit of Sublandlord and
Subtenant respectively except that the time limits contained in the Lease for
the giving of notices, making of demands, or performing of any act, condition
or covenant on the part of Subtenant as tenant under the Lease or for the
exercise by Sublandlord as landlord under the Lease of any right, remedy or
option, are changed for the purposes of incorporation herein by shortening the
same in each instance by two (2) business days so that in each instance
Subtenant shall have two (2) business days less time to observe or perform
under this Sublease than Sublandlord has as tenant under the Lease. As between
the parties hereto only, in the event of a conflict between the terms of the
Lease and the terms of this Sublease, the terms of this Sublease shall control
only to the extent they are inconsistent with the terms of the Lease and their
respective counterpart provisions in the Lease shall be excluded only to such
extent.

9.     Excluded Lease Provisions. Notwithstanding anything to the contrary herein,
the following provisions of the Lease shall not apply to this Sublease: (a)
Summary of Basic Lease Information, Sections 1, 2, 3, 4, 5, 6.3 and 7-12; (b)
Lease, Sections 1.1.1, 1.1.2 (first sentence and third sentence after the first
appearance of the words “Building 3” only) and 1.1.3, Articles 2 and 3,
Sections 4.1-4.4, 4.6-4.8, 6.1 (except for the definition of “Building Hours”
and “Holidays” and the first sentence of Section 6.1.2), 6.2, 6.5, 7.2, 8.1,
8.2 (only that portion of the first sentence beginning “provided, however”
through the end of the sentence), 8.6, 10.2.2 and 10.6, Articles 14, 16 and 18
(only the requirement to deliver a Non-Disturbance Agreement), Section 19.1.1,
Article 21 (but Subtenant acknowledges that Landlord may during the Term, at
its discretion, construct a building or buildings on property adjacent to the
Buildings), Sections 23.1, 23.2 and 23.5, Articles 25 (first sentence only), 27
and 28, and Sections 29.5, 29.11, 29.12, 29.14, 29.20, 29.25.2-29.25.6, 29.34,
29.35 and 29.36; and (c) Lease, Exhibits “A,” “C,” “D”, “F,” “G,” “H,” “I,”
“J,” “L,” “M” and “N”.

10.     Landlord’s Performance Under Lease. Subtenant recognizes that Sublandlord
is not in a position to render certain of the services or to perform certain of
the obligations required by Sublandlord by the terms of this Sublease.
Therefore, except as expressly set forth herein, Subtenant agrees that
performance by Sublandlord of its obligations with respect to those items are
subject to due performance by Landlord of its corresponding obligations under
the Lease and Sublandlord shall not be liable to Subtenant for any default of
Landlord under the Lease. Subtenant shall not have any claim against
Sublandlord by reason of Landlord’s failure or refusal to comply with any of
the provisions of the Lease, unless such failure or refusal is a result of
Sublandlord’s act or failure to act, and Subtenant shall pay Basic Rent,
Additional Rent and all other charges provided for herein without any
abatement, deduction or set-off whatsoever. Subtenant covenants and warrants
that it fully understands and agrees to be subject to and bound by all of the
covenants, agreements, terms, provisions and conditions of the Lease, except as
modified herein. Furthermore, Subtenant and Sublandlord further covenant not
to take any action or do or perform any act or fail to perform any act which
would result in the failure or breach of any of the covenants, agreements,
terms, provisions or conditions of the Lease on the part of the “Tenant”
thereunder. Whenever the consent of Landlord shall be required by, or Landlord
shall fail to perform its obligations under, the Lease, Sublandlord agrees to
use commercially reasonable efforts to obtain such consent (as more
specifically provided in Section 12, below) and/or performance on behalf of
Subtenant. So long as Subtenant is not in default under this Sublease,
Sublandlord covenants as follows: (i) not to voluntarily terminate the Lease
(except in the event of damage or destruction or condemnation and in accordance
with Sublandlord’s rights under the Lease or in any other manner in which
Subtenant’s rights hereunder are preserved); (ii) not to modify the Lease so as
to adversely affect Subtenant’s rights hereunder; and (iii) to take all
commercially reasonable actions necessary to preserve the Lease. Sublandlord
shall indemnify, defend and hold Subtenant harmless from all claims, costs and
liabilities, including reasonable attorneys’

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fees and costs, arising out of or in connection with the breach by Sublandlord
of any of the covenants set forth in the immediately preceding sentence. If
Sublandlord fails, after using reasonable efforts, to cause Landlord under the
Lease to observe and/or perform its obligations under the Lease, Subtenant
shall have the right, in Sublandlord’s name, to seek to enforce the Lease
against Landlord and Sublandlord, upon Subtenant’s reasonable request and at
Subtenant’s sole cost and expense, shall reasonably cooperate with Subtenant in
this regard. Subtenant shall defend, indemnify and hold Sublandlord harmless
from all claims, costs and liabilities, including reasonable attorneys’ fees
and costs, arising out of or in connection with any such action by Subtenant,
unless such actions are required as a result of Sublandlord’s breach of any of
its covenants set forth in items (i) - (iii) above. Subtenant agrees that
except as otherwise expressly provided herein, Sublandlord shall not be
required to dispute any determinations or other assertions or claims of
Landlord regarding the rights or obligations of Sublandlord under the Lease for
which Subtenant is or may be responsible under this Sublease or by which
Subtenant may be bound.

11.     Sublandlord’s
Liability. Sublandlord’s partners, officers, directors,
shareholders, employees and agents shall not be liable to Subtenant under any
circumstance. Subtenant waives all claims against Sublandlord for any injury
or damage to any person or property in or about the Sublease Premises to the
extent of insurance proceeds to which Subtenant is entitled to receive, except
injury or damage caused by the gross negligence or intentional misconduct of
Sublandlord or its agents or employees; provided, further, Subtenant shall be
deemed to be entitled to receive insurance proceeds for the policy amount of
insurance Subtenant is required to obtain pursuant to the terms of this
Sublease regardless of whether Subtenant actually obtains such insurance.

12.     Consents. All references in this Sublease to the consent or approval of
Landlord and/or Sublandlord shall be deemed to mean the written consent or
approval of Landlord and/or Sublandlord, as the case may be, and no consent or
approval of Landlord and/or Sublandlord, as the case may be, shall be effective
for any purpose unless such consent or approval is set forth in a written
instrument executed by Landlord and/or Sublandlord, as the case may be. In all
provisions requiring the approval or consent of Sublandlord (whether pursuant
to the express terms of this Sublease or the terms of the Lease incorporated
herein), Subtenant shall be required to obtain the approval or consent of
Landlord and then to obtain like approval or consent of Sublandlord; provided,
however, that: (a) application for Sublandlord’s approval or consent may be
submitted by Subtenant prior to receipt of Landlord’s approval or consent; (b)
Sublandlord shall respond to such application for approval or consent within a
reasonable time after receipt thereof, but need not respond prior to receipt
from Landlord of its consent; and (c) Sublandlord may condition its approval or
consent upon the subsequent receipt by Subtenant of Landlord’s unconditional
approval or consent to such application. If Sublandlord is required or has
determined to give its consent or approval, Sublandlord shall cooperate
reasonably with Subtenant in endeavoring to obtain Landlord’s consent or
approval upon and subject to the following terms and conditions: (i) Subtenant
shall reimburse Sublandlord for any out-of-pocket costs incurred by Sublandlord
in connection with seeking such consent or approval; (ii) Sublandlord shall not
be required to make any payments to Landlord or to enter into any agreements or
to modify the Lease or this Sublease in order to obtain any such consent or
approval; and (iii) if Subtenant agrees or is otherwise obligated to make any
payments to Sublandlord or Landlord in connection with such request for such
consent or approval, Subtenant shall have made arrangements for such payments
which are reasonably satisfactory to Sublandlord. If Subtenant asks
Sublandlord in writing to request Landlord to give Landlord’s consent or
approval in any situation where such consent or approval is required hereunder
or under the Lease, if such request contains the form and substance of the
request prepared for Sublandlord’s signature and is reasonably acceptable to
Sublandlord, Sublandlord shall promptly request such consent or approval from
Landlord. Nothing contained in this Section 12 shall be deemed to require
Sublandlord to give any consent or approval because Landlord has given such
consent or approval. Whenever either party to this

-15-

 

Sublease agrees not to unreasonably withhold its consent, such consent shall
also not be unreasonably delayed or conditioned.

13.     Consent
of Landlord. This Sublease shall not be effective until Landlord
has signed and delivered to Sublandlord and Subtenant a consent and recognition
to this Sublease (the “Consent”) on a form reasonably approved by Subtenant,
which Consent shall include a covenant of non-disturbance in the event of a
termination of the Lease as a result of default by Sublandlord. Promptly
following execution and delivery hereof, Sublandlord will submit this Sublease
to Landlord for such consent. Subtenant agrees that it shall cooperate in good
faith with Sublandlord and shall comply with any reasonable request made of
Subtenant by Sublandlord or Landlord in connection with the procurement of the
Consent. In the event, for any reason whatsoever, the Consent is not delivered
to Sublandlord within thirty (30) days after Sublandlord’s request therefor
from Landlord, Sublandlord may, in its sole discretion, cancel this Sublease by
giving written notice to Subtenant before the Consent is actually delivered to
Sublandlord.

14.     Effect of Sublease and Landlord’s Consent. Notwithstanding this Sublease
and any consent of Landlord to this Sublease:

     a.     Such consent to this Sublease will not release Sublandlord of its
obligations or alter the primary liability of Sublandlord to pay the rent and
perform and comply with all of the obligations of Sublandlord to be performed
under the Lease. By Landlord’s consent hereto, Landlord does not consent or
agree to any modifications of the Lease;

     b.     The acceptance of rent or any other sums by Landlord from Subtenant
and/or anyone else liable under the Lease shall not be deemed a waiver by
Landlord of any provisions of the Lease;

     c.     Landlord’s consent to this Sublease shall not constitute a consent to
any subsequent subletting or assignment;

     d.     In the event of any default of Sublandlord under the Lease, Landlord
may proceed directly against Sublandlord or anyone else liable under the Lease
without first exhausting Landlord’s remedies against any other person or entity
liable thereon to Landlord; and

     e.     Landlord does not agree to attorn to Subtenant upon a termination of
the Lease. In the event Landlord succeeds to Sublandlord’s interest under the
Lease, whether as a result of a default under the Lease and in termination
thereof or otherwise, then Landlord, at its option and without being obligated
to do so, may require Subtenant to attorn to Landlord. In such event (but not
otherwise), Landlord shall undertake the obligations of Sublandlord under this
Sublease from the time of the exercise of said option to terminate this
Sublease, but Landlord shall not be liable for any prepaid rents or any
security deposit paid by Subtenant, nor shall Landlord be liable for any other
defaults of Sublandlord under this Sublease. In the event the Lease is
terminated and if Landlord does not require Subtenant to attorn to Landlord,
Subtenant shall have no further right to possession of the Sublease Premises.

15.     Subtenant Default. Notwithstanding anything to the contrary in the Lease,
as used in this Sublease, the term “Monetary Default” shall mean Subtenant’s
failure to pay when due all or any portion of the Rent, if the failure
continues for three (3) days after written notice to Subtenant; provided,
however, that such notice shall be in lieu of and not in addition to any notice
required under California Code of Civil Procedure § 1161.

-16-

 

16.     Entry Into Sublease Premises. Notwithstanding anything to the contrary in
the Lease, Sublandlord (and Landlord) and their agents, contractors and
representatives may enter the Sublease Premises to inspect or show the Sublease
Premises, to clean and make repairs, alterations or additions to the Sublease
Premises, and to conduct or facilitate repairs, alterations or additions to any
portion of the Building, including other subtenants’ premises. Except in
emergencies or to provide janitorial and other services after Business Hours,
Sublandlord (and Landlord, as the case may be) shall provide Subtenant with
reasonable prior notice of entry into the Sublease Premises. If reasonably
necessary for the protection and safety of Subtenant and its employees,
Sublandlord (or Landlord, as the case may be) shall have the right to
temporarily close all or a portion of the Sublease Premises to perform repairs,
alterations and additions. However, except in emergencies, Sublandlord will
not close the Sublease Premises if the work can reasonably be completed on
weekends and after Business Hours. Entry by Sublandlord (or Landlord, as the
case may be) shall not constitute constructive eviction or entitle Subtenant to
an abatement or reduction of Rent.

17.     Notices. Any and all notices, approvals or demands required or permitted
under this Sublease shall be in writing, shall be served either personally, by
United States certified mail, postage prepaid, return receipt requested or by
reputable overnight carrier and, shall be deemed to have been given or made on
the day on which it was received and shall be addressed to the parties at the
addresses set forth below. Any party may, from time to time, by like notice,
give notice of any change of address, and in such event, the address of such
party shall be deemed to have been changed accordingly. The address for each
party is:

	 	 	 
	If to Sublandlord:	 	
Electronic Arts Inc.
	 	 	
5570 Lincoln Boulevard
	 	 	
Los Angeles, California 90066
	 	 	
Attention: Head of Facilities and COO EALA
	 	 	 
	and	 	
Electronic Arts Inc.
	 	 	
209 Redwood Shores Parkway
	 	 	
Redwood City, California 94065
	 	 	
Attention: General Counsel
	 	 	 
	and	 	
Electronic Arts Inc.
	 	 	
209 Redwood Shores Parkway
	 	 	
Redwood City, California 94065
	 	 	
Attention: Senior Director of Facilities and Corporate Services
	 	 	 
	If to Subtenant:	 	
Prior to the Commencement Date:
	 	 	 
	 	 	
Playa Capital Company, LLC
	 	 	
12555 West Jefferson Boulevard, Suite 300
	 	 	
Los Angeles, California 90066
	 	 	
Attention: Mr. Steve Soboroff, President
	 	 	 
	 	 	
On and after the Commencement Date:
	 	 	 
	 	 	
At the Premises.
	 	 	
Attn: Mr. Steve Soboroff, President

-17-

 

18.     Brokers. Sublandlord and Subtenant warrant to each other and to Landlord
that each has had no dealings with any real estate broker or agent in
connection with the negotiation of this Sublease, other than CRESA Partners (on
behalf of Sublandlord) and Cushman & Wakefield of California, Inc. (on behalf
of Subtenant) (collectively, the “Brokers”), and that neither Sublandlord nor
Subtenant knows of any real estate broker or agent (other than the Brokers) who
is or might be entitled to a commission in connection with this Sublease. In
connection with this Sublease, Cushman & Wakefield of California, Inc. shall be
paid a commission by Sublandlord (or Landlord, as the case may be) pursuant to
a separate written agreement. Sublandlord and Subtenant each hereby agree to
indemnify, defend and hold harmless the other from and against any losses,
causes of action, liabilities, damages, claims, demands, costs and expenses
(including reasonable attorneys’ fees and costs) incurred, or to be incurred,
by reason of any breach of the foregoing warranty by either party hereto with
respect to any such dealings with any and all real estate broker(s) or
agent(s), other than Brokers.

19.     Insurance.

     a.     Proceeds and Awards. Notwithstanding anything contained in the Lease
to the contrary, as between Sublandlord and Subtenant only, all insurance
proceeds (other than those proceeds paid out on insurance obtained by
Subtenant) or condemnation awards received by Sublandlord under the Lease shall
be deemed to be the property of Sublandlord.

     b.     Requirements. Subtenant shall comply with all of the insurance
requirements and obligations of Sublandlord (applicable to the Sublease
Premises), as tenant under the Lease, and shall, whether required by the Lease
or not, name Landlord and Sublandlord as additional insureds, as their
interests may appear, on all policies of insurance required to be carried by
Subtenant hereunder or thereunder. Notwithstanding the foregoing and anything
to the contrary in the Lease, the required coverages and limits of insurance
shall be as follows: (a) Commercial General Liability Insurance applicable to
the Sublease Premises and its appurtenances providing, on an occurrence basis,
a minimum combined single limit of $3,000,000.00; (b) All Risk Property
Insurance, with coverage for broad form water damage, including earthquake
sprinkler leakage, written at replacement cost value and with a replacement
cost endorsement covering all of Subtenant’s trade fixtures, equipment,
furniture and other personal property within the Sublease Premises
(“Subtenant’s Property”); (c) Workers’ Compensation Insurance as required by
the State of California and in amounts as may be required by applicable
statute; and (d) Employers Liability Coverage of at least $1,000,000.00 per
occurrence.

     c.     Waivers of Subrogation. Sublandlord and Subtenant agree to have their
respective insurance companies issuing property damage insurance waive any
rights of subrogation that such companies may have against Sublandlord or
Subtenant, as the case may be, so long as the insurance carried by Sublandlord
and Subtenant, respectively, is not invalidated thereby. As long as such
waivers of subrogation are contained in their respective insurance policies,
Sublandlord and Subtenant hereby waive any right that either may have against
the other on account of any loss or damage to their respective property to the
extent such loss or damage is insurable under policies of insurance for fire
and all risk coverage, theft, or other similar insurance. If either party
fails to carry the amounts and types of insurance required to be carried by it
pursuant to this Sublease, in addition to any remedies the other party may have
under this Sublease, such failure shall be deemed to be a covenant and
agreement by such party to self-insure with respect to the type and amount of
insurance which such party so failed to carry, with full waiver of subrogation
with respect thereto.

20.     Indemnity. Subtenant hereby agrees to indemnify, protect, defend and hold
Sublandlord harmless from and against any and all claims, losses and damages
including, without limitation, reasonable attorneys’ fees and disbursements,
(A) which may at any time be asserted against Sublandlord by (i) Landlord for
failure of Subtenant to perform any of the covenants, agreements, terms,
provisions or

-18-

 

conditions contained in the Lease which by reason of the provisions of this
Sublease Subtenant is obligated to perform, or (ii) any person or entity by
reason of Subtenant’s use and/or occupancy of the Sublease Premises, and (B)
resulting from any failure by Subtenant to comply with the terms of this
Sublease and the Lease, except to the extent any of the foregoing is caused by
the gross negligence or willful misconduct of Sublandlord. The provisions of
this Section 20 shall survive the expiration or earlier termination of the
Lease and/or this Sublease, or the failure of Sublandlord to perform its
obligations hereunder.

21.     Assignment
and Subletting.

     a.     Except
in connection with a Permitted Transfer (defined in Section
21(f) below), subject to Landlord’s rights under the Lease, Subtenant shall not
assign, sublease, transfer or encumber any interest in this Sublease or, except
on a temporary basis (not to exceed 90 days) to invitees of Subtenant without
payment to Subtenant, allow any third party to use any portion of the Sublease
Premises (collectively or individually, a “Transfer”) without the prior written
consent of Sublandlord and Landlord, which consent shall not be unreasonably
withheld by Sublandlord if Sublandlord does not elect to exercise its
termination rights under Section 21(b) below. Without limitation, it is agreed
that Sublandlord’s consent shall not be considered unreasonably withheld if:
(1) the proposed transferee is not a party of reasonable financial worth and/or
financial stability in light of the responsibilities to be undertaken in
connection with the Transfer on the date consent is requested; (2) the proposed
transferee’s business is not suitable for the Buildings considering the
business of Sublandlord and the Buildings’ prestige, or would result in a
violation of another tenant’s rights; (3) the proposed transferee is a
governmental agency or occupant of the Buildings; (4) Subtenant is in default
after the expiration of the notice and cure periods in this Sublease; (5) any
portion of the Buildings or Sublease Premises would likely become subject to
additional or different Laws as a consequence of the proposed Transfer; or (6)
Landlord does not consent to the Transfer. Subtenant shall not be entitled to
receive monetary damages based upon a claim that Sublandlord unreasonably
withheld its consent to a proposed Transfer and Subtenant’s sole remedy shall
be an action to enforce any such provision through specific performance or
declaratory judgment. Subtenant hereby waives the provisions of Section
1995.310 of the California Civil Code, or any similar or successor Laws, now or
hereinafter in effect, and all other remedies, including, without limitation,
any right at law or equity to terminate this Sublease, on its own behalf and,
to the extent permitted under all applicable Laws, on behalf of the proposed
transferee. Any attempted Transfer in violation of this Section shall, at
Sublandlord’s option, be void. Consent by Sublandlord to one or more
Transfer(s) shall not operate as a waiver of Sublandlord’s rights to approve
any subsequent Transfers. In no event shall any Transfer or Permitted Transfer
release or relieve Subtenant from any obligation under this Sublease.

     b.     As part of its request for Sublandlord’s consent to a Transfer, Subtenant shall provide Sublandlord with financial statements
for the proposed transferee, a complete copy of the proposed assignment, sublease and other contractual documents and such other
information as Sublandlord may reasonably request. Sublandlord shall, by written notice to Subtenant within 30 days of its receipt of the
required information and documentation, either: (1) consent to the Transfer by the execution of a consent agreement in a form reasonably
designated by Sublandlord or reasonably refuse to consent to the Transfer in writing; or (2) exercise its right to terminate this Sublease with
respect to the portion of the Sublease Premises that Subtenant is proposing to assign or sublet. Any such termination shall be effective on the
proposed effective date of the Transfer for which Subtenant requested consent. Subtenant shall pay Sublandlord a review fee of $1,250.00 for
Sublandlord’s and Landlord’s review of any Permitted Transfer or requested Transfer, provided if Sublandlord’s actual reasonable costs and
expenses (including reasonable attorney’s fees) exceed $1,250.00, Subtenant shall reimburse Sublandlord for its actual reasonable costs and
expenses in lieu of a fixed review fee.

-19-

 

     c.     Subtenant shall pay Sublandlord 50% of all rent and other consideration
which Subtenant receives as a result of a Transfer that is in excess of the
Rent payable to Sublandlord for the portion of the Sublease Premises and Term
covered by the Transfer. Subtenant shall pay Sublandlord for Sublandlord’s
share of any excess within thirty (30) days after Subtenant’s receipt of such
excess consideration. Subtenant may deduct from the excess all reasonable and
customary expenses directly incurred by Subtenant attributable to the Transfer
(other than Sublandlord’s review fee), including, without limitation, brokerage
fees, legal fees and construction costs. If Subtenant is in Monetary Default
(defined in Section 15, above), Sublandlord may require that all sublease
payments be made directly to Sublandlord, in which case Subtenant shall receive
a credit against Rent in the amount of any payments received (less
Sublandlord’s share of any excess).

     d.     Except as provided below with respect to a Permitted Transfer, if
Subtenant is a corporation, limited liability company, partnership, or similar
entity, and if the entity which owns or controls a majority of the voting
shares/rights at any time changes for any reason (including but not limited to
a merger, consolidation or reorganization), such change of ownership or control
shall constitute a Transfer. The foregoing shall not apply so long as
Subtenant is an entity whose outstanding stock is listed on a recognized
security exchange, or if at least 80% of its voting stock is owned by another
entity, the voting stock of which is so listed.

     e.     Notwithstanding the foregoing or anything to the contrary herein or in
the Lease, Subtenant shall not be permitted to sublease the Sublease Premises
or assign this Sublease to a “Competitor” as that term is defined, below, nor
shall any Transferee be permitted to use any portion of the Sublease Premises
for any “Excluded Use” as that term is defined, below. For purposes of this
Sublease, a “Competitor” shall mean (i) any entity which has a primary business
of video game development; visual effects for video games, motion pictures or
television; or computer software development (collectively, “Competitive
Businesses”), or (ii) the division or subdivision of any entity whose primary
business at the Sublease Premises shall be a Competitive Business. For
purposes of this Lease, “Excluded Use” shall mean retail businesses offering
goods and services pursuant to which customers are solicited to come or
otherwise are anticipated to come to the Sublease Premises primarily without
appointments.

     f.     Subject to the terms of the Lease, Subtenant may assign its entire
interest under this Sublease to a successor to Subtenant by purchase, merger,
consolidation or reorganization without the consent of Sublandlord, provided
that all of the following conditions are satisfied (a “Permitted Transfer”):
(1) Subtenant is not in default under this Sublease; (2) Subtenant’s successor
shall own all or substantially all of the assets of Subtenant; (3) Subtenant’s
successor shall have a tangible net worth which is at least equal to
$10,000,000.00; (4) Subtenant’s successor shall have unrestricted available
cash or cash equivalents at least equal to $5,000,000.00; (5) the Permitted Use
does not allow the Sublease Premises to be used for an Excluded Use; (6) the
Transfer and the Transferee will not violate Section 21(b), above; and (7)
Subtenant shall give Sublandlord written notice at least thirty (30) days prior
to the effective date of the proposed purchase, merger, consolidation or
reorganization. Subtenant’s notice to Sublandlord shall include information
and documentation showing that each of the above conditions has been satisfied.
If requested by Sublandlord, Subtenant’s successor shall sign a commercially
reasonable form of assumption agreement.

22. Miscellaneous.

     a.     Severability. If any term or provision of this Sublease or the
application thereof to any person or circumstances shall, to any extent, be
invalid and unenforceable, the remainder of this Sublease or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each
term or provision of this Sublease shall be valid and be enforced to the
fullest extent permitted by law.

-20-

 

     b.     Entire Agreement; Waiver. This Sublease contains the entire agreement
between the parties hereto and shall be binding upon and inure to the benefit
of their respective heirs, representatives, successors and permitted assigns.
Any agreement hereinafter made shall be ineffective to change, modify, waive,
release, discharge, terminate or effect an abandonment hereof, in whole or in
part, unless such agreement is in writing and signed by the parties hereto.

     c.     Further Assurances. The parties hereto agree that each of them, upon
the request of the other party, shall execute and deliver, in recordable form
if necessary, such further documents, instruments or agreements and shall take
such further action that may be necessary or appropriate to effectuate the
purposes of this Sublease.

     d.     Attorneys’ Fees. In the event of the bringing of any action or suit by
any part or parties hereto against another party or parties hereunder alleging
a breach of any of the covenants, conditions, agreements or provisions of this
Sublease, the prevailing party or parties shall recover all reasonable costs
and expenses of suit including, without limitation, reasonable attorneys’ fees,
consultants fees and fees of expert witnesses.

     e.     Defined Terms. All capitalized, defined terms used in this Sublease
shall have the same meanings and effect given to them in the Lease unless
otherwise defined herein.

     f.     Choice of Law. This Sublease shall be governed by and construed in
accordance with the laws of the State of California without regard to choice of
law principles.

     g.     Power and Authority. Each of the persons executing this Sublease on
behalf of Subtenant and Sublandlord respectively warrant and represent to the
other that they have full power and authority to execute this Sublease and bind
their respective parties hereto.

     h.     Counterparts. This Sublease may be executed in one or more
counterparts, each of which shall be deemed original, and all of which together
shall constitute one and the same instrument.

     i.     Relocation. Sublandlord, at its expense, at any time before or during
the Term, may relocate Subtenant from the Sublease Premises to reasonably
comparable space (“Relocation Space”) within the Building or Buildings within
the same project upon 60 days’ prior written notice to Subtenant. From and
after the date of the relocation, “Sublease Premises” shall refer to the
Relocation Space into which Subtenant has been moved and the Basic Rent and
Additional Rent shall be adjusted based on the rentable square footage of the
Relocation Space. Sublandlord shall pay Subtenant’s reasonable costs for
moving Subtenant’s furniture and equipment and printing and distributing
notices to Subtenant’s customers of Subtenant’s change of address and one
month’s supply of stationery showing the new address.

[balance of page intentionally left blank – signatures on next page]

-21-

 

     IN WITNESS WHEREOF, the parties hereto have executed this Sublease to be
effective as of the day and year first above written.

	 	 	 
	 	
“SUBTENANT”:
	 	 	
 
	 	
PLAYA CAPITAL COMPANY, LLC,
	 	
a Delaware limited liability company
	 	 	
 
	 	By:	
/s/ Steve Soboroff
	 	 	

	 	 	
Name: Steve Soboroff
	 	 	
Its: President
	 	 	
 
	 	By:	
/s/ Patricia T. Sinclair
	 	 	

	 	 	
Name: Patricia T. Sinclair
	 	 	
Its: Senior Vice President
	 	 	
 
	 	
“SUBLANDLORD”:
	 	 	
 
	 	
ELECTRONIC ARTS INC.,
	 	
a Delaware corporation
	 	 	
 
	 	By:	
/s/ John Batter
	 	 	

	 	 	
Name: John Batter
	 	 	
Its: VP and Group General Manager

-22-

 

EXHIBIT “A”

Sublease Premises

-1-

 

EXHIBIT “B”

Subtenant Work Letter

     This Work Letter shall set forth the terms and conditions relating to the
construction of certain initial improvements in the Sublease Premises. This
Work Letter is essentially organized chronologically and addresses the issues
of the construction of the Sublease Premises, in sequence, as such issues will
arise during the actual construction of the Sublease Premises. All references
in this Work Letter to Sections of the “Sublease” shall mean the relevant
portions of Sections 1 through 22 of that certain Sublease dated as of July 31,
2003 (the “Sublease”), by and between Sublandlord and Subtenant, to which this
Work Letter is attached as Exhibit B and of which this Work Letter forms a
part, and all references in this Work Letter to Sections of “this Work Letter”
shall mean the relevant portions of Sections 1 through 5 of this Work Letter.
Terms used in this Work Letter and not defined herein shall have the same
meaning given to such terms in the Sublease.

SECTION 1

DELIVERY OF THE SUBLEASE PREMISES

     Subject to the terms of this Section 1, as set forth in Section 2(b) of
the Sublease, the Sublease Premises shall be delivered to Subtenant in its
current “as-is, where-is” condition and Sublandlord shall have no obligation to
make any alterations, modifications or additions to the Sublease Premises prior
to or after delivering the same to Subtenant. Sublandlord, at its sole cost
and expense, shall construct the entry stairway, entry doors and signage
depicted on Exhibit “D” on or prior to February 1, 2004. Sublandlord, at it
sole cost and expense, shall also cause a shower to be installed in the
bathrooms located on the first (1st) floor of the Building or such other
location as is mutually approved by Sublandlord and Subtenant. Subtenant shall
construct the common hallway as shown on Exhibit “A” pursuant to plans and
specifications, including finishes, as reasonably approved by Sublandlord and
Sublandlord agrees to reimburse Subtenant, in addition to the Improvement
Allowance, one-half of the cost thereof subject to a reasonably approved
construction budget. Notwithstanding anything to the contrary contained
herein, in the event that Sublandlord’s performance of the entry stairway and
entry doors is not completed by the later of (i) February 1, 2004, subject to a
one day delay for each day of delay resulting from “Force Majeure,” as that
term is defined in Section 29.13 of the Lease, and/or Subtenant delays and (ii)
the date Subtenant otherwise would have received a certificate of occupancy, or
its legal equivalent, for the Sublease Premises, Subtenant shall receive
one-half day of free Basic Rent for each day until the date Sublandlord
completes the entry stairway and entry doors. In addition, Sublandlord agrees
to improve the freight elevator lobby with painted drywall and VCT flooring or
as otherwise mutually agreed to by Sublandlord and Subtenant.

SECTION 2

INITIAL IMPROVEMENTS

     2.1 Improvement Allowances.

          2.1.1 Subtenant shall be entitled to a one-time base improvement allowance
(the “Base Improvement Allowance”) in an amount up to Forty-Five and No/100
Dollars ($45.00) per rentable square foot of the Sublease Premises (based on a
14% load factor rather than a 5% load factor) (to wit, $865,020.60) for the
costs relating to the initial design and construction of Subtenant’s
improvements which are permanently affixed to the Sublease Premises (the
“Initial Improvements”). Subject to the provisions of Section 2.1.2, below,
Subtenant has elected to receive $250,000.00 in additional funds (the “Excess
Improvement Allowance”; and collectively, with the Base Improvement Allowance,
the “Improvement Allowance”) from Sublandlord for costs of the Initial
Improvements. All Initial

-1-

 

Improvements for which the Improvement Allowance has been made available
shall be deemed Sublandlord’s property under the terms of the Sublease. In no
event shall Sublandlord be obligated to make disbursements pursuant to this
Work Letter (A) in a total amount which exceeds the Improvement Allowance, or
(B) for any costs incurred later than December 31, 2004 (the “Outside
Improvement Date”). After the Outside Improvement Date, any unused amount of
the Base Improvement Allowance shall accrue to the sole benefit of Sublandlord,
it being understood that Subtenant shall not be entitled to any credit,
abatement or other concession in connection therewith; provided, however, upon
completion of the Initial Improvements, Subtenant shall have the right,
exercisable by written notice to Sublandlord within six (6) months following
the Commencement Date to apply any unused amount of the Base Improvement
Allowance that does not to exceed one-third of the total Base Improvement
Allowance (the “Allowance Excess”) as reimbursement from Sublandlord for
out-of-pocket costs and expenses actually incurred by Subtenant in connection
with Subtenant’s relocation of its business from its prior space to the
Sublease Premises and/or Subtenant’s acquisition and installation of furniture,
partition systems, furnishings and computer or communications equipment cabling
for the Sublease Premises; provided, further, notwithstanding anything in this
subsection the contrary, in no event shall the aggregate of any reimbursement
received by Subtenant pursuant hereto exceed the Allowance Excess. Any
reimbursement from the Allowance Excess shall be paid to Subtenant within
thirty-five (35) days after delivery by Subtenant to Sublandlord of the
following: (1) written notice describing the nature and amount of Subtenant’s
cost or expense; and (2) invoices marked as having been paid or other
reasonable evidence in support of such costs and expenses and Subtenant’s
payment thereof.

          2.1.2
Additional Allowance. Subtenant has elected to have Sublandlord pay
an additional allowance in the amount of Two Hundred Fifty Thousand Dollars
($250,000.00) (the “Excess Improvement Allowance”) to be utilized for the
design and construction of the Initial Improvements plus, notwithstanding
anything to the contrary contained herein, for any other purpose related to
Subtenant’s move to and occupancy of the Premises. Subtenant shall repay the
Excess Improvement Allowance to Sublandlord as follows: concurrently with its
payments to Sublandlord of monthly Basic Rent during the Term, Subtenant shall
pay to Sublandlord as Additional Rent the amount necessary to repay the Excess
Improvement Allowance in equal monthly payments over the Term, together with
interest thereon at the rate of nine percent (9%) per annum. Such monthly
payments shall be deemed Additional Rent due under this Sublease, and shall be
paid in the time and manner as Basic Rent is required to be paid (disregarding
any abatement of Basic Rent). If the Sublease is canceled or terminated for
any reason prior to the expiration of the full initial Term of the Sublease,
then the present value of the unpaid installments of the Excess Improvement
Allowance shall become immediately due and payable to Sublandlord. The Excess
Improvement Allowance shall be deemed part of the Base Improvement Allowance
for purposes of this Subtenant Work Letter, except for Subtenant’s re-payment
obligations set forth herein. Upon Sublandlord’s demand, Subtenant shall
execute an amendment to the Sublease, on Sublandlord’s commercially reasonable
form, to reflect the additional rent described herein.

     2.2
Disbursement of the Improvement Allowance.

          2.2.1
Improvement Allowance Items. Except as otherwise set forth in this
Work Letter, the Improvement Allowance shall be disbursed by Sublandlord only
for the following items and costs (collectively the “Improvement Allowance
Items”):

               2.2.1.1 Payment of the fees of the “Architect” and the “Engineers,” as
those terms are defined in Section 3.1 of this Work Letter (collectively, the
“Design Costs”), and payment of the fees incurred by, and the cost of documents
and materials supplied by, Sublandlord and Sublandlord’s consultants and/or
Landlord and Landlord’s consultants in connection with the preparation and
review of the “Construction Drawings,” as that term is defined in Section 3.1
of this Subtenant Work Letter; provided, however, Subtenant shall not be
entitled to receive reimbursement from the Improvement

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Allowance for Design Costs in excess of $5.00 per rentable square foot of
the Sublease Premises (to wit, $96,113.40);

               2.2.1.2 Payment of plan check, permit and license fees relating to
construction of the Initial Improvements;

               2.2.1.3 The cost of construction of the Initial Improvements, including,
without limitation, testing and inspection costs, freight elevator usage,
hoisting and trash removal costs, and contractors’ fees and general conditions;

               2.2.1.4 The cost of any changes in the Building when such changes are
required by the Construction Drawings (as defined below), such cost to include
all direct architectural and/or engineering fees and expenses incurred in
connection therewith;

               2.2.1.5 The cost of any changes to the Construction Drawings or Initial
Improvements required by Code (as defined herein);

               2.2.1.6 Sales and use taxes and Title 24 fees; and

               2.2.1.7 All other costs to be expended by Sublandlord in connection with
the construction of the Initial Improvements.

          2.2.2 Disbursement of Improvement Allowances. During the construction of
the Initial Improvements, Sublandlord shall make monthly disbursements of the
Improvement Allowance for Improvement Allowance Items for Design Costs for the
benefit of Subtenant and shall authorize the release of monies for the benefit
of Subtenant as follows:

               2.2.2.1 Monthly Disbursements. On or before the twenty-five (25th) day of
each calendar month during the construction of the Initial Improvements,
Subtenant may deliver to Sublandlord: (i) a request for payment of the
“Contractor” and/or “Subtenant’s Agents” as those terms are defined in Section
4 of this Work Letter, approved by Subtenant, in a form to be provided by
Sublandlord, showing the schedule, by trade, of percentage of completion of the
Initial Improvements in the Sublease Premises, detailing the portion of the
work completed and the portion not completed; (ii) invoices from all of
“Subtenant’s Agents” as that term is defined in Section 4.1.2 of this Work
Letter, for labor rendered and materials delivered to the Sublease Premises;
(iii) executed mechanic’s lien releases from all of Subtenant’s Agents which
shall comply with the appropriate provisions, as reasonably determined by
Sublandlord, of California Civil Code Section 3262(d); and (iv) all other
information reasonably requested by Sublandlord. Subtenant’s request for
payment shall be deemed Subtenant’s acceptance and approval of the work
furnished and/or the materials supplied as set forth in Subtenant’s payment
request. Within thirty-five (35) days thereafter, Sublandlord shall deliver a
check to Subtenant in payment of the lesser of: (A) the amounts so requested
by Subtenant, as set forth in this Section 2.2.2.1, above, less a ten percent
(10%) retention (the aggregate amount of such retentions to be known as the
“Final Retention”); and (B) the balance of any remaining available portion of
the Improvement Allowance (not including the Final Retention), provided that
Sublandlord does not dispute any request for payment based on non-compliance of
any work with the “Approved Working Drawings,” as that term is defined in
Section 3.4, below, or due to any substandard work, or for any other reason.
Sublandlord’s payment of such amounts shall not be deemed Sublandlord’s
approval or acceptance of the work furnished or materials supplied as set forth
in Subtenant’s payment request.

               2.2.2.2 Final Retention. Subject to the provisions of this Work Letter, a
check for the Final Retention payable to Subtenant shall be delivered by
Sublandlord to Subtenant following the completion of construction of the
Sublease Premises, and provided that: (i) Subtenant delivers to

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Sublandlord properly executed mechanics lien releases in compliance with
both California Civil Code Section 3262(d)(2) and either Section 3262(d)(3) or
Section 3262(d)(4); (ii) Sublandlord has determined that no substandard work
exists which adversely affects the mechanical, electrical, plumbing, heating,
ventilating and air conditioning, life-safety or other systems of the Building,
the curtain wall of the Building, the structure or exterior appearance of the
Building, or any other tenant’s use of such other tenant’s leased premises in
the Building; (iii) Architect (as defined below) delivers to Sublandlord a
certificate, in a form reasonably acceptable to Sublandlord, certifying that
the construction of the Initial Improvements in the Sublease Premises has been
substantially completed; and (iv) Tenant delivers to Landlord a commercially
reasonable “Closing Package,” as that term is defined below. The “Closing
Package” shall consist of (a) an application and certificate for payment (AIA
from G702-1992 or equivalent) signed by the Architect, (b) a breakdown sheet
(AIA from 3703-1992 or equivalent), (c) original stamped building permit plans,
(d) copy of the building permit, (e) original stamped building permit
inspection card with all final sign-offs, (f) a reproducible copy (in a form as
reasonably approved by Landlord) of the “as built” drawings of the Tenant
Improvements, (g) air balance reports, (h) a one (1) year warranty letter from
the Contractor, from the date of Substantial Completion and (i) a copy of any
manufacturers’ warranties and operating instructions.

               2.2.2.3 Other Terms. Except as otherwise expressly set forth in Section
2.1.1, Sublandlord shall only be obligated to make disbursements from the
Improvement Allowance to the extent costs are incurred by Subtenant for
Improvement Allowance Items. All Improvement Allowance Items for which the
Improvement Allowance has been made available shall be deemed Sublandlord’s
property under the terms of Section 6(c) of the Sublease.

          2.2.3 Standard Subtenant Improvement Package. Landlord has established
specifications (the “Specifications”) for the Building standard components to
be used in the construction of the improvements in the Premises, which are set
forth on Schedule 4 to Exhibit “D” to the Lease. The quality of the Initial
Improvements shall be equal to or of greater quality than the quality of the
Specifications, provided that Landlord may, at Landlord’s option, require the
Initial Improvements to comply with certain Specifications. Landlord may make
changes to the Specifications from time to time.

SECTION 3

CONSTRUCTION DRAWINGS

     3.1 Selection of Architect/Construction Drawings. Subtenant has retained
Studio V (the “Architect”) to prepare the “Construction Drawings,” as that term
is defined in this Section 3.1, and Syska & Hennessey (the “Engineers”) to
prepare all plans and engineering working drawings relating to the structural,
mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work in the
Sublease Premises, which Architect and Engineers have been approved by
Sublandlord and Landlord. The plans and drawings to be prepared by Architect
and the Engineers hereunder shall be known collectively as the “Construction
Drawings.” All Construction Drawings shall comply with the drawing format and
specifications determined by Landlord and Sublandlord, and shall be subject to
Landlord’s and Sublandlord’s approval. Subtenant and Architect shall verify,
in the field, the dimensions and conditions as shown on the relevant portions
of the base building plans, and Subtenant and Architect shall be solely
responsible for the same, and neither Landlord nor Sublandlord shall have any
responsibility in connection therewith. Landlord’s and Sublandlord’s review of
the Construction Drawings as set forth in this Section 3, shall be for their
sole purpose and shall not imply Landlord’s or Sublandlord’s review of the
same, or obligate Landlord or Sublandlord to review the same, for quality,
design, Code compliance or other like matters. Accordingly, notwithstanding
that any Construction Drawings are reviewed by Landlord or Sublandlord or their
respective space planner, architect, engineers and consultants, and
notwithstanding any advice or assistance which may be rendered to Subtenant by
Landlord, Sublandlord or Landlord’s or Sublandlord’s space planner, architect,
engineers, and consultants, neither Landlord nor

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Sublandlord shall have any liability whatsoever in connection therewith
and shall not be responsible for any omissions or errors contained in the
Construction Drawings, and Subtenant’s waiver and indemnity set forth in
Section 20 of the Sublease (and in Section 10.1 of the Lease, as incorporated
herein) shall specifically apply to the Construction Drawings.

     3.2
Final Space Plan. Subtenant has submitted to Landlord and Sublandlord
the final space plan for the Sublease Premises prepared by Architect by e-mail
dated July 22, 2003 from Sandra Call (the “Final Space Plan”), which has
heretofore been approved by Landlord and Sublandlord.

     3.3
Final Working Drawings. Subtenant shall cause the Architect and the
Engineers to complete the architectural and engineering drawings for the
Sublease Premises, and Architect shall compile a fully coordinated set of
architectural, structural, mechanical, electrical and plumbing working drawings
in a form which is complete to allow subcontractors to bid on the work and to
obtain all applicable permits (collectively, the “Final Working Drawings”) and
shall submit the same to Landlord and Sublandlord for their respective
approval. Subtenant shall supply Landlord and Sublandlord with four (4) copies
signed by Subtenant of such Final Working Drawings. Sublandlord shall advise
Subtenant within ten (10) business days after its receipt of the Final Working
Drawings for the Sublease Premises if the same is unsatisfactory or incomplete
in any respect. If Subtenant is so advised, Subtenant shall immediately revise
the Final Working Drawings in accordance with such review and any disapproval
of Landlord or Sublandlord in connection therewith.

     3.4
Approved Working Drawings. The Final Working Drawings shall be
approved by Landlord and Sublandlord (the “Approved Working Drawings”) prior to
the commencement of construction of the Initial Improvements by Subtenant.
After approval by Landlord and Sublandlord of the Final Working Drawings,
Subtenant may submit the same to the City of Los Angeles for all applicable
building permits. Subtenant hereby agrees that neither Landlord, Sublandlord
nor Landlord’s and/or Sublandlord’s consultants shall be responsible for
obtaining any building permit or certificate of occupancy for the Sublease
Premises and that obtaining the same shall be Subtenant’s responsibility,
provided, however, that Sublandlord shall cooperate with Subtenant in executing
permit applications and performing other ministerial acts reasonably necessary
to enable Subtenant to obtain any such permit or certificate of occupancy. No
changes, modifications or alterations in the Approved Working Drawings may be
made without the prior written consent of Landlord and Sublandlord, which
consent may not be unreasonably withheld, conditioned or delayed.

SECTION 4

CONSTRUCTION OF THE INITIAL IMPROVEMENTS

     4.1
Subtenant’s Selection of Contractors. Subtenant has retained
Environmental Construction (“Contractor”) to complete the Initial
Improvements, which Contractor has been approved by Sublandlord and Subtenant.

     4.2
Subtenant’s Agents. All subcontractors, laborers, materialmen, and
suppliers used by Subtenant (such subcontractors, laborers, materialmen, and
suppliers, and the Contractor to be known collectively as “Subtenant’s Agents”)
must be approved in writing by Landlord and Sublandlord, which approval shall
not be unreasonably withheld or delayed. If Landlord and Sublandlord do not
approve any of Subtenant’s proposed subcontractors, laborers, materialmen or
suppliers, Subtenant shall submit other proposed subcontractors, laborers,
materialmen or suppliers for Landlord and Sublandlord’s written approval.
Subtenant’s Agents shall comply with the terms of Section 4.1.2 of Exhibit D
attached to the Lease, which provision is hereby incorporated herein.

     4.3
Construction of Initial Improvements by Subtenant’s
Agents.

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          4.3.1
Construction Contract; Cost Budget. Prior to Subtenant’s execution
of the construction contract and general conditions with Contractor (if such
party is required pursuant to the terms hereof) (the “Contract”), Subtenant
shall submit the Contract to Sublandlord for its approval, which approval shall
not be unreasonably withheld or delayed. Prior to the commencement of the
construction of the Initial Improvements, and after Subtenant has accepted all
bids for the Initial Improvements, Subtenant shall provide Sublandlord with a
detailed breakdown, by trade, of the final costs to be incurred or which have
been incurred in connection with the design and construction of the Initial
Improvements to be performed by or at the direction of Subtenant or the
Contractor, which costs form a basis for the amount of the Contract (the “Final
Costs”). Any costs necessary to complete such design and construction in
excess of the Improvement Allowance shall be paid by Subtenant out of its own
funds, but Subtenant shall continue to provide Sublandlord with the documents
described in items (i) through (iv) of
Section 2.2.2.1 of this Work Letter for
Sublandlord’s approval, prior to Subtenant paying such costs.

          4.3.2
Subtenant’s Agents.

               4.3.2.1
Sublandlord’s General Conditions. Construction of the Initial
Improvements by Subtenant and Subtenant’s Agents shall comply with the
following: (i) the Initial Improvements shall be constructed in accordance with
the Approved Working Drawings; (ii) Subtenant and Contractor shall submit
schedules of all work relating to the Initial Improvements, and Sublandlord
shall, within five (5) business days of receipt thereof, inform Subtenant of
any changes which are necessary thereto, whereupon Subtenant shall use
commercially reasonable efforts to adhere, and cause the Subtenant Agents to
adhere, thereto, and (iii) Subtenant shall abide by all rules made by Landlord
and Sublandlord with respect to the use of freight, loading dock and service
elevators, storage of materials, coordination of work with the contractors of
other tenants, and any other matter in connection with this Work Letter,
including, without limitation, the construction of the Initial Improvements.

               4.3.2.2
Indemnity. Subtenant’s indemnity of Sublandlord as set forth in
Section 20 of the Sublease (and Section 10.1 of the Lease, as incorporated
herein) shall also apply with respect to any and all costs, losses, damages,
injuries and liabilities related in any way to any act or omission of Subtenant
or Subtenant’s Agents, or anyone directly or indirectly employed by any of
them, or in connection with Subtenant’s non-payment of any amount arising out
of the Initial Improvements and/or Subtenant’s disapproval of all or any
portion of any request for payment. Such indemnity by Subtenant, as set forth
in Section 20 of the Sublease (and Section 10.1 of the Lease, as incorporated
herein), shall also apply with respect to any and all costs, losses, damages,
injuries and liabilities related in any way to Sublandlord’s or Landlord’s
performance of any purely ministerial acts requested by Subtenant (i) to permit
Subtenant to complete the Initial Improvements, and (ii) to enable Subtenant to
obtain any building permit or certificate of occupancy for the Sublease
Premises.

               4.3.2.3
Requirements of Subtenant’s Agents. Each of Subtenant’s Agents
shall guarantee to Subtenant and for the benefit of Sublandlord and Landlord
that the portion of the Initial Improvements for which it is responsible shall
be free from any defects in workmanship and materials for a period of not less
than one (1) year from the date of completion thereof. Each of Subtenant’s
Agents shall be responsible for the replacement or repair, without additional
charge, of all work done or furnished in accordance with its contract that
shall become defective within one (1) year after the later to occur of (i)
completion of the work performed by such contractor or subcontractors and (ii)
the Commencement Date. The correction of such work shall include, without
additional charge, all additional expenses and damages incurred in connection
with such removal or replacement of all or any part of the Initial
Improvements, and/or the Premises, Building and/or common areas that may be
damaged or disturbed thereby. All such warranties or guarantees as to
materials or workmanship of or with respect to the Initial Improvements shall
be contained in the Contract or subcontract and shall be written such that such

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guarantees or warranties shall inure to the benefit of Landlord,
Sublandlord and Subtenant, as their respective interests may appear, and can be
directly enforced by either. Subtenant covenants to give to Landlord and
Sublandlord any assignment or other assurances which may be necessary to effect
such right of direct enforcement.

          4.3.2.4
Insurance Requirements.

               4.2.2.4.1 General Coverages. All of Subtenant’s Agents shall carry
worker’s compensation insurance covering all of their respective employees, and
shall also carry public liability insurance, including property damage, all
with limits, in form and with companies as are required to be carried by
Subtenant as set forth in Section 19(b) of the Sublease.

               4.2.2.4.2 Special Coverages. Subtenant shall carry “Builder’s All Risk”
insurance in an amount approved by Landlord and Sublandlord covering the
construction of the Initial Improvements, and such other insurance as Landlord
and Sublandlord may require, it being understood and agreed that the Initial
Improvements shall be insured by Subtenant pursuant to Section 19(b) of the
Sublease immediately upon completion thereof. Such insurance shall be in
amounts and shall include such extended coverage endorsements as may be
reasonably required by Landlord and Sublandlord including, but not limited to,
the requirement that all of Subtenant’s Agents shall carry excess liability and
Products and Completed Operation Coverage insurance, each in amounts not less
than $1,000,000 per incident, $2,000,000 in aggregate, and in form and with
companies as are required to be carried by Subtenant as set forth in Section
19(b) of the Sublease.

               4.2.2.4.3 General Terms. Certificates for all insurance carried pursuant
to this Section 4.2.2.4 shall be delivered to Landlord and Sublandlord before
the commencement of construction of the Initial Improvements and before the
Contractor’s equipment is moved onto the site. All such policies of insurance
must contain a provision that the company writing said policy will give
Landlord and Sublandlord thirty (30) days prior written notice of any
cancellation or lapse of the effective date or any reduction in the amounts of
such insurance. In the event that the Initial Improvements are damaged by any
cause during the course of the construction thereof, Subtenant shall
immediately repair the same at Subtenant’s sole cost and expense. Subtenant’s
Agents shall maintain all of the foregoing insurance coverage in force until
the Initial Improvements are fully completed and accepted by Landlord and
Sublandlord, except for any Products and Completed Operation Coverage insurance
required by Landlord and Sublandlord, which is to be maintained for the term of
the policy period following the substantial completion of the Initial
Improvements. All policies carried under this Section 4.2.2.4 shall insure
Landlord, Sublandlord and Subtenant, as their interests may appear, as well as
Contractor and Subtenant’s Agents. All insurance, except Workers’
Compensation, maintained by Subtenant’s Agents shall preclude subrogation
claims by the insurer against anyone insured thereunder. Such insurance shall
provide that it is primary insurance as respects Landlord and/or Sublandlord
and that any other insurance maintained by Sublandlord is excess and
noncontributing with the insurance required hereunder. The requirements for
the foregoing insurance shall not derogate from the provisions for
indemnification of Landlord and Sublandlord by Subtenant under Section 4.2.2.2
of this Work Letter.

          4.3.3 Governmental Compliance. The Initial Improvements shall comply in
all respects with the following: (i) all state, federal, city or
quasi-governmental laws, codes, ordinances and regulations, as each may apply
according to the rulings of the controlling public official, agent or other
person (collectively referred to herein as the “Code”); (ii) applicable
standards of the American Insurance Association (formerly, the National Board
of Fire Underwriters) and the National Electrical Code; and (iii) building
material manufacturer’s specifications.

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          4.3.4 Inspection by Landlord and Sublandlord. Landlord and Sublandlord
shall have the right to inspect the Initial Improvements at all times;
provided, however, Landlord’s and/or Sublandlord’s failure to inspect the
Initial Improvements shall in no event constitute a waiver of any of
Sublandlord’s rights hereunder nor shall Landlord and/or Sublandlord’s
inspection of the Initial Improvements constitute Landlord’s and/or
Sublandlord’s respective approval of the same. Should Landlord or Sublandlord
disapprove any portion of the Initial Improvements, they shall notify Subtenant
in writing of such disapproval and shall specify the items disapproved. Any
defects or deviations in, and/or disapproval by Landlord and/or Sublandlord of,
the Initial Improvements shall be rectified by Subtenant at no expense to
Landlord or Sublandlord; provided, however, if Landlord or Sublandlord
determines that a defect or deviation exists or disapproves of any matter in
connection with any portion of the Initial Improvements and such defect,
deviation or matter might adversely affect the mechanical, electrical,
plumbing, heating, ventilating and air conditioning or life-safety systems of
the Building, the structure or exterior appearance of the Building or any other
subtenant’s use of such other subtenant’s leased premises, Landlord or
Sublandlord may, at their sole discretion, take such action as Landlord or
Sublandlord deems necessary, at Subtenant’s expense and without incurring any
liability on Landlord’s or Sublandlord’s part, to correct any such defect,
deviation and/or matter, including, without limitation, causing the cessation
of performance of the construction of the Initial Improvements until such time
as the defect, deviation and/or matter is corrected to Landlord’s and
Sublandlord’s satisfaction.

          4.3.5 Meetings. Commencing upon the execution of this Sublease, Subtenant
shall hold regular meetings at a reasonable time, with the Architect and the
Contractor regarding the progress of the preparation of Approved Working
Drawings and the construction of the Initial Improvements, which meetings shall
be held at the Project or another location in West Los Angeles, and, for at
least one (1) meeting a month, Landlord and Sublandlord and/or their agents
shall receive prior notice of, and shall have the right to attend, a meeting to
review the Improvement Allowance draw package and the Initial Improvement
design and/or construction status, and, upon Landlord’s and/or Sublandlord’s
request, certain of Subtenant’s Agents shall attend such meetings. Upon
request by Landlord and/or Sublandlord, Subtenant shall supply Landlord and/or
Sublandlord with the date, time and location of any particular meeting relating
to the construction of the Initial Improvements and Landlord and/or Sublandlord
shall have the right to attend such meetings.

     4.4 Notice of Completion: Copy of Record Set of Plans. Within ten (10)
days after completion of construction of the Initial Improvements, Subtenant
shall cause a Notice of Completion to be recorded in the Office of the Recorder
of the County of Los Angeles in accordance with Section 3093 of the California
Civil Code or any successor statute, and shall furnish a copy thereof to
Sublandlord upon such recordation. If Subtenant fails to do so, Sublandlord
may execute and file the same on behalf of Subtenant as Subtenant’s agent for
such purpose, at Subtenant’s sole cost and expense. At the conclusion of
construction (i) Subtenant shall cause the Architect and Contractor (A) to
update the Approved Working Drawings as necessary to reflect all changes made
to the Approved Working Drawings during the course of construction, (B) to
certify to the best of their knowledge that the “record-set” of as-built
drawings are true and correct, which certification shall survive the expiration
or termination of the Sublease, and (C) to deliver to Landlord and Sublandlord
two (2) sets of sepias or electronic format of such record set of drawings,
together with any permits or similar documents issued by governmental agencies
in connection with the construction of the Initial Improvements, within ninety
(90) days following issuance of a certificate of occupancy for the Sublease
Premises; and (ii) Subtenant shall deliver to Sublandlord a copy of all
warranties, guaranties, and operating manuals and information relating to the
improvements, equipment, and systems in the Sublease Premises.

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SECTION 5
MISCELLANEOUS

     5.1 Subtenant’s Representative. Subtenant has designated Mr. Steve
Dettmann as its sole representative with respect to the matters set forth in
this Work Letter, who shall have full authority and responsibility to act on
behalf of the Subtenant as required in this Work Letter.

     5.2 Sublandlord’s Representative. Sublandlord has designated Mr. Randy
Gustafson as its sole representative with respect to the matters set forth in
this Work Letter, who, until further notice to Subtenant, shall have full
authority and responsibility to act on behalf of the Sublandlord as required in
this Work Letter.

     5.3 Time of the Essence in This Subtenant Work Letter. Unless otherwise
indicated, all references herein to a “number of days” shall mean and refer to
calendar days. If any item requiring approval is timely disapproved by
Sublandlord, the procedure for preparation of the document and approval thereof
shall be repeated until the document is approved by Sublandlord. Sublandlord’s
failure to approve or disapprove of any items within the time periods required
herein for approval or disapproval shall be deemed to be Sublandlord’s approval
thereof upon an additional one (1) business day’s notice from Subtenant to
Sublandlord advising Sublandlord of the consequences of Sublandlord’s failure
to so respond.

     5.4 Subtenant’s Sublease Default. Notwithstanding any provision to the
contrary contained in the Sublease, if an event of default occurs under the
Sublease, or a default by Subtenant under this Work Letter, has occurred at any
time on or before the substantial completion of the Sublease Premises, then (i)
in addition to all other rights and remedies granted to Sublandlord pursuant to
the Sublease, Sublandlord shall have the right to withhold payment of all or
any portion of the Improvement Allowance and/or Sublandlord may cause
Contractor to cease the construction of the Sublease Premises (in which case,
Subtenant shall be responsible for any delay in the substantial completion of
the Sublease Premises caused by such work stoppage), and (ii) all other
obligations of Sublandlord under the terms of this Work Letter shall be
forgiven until such time as such default is cured pursuant to the terms of the
Sublease (in which case, Subtenant shall be responsible for any delay in the
substantial completion of the Sublease Premises caused by such inaction by
Sublandlord).

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EXHIBIT “C”

SUBLEASE DATE CONFIRMATION NOTICE

     In accordance with and pursuant to Section 3(a) of that certain Sublease
by and between ELECTRONIC ARTS INC., a Delaware corporation (the
“Sublandlord”), and PLAYA CAPITAL COMPANY, LLC, a Delaware limited liability
company (the “Subtenant”), the parties hereby confirm the following with
respect to certain dates described in the Sublease: (a) the Commencement Date
occurred on
                    ,
2003; (b) the First SLET Date is                     ,
2007; (c) the STET Date and the Second SLET Date shall occur on                          ,
2008; and (d) the Expiration Date shall occur on                          , 2013.

	 	 	 	 	 
	DATE:     
          
          ,
200  	 	 
	SUBLANDLORD:
	 	 	 	 	 
	 	 	 	ELECTRONIC ARTS INC.,

a Delaware corporation
	 	 	 	 	 
	 	 	 	By:	

	 	 	 	 	
Name:

	 	 	 	 	Its:

	 
	 	 	 	By:	

	 	 	 	 	Name:

	 	 	 	 	Its:

	 	 	 	 	 
	DATE:     
          
          ,
200  
	 	
 
	SUBTENANT:
	 
	 	 	 	PLAYA CAPITAL COMPANY, LLC,

a Delaware limited liability company
	 
	 	 	 	By:	

	 	 	 	 	
Name:

	 	 	 	 	Its:

	 
	 	 	 	By:	

	 	 	 	 	Name:

	 	 	 	 	Its:

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EXHIBIT “D”

Subtenant Stairs, Entry Door and Signage

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EXHIBIT “E”

Location of Parking in

Existing Parking Facilities

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EXHIBIT “F”

Lease

[Attached]

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EXHIBIT “G”

BUILDING RULES AND REGULATIONS

          The following rules and regulations shall apply, where applicable, to the
Sublease Premises, the Building, the parking garage, the Property and the
appurtenances. Capitalized terms have the same meaning as defined in the
Sublease.

	1.	 	Sidewalks, doorways, vestibules, halls, stairways and other similar areas
shall not be obstructed by Subtenant or used by Subtenant for any purpose
other than ingress and egress to and from the Sublease Premises. No
rubbish, litter, trash, or material shall be placed, emptied, or thrown in
those areas. At no time shall Subtenant permit Subtenant’s employees to
loiter in Common Areas or elsewhere about the Building or Property.

	 
	2.	 	Plumbing fixtures and appliances shall be used only for the purposes for
which designed, and no sweepings, rubbish, rags or other unsuitable
material shall be thrown or placed in the fixtures or appliances. Damage
resulting to fixtures or appliances by Subtenant, its agents, employees or
invitees, shall be paid for by Subtenant, and Sublandlord shall not be
responsible for the damage.

	 
	3.	 	No signs, advertisements or notices shall be painted or affixed to
windows, doors or other parts of the Building, except those of such color,
size, style and in such places as are first approved in writing by
Sublandlord. All tenant identification and suite numbers at the entrance
to the Premises shall be installed by Subtenant, at Subtenant’s cost and
expense, using graphics approved by Sublandlord for the Building. Except
in connection with the hanging of lightweight pictures and wall
decorations, no nails, hooks or screws shall be inserted into any part of
the Sublease Premises or Building except by the Building maintenance
personnel.

	 
	4.	 	Subtenant shall not place any lock(s) on any door in the Sublease
Premises or Building without Sublandlord’s prior written consent and
Sublandlord and Landlord shall have the right to retain at all times and
to use keys to all locks within and into the Sublease Premises. A
reasonable number of keys to the locks on the entry doors in the Sublease
Premises shall be furnished by Sublandlord to Subtenant at Subtenant’s
cost, and Subtenant shall not make any duplicate keys. All keys shall be
returned to Sublandlord at the expiration or early termination of this
Sublease.

	 
	5.	 	All contractors, contractor’s representatives and installation
technicians performing work in the Building shall be subject to
Sublandlord’s and Landlord’s prior approval and shall be required to
comply with Sublandlord’s and Landlord’s standard rules, regulations,
policies and procedures, which may be revised from time to time.

	 
	6.	 	Movement in or out of the Building of furniture or office equipment, or
dispatch or receipt by Subtenant of merchandise or materials requiring the
use of elevators, stairways, lobby areas or loading dock areas, shall be
restricted to hours designated by Sublandlord. Subtenant shall obtain
Sublandlord’s prior approval by providing a detailed listing of the
activity. If approved by Sublandlord, the activity shall be under the
supervision of Sublandlord and performed in the manner required by
Sublandlord. Subtenant shall assume all risk for damage to articles moved
and injury to any persons resulting from the activity. If equipment,
property, or personnel of Sublandlord or of any other party is damaged or
injured as a result of or in connection with the activity, Subtenant shall
be solely liable for any resulting damage or loss.

-1-

 

	7.	 	Landlord and Sublandlord shall have the right to approve the weight,
size, or location of heavy equipment or articles in and about the Sublease
Premises. Damage to the Building by the installation, maintenance,
operation, existence or removal of Subtenant’s Property shall be repaired
at Subtenant’s sole expense.

	 
	8.	 	Corridor doors, when not in use, shall be kept closed.

	 
	9.	 	Subtenant shall not: (1) make or permit any improper, objectionable or
unpleasant noises or odors in the Building, or otherwise interfere in any
way with other tenants or persons having business with them; (2) solicit
business or distribute, or cause to be distributed, in any portion of the
Building, handbills, promotional materials or other advertising; or (3)
conduct or permit other activities in the Building that might, in
Sublandlord’s sole opinion, constitute a nuisance.

	 
	10.	 	No animals, except those assisting handicapped persons, shall be brought
into the Building or kept in or about the Sublease Premises.

	 
	11.	 	No inflammable, explosive or dangerous fluids or substances shall be used
or kept by Subtenant in the Sublease Premises, Building or about the
Property. Subtenant shall not, without Sublandlord’s and Landlord’s prior
written consent, use, store, install, spill, remove, release or dispose
of, within or about the Sublease Premises or any other portion of the
Property, any asbestos-containing materials or any solid, liquid or
gaseous material now or subsequently considered toxic or hazardous under
the provisions of 42 U.S.C. Section 9601 et seq. or any other applicable
environmental Law which may now or later be in effect. Subtenant shall
comply with all Laws pertaining to and governing the use of these
materials by Subtenant, and shall remain solely liable for the costs of
abatement and removal.

	 
	12.	 	Subtenant shall not use or occupy the Sublease Premises in any manner or
for any purpose which might injure the reputation or impair the present or
future value of the Sublease Premises or the Buildings. Subtenant shall
not use, or permit any part of the Sublease Premises to be used, for
lodging, sleeping or for any illegal purpose.

	 
	13.	 	Subtenant shall not take any action which would violate Landlord’s and/or
Sublandlord’s labor contracts or which would cause a work stoppage,
picketing, labor disruption or dispute, or interfere with Landlord’s
and/or Sublandlord’s business or with the rights and privileges of any
person lawfully in the Building (“Labor Disruption”). Subtenant shall
take the actions necessary to resolve the Labor Disruption, and shall have
pickets removed and, at the request of Landlord and/or Sublandlord,
immediately terminate any work in the Sublease Premises that gave rise to
the Labor Disruption, until Landlord and/or Sublandlord gives its written
consent for the work to resume. Subtenant shall have no claim for damages
against Landlord and/or Sublandlord or any of the Landlord Related
Parties, nor shall the Commencement Date of the Term be extended as a
result of the above actions.

	 
	14.	 	Subtenant shall not install, operate or maintain in the Sublease Premises
or in any other area of the Building, electrical equipment that would
overload the electrical system beyond its capacity for proper, efficient
and safe operation as determined solely by Sublandlord and/or Landlord.
Subtenant shall not furnish cooling or heating to the Sublease Premises,
including, without limitation, the use of electronic or gas heating
devices, without Sublandlord’s and Landlord’s prior written consent.
Subtenant shall not use more than its proportionate share of telephone
lines and other telecommunication facilities available to service the
Building.

-2-

 

	15.	 	Subtenant shall not operate or permit to be operated a coin or token
operated vending machine or similar device (including, without limitation,
telephones, lockers, toilets, scales, amusement devices and machines for
sale of beverages, foods, candy, cigarettes and other goods), except for
machines for the exclusive use of Subtenant’s employees, and then only if
the operation does not violate the lease of any other tenant in the
Building.

	 
	16.	 	Bicycles and other vehicles are not permitted inside the Building or on
the walkways outside the Building, except in areas designated by
Sublandlord.

	 
	17.	 	Sublandlord and/or Landlord may from time to time adopt systems and
procedures for the security and safety of the Building, its occupants,
entry, use and contents. Subtenant, its agents, employees, contractors,
guests and invitees shall comply with Landlord’s and/or Sublandlord’s
systems and procedures.

	 
	18.	 	Landlord and Sublandlord shall have the right to prohibit the use of the
name of the Building or Property or any other publicity by Subtenant that
in Landlord’s and/or Sublandlord’s sole opinion may impair the reputation
of the Building or Property or their desirability. Upon written notice
from Landlord and/or Sublandlord, Subtenant shall refrain from and
discontinue such publicity immediately.

	 
	19.	 	Subtenant shall not canvass, solicit or peddle in or about the Building
or the Property.

	 
	20.	 	Neither Subtenant nor its agents, employees, contractors, guests or
invitees shall smoke or permit smoking in the Common Areas, unless the
Common Areas have been declared a designated smoking area by Sublandlord,
nor shall the above parties allow smoke from the Sublease Premises to
emanate into the Common Areas or any other part of the Building. Landlord
shall have the right to designate the Building (including the Sublease
Premises) as a non-smoking building.

	 
	21.	 	Sublandlord shall have the right to designate and approve standard window
coverings for the Sublease Premises and to establish rules to assure that
the Building presents a uniform exterior appearance. Subtenant shall
ensure, to the extent reasonably practicable, that window coverings are
closed on windows in the Sublease Premises while they are exposed to the
direct rays of the sun.

	 
	22.	 	Deliveries to and from the Sublease Premises shall be made only at the
times, in the areas and through the entrances and exits designated by
Sublandlord. Subtenant shall not make deliveries to or from the Sublease
Premises in a manner that might interfere with the use by any other tenant
of its premises (including Sublandlord) or of the Common Areas, any
pedestrian use, or any use which is inconsistent with good business
practice.

	 
	23.	 	The work of cleaning personnel shall not be hindered by Subtenant after
5:30 P.M., and cleaning work may be done at any time when the offices are
vacant. Windows, doors and fixtures may be cleaned at any time. Subtenant
shall provide adequate waste and rubbish receptacles to prevent
unreasonable hardship to the cleaning service.

-3-<PAGE>

                                                                   EXHIBIT 10.21

SILICON VALLEY BANK

            AMENDMENT TO LOAN DOCUMENTS

BORROWER:   HARMONIC INC.

DATE:       SEPTEMBER 26, 2003

         THIS AMENDMENT TO LOAN DOCUMENTS is entered into between Silicon Valley
Bank ("Silicon") and the borrower named above ("Borrower").

         The Parties agree to amend the Loan and Security Agreement between
them, dated March 28, 2003 (as otherwise amended, if at all, the "Loan
Agreement"), as follows, effective as of the date hereof. (Capitalized terms
used but not defined in this Amendment, shall have the meanings set forth in the
Loan Agreement.)

         1. LC AND FX SUBLIMITS. The portion of Section 1 of the Schedule to the
Loan Agreement, which presently reads as follows:

         "Letter of Credit
         Sublimit
         (Section 1.6):                 $4,500,000, provided that the
                                        total Letter of Credit Sublimit and
                                        Foreign Exchange Contract Sublimit shall
                                        not, at any time, exceed $4,500,000.

         "Foreign Exchange
         Contract Sublimit:             $4,500,000, provided that the total
                                        Letter of Credit Sublimit and the
                                        Foreign Exchange Contract Sublimit shall
                                        not, at any time, exceed $4,500,000."

is amended to read as follows:

         "Letter of Credit
         Sublimit
         (Section 1.6):                 $10,000,000, provided that the
                                        total Letter of Credit Sublimit and
                                        Foreign Exchange Contract Sublimit shall
                                        not, at any time, exceed $10,000,000.

         "Foreign Exchange
         Contract Sublimit:             $10,000,000, provided that the total
                                        Letter of Credit Sublimit and the
                                        Foreign Exchange Contract Sublimit shall
                                        not, at any time, exceed $10,000,000."

2. LIMITED WAIVER. Silicon waives compliance by the Borrower with the Maximum
Net Loss Financial Covenant set forth in Section 5 of the Schedule to the Loan

                                      -1-
<PAGE>
SILICON VALLEY BANK                                  AMENDMENT TO LOAN AGREEMENT

Agreement for the three month period ending July 25, 2003. This waiver does not
constitute a waiver of the Borrower's obligation to meet said covenant at any
other date, nor does it constitute a waiver of any other term or provision of
the Loan Agreement or any related document, nor an agreement to waive in the
future this covenant or any other term or provision of the Loan Agreement or any
related document.

         3. MODIFICATION TO MAXIMUM NET LOSS COVENANT. The portion of Section 5
of the Schedule to the Loan Agreement, which presently reads as follows:

         "Maximum Net Loss: Borrower shall not incur a net loss (determined in
         accordance with GAAP) for any three month period ending as of the end
         of any fiscal month, in excess of the following amounts:

<TABLE>
<CAPTION>
         Three months ending as of the end of each                 Maximum Net Loss for such
         of the following fiscal months:                               three-month period
         -------------------------------                               ------------------
<S>                                                                <C>
         Fiscal month ending March 28, 2003                                 $16,000,000

         Fiscal months ending April 25, 2003, May                           $13,000,000
         23, 2003 and June 27, 2003

         Fiscal months ending July 25, 2003 and                             $ 8,000,000
         thereafter
</TABLE>

is amended to read as follows:

         "Maximum Net Loss:

                  "(1) Borrower shall not incur a net loss (determined in
                  accordance with GAAP) for any three month period ending as of
                  the end of any fiscal month, in excess of the following
                  amounts:

<TABLE>
<CAPTION>
    Three months ending as of the end of each                 Maximum Net Loss for such
    of the following fiscal months:                              three-month period
    -------------------------------                              ------------------
<S>                                                           <C>
    Fiscal month ending March 28, 2003                                 $16,000,000

    Fiscal months ending April 25, 2003, May                           $13,000,000
    23, 2003 and June 27, 2003
</TABLE>

                                      -2-
<PAGE>
SILICON VALLEY BANK                                  AMENDMENT TO LOAN AGREEMENT

<TABLE>
<S>                                                           <C>
    Fiscal months ending July 25, 2003 and                              $8,000,000
    August 22, 2003
</TABLE>

                  "(2) Borrower shall not incur a net loss (determined in
                  accordance with GAAP) for any single fiscal month, in excess
                  of the following amounts:

<TABLE>
<CAPTION>
                                                                Maximum Net Loss for such
    Fiscal Month                                                       Fiscal Month
    ------------                                                       ------------
<S>                                                             <C>
    Fiscal month ending September 26, 2003                              $4,500,000

    Fiscal month ending October 24, 2003                                $4,500,000

    Fiscal months ending after October 24,                              $2,500,000
    2003
</TABLE>

                  "(3) Borrower shall not incur a net loss (determined in
                  accordance with GAAP) for any fiscal quarter, in excess of the
                  following amounts:

<TABLE>
<CAPTION>
                                                                 Maximum Net Loss for such
      Fiscal Quarter                                                  Fiscal Quarter
      --------------                                                  --------------
<S>                                                              <C>
    Fiscal quarter ending September 26, 2003                           $10,500,000

    Fiscal quarter ending December 31, 2003                             $8,500,000
    and each fiscal quarter thereafter
</TABLE>

         4. FEE. In consideration for Silicon entering into this Amendment,
Borrower shall concurrently pay Silicon a fee in the amount of $5,000, which
shall be non-refundable and in addition to all interest and other fees payable
to Silicon under the Loan Documents. Silicon is authorized to charge said fee to
Borrower's loan account.

         5. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.

         6. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and Borrower, and the
other written

                                      -3-
<PAGE>
SILICON VALLEY BANK                                  AMENDMENT TO LOAN DOCUMENT

documents and agreements between Silicon and Borrower set forth in full all of
the representations and agreements of the parties with respect to the subject
matter hereof and supersede all prior discussions, representations, agreements
and understandings between the parties with respect to the subject hereof.
Except as herein expressly amended, all of the terms and provisions of the Loan
Agreement, and all other documents and agreements between Silicon and Borrower
shall continue in full force and effect and the same are hereby ratified and
confirmed.

   BORROWER:                                    SILICON:

   HARMONIC, INC.                               SILICON VALLEY BANK

   BY /s/ Anthony J. Ley                        BY /s/ Arlene Soriano
      ------------------------------               -------------------------
      PRESIDENT OR VICE PRESIDENT               TITLE Vice President

   BY /s/ Robin N. Dickson
      ------------------------------
      SECRETARY OR ASS'T SECRETARY

                                      -4-

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